Registration Nos: 2-62492
811-2865
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre Effective Amendment No. [ ]
Post Effective Amendment No. 40 [ X ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 38 [ X ]
COLONIAL TRUST IV
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(Exact Name of Registrant as Specified in Charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of Principal Executive Office)
(617) 426-3750
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(Registrant's Telephone Number, Including Area Code)
Name and Address of Agent for Copy to:
Service:
Arthur O. Stern, Esquire John M. Loder, Esquire
Colonial Management Associates, Inc. Ropes & Gray
One Financial Center One International Place
Boston, Massachusetts 02111 Boston, Massachusetts 02110-2624
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b).
[ X ] on March 30, 1995 pursuant to paragraph (b).
[ ] 60 days after filing pursuant to paragraph (a)(i).
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485.
[ ] 75 days after filing pursuant to paragraph (a)(ii).
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
DECLARATION PURSUANT TO RULE 24f-2
The Registrant has registered an indefinite number of its shares of
beneficial interest under the Securities Act of 1933 pursuant to Rule
24f-2 under the Investment Company Act of 1940. On or about January 27,
1995, the Registrant filed a Rule 24f-2 Notice in respect of its fiscal
year ended November 30, 1994.
COLONIAL TRUST IV
Cross Reference Sheet
Colonial Intermediate Tax-Exempt Fund
Colonial Short-Term Tax-Exempt Fund
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Item Number of Form N-1A Location or Caption in Prospectus
- ------------------------ ---------------------------------
Part A
1. Cover Page
2. Summary of expenses
3. The Funds' financial history
4. The Funds' investment objectives;
Organization and history; How the
Funds pursue their objectives
5. Back cover; How the Funds are
managed; Organization and
history; The Funds' investment
objectives
6. Organization and history;
Distributions and taxes; How to
buy shares
7. How to buy shares; How the Funds
value their shares; 12b-1 plans;
Back cover
8. How to sell shares; How to
exchange shares; Telephone
transactions
9. Not Applicable
March 30, 1995
COLONIAL INTERMEDIATE
TAX-EXEMPT FUND
COLONIAL
SHORT-TERM
TAX-EXEMPT FUND
PROSPECTUS
BEFORE YOU INVEST
Colonial Management Associates, Inc. (Adviser) and your full-service
financial adviser want you to understand both the risks and benefits
of mutual fund investing.
While mutual funds offer significant opportunities and are
professionally managed, they also carry risk including possible loss
of principal. Unlike savings accounts and certificates of deposit,
mutual funds are not insured or guaranteed by any financial
institution or government agency.
Please consult your full-service financial adviser to determine how
investing in this mutual fund may suit your unique needs, time horizon
and risk tolerance.
Colonial Intermediate Tax-Exempt Fund (Intermediate Fund) and Colonial
Short-Term Tax-Exempt Fund (Short-Term Fund) (Funds), are diversified
funds of Colonial Trust IV (Trust), an open-end management investment
company. The Funds seek, primarily, current income exempt from
federal income tax and, secondarily, preservation of capital.
Effective May 31, 1995, the Intermediate Fund's objective will be 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. Effective May 31, 1995, the Short-Term Fund's objective will
be to seek as high a level of current income exempt from federal
income tax as is consistent with relatively low volatility by
investing primarily in investment-grade short-term municipal
securities. The Funds are managed by the Adviser, an investment
adviser since 1931.
This Prospectus explains concisely what you should know before
investing in the Funds. Read it carefully and retain it for future
reference. More detailed information about the Funds is in the March
30, 1995
IS-01/689A-0395
Statement of Additional Information, which has been filed with the
Securities and Exchange Commission and is obtainable free of charge by
calling the Adviser at 1-800-248-2828. The Statement of
Additional Information is incorporated by reference in (which means it
is considered to be part of) this Prospectus.
The Intermediate Fund offers two classes of shares. Class A shares
are offered at net asset value plus a sales charge imposed at the time
of purchase; Class B shares are offered at net asset value plus an
annual distribution fee and a declining contingent deferred sales
charge on redemptions made within four years after purchase. Class B
shares automatically convert to Class A shares after approximately
eight years. The Short-Term Fund only offers Class A shares. See
"How to buy shares."
Contents Page
Summary of Expenses
The Funds' financial history
The Funds' investment objective
How the Funds pursue their
objectives
How the Funds measure their
performance
How the Funds are managed
How the Funds values their shares
Distributions and Taxes
How the buy shares
How to sell shares
How to exchange shares
Telephone transactions
12b-1 plans
Organization and history
Appendix
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in the
Funds. The following tables summarize your maximum transaction costs
and annual expenses for an investment in each Class of the Funds'
shares.
Shareholder Transaction Expenses (1)(2)
Intermediate Short-Term
Fund Fund
Class A Class B Class A
Maximum Initial Sales
Charge Imposed on a
purchase (as % of
offering price)(3) 3.25% 0.00%(5) 1.00%
Maximum Contingent
Deferred Sales Charge
(as % of offering
price)(3) 1.00%(4) 4.00% 0.90%(4)
(1) For accounts less than $1,000 an annual fee of $10 may be
deducted. See "How to sell shares."
(2) Redemption proceeds exceeding $5,000 sent via federal funds
wire will be subject to a $7.50 charge per transaction.
(3) Does not apply to reinvested distributions.
(4) Only with respect to any portion of purchases of $1 million to
$5 million redeemed within approximately 18 months after purchase.
See "How to buy shares."
(5) Because of the 0.65% distribution fee applicable to Class B
shares, long-term Class B shareholders may pay more in aggregate
sales charges than the maximum initial sales charge permitted by
the National Association of Securities Dealers, Inc. However,
because the Fund's Class B shares automatically convert to Class A
shares after approximately 8 years, this is less likely for Class B
shares than for a class without a conversion feature.
Annual Operating Expenses (as a % of net assets)
Intermediate Short-Term
Fund Fund
Class A Class B Class A
Management fee
(after expense waiver) 0.00% 0.00% 0.00%
12b-1 fees 0.20 0.85 0.10
Other expenses 0.00(6) 0.00(6) 0.40
Total expenses 0.20%(7) 0.85%(7) 0.50%(8)
(6) After expense waiver.
(7) The Adviser has voluntarily agreed to reimburse the
Intermediate Fund for all expenses (exclusive of 12b-1 fees,
brokerage commissions, interest, taxes and extraordinary expenses,
if any). This agreement may be revoked at any time. Absent such
agreement, the "Management fee" would have been 0.55%, "Other
expenses" would have been 0.52% for each Class, and "Total
expenses" would have been 1.27% for Class A and 1.92% for Class B.
(8) The Adviser has voluntarily agreed to reimburse the Short-Term
Fund's expenses to the extent total expenses (exclusive of the 12b-1
fee, brokerage commissions, interest, taxes and extraordinary
expenses, if any) exceed 0.40% annually of the Fund's average net
assets. This agreement may be revoked at any time. Absent such
agreement, the "Management fee" would have been 0.50%, "Other
expenses" would have been 0.75%, and "Total expenses" would have
been 1.35%.
Example
The following Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in each class of shares of the Funds
for the periods specified, assuming a 5% annual return and, unless
otherwise noted, redemption at period end. The 5% return and expenses
used in this Example should not be considered indicative of actual or
expected Fund performance or expenses, both of which will vary:
Intermediate Short-Term
Fund Fund
Class A Class B Class A
Period: (9)
1 year $34 $49 $ 9 $15
3 years 39 47 27 26
5 years 43 47 47 38
10 years 57 86(10) 86(10) 72
Without expense reimbursements the amounts would be:
Intermediate Short-Term
Fund Fund
Class A Class B Class A
Period: (9)
1 year $45 $60 $20 $24
3 years 72 81 6 52
5 years 100 105 105 83
10 years 181 209(10) 209(10) 171
(9) Assumes no redemption.
(10)Class B shares convert to Class A shares after approximately 8
years; therefore, years 9 and 10 reflect Class A expenses.
THE FUNDS' FINANCIAL HISTORY
The following schedules of financial highlights for a share outstanding
throughout each period have been audited by Price Waterhouse LLP, independent
accountants. Their unqualified report is included in the Funds' 1994 annual
Report and is incorporated by reference into the Statement of Additional
Information.
<TABLE>
<CAPTION>
Intermediate Fund Short-Term Fund
Year ended Period ended Year ended Period ended
November 30 November 30 November 30, November 30,
1994 1993(b) 1994 1993(b)
Class A Class B Class A Class B Class A Class A
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $7.810 $7.810 $7.500 $7.500 $7.530 $7.500
Income (loss) from investment operations:
Net investment income(a) 0.366 0.317 0.305 0.263 0.215 0.196
Net realized and unrealized
gain (loss) on investments (0.596) (0.596) 0.302 0.302 (0.105) 0.012
Total from investment operations (0.230) (0.279) 0.607 0.565 0.110 0.208
Less distributions declared to
shareholders:
From net investment income (0.370) (0.321) (0.297) (0.255) (0.220) (0.178)
Net asset value - End of period $7.210 $7.210 $7.810 $7.810 $7.420 $7.530
Total return (c)(d) (3.05)% (3.68)% 8.18%(e) 7.61%(e) 1.48% 2.80%(e)
Ratios to average net assets:
Expenses 0.20% 0.85% 0.20%(f) 0.85%(f) 0.50% 0.50%(f)
Fees and expenses waived
or borne by the Adviser 1.07% 1.07% 1.33%(f) 1.33%(f) 0.85% 1.92%(f)
Net investment income 4.85% 4.20% 4.53%(f) 3.88%(f) 2.97% 2.85%(f)
Portfolio turnover 26% 26% 5%(f) 5%(f) 16% 22%(f)
Net assets at end of period ($000) $16,791 $14,138 $14,700 $9,396 $13,763 $4,961
_________________________________
(a) Net of fees and expenses
waived or borne by the $0.080 $0.080 $0.090 $0.090 $0.063 $0.132
Adviser which amounted to
(b) The Fund commenced investment operations on February 1, 1993
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Adviser not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) Annualized.
</TABLE>
Further performance information is contained in the Funds' Annual Report to
shareholders, which is obtainable free of charge by calling 1-800-248-2828.
THE FUNDS' INVESTMENT OBJECTIVES
The Funds seek, primarily, current income exempt from federal
income tax and, secondarily, preservation of capital. Effective May
31, 1995, the Intermediate Fund's objective will be 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.
Effective May 31, 1995, the Short-Term Fund's objective will be to
seek as high a level of current income exempt from federal income
tax as is consistent with relatively low volatility by investing
primarily in investment-grade short-term municipal securities.
HOW THE FUNDS PURSUE THEIR OBJECTIVES
Each Fund normally invests substantially all its assets in investment
grade tax-exempt bonds. In this Prospectus, "tax-exempt bonds" means
debt securities, the interest on which is, in the issuer's counsel's
opinion, exempt from federal income taxes. The Intermediate Fund may
invest in bonds of any maturity. The weighted average maturity will
normally range from 3 to 10 years. The Short-Term Fund may invest in
bonds with maturities of 3 years or less. The weighted average
maturity will normally be approximately two years. Tax-exempt bonds
may include fixed, variable or floating rate general obligation and
revenue bonds (including municipal lease obligations and resource
recovery bonds); zero coupon and asset-backed securities; inverse
floating obligations; tax, revenue or bond anticipation notes; and tax-
exempt commercial paper. Each Fund may buy or sell securities on a
delayed-delivery basis and may purchase when-issued securities and
securities restricted as to resale. Many bonds have call features
that require the Fund to tender the bond back to the issuer at the
issuer's request. If a bond is called, the Fund may be able to invest
the proceeds at lower yields.
Investment grade securities are rated Baa or higher by Moody's or BBB
or higher by S&P or unrated securities determined by the Adviser to be
of comparable quality. Bonds rated Baa or BBB are considered to have
some speculative characteristics and could be more adversely affected
by unfavorable economic developments than higher rated bonds. Neither
Fund is required to sell a security when its rating is reduced. Each
Fund currently intends to limit its investments in unrated bonds to
less than 25% of total assets.
The value of debt securities (and thus Fund shares) usually fluctuates
inversely to changes in interest rates. "Inverse floating
obligations," also known as "residual interest bonds," represent
interests in tax-exempt bonds. These securities carry interest rates
that vary inversely to changes in market interest rates. Such
securities have investment characteristics similar to investment
leverage.Their market values are subject to greater risks of
fluctuation than securities bearing a fixed rate of interest which may
lead to greater fluctuation in the value of Fund shares.
"Asset-backed securities" are interests in pools of debt securities.
Principal and interest payments on the underlying debt are passed
through to the holders of the asset-backed securities. A pool may
issue more than one class of asset-backed securities, representing
different rights to receive principal and/or interest. Principal on
the asset-backed securities may be prepaid if the underlying debt
securities are prepaid. As a result, these securities may not
increase in value when interest rates fall. The Fund may be able to
invest prepaid principal only at lower yields. The prepayment of such
securities purchased at a premium may result in losses equal to the
premium.
Certain bonds do not pay interest in cash on a current basis.
However, each Fund will accrue and distribute this interest on a
current basis, and may have to sell securities to generate cash for
distributions.
A portion of each Fund's assets may be held in cash or invested in
short-term securities for day-to-day operating purposes. Each Fund
intends that its short-term investments will be tax-exempt, but if
suitable tax-exempt securities are not available or are available only
on a when-issued basis, each Fund may invest up to 20% of its assets
in repurchase agreements; short-term taxable obligations rated A-1+ of
banks which have or whose parent holding companies have long-term debt
ratings of AAA, or of corporations with long-term debt ratings of AAA;
and securities of the U.S. Government. Based on the Adviser's
determination, each Fund may temporarily invest more than 20% of its
assets in such taxable obligations for defensive purposes. Each
Fund's policy is not to concentrate in any industry, but it may invest
up to 25% of its assets in industrial development revenue bonds based
on the credit of private entities in any one industry (governmental
issuers are not considered to be part of any "industry"). As a
fundamental policy, each Fund normally limits investments in
securities subject to the federal alternative minimum tax to a maximum
of 20% of total assets.
When-Issued And Delayed Delivery Securities. Each Fund may acquire
without limit securities on a "when-issued" basis by contracting to
purchase securities for a fixed price on a date beyond the customary
settlement time with no interest accruing until settlement. Assets
equal in value are segregated at the custodian. If made through a
dealer, the contract is dependent on the dealer's consummation of the
sale. The dealer's failure could deprive the Fund of an advantageous
yield or price. These contracts involve the risk that the value of
the underlying security may change prior to settlement. The Fund may
realize short-term profits or losses if the contracts are sold.
Options and Futures. For hedging purposes, each Fund may purchase or
sell interest rate and tax-exempt bond index futures contracts.
A futures contract creates an obligation by the seller to deliver and
the buyer to take delivery of the type of instrument or cash at the
time and in the amount specified in the contract. Although most
futures contracts call for the delivery (or acceptance) of the
specified instrument, futures are usually closed out before the
settlement date through the purchase (or sale) of a comparable
contract. If the price of the initial sale of the futures contract
exceeds (or is less than) the price of the offsetting purchase, the
Fund realizes a gain (or loss). Futures contracts are either covered
(by holding the securities deliverable under the contract) or assets
equal in value are segregated in an account at the custodian.
For hedging purposes, each Fund also may purchase or sell put and call
options on futures contracts and purchase put options on debt
securities. A call option gives the purchaser the right to buy a
security from, and a put option the right to sell a security or
contract to, the option writer at a specified price, on or before a
specified date. Each Fund will pay a premium when purchasing an
option, which reduces the Fund's return on the underlying security if
the option is exercised and results in a loss if the option expires
unexercised, and will receive a premium from writing an option, which
may increase its return if the option expires or is closed out at a
profit. If the Fund is unable to close out an unexpired option, the
Fund must continue to hold the underlying security until the option
expires.
A Fund may not purchase or sell futures or related options if
immediately thereafter the sum of the amount of deposits for initial
margin or premiums on the existing futures and options would exceed 5%
of the market value of the Fund's total assets. Transactions in
futures and related options involve the risk of (1) imperfect
correlation between the price movement of the contracts and the
underlying securities, (2) significant price movement in one but not
the other market because of different trading hours, (3) the possible
absence of a liquid secondary market at any point in time, and (4)
failure of the other party to the transaction to fulfill its
obligations. Also, if the Adviser's prediction on interest rates is
inaccurate, the Fund may be worse off than if it had not hedged.
Other. The Funds may not always achieve their investment objectives.
The Funds' investment objectives and nonfundamental policies may be
changed without shareholder approval. Each Fund will notify investors
at least 30 days prior to any material change in its investment
objectives. If there is a change in the investment objectives,
shareholders should consider whether their Fund remains an appropriate
investment in light of their current financial position and needs.
Shareholders may incur a contingent deferred sales charge if shares
are redeemed in response to a change in objectives. Each Fund has a
fundamental policy of investing under normal circumstances at least
80% of its total assets in tax-exempt bonds. This policy and the
Funds' other fundamental policies listed in the Statement of
Additional Information cannot be changed without the approval of a
majority of each Fund's outstanding voting securities. Additional
information concerning certain of the securities and investment
techniques described above is contained in the Statement of Additional
Information.
HOW THE FUNDS MEASURE THEIR PERFORMANCE
Performance may be quoted in sales literature and advertisements.
Each Fund's Class's average annual total returns are calculated in
accordance with the Securities and Exchange Commission's formula and
assume the reinvestment of all distributions, the maximum initial
sales charge of 3.25% on Class A shares for the Intermediate Fund or
1.00% on Class A shares for the Short-Term Fund, and the contingent
deferred sales charge applicable to the time period quoted on Class B
shares for the Intermediate Fund. Other total returns differ from
average annual total return only in that they may relate to different
time periods, may represent aggregate as opposed to average annual
total returns and may not reflect the initial or contingent deferred
sales charges.
Each Fund's Class's yield and tax-equivalent yield, which differ from
total return because they do not consider the change in net asset
value, are calculated in accordance with the Securities and Exchange
Commission's formula. Each Class's distribution rate is calculated by
dividing the most recent month's distribution, annualized, by the
maximum offering price of that Class at the end of the month. Each
Class's performance may be compared to various indices. Quotations
from various publications may be included in sales literature and
advertisements. See "Performance Measures" in the Statement of
Additional Information for more information.
All performance information is historical and does not predict future
results.
HOW THE FUNDS ARE MANAGED
The Trustees formulate the Funds' general policies and oversee the
Funds' affairs as conducted by the Adviser.
The Adviser is a subsidiary of The Colonial Group, Inc. The Colonial
Group, Inc. is also the parent of Colonial Investment Services,
Inc.(Distributor), which serves as the distributor for the Funds'
shares, and of Colonial Investors Service Center, Inc. (Transfer
Agent), which serves as the shareholder services and transfer agent
for the Funds. Liberty Financial Companies, Inc. is considered to be
the controlling person of The Colonial Group, Inc.
The Adviser furnishes each Fund with investment management, accounting
and administrative personnel and services, office space and other
equipment and services at the Adviser's expense. For these services,
the Intermediate Fund and the Short-Term Fund pay the Adviser an
annual fee of 0.55% and 0.50%, respectively, of their average net
assets.
William C. Loring, Vice President of the Adviser, has managed the
Funds since their inception and various other Colonial tax-exempt
funds since 1986.
The Adviser also provides pricing and bookkeeping services to each
Fund for a monthly fee of $2,250 plus a percentage of each Fund's
average net assets over $50 million.
The Transfer Agent provides transfer agency and shareholder services
to each Fund for a fee of 0.14% annually of average net assets plus
out-of-pocket expenses.
Each of the foregoing fees is subject to any reimbursement or fee
waiver to which the Adviser may agree.
The Adviser places all orders for the purchase and sale of portfolio
securities. In selecting broker-dealers, the Adviser may consider
research and brokerage services furnished to it and its affiliates.
Subject to seeking best execution, the Adviser may consider sales of
shares of the Funds (and of certain other Colonial funds) in selecting
broker-dealers for portfolio security transactions.
HOW THE FUNDS VALUE THEIR SHARES
Per share net asset value is calculated by dividing the total value of
each Class's net assets by its number of outstanding shares. Shares
are valued each day the New York Stock Exchange is open as of
approximately 4:00 p.m. Eastern time. Portfolio securities for which
quotations are readily available are valued at market. Short-term
investments maturing in 60 days or less are valued at amortized cost
when it is determined , pursuant to procedures adopted by the
Trustees, that such cost approximates market value. All other
securities and assets are valued at fair value following procedures
adopted by the Trustees.
DISTRIBUTIONS AND TAXES
Each Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code and to distribute to shareholders virtually
all net income and any net realized gain at least annually.
Each Fund generally declares distributions daily and pays them
monthly. Distributions are invested in additional shares of the same
Class of the Fund at net asset value unless the shareholder elects to
receive cash. Regardless of the shareholder's election, distributions
of $10 or less will not be paid in cash but will be invested in
additional shares of the same Class of the Fund at the net asset
value. To change your election, call the Transfer Agent for
information. Whether you receive them in cash or in additional Fund
shares, you must report them as taxable income unless you are a tax-
exempt institution. While each Fund's distributions of tax-exempt
bond interest are not subject to regular federal income tax, a portion
may be included in computing a shareholder's federal alternative
minimum tax liability. Social security benefits may be taxed as a
result of receiving tax-exempt income. Each January, information on
the amount and nature of distributions for the prior year is sent to
shareholders.
HOW TO BUY SHARES
Shares are offered continuously. Orders received in good form prior
to 4:00 p.m. Eastern time (or placed with a financial service firm
before such time and transmitted by the financial service firm before
the Funds process that day's share transactions) will be processed
based on that day's closing net asset value, plus any applicable
initial sales charge.
The minimum initial investment is $1,000; subsequent investments may
be as small as $50. The minimum initial investment for the Colonial
Fundamatic program is $50. Certificates will not be issued for Class
B shares and there are some limitations on the issuance of Class A
certificates. Each Fund may refuse any purchase order for its shares.
See the Statement of Additional Information for more information.
Intermediate Fund. The Intermediate Fund's Class A shares are offered
at net asset value plus an initial or a contingent deferred sales
charge as follows:
Initial Sales Charge
Retained
by
Financial
Service
Firm
as % of as % of
Amount Amount Offering Offering
Purchased Invested Price Price
Less than $100,000 3.35% 3.25% 3.00%
$100,000 to less than
$250,000 2.56% 2.50% 2.25%
$250,000 to less than
$500,000 2.04% 2.00% 1.75%
$500,000 to less than
$1,000,000 1.52% 1.50% 1.25%
$1,000,000 or
more 0.00% 0.00% 0.00%
On purchases of $1 million or more, the Distributor pays the financial
service firm a cumulative commission as follows:
Amount Purchased Commission
First $3,000,000 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25%(1)
(1) Paid over 12 months but only
to the extent the shares
remain outstanding.
Purchases of $1 million to $5 million are subject to a 1.00%
contingent deferred sales charge payable to the Distributor on
redemptions within 18 months from the first day of the month following
the purchase. The contingent deferred sales charge does not apply to
the excess of any purchase over $5 million.
Class A shares bear a 0.20% annual service fee.
Class B Shares. Class B shares are offered at net asset value,
without an initial sales charge, subject to a 0.65% annual
distribution fee for approximately 8 years (at which time they
convert to Class A shares not bearing a distribution fee), a 0.20%
annual service fee and a contingent deferred sales charge if redeemed
within 4 years after purchase. As shown below, the amount of the
contingent deferred sales charge depends on the number of years after
purchase that the redemption occurs:
During Years Contingent Deferred
After Purchase Sales Charge
0-1 4.00%
1-2 3.00%
2-3 2.00%
3-4 1.00%
More than 4 0.00%
Year one ends one year after the end of the month in which the
purchase was accepted and so on. The Distributor pays financial
service firms a commission of 3.00% on Class B share purchases.
Short-Term Fund. The Short-Term Fund's Class A shares are offered at
net asset value plus an initial or a contingent deferred sales charge
as follows:
Initial Sales Charge
Retained by
Financial
Service Firm as
as % of % of
Amount Amount Offering Offering
Purchased Invested Price Price
Less than
$1,000,000 1.01% 1.00% 0.90%
$1,000,000
or more 0.00% 0.00% 0.00%
On purchases of $1 million or more, the Distributor pays the financial
service firm a cumulative commission as follows:
Amount Purchased Commission
First $3,000,000 0.90%
Next $2,000,000 0.50%
Over $5,000,000 0.25%(1)
(1) Paid over 12 months but only to the
extent the shares remain outstanding.
Purchases of $1 million to $5 million are subject to a 0.90%
contingent deferred sales charge payable to the Distributor on
redemptions within 18 months from the first day of the month following
the purchase. The contingent deferred sales charge does not apply to
the excess over $5 million.
Class A shares bear a 0.10% annual service fee.
The Short-Term Fund may in the future issue Class B and other classes
of shares which may have different sales charges or other features.
General. All contingent deferred sales charges are deducted from the
redemption, not the amount remaining in the account, and are paid to
the Distributor. Shares issued upon distribution reinvestment and
amounts representing appreciation are not subject to a contingent
deferred sales charge. The contingent deferred sales charge is
imposed on redemptions which result in the account value falling below
its Base Amount (the total dollar value of purchase payments in the
account reduced by prior redemptions on which a contingent deferred
sales charge was paid and any exempt redemptions). See the Statement
of Additional Information for more information.
Which Class is more beneficial to an investor depends on the amount
and intended length of the investment. Large investments, qualifying
for a reduced Class A sales charge, avoid the distribution fee.
Investments in Class B shares have 100% of the purchase invested
immediately. Purchases of $250,000 or more must be for Class A
shares. Consult your financial service firm.
Financial service firms may receive different compensation rates for
selling different classes of shares. The Distributor may pay
additional compensation to financial service firms which have made or
may make significant sales. Initial or contingent deferred sales
charges may be reduced or eliminated for certain persons or
organizations purchasing the Funds' shares alone or in combination
with certain other Colonial funds. See the Statement of Additional
Information for more information.
Shareholder Services. A variety of shareholder services are
available. For more information about these services or your account,
call 1-800-345-6611. Some services are described in the attached
account application. A shareholder's manual explaining all available
services will be provided upon request.
HOW TO SELL SHARES
Shares may be sold on any day the New York Stock Exchange is open,
either directly to the Fund or through your financial service firm.
Sale proceeds generally are sent within seven days (usually on the
next business day after your request is received in good form).
However, for shares recently purchased by check, the Fund will send
proceeds as soon as the check has cleared (which may take up to 15
days).
Selling Shares Directly To The Fund. Send a signed letter of
instruction or stock power form to the Transfer Agent along with any
certificates for shares to be sold. The sale price is the net asset
value (less any applicable contingent deferred sales charge) next
calculated after the Fund receives the request in proper form.
Signatures must be guaranteed by a bank, a member firm of a national
stock exchange or another eligible guarantor institution. Stock power
forms are available from financial service firms, the Transfer Agent
and many banks. Additional documentation is required for sales by
corporations, agents, fiduciaries, surviving joint owners and
individual retirement account holders. For details contact:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Selling Shares Through Financial Service Firms. Financial service
firms must receive requests before 4:00 p.m. Eastern time to receive
that day's price, are responsible for furnishing all necessary
documentation to the Transfer Agent, and may charge for this service.
General. The sale of shares is a taxable transaction for federal tax
purposes and may be subject to a contingent deferred sales charge.
The contingent deferred sales charge may be waived under certain
circumstances. See the Statement of Additional Information for more
information. Under unusual circumstances, the Funds may suspend
repurchases or postpone payment for up to seven days or longer, as
permitted by federal securities law. In June of any year, the Funds
may deduct $10 (payable to the Transfer Agent) from accounts valued at
less than $1,000 unless the account value has dropped below $1,000
solely as a result of share value depreciation. Shareholders will
receive 60 days' written notice to increase the account value before
the fee is deducted.
HOW TO EXCHANGE SHARES
Exchanges at net asset value may be made among shares of the same
class of shares of most Colonial funds. Shares will continue to age
without regard to the exchange for purposes of conversion and
determining the contingent deferred sales charge, if any, upon
redemption. Carefully read the prospectus of the fund into which the
exchange will go before submitting the request. Call 1-800-248-2828
to receive a prospectus and an exchange form. Call 1-800-422-3737 to
exchange shares by telephone. An exchange is a taxable capital
transaction. The exchange service may be changed, suspended or
eliminated on 60 days' written notice.
Class A Shares. An exchange from a money market fund into a non-money
market fund will be at the applicable offering price next determined
(including sales charge), except for amounts on which an initial sales
charge was paid. An exchange from the Short-Term Fund into a non-
money market fund will be at the applicable offering price (including
sales charge) next determined less any sales charge previously paid.
Other fund shares must be held for five months before qualifying for
exchange to a fund with a higher sales charge, after which, exchanges
are made at the net asset value next determined.
Class B Shares. Exchange of Class B shares are not subject to the
contingent deferred sales charge. However, if shares are redeemed
within six years after the original purchase, a contingent deferred
sales charge will be assessed using the schedule of the fund in which
the original investment was made.
TELEPHONE TRANSACTIONS
All shareholders may redeem up to $50,000 of each Fund's shares by
telephone, and may elect telephone redemption privileges for larger
amounts on the account application. All exchanges may be accomplished
by telephone. See the Statement of Additional Information for more
information. The Adviser, the Transfer Agent and the Fund will not be
liable when following telephone instructions reasonably believed to be
genuine and a shareholder may suffer a loss from unauthorized
transactions. The Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine.
Shareholders will be required to provide their name, address and
account number. Proceeds and confirmations of telephone transactions
will be mailed or sent to the address of record. Telephone
redemptions are not available on accounts with an address change in
the preceding 60 days. All telephone transactions are recorded.
Shareholders are not obligated to transact by telephone.
12B-1 PLANS
Under 12b-1 Plans, the Short-Term Fund pays the Distributor an annual
service fee of 0.10% of the Fund's average net assets; the
Intermediate Fund pays the Distributor an annual service fee of 0.20%
of the Fund's average net assets attributed to each Class of shares
and an annual distribution fee of 0.65% of average net assets
attributed to its Class B shares. Because the Intermediate Fund's
Class B shares bear the additional distribution fee, their dividends
will be lower than the dividends of the Fund's Class A shares. Class
B shares automatically convert to Class A shares, approximately eight
years after the Class B shares were purchased. The Intermediate
Fund's multiple class structure could be terminated should certain
Internal Revenue Service rulings be rescinded. See the Statement of
Additional Information for more information. The Distributor uses the
fees to defray the cost of commissions and service fees paid to
financial service firms which have sold Fund shares, and to defray
other expenses such as sales literature, prospectus printing and
distribution, shareholder servicing costs and compensation to
wholesalers. Should the fees exceed the Distributor's expenses in any
year, the Distributor would realize a profit. The Plans also
authorize other payments to the Distributor and its affiliates
(including the Adviser) which may be construed to be indirect
financing of sales of Fund shares.
ORGANIZATION AND HISTORY
The Trust is a Massachusetts business trust organized in 1978. Each
Fund represents the entire interest in a separate portfolio of the
Trust.
The Trust is not required to hold annual shareholder meetings, but
special meetings may be called for certain purposes. You receive one
vote for each of your Fund shares. Shares of the Trust vote together
except when required by law to vote separately by fund or by class.
Shareholders owning in the aggregate ten percent of Trust shares may
call meetings to consider removal of Trustees. Under certain
circumstances, the Trust will provide information to assist
shareholders in calling such a meeting. See the Statement of
Additional Information for more information.
Investment Adviser
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Distributor
Colonial Investment Services, Inc.
One Financial Center
Boston, MA 02111-2621
Custodian
United Missouri Bank, n.a.
928 Grand Avenue
Kansas City, MO 64106
Shareholder Services and Transfer Agent
Colonial Investors Service Center, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110-2624
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624
Your financial service firm is:
Printed in U.S.A.
March 30, 1995
COLONIAL
INTERMEDIATE
TAX-EXEMPT FUND
COLONIAL
SHORT-TERM
TAX-EXEMPT FUND
PROSPECTUS
Colonial Intermediate Tax-Exempt Fund and Colonial Short-Term Tax-
Exempt Fund seek, primarily, current income exempt from federal
income tax and, secondarily, preservation of capital. Effective May
31, 1995, the Intermediate Fund's objective will be 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.
Effective May 31, 1995, the Short-Term Fund's objective will be to
seek as high a level of current income exempt from federal income
tax as is consistent with relatively low volatility by investing
primarily in investment-grade short-term municipal securities.
For more detailed information about the Funds, call the Adviser at 1-
800-248-2828 for the March 30, 1995 Statement of Additional
Information.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
Colonial Mutual Funds
_________________________________________________________________
Please send your completed application to:
Colonial Mutual Funds
P.O. Box 1722
Boston, Massachusetts 02105-1722
New Account Application/Revision to Existing Account
To open a new account, complete sections 1, 2, 3, & 8.
To apply for special services for a new or existing account,
complete sections 4, 5, 6, 7, or 9 as appropriate.
___ Please check here if this is a revision.
1-----------Account Ownership--------------
Please choose one of the following.
__Individual: Print your name, Social Security #, U.S.
citizen status.
__Joint Tenant: Print all names, the Social Security # for
the first person, and his/her U.S. citizen status.
__Uniform Gift to Minors: Name of custodian and minor,
minor's Social Security #, minor's U.S. citizen status.
__Corporation, Association, Partnership: Include full name,
Taxpayer I.D. #.
__Trust: Name of trustee, trust title & date, and trust's
Taxpayer I.D. #.
______________________________________
Name of account owner
______________________________________
Name of joint account owner
______________________________________
Street address
______________________________________
Street address
______________________________________
City, State, and Zip
______________________________________
Daytime phone number
______________________________________
Social Security # or Taxpayer I.D. #
Are you a U.S. citizen? Yes___ No___
______________________________________
If no, country of permanent residence
______________________________________
Owner's date of birth
______________________________________
Account number (if existing account)
2 -----Colonial Fund(s) You Are Purchasing--------
Your investment will be made in Class A shares if no class
is indicated. Certificates are not available for Class B shares.
If no distribution option is selected,
distributions will be reinvested in additional Fund shares.
Please consult your financial adviser to determine which
class of shares best suits your needs.
Fund Choice(s)
Fund
___ A Shares ___ B Shares (less than $250,000)
$______________________________________________
Amount
Method of Payment
Choose one for each fund
___Check payable to the Fund, enclosed
___Bank wired on (Date) ____/____/____
Wire confirmation #
___Dealer purchased on (Date) ____/____/____
Trade confirmation #
Ways to Receive Your Distributions
Choose one for each fund
___Reinvest dividends and capital gains
___Dividends in cash; reinvest capital gains
___Dividends and capital gains in cash
___Automatic Dividend Diversification See section 5A, inside
___Direct Deposit via Colonial Cash Connection See section
4B, inside
Fund Choice(s)
Fund
___ A Shares ___ B Shares (less than $250,000)
$______________________________________________
Amount
Method of Payment
Choose one for each fund
___Check payable to the Fund, enclosed
___Bank wired on (Date) ____/____/____
Wire confirmation #
___Dealer purchased on (Date) ____/____/____
Trade confirmation #
Ways to Receive Your Distributions
Choose one for each fund
___Reinvest dividends and capital gains
___Dividends in cash; reinvest capital gains
___Dividends and capital gains in cash
___Automatic Dividend Diversification See section 5A, inside
___Direct Deposit via Colonial Cash Connection See section
4B, inside
Fund Choice(s)
Fund
___ A Shares ___ B Shares (less than $250,000)
$______________________________________________
Amount
Method of Payment
Choose one for each fund
___Check payable to the Fund, enclosed
___Bank wired on (Date) ____/____/____
Wire confirmation #
___Dealer purchased on (Date) ____/____/____
Trade confirmation #
Ways to Receive Your Distributions
Choose one for each fund
___Reinvest dividends and capital gains
___Dividends in cash; reinvest capital gains
___Dividends and capital gains in cash
___Automatic Dividend Diversification See section 5A, inside
___Direct Deposit via Colonial Cash Connection See section
4B, inside
3---Your Signature & Taxpayer I.D. Number Certification----
Each person signing on behalf of an entity represents that
his/her actions are authorized.
I have received and read each appropriate Fund prospectus
and understand that its terms are incorporated by reference
into this application. I understand that this application
is subject to acceptance. I understand that certain
redemptions may be subject to a contingent deferred sales
charge. I certify, under penalties of perjury, that:
1. The Social Security # or Taxpayer I.D. # provided is
correct.
Cross out 2(a) or 2(b) if either is not true in your case.
2. I am not subject to 31% backup withholding because (a) I
have not been notified that I am subject to backup
withholding or (b) the Internal Revenue Service has notified
me that I am no longer subject to backup withholding.
It is agreed that the Fund, all Colonial companies and their
officers, directors, agents, and employees will not be
liable for any loss, liability, damage, or expense for
relying upon this application or any instruction believed
genuine.
X______________________________________________
Signature
_______________________________________________
Capacity, if applicable Date
X______________________________________________
Signature
_______________________________________________
Capacity, if applicable Date
4--------Ways to Withdraw from Your Fund-------
It may take up to 30 days to activate the following
features. Complete only the section(s) that apply to the
features you would like.
A. Systematic Withdrawal Plan (SWP)
You can receive monthly, quarterly, or semiannual checks
from your account in any amount you select, with certain
limitations. Your redemption checks can be sent to you at
the address of record for your account, to your bank
account, or to another person you choose. The value of the
shares in your account must be at least $5,000 and you must
reinvest all of your distributions. Checks will be processed
on the 10th calendar day of the month or the following
business day. Withdrawals in excess of 12% annually of your
current account value will not be accepted. Redemptions made
in addition to Plan payments may be subject to a contingent
deferred sales charge for Class B shares. Please
consult your financial or tax adviser before electing this
option.
Funds for Withdrawal:
______________________________________________
Name of fund
Withdrawal Amount
Redeem shares from account as follows:
Dollar amount of payment $___________
or
Total annual %_________
Frequency (choose one)
__Monthly __Quarterly __Semiannually
I would like payments to begin _________________ (month).
______________________________________________
Name of fund
Withdrawal Amount
Redeem shares from account as follows:
Dollar amount of payment $___________
or
Total annual %_________
Frequency (choose one)
__Monthly __Quarterly __Semiannually
I would like payments to begin _________________ (month).
______________________________________________
Name of fund
Withdrawal Amount
Redeem shares from account as follows:
Dollar amount of payment $___________
or
Total annual %_________
Frequency (choose one)
__Monthly __Quarterly __Semiannually
I would like payments to begin _________________ (month).
Payment Instructions
Send the payment to (choose one):
__My address of record.
__My bank account via Colonial Cash Connection. Please
complete Section 4B and the Bank Information section below.
__The payee listed at right.
______________________________________________
Name of payee
______________________________________________
Address of payee
______________________________________________
City
______________________________________________
State Zip
______________________________________________
Payee's bank account number, if applicable
X_____________________________________________
Signature of account owner(s)
X_____________________________________________
Signature of account owner(s)
Signatures of all owners must be guaranteed. Provide the
name, address, payment amount, and frequency for other
payees (maximum of 5) on a separate sheet.
B. Direct Deposit via Colonial Cash Connection
You can arrange to have distributions from your Colonial
fund account(s) or Systematic Withdrawal Plan checks
automatically deposited directly into your bank checking
account. Distribution deposits will be made 2 days after the
Fund's payable date. Please complete Bank Information below
and attach a blank check marked "VOID."
Please deposit my:
__Dividend distributions only
__Dividend and capital gain distributions
__Systematic Withdrawal Plan payments
I understand that my bank must be a member of the Automated
Clearing House system.
C. Telephone Withdrawal Options
All telephone transaction calls are recorded. These options
are not available for retirement accounts.
1. Fast Cash
You are automatically eligible for this service. You or
your financial adviser can withdraw up to $50,000 from your
account and have it sent to your address on our records. For
your protection, this service is only available on accounts
that have not had an address change within
60 days of the redemption request.
2. Telephone Redemption
__I would like the Telephone Redemption privilege.
You may withdraw shares from your fund account by telephone
and send your money to your bank account. If you are adding
this service to an existing account, complete the Bank
Information section below and have all shareholder
signatures guaranteed.
Colonial's and the Fund's liability is limited when
following telephone instructions; a shareholder may suffer a
loss from an unauthorized transaction reasonably believed by
Colonial to have been authorized. Telephone redemptions
exceeding $5,000 will be sent via Federal Fund Wire, usually
on the next business day ($7.50 will be deducted).
Redemptions of $5,000 or less will be sent by check to your
designated bank.
Bank Information (For A, B, or C Above)
I authorize deposits to the following bank account:
____________________________________________________________
____
Bank name City Bank account number
____________________________________________________________
____
Bank street address State Zip Bank routing # (your bank
can provide this)
5-----Ways to Make Additional Investments--------
These services involve continuous investments regardless of
varying share prices. Please consider your ability to
continue purchases through periods of price fluctuations.
Dollar cost averaging does not assure a profit or protect
against loss in declining markets.
A. Automatic Dividend Diversification
Please diversify my portfolio by investing fund
distributions in another Colonial fund. These investments
will be made in the same share class and without sales
charges. I have carefully read the prospectus for the
fund(s) listed below.
____________________________
From fund
____________________________
Account number (if existing)
____________________________
To fund
____________________________
Account number (if existing)
____________________________
From fund
____________________________
Account number (if existing)
____________________________
To fund
____________________________
Account number (if existing)
____________________________
From fund
____________________________
Account number (if existing)
____________________________
To fund
____________________________
Account number (if existing)
B. Automated Dollar Cost Averaging
This program allows you to automatically have money from any
Colonial fund in which you have a balance of at least
$5,000 transferred into the same share class of up to four
other Colonial funds, on a monthly basis. The minimum amount
for each transfer is $100. Please complete the section
below.
____________________________________
Fund from which shares will be sold
$_________________________
Amount to redeem monthly
____________________________________
Fund name
$_________________________
Amount to invest monthly
____________________________________
Fund name
$_________________________
Amount to invest monthly
____________________________________
Fund name
$_________________________
Amount to invest monthly
C. Fundamatic
Fundamatic automatically transfers the specified amount from
your bank checking account to your Colonial fund account.
Your bank needs to be a member of the Automated Clearing
House system. Please attach a blank check marked "VOID."
Also, complete the section below and Fundamatic
Authorization (Section 6).
____________________________________
Fund name
$_____________________ _________________
Amount to transfer Month to start
Frequency
__Monthly or __Quarterly
Date
__5th or __20th of the month
____________________________________
Fund name
$_____________________ _________________
Amount to transfer Month to start
Frequency
__Monthly or __Quarterly
Date
__5th or __20th of the month
____________________________________
Fund name
$_____________________ _________________
Amount to transfer Month to start
Frequency
__Monthly or __Quarterly
Date
__5th or __20th of the month
6 -------------Fundamatic Authorization--------------------
Authorization to honor checks drawn by Colonial Investors
Service Center. Do Not Detach. Make sure all depositors on
the bank account sign to the far right. Please attach a
blank check marked "VOID" here. See reverse for bank
instructions.
I authorize Colonial to draw on my bank account, by check or
electronic funds transfer, for an investment in a Colonial
fund. Colonial and my bank are not liable for any loss
arising from delays or dishonored draws. If a draw is not
honored, I understand that notice may not be given and
Colonial may reverse the purchase and charge my account $15.
______________________________________
Bank name
______________________________________
Bank street address
______________________________________
Bank street address
______________________________________
City State Zip
______________________________________
Bank account number
______________________________________
Bank routing #
X_____________________________________
Depositor's Signature(s)
Exactly as appears on bank records
X_____________________________________
Depositor's Signature(s)
Exactly as appears on bank records
7--Ways to Reduce Your Sales Charges for Class A Shares--
These services can help you reduce your sales charge while
increasing your share balance over the long term.
A. Right of Accumulation
If you, your spouse or your children own Class A, B or D
shares in other Colonial funds, you may be eligible for a
reduced sales charge. The combined value of your accounts
must be $50,000 or more. Class A shares of money market
funds are not eligible unless purchased by exchange from
another Colonial fund.
The sales charge for your purchase will be based on the sum
of the purchase added to the value of all shares in other
Colonial funds at the previous day's public offering price.
__Please link the accounts listed below for Right of
Accumulation privileges, so that this and future purchases
will receive any discount for which they are eligible.
_____________________________________
Name on account
_____________________________________
Account number
_____________________________________
Name on account
_____________________________________
Account number
B. Statement of Intent
If you agree in advance to invest at least $50,000 within 13
months, you'll pay a lower sales charge on every dollar you
invest. If you sign a Statement of Intent within 90 days
after you establish your account, you can receive a
retroactive discount on prior investments. The amount
required to receive a discount varies by fund; see the sales
charge table in the "How to Buy Shares" section of your fund
prospectus.
__I want to reduce my sales charge.
I agree to invest $ _______________
over a 13-month period starting ______/______/ 19______ (not
more than 90 days prior to this application). I understand
an additional sales charge must be paid if I do not complete
this Statement of Intent.
8-------------Financial Service Firm---------------------
To be completed by a Representative of your financial
service firm.
This application is submitted in accordance with our selling
agreement with Colonial Investment Services (CIS), the
Fund's prospectus, and this application. We will notify CIS
of any purchase made under a Statement of Intent, Right of
Accumulation, or Sponsored Arrangement. We guarantee the
signatures on this application and the legal capacity of the
signers.
_____________________________________
Representative's name
_____________________________________
Representative's number
_____________________________________
Representative's phone number
_____________________________________
Account # for client at financial
service firm
_____________________________________
Branch office address
_____________________________________
City
_____________________________________
State Zip
_____________________________________
Branch office number
_____________________________________
Name of financial service firm
_____________________________________
Main office address
_____________________________________
Main office address
_____________________________________
City
_____________________________________
State Zip
X____________________________________
Authorized signature
9--Request for a Combined Quarterly Statement Mailing--
Colonial can mail all of your quarterly statements in one
envelope. This option simplifies your record keeping and
helps reduce fund expenses.
__I want to receive a combined quarterly mailing for all my
accounts.
Fundamatic (See Reverse Side)
Applications must be received before the start date for
processing.
This program's deposit privilege can be revoked by Colonial
without prior notice if any check is not paid upon
presentation. Colonial has no obligation to notify the
shareholder of non-payment of any draw. This program may be
discontinued by Colonial by written notice at least 30
business days prior to the due date of any draw or by the
shareholder at any time.
To the Bank Named on the Reverse Side:
Your depositor has authorized Colonial Investors Service
Center to collect amounts due under an investment program
from his/her personal checking account. When you pay and
charge the draws to the account of your depositor executing
the authorization payable to the order of Colonial Investors
Service Center, Colonial Management Associates, Inc., hereby
indemnifies and holds you harmless from any loss (including
reasonable expenses) you may suffer from honoring such draw,
except any losses due to your payment of any draw against
insufficient funds.
D-461L-594
COLONIAL TRUST IV
Cross Reference Sheet
Colonial Tax-Exempt Fund
------------------------
Item Number of Form N-1A Location or Caption in Prospectus
- ------------------------ ---------------------------------
Part A
1. Cover Page
2. Summary of expenses
3. The Fund's financial history
4. The Fund's investment objectives;
Organization and history; How the
Fund pursues its objectives
5. Back cover; How the Fund is
managed; Organization and
history; The Fund's investment
objectives
6. Organization and history;
Distributions and taxes; How to
buy shares
7. How to buy shares; How the Fund
values its shares; 12b-1 plans;
Back cover
8. How to sell shares; How to
exchange shares; Telephone
transactions
9. Not Applicable
March 30, 1995
COLONIAL TAX-
EXEMPT FUND
PROSPECTUS
BEFORE YOU INVEST
Colonial Management Associates, Inc. (Adviser) and your full-service
financial adviser want you to understand both the risks and benefits of
mutual fund investing.
While mutual funds offer significant opportunities and are
professionally managed, they also carry risk including possible loss of
principal. Unlike savings accounts and certificates of deposit, mutual
funds are not insured or guaranteed by any financial institution or
government agency.
Please consult your full-service financial adviser to determine how
investing in this mutual fund may suit your unique needs, time horizon
and risk tolerance.
Colonial Tax-Exempt Fund (Fund), a diversified fund of Colonial Trust
IV (Trust), an open-end management investment company, seeks,
primarily, current income exempt from federal income tax by investing
primarily in investment grade tax-exempt bonds and, secondarily,
preservation of capital. Effective May 31, 1995, the Fund's objective
will be to seek as high a level of after-tax total return, as is
consistent with prudent risk, by pursuing current income exempt from
federal income tax and opportunities for long-term appreciation from a
portfolio primarily invested in investment-grade municipal bonds.
The Fund is managed by the Adviser, an investment adviser since 1931.
This Prospectus explains concisely what you should know before
investing in the Fund. Read it carefully and retain it for future
reference. More detailed information about the Fund is in the March
30, 1995 Statement of Additional Information which has been filed with
the Securities and Exchange Commission and is obtainable free of charge
by calling the Adviser at 1-800-248-2828. The Statement of Additional
Information is incorporated by reference in (which means it is
considered to be a part of) this Prospectus.
TE-01/687A-0395
The Fund offers two classes of shares. Class A shares are offered at
net asset value plus a sales charge imposed at the time of purchase;
Class B shares are offered at net asset value plus an annual
distribution fee and a declining contingent deferred sales charge on
redemptions made within six years of purchase. Class B shares
automatically convert to Class A shares after approximately eight
years. See "How to buy shares."
Contents Page
Summary of expenses
The Fund's financial history
The Fund's investment objectives
How the Fund pursues its objectives
How the Fund measures its performance
How the Fund is managed
How the Fund values its shares
Distributions and taxes
How to buy shares
How to sell shares
How to exchange shares
Telephone transactions
12b-1 plans
Organization and history
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, ENDORSED
OR INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in the
Fund. The following tables summarize your maximum transaction costs
and annual expenses for an investment in each Class of the Fund's
shares.
Shareholder Transaction Expenses(1)(2)
Class A Class B
Maximum Initial Sales Charge Imposed on a 4.75% 0.00%(5)
Purchase
(as a % of offering price)(3)
Maximum Contingent Deferred Sales Charge 1.00%(4) 5.00%
(as a % of offering price)
(1) For accounts less than $1,000 an annual fee of $10 may be deducted. See
"How to sell shares."
(2) Redemption proceeds exceeding $5,000 sent via federal funds wire will be
subject to a $7.50 charge per transaction.
(3) Does not apply to reinvested distributions.
(4) Only with respect to any portion of purchases of $1 million to $5 million
redeemed within approximately 18 months after purchase. See "How to buy
shares."
(5) Because of the 0.75% distribution fee applicable to Class B shares, long-
term Class B shareholders may pay more in aggregate sales charges than
the maximum initial sales charge permitted by the National Association of
Securities Dealers, Inc. However, because the Fund's Class B shares
automatically convert to Class A shares after approximately 8 years, this
is less likely for Class B shares than
for a class without a conversion feature.
Annual Operating Expenses (as a % of net assets)
Class A Class B
Management fee 0.55% 0.55%
12b-1 fees 0.25 1.00
Other expenses 0.21 0.21
Total expenses 1.01% 1.76%
Example
The following Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in each Class of shares of the Fund for
the periods specified, assuming a 5% annual return and, unless
otherwise noted, redemption at period end. The 5% return and expenses
used in this Example should not be considered indicative of actual or
expected Fund performance or expenses, both of which will vary:
Period: Class A Class B
(6)
1 year $ 57 $ 68 $ 18
3 years 78 86 56
5 years 101 116 96
10 years 165 189(7) 189(7)
(6) Assumes no redemption.
(7) Class B shares convert to Class A shares after approximately
8 years; therefore, years 9 and 10 reflect Class A expenses.
THE FUND'S FINANCIAL HISTORY
The following schedule of financial highlights for a share outstanding
throughout each period has been audited by Price Waterhouse LLP,
independent accountants. Their unqualified report is included in the
Fund's 1994 Annual Report and is incorporated by reference into the
Statement of Additional Information. The Fund adopted its current
objective of investing primarily in investment grade tax-exempt bonds
on January 11, 1990. The data presented for earlier periods represent
operations under earlier objectives and policies.
<TABLE>
<CAPTION>
CLASS A
Year ended November 30
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of
period $13.920 $13.480 $13.190 $12.890 $13.020
Income from investment
operations:
Net investment income 0.795 0.842 0.913 0.955 0.986
Net realized and unrealized
gain (loss) (1.744) 0.451 0.277 0.305 (0.120)
Total from investment
operations (0.949) 1.293 1.190 1.260 0.866
Less distributions declared to
shareholders:
From net investment income (0.791) (0.853) (0.900) (0.955) (0.996)
Net realized gains --- --- --- --- ---
From capital paid in (a) --- --- --- (0.005) ---
Total distributions declared
to shareholders (0.791) (0.853) (0.900) (0.960) (0.996)
Net asset value - End of period $12.180 $13.920 $13.480 $13.190 $12.890
Total return (b) (7.08)% 9.80% 9.29% 10.12% 6.95%
Ratios to average net assets:
Expenses 1.01% 1.02% 1.05% 1.03% 1.05%
Net investment income 6.00% 6.06% 6.81% 7.29% 7.64%
Portfolio turnover 56% 28% 14% 10% 10%
Net assets at end of period (in millions) $2,858 $3,357 $2,899 $2,486 $1,886
_________________________________
</TABLE>
<TABLE>
<CAPTION>
CLASS A
Year ended November 30
1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of
period $12.970 $12.760 $13.880 $12.760 $11.670
Income from investment
operations:
Net investment income 1.001 1.007 1.083 1.110 1.171
Net realized and unrealized
gain (loss) 0.045 0.235 (1.159) 1.150 1.132
Total from investment
operations 1.046 1.242 (0.076) 2.260 2.303
Less distributions declared to
shareholders:
From net investment income (0.996) (1.032) (1.015) (1.085) (1.203)
Net realized gains --- --- (0.029) (0.055) (0.010)
From capital paid in (a) --- --- --- --- ---
Total distributions declared
to shareholders (0.996) (1.032) (1.044) (1.140) (1.213)
Net asset value - End of period $13.020 $12.970 $12.760 $13.880 $12.760
Total return (b) 8.33% 10.03% (0.55)% 18.38% 20.64%
Ratios to average net assets:
Expenses 1.03% 1.06% 1.08% 1.05% 1.11%
Net investment income 7.67% 7.77% 7.79%(c) 8.10%(c) 9.37%
Portfolio turnover 9% 22% 20% 26% 68%
Net assets at end of period (in millions) $1,547 $1,389 $1,278 $1,342 $694
_________________________________
</TABLE>
(a) Because of differences between book and tax basis accounting, there
was no return of capital for federal income tax purposes.
(b) Total return at net asset value assuming all distributions
reinvested and no initial sales charge or contingent deferred sales
charge.
(c) Ratio excludes reduction of provision for accumulated earnings tax.
Further performance information is contained in the Fund's Annual
Report to shareholders, which is obtainable free of charge by calling
1-800-248-2828.
THE FUND'S FINANCIAL HISTORY (CONT'D)
<TABLE>
<CAPTION>
Class B
Year ended November 30
1994 1993 1992 (a)
<S> <C> <C> <C>
Net asset value - Beginning of period $13.920 $13.480 $13.230
Income from investment operations:
Net investment income 0.695 0.740 0.462
Net realized and unrealized
gain (loss) (1.744) 0.451 0.248
Total from investment operations (1.049) 1.191 0.710
Less distributions declared to shareholders:
From net investment income (0.691) (0.751) (0.460)
Total distributions declared to shareholders (0.691) (0.751) (0.460)
Net asset value - End of period $12.180 $13.920 $13.480
Total return(b) (7.78)% 9.00% 9.29%(c)
Ratios to average net assets:
Expenses 1.76% 1.77% 1.80%(d)
Net investment income 5.25% 5.31% 6.06%(d)
Portfolio turnover 56% 28% 14%
Net assets at end of period (in millions) $440 $430 $137
_____________________________
</TABLE>
(a) Class B shares were initially offered on May 5, 1992. Per share
amounts reflect activity from that date.
(b) Total return at net asset value assuming all distributions
reinvested and no initial sales charge or contingent
(c) Not annualized.
(d) Annualized.
Further performance information is contained in the Fund's Annual
Report to shareholders, which is obtainable free of charge by calling
1-800-248-2828.
THE FUND'S INVESTMENT OBJECTIVES
The Fund seeks, primarily, current income exempt from federal income
tax by investing primarily in investment grade tax-exempt bonds and,
secondarily, preservation of capital. Effective May 31, 1995, the
Fund's objective will be to seek as high a level of after-tax total
return, as is consistent with prudent risk, by pursuing current income
exempt from federal income tax and opportunities for long-term
appreciation from a portfolio primarily invested in investment-grade
municipal bonds. In this Prospectus, "tax-exempt bonds" means debt
securities of any maturity that, in the issuer's counsel's opinion, are
exempt from federal income taxes.
HOW THE FUND PURSUES ITS OBJECTIVES
The Fund normally invests substantially all its assets in tax-exempt
bonds. The Fund may invest in bonds of any maturity. Certain bonds do
not pay interest in cash on a current basis. However, the
Fund will accrue and distribute this interest on a current basis, and
may have to sell securities to generate cash for distributions. Many
bonds have call features that require the Fund to tender the bond back
to the issuer at the issuer's request. If a bond is called, the Fund
may only be able to invest the proceeds at lower yields.
The Fund currently intends to limit its investments in lower rated
bonds (commonly referred to as junk bonds) to less than 35%, and in
unrated bonds to less than 25%, of total assets. Lower rated bonds are
bonds rated lower than Baa by Moody's or BBB by S&P or comparable unrated
securities and are predominantly speculative. The Fund will not invest more
than 5% of its total assets in securities rated below Ba or BB and then only
when the Adviser believes the ratings do not accurately reflect the issuer's
true credit quality. Relative to comparable securities of higher quality:
1. The market price is likely to be more volatile because:
a. An economic downturn or increased interest rates may have a more
significant effect on the yield, price and potential for default;
b. the secondary market may at times become less liquid or respond
to adverse publicity or investor perceptions, increasing the
difficulty in valuing or disposing of the bonds;
c. existing and future legislation limits and may further limit (i)
investment by certain institutions or (ii) tax deductibility of
the interest by the issuer, which may adversely affect value;
d. certain lower rated bonds do not pay interest in cash on a
current basis. However, the Fund will accrue and distribute this
interest on a current basis, and may have to sell securities to
generate cash for distributions.
2. The Fund's achievement of its investment objectives is more dependent
on the Adviser's credit analysis; and
3. Lower rated bonds are less sensitive to interest rate changes but are
more sensitive to adverse economic developments.
Weighted average composition of the Fund's portfolio at November 30,
1994, was:
Rated Unrated
Investment grade 81.65% 15.47%
B-BB and equivalent 0.65 1.85
Below B 0.00 0.38
Total 82.30% 17.70%
This composition does not necessarily reflect the current or future
portfolio. The Fund is not required to sell a security when its rating
is reduced.
The value of debt securities (and thus Fund shares) usually fluctuates
inversely to changes in interest rates. A portion of the Fund's assets
may be held in cash or invested in short-term securities for day-to-day
operating purposes. The Fund intends that its short-term investments
will be tax-exempt, but if suitable tax-exempt securities are not
available or are available only on a when-issued basis, the Fund may
invest up to 20% of its assets (reduced by the percentage of its total
assets invested in "private activity bonds", which the Fund intends
will not exceed 20% of its assets) in repurchase agreements; short-term
taxable obligations rated A-1+ of banks which have or whose parent
holding companies have long-term debt ratings of AAA, or of
corporations with long-term debt ratings of AAA; and securities of the
U.S. government. The Fund may temporarily invest more than 20% of its
assets in taxable obligations for defensive purposes. The Fund's
policy is not to concentrate in any industry, but it may invest up to
25% of its assets in industrial development revenue bonds based on the
credit of private entities in any one industry (governmental issuers
are not considered to be part of any "industry"). The Fund currently
limits investments in securities subject to the federal alternative
minimum tax to a maximum of 20% of total assets.
"When Issued" and "Delayed Delivery" Securities. The Fund may acquire
securities on a "when-issued" or "delayed delivery" basis by
contracting to purchase securities for a fixed price on a date beyond
the customary settlement time with no interest accruing until
settlement. If made through a dealer, the contract is dependent on the
dealer completing the sale. The dealer's failure could deprive the
Fund of an advantageous yield or price. These contracts involve the
risk that the value of the underlying security may change prior to
settlement. The Fund may realize short-term gains or losses if the
contracts are sold. Transactions in when-issued securities may be
limited by certain Internal Revenue Code requirements.
Options and Futures. The Fund may write covered call and put
options on securities held in its portfolio and purchase call and
put options on debt securities. A call option gives the purchaser
the right to buy a security from, and a put option the right to sell
a security to, the option writer at a specified price, on or before
a specified date. The Fund will pay a premium when purchasing an
option, which reduces the Fund's return on the underlying security
if the option is exercised and results in a loss if the option
expires unexercised. The Fund will receive a premium from writing
an option, which may increase its return if the option expires or is
closed out at a profit. So long as the Fund is the writer of a call
option it will own the underlying security subject to the option (or
comparable securities satisfying the cover requirements of
securities exchanges). So long as the Fund is the writer of a put
option it will hold cash and/or high-grade debt obligations equal to
the price to be paid if the option is exercised. If the Fund is
unable to close out an unexpired option, the Fund must continue to
hold the underlying security until the option expires. Trading
hours for options may differ from the trading hours for the
underlying securities. Thus significant price movements may occur
in the securities markets that are not reflected in the options
market. This may limit the effectiveness of options as hedging
devices.
The Fund may buy or write options that are not traded on national
securities exchanges and not protected by the Options Clearing
Corporation. These transactions are effected directly with a broker-
dealer, and the Fund bears the risk that the broker-dealer will fail
to meet its obligations. The market value of such options and other
illiquid assets will not exceed 10% of the Fund's total assets.
For hedging purposes, the Fund may purchase or sell (1) interest
rate and tax-exempt bond index futures contracts, and (2) put and
call options on such contracts and on such indices. A futures
contract creates an obligation by the seller to deliver and the
buyer to take delivery of the type of instrument at the time and in
the amount specified in the contract. Although futures call for
delivery (or acceptance) of the specified instrument, futures are
usually closed out before the settlement date through the purchase
(sale) of a comparable contract. If the initial sale price of the
future exceeds (or is less than) the price of the offsetting
purchase, the Fund realizes a gain (or loss). Options on futures
contracts operate in a similar manner to options on securities,
except that the position assumed is in futures contracts rather than
in securities. The Fund may not purchase or sell futures contracts
or purchase related options if immediately thereafter the sum of the
amount of deposits for initial margin or premiums on the existing
futures and related options positions would exceed 5% of the market
value of the Fund's total assets. Transactions in futures and
related options involve the risk of (1) imperfect correlation
between the price movement of the contracts and the underlying
securities, (2) significant price movement in one but not the other
market because of different trading hours, (3) the possible absence
of a liquid secondary market at any point in time, and (4) if the
prediction on the Adviser's interest rate forecast is inaccurate,
the Fund may be worse off than if it had not hedged.
Other. The Fund may not always achieve its investment objectives. The
Fund's investment objectives and non-fundamental policies may be
changed without shareholder approval. The Fund will notify investors
at least 30 days prior to any material change in the Fund's investment
objectives. If there is a change in the investment objectives,
shareholders should consider whether the Fund remains an appropriate
investment in light of their current financial position and needs.
Shareholders may incur a contingent deferred sales charge if shares are
redeemed in response to a change in objectives. The Fund has a
fundamental policy of investing under normal circumstances at least 80%
of its total assets in tax-exempt bonds. This policy and the Fund's
other fundamental policies listed in the Statement of Additional
Information cannot be changed without the approval of a majority of the
Fund's outstanding voting securities. Additional information
concerning certain of the securities and investment techniques
described above is contained in the Statement of Additional
Information.
HOW THE FUND MEASURES ITS PERFORMANCE
Performance may be quoted in sales literature and advertisements. Each
Class's average annual total returns are calculated in accordance with
the Securities and Exchange Commission's formula and assume the
reinvestment of all distributions, the maximum initial sales charge of
4.75% on Class A shares and the contingent deferred sales charge
applicable to the time period quoted on Class B shares. Other total
returns differ from average annual total return only in that they may
relate to different time periods, may represent aggregate as opposed to
average annual total returns and may not reflect the initial or
contingent deferred sales charges.
Each Class's yield and tax-equivalent yield, which differ from total
return because they do not consider changes in net asset value, are
calculated in accordance with the Securities Exchange Commission's
formula. Each Class's distribution rate is calculated by dividing the
most recent month's distribution, annualized, by the maximum offering
price of that Classat the end of the month. Each Class's performance
may be compared to various indices. Quotations from various
publications may be included in sales literature and advertisements.
See "Performance Measures" in the Statement of Additional Information
for more information.
All performance information is historical and does not predict future
results.
HOW THE FUND IS MANAGED
The Trustees formulate the Fund's general policies and oversee the
Fund's affairs as conducted by the Adviser.
The Adviser is a subsidiary of The Colonial Group, Inc. The Colonial
Group, Inc. is also the parent of Colonial Investment Services, Inc.
(Distributor), which serves as the distributor for the Fund's shares,
and of Colonial Investors Service Center, Inc. (Transfer Agent), which
serves as the shareholder services and transfer agent for the Fund.
Liberty Financial Companies, Inc. is considered to be the controlling
person of The Colonial Group, Inc.
The Adviser furnishes the Fund with investment management, accounting
and administrative personnel and services, office space and other
equipment and services at the Adviser's expense. For these services,
the Fund paid the Adviser 0.55% of the Fund's average net assets for
fiscal year 1994.
Bonny E. Boatman, Senior Vice President and Director of the Adviser and
head of the Tax-Exempt Group, has managed the Fund since 1993 and has
managed various other Colonial tax-exempt funds since 1985.
The Adviser also provides pricing and bookkeeping services to the Fund
for a monthly fee of $2,250 plus a percentage of the Fund's average net
assets over $50 million.
The Transfer Agent provides transfer agency and shareholder services to
the Fund for a fee of 0.14% annually of average net assets plus out-of-
pocket expenses.
Each of the foregoing fees is subject to any reimbursement or fee
waiver to which the Adviser may agree.
The Adviser places all orders for the purchase and sale of portfolio
securities. In selecting broker-dealers, the Adviser may consider
research and brokerage services furnished to it and its affiliates.
Subject to seeking best execution, the Adviser may consider sales of
shares of the Fund (and of certain other Colonial funds) in selecting
broker-dealers for portfolio security transactions.
HOW THE FUND VALUES ITS SHARES
Per share net asset value is calculated by dividing the total value of
each Class's net assets by its number of outstanding shares. Shares
are valued each day the New York Stock Exchange is open as of
approximately 4:00 p.m. Eastern time. Portfolio securities for which
market quotations are readily available are valued at market. Short-
term investments maturing in 60 days or less are valued at amortized
cost, when it is determined, pursuant to procedures adopted by the
Trustees, that such cost approximates market value. All other
securities and assets are valued at fair value following procedures
adopted by the Trustees.
DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code and to distribute to shareholders virtually
all net income and any net realized gain at least annually.
The Fund generally declares distributions daily and pays them monthly.
Distributions are invested in additional shares of the same Class of
the Fund at net asset value unless the shareholder elects to receive
cash. Regardless of the shareholder's election, distributions of $10
or less will not be paid in cash but will be invested in additional
shares of the same Class of the Fund at net asset value. To change
your election, call the Transfer Agent for information. If the Fund
makes taxable distributions they will generally be taxable whether you
receive them in cash or in additional Fund shares, you must report them
as taxable income unless you are a tax-exempt institution. While the
Fund's distributions of tax-exempt bond interest are not subject to
regular federal income tax, a portion may be included in computing a
shareholder's federal alternative minimum tax liability. Social
security benefits may be taxed as a result of receiving tax-exempt
income. Each January, information
HOW TO BUY SHARES
Shares are offered continuously. Orders received in good form prior to
4:00 p.m. Eastern time (or placed with a financial service firm before
such time and transmitted by the financial service firm before the Fund
processes that day's share transactions) will be processed based on
that day's closing net asset value, plus any applicable initial sales
charge.
The minimum initial investment is $1,000; subsequent investments may be
as small as $50. The minimum initial investment for the Colonial
Fundamatic program is $50 and the minimum initial investment for a
Colonial retirement program is $25. Certificates will not be issued
for Class B shares and there are some limitations on the issuance of
Class A certificates. The Fund may refuse any purchase order for its
shares. See the Statement of Additional Information for more
information.
Class A Shares. Class A shares are offered at net asset value plus an
initial or a contingent deferred sales charge as follows:
Initial Sales Charge
Retained
by
Financial
Service
Firm
as % of as % of
Amount Offering Offering
Amount Purchased Invested Price Price
Less than $50,000 4.99% 4.75% 4.25%
$50,000 to less than $100,000 4.71% 4.50% 4.00%
$100,000 to less than $250,000 3.63% 3.50% 3.00%
$250,000 to less than $500,000 2.56% 2.50% 2.00%
$500,000 to less than $1,000,000 2.04% 2.00% 1.75%
$1,000,000 or more 0.00% 0.00% 0.00%
On purchases of $1 million or more, the Distributor pays the financial
service firm a cumulative commission as follows:
Amount Purchased Commission
First $3,000,000 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25%(1)
(1) Paid over 12 months but only to the extent the shares remain
outstanding.
Purchases of $1 million to $5 million are subject to a 1.00% contingent
deferred sales charge payable to the Distributor on redemptions within
18 months from the first day of the month following the purchase. The
contingent deferred sales charge does not apply to the excess of any
purchase over $5 million.
Class A shares bear a 0.25% annual service fee.
Class B Shares. Class B shares are offered at net asset value, without
an initial sales charge, subject to a 0.75% annual distribution fee for
approximately 8 years (at which time they convert to Class A shares
not bearing a distribution fee), a 0.25% annual service fee and a
contingent deferred sales charge if redeemed within 6 years after
purchase. As shown below, the amount of the contingent deferred sales
charge depends on the number of years after purchase that the
redemption occurs:
Years Contingent Deferred
After Purchase Sales Charge
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
More than 6 0.00%
Year one ends one year after the end of the month in which the purchase
was accepted and so on. The Distributor pays financial service firms a
commission of 4.00% on Class B share purchases.
General. All contingent deferred sales charges are deducted from the
redemption, not the amount remaining in the account, and are paid to
the Distributor. Shares issued upon distribution reinvestment and
amounts representing appreciation are not subject to a contingent
deferred sales charge. The contingent deferred sales charge is imposed
on redemptions which result in the account value falling below its Base
Amount (the total dollar value of purchase payments in the account
reduced by prior redemptions on which a contingent deferred sales
charge was paid and any exempt redemptions). See the Statement of
Additional Information for more information.
Which Class is more beneficial to an investor depends on the amount and
intended length of the investment. Large investments, qualifying for a
reduced Class A sales charge, avoid the distribution fee. Investments
in Class B shares have 100% of the purchase invested immediately.
Purchases of $250,000 or more must be for Class A shares. Consult your
financial service firm.
Financial service firms may receive different compensation rates for
selling different classes of shares. The Distributor may pay
additional compensation to financial service firms which have made or
may make significant sales.
Initial or contingent deferred sales charges may be reduced or
eliminated for certain persons or organizations purchasing Fund shares
alone or in combination with certain other Colonial Funds. See the
Statement of Additional Information for more information.
Shareholder Services. A variety of shareholder services are available.
For more information about these services or your account call 1-800-
345-6611. Some services are described in the attached account
application. A shareholder's manual explaining all available services
will be provided upon request.
HOW TO SELL SHARES
Shares may be sold on any day the New York Stock Exchange is open,
either directly to the Fund or through your financial service firm.
Sale proceeds generally are sent within seven days (usually on the next
business day after your request is received in good form). However,
for shares recently purchased by check, the Fund will send proceeds as
soon as the check has cleared (which may take up to 15 days).
Selling Shares Directly To The Fund. Send a signed letter of
instruction or stock power form to the Transfer Agent, along with any
certificates for shares to be sold. The sale price is the net asset
value (less any applicable contingent deferred sales charge) next
calculated after the Fund receives the request in proper form.
Signatures must be guaranteed by a bank, a member firm of a national
stock exchange or another eligible guarantor institution. Stock power
forms are available from financial service firms, the Transfer Agent
and many banks. Additional documentation is required for sales by
corporations, agents, fiduciaries, surviving joint owners and
individual retirement account holders. For details contact:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Selling Shares Through Financial Service Firms. Financial service
firms must receive requests before 4:00 p.m. Eastern time to receive
that day's price, are responsible for furnishing all necessary
documentation to the Transfer Agent and may charge for this service.
General. The sale of shares is a taxable transaction for federal tax
purposes and may be subject to a contingent deferred sales charge. The
contingent deferred sales charge may be waived under certain
circumstances. See the Statement of Additional Information for more
information. Under unusual circumstances, the Fund may suspend
repurchases or postpone payment for up to seven days or longer, as
permitted by federal securities law. In June of any year, the Fund may
deduct $10 (payable to the Transfer Agent) from accounts valued at less
than $1,000 unless the account value has dropped below $1,000 solely as
a result of share value depreciation. Shareholders will receive 60
days' written notice to increase the account value before the fee is
deducted.
HOW TO EXCHANGE SHARES
Exchanges at net asset value may be made among shares of the same class
of shares of most Colonial funds. Shares will continue to age without
regard to the exchange for purposes of conversion and determining the
contingent deferred sales charge, if any, upon redemption. Carefully
read the prospectus of the fund into which the exchange will go before
submitting the request. Call 1-800-248-2828 to receive a prospectus
and an exchange authorization form. Call 1-800-422-3737 to exchange
shares by telephone. An exchange is a taxable capital transaction.
The exchange service may be changed, suspended or eliminated on 60
days' written notice.
Class A Shares. An exchange from a money market fund into a non-money
market fund will be at the applicable offering price next determined
(including sales charge), except for amounts on which an initial sales
charge was paid. Non-money market fund shares must be held for five
months before qualifying for exchange to a fund with a higher sales
charge, after which exchanges are made at the net asset value next
determined.
Class B Shares. Exchanges of Class B shares are not subject to the
contingent deferred sales charge. However, if shares are redeemed
within six years after the original purchase, a contingent deferred
sales charge will be assessed using the schedule of the fund into which
the original investment was made.
TELEPHONE TRANSACTIONS
All shareholders may redeem up to $50,000 of Fund shares by telephone,
and may elect telephone redemption privileges for larger amounts on the
account application. All exchanges may be accomplished by telephone.
See the Statement of Additional Information for more information. The
Adviser, the Transfer Agent and the Fund will not be liable when
following telephone instructions reasonably believed to be genuine and
a shareholder may suffer a loss from unauthorized transactions. The
Transfer Agent will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Shareholders will
be required to provide their name, address and account number.
Proceeds and confirmations of telephone transactions will be mailed or
sent to the address of record. Telephone redemptions are not available
on accounts with an address change in the preceding 60 days. All
telephone transactions are recorded. Shareholders are not obligated to
transact by telephone.
12B-1 PLANS
Under 12b-1 Plans, the Fund pays the Distributor an annual service fee
of 0.25% of the Fund's average net assets attributed to each Class of
shares. The Fund also pays the Distributor an annual distribution fee
of 0.75% of the average net assets attributed to its Class B shares.
Because the Class B shares bear the additional distribution fees, their
dividends will be lower than the dividends of Class A shares. Class B
shares automatically convert to Class A shares, approximately eight
years after the Class B shares were purchased. The multiple class
structure could be terminated should certain Internal Revenue Service
rulings be rescinded. See the Statement of Additional Information for
more information. The Distributor uses the fees to defray the cost of
commissions and service fees paid to financial service firms which have
sold Fund shares, and to defray other expenses such as sales
literature, prospectus printing and distribution, shareholder servicing
costs and compensation to wholesalers. Should the fees exceed the
Distributor's expenses in any year, the Distributor would realize a
profit. The Plans also authorize other payments to the Distributor and
its affiliates (including the Adviser) which may be construed to be
indirect financing of sales of Fund shares.
ORGANIZATION AND HISTORY
The Trust is a Massachusetts business trust, which was organized in
1978. The Fund represents the entire interest in a separate portfolio
of the Trust.
The Trust is not required to hold annual shareholder meetings, but
special meetings may be called for certain purposes. You receive one
vote for each of your Fund shares. Shares of the Trust vote together
except when required by law to vote separately by fund or by class.
Shareholders owning in the aggregate ten percent of Trust shares may
call meetings to consider removal of Trustees. Under certain
circumstances, the Trust will provide information to assist
shareholders in calling such a meeting. See the Statement of
Additional Information for more information.
Investment Adviser
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Distributor
Colonial Investment Services, Inc.
One Financial Center
Boston, MA 02111-2621
Custodian
United Missouri Bank, n.a.
928 Grand Avenue
Kansas City, MO 64106
Shareholder Services and Transfer Agent
Colonial Investors Service Center, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110-2624
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624
Your financial service firm is:
Printed in U.S.A.
March 30, 1995
COLONIAL TAX-
EXEMPT FUND
PROSPECTUS
Colonial Tax-Exempt Fund seeks, primarily, current income exempt from
federal income tax by investing primarily in investment grade tax-
exempt bonds and, secondarily, preservation of capital. Effective May
31, 1995, the Fund's objective will be to seek as high a level of after-
tax total return, as is consistent with prudent risk, by pursuing
current income exempt from federal income tax and opportunities for
long-term appreciation from a portfolio primarily invested in
investment-grade municipal bonds.
For more detailed information about the Fund, call the Adviser at 1-800-
248-2828 for the March 30, 1995 Statement of Additional Information.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, ENDORSED
OR INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
COLONIAL TRUST IV
Cross Reference Sheet
Colonial High Yield Municipal Fund
----------------------------------
Item Number of Form N-1A Location or Caption in Prospectus
- ------------------------ ---------------------------------
Part A
1. Cover Page
2. Summary of expenses
3. The Fund's financial history
4. The Fund's investment objective;
Organization and history; How the
Fund pursues its objective
5. Back cover; How the Fund is
managed; Organization and
history; The Fund's investment
objective
6. Organization and history;
Distributions and taxes; How to
buy shares
7. How to buy shares; How the Fund
values its shares; 12b-1 plans;
Back cover
8. How to sell shares; How to
exchange shares; Telephone
transactions
9. Not Applicable
March 30, 1995
COLONIAL HIGH YIELD MUNICIPAL FUND
PROSPECTUS
BEFORE YOU INVEST
Colonial Management Associates, Inc. (Adviser) and your full-service
financial adviser want you to understand both the risks and benefits
of mutual fund investing.
While mutual funds offer significant opportunities and are
professionally managed, they also carry risk including possible loss
of principal. Unlike savings accounts and certificates of deposit,
mutual funds are not insured or guaranteed by any financial
institution or government agency.
Please consult your full-service financial adviser to determine how
investing in this mutual fund may suit your unique needs, time horizon
and risk tolerance.
Colonial High Yield Municipal Fund (Fund), a diversified portfolio of
Colonial Trust IV (Trust), an open-end management investment company,
seeks high current income generally exempt from ordinary federal
income taxes and relative stability of net asset value. The Fund may
invest a portion of its assets in lower-rated tax-exempt bonds and
therefore may not be suitable for all investors. Effective May 31,
1995, the Fund's objective will be to seek a high level of after-tax
total return by pursuing current income exempt from ordinary federal
income tax and opportunities for long-term appreciation from a
portfolio primarily invested in medium- to lower-grade municipal
bonds.
The Fund is managed by the Adviser, an investment adviser since 1931.
The Fund may invest in lower rated bonds (commonly referred to as
"junk bonds") which are regarded as speculative as to payment of
principal and interest. Purchasers should carefully assess the risks
associated with an investment in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Read it carefully and retain it for future
reference. More detailed information about the Fund is in the March
30, 1995 Statement of Additional Information which has been filed with
the Securities and Exchange Commission and is obtainable free of
charge by calling the Adviser at 1-800-248-2828. The Statement of
Additional Information is incorporated by reference in (which means it
is considered to be a part of) this Prospectus.
HM-01/690A-0395
This Prospectus describes the Fund's two classes of shares: Class A
and Class B.
Class A shares are offered at net asset value plus a sales charge
imposed at the time of purchase. Class B shares are offered at net
asset value plus an annual distribution fee and a declining contingent
deferred sales charge on redemptions made within six years after
purchase. Class B shares automatically convert to Class A shares
after approximately eight years. See "How to buy shares."
Contents Page
Summary of expenses
The Fund's financial history
The Fund's investment objective
How the fund pursues its objective
How the Fund measures its performance
How the Fund is managed
How the fund values its shares
Distributions and Taxes
How to buy shares
How to sell shares
How to exchange shares
Telephone transactions
12b-1 plans
Organization and history
Appendix
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in the
Fund. The following tables summarize your maximum transaction costs
and annual expenses for an investment in each Class of the Fund's
shares.
Shareholder Transaction Expenses (1)(2)
Class A Class B
Maximum Initial Sales Charge
Imposed on a Purchase (as of
% of purchase price)(3) 4.75% 0.00%(5)
Maximum Contingent Deferred
Sales Charge (as a % of
purchase price)(3) 1.00%(4) 5.00%
(1) For accounts less than $1,000 an annual fee of $10 may be
deducted. See "How to sell shares."
(2) Redemption proceeds exceeding $5,000 sent via federal funds
wire will be subject to a $7.50 charge per transaction.
(3) Does not apply to reinvested distributions.
(4) Only with respect to any portion of purchases of $1 million to
$5 million redeemed within approximately 18 months after purchase.
See "How to buy shares."
(5) Because of the 0.75% distribution fee applicable to Class B
shares, long-term Class B shareholders may pay more in aggregate
sales charges than the maximum initial sales charge permitted by
the National Association of Securities Dealers, Inc. However,
because the Fund's Class B shares automatically convert to Class A
shares after approximately 8 years, this is less likely for Class B
shares than for a class without a conversion feature.
Annual Operating Expenses
(as a % of net assets)
Class A Class B
Management fee 0.55% 0.55%
12b-1 fees 0.25 1.00
Other expenses 0.35 0.35
Total expenses 1.15% 1.90%
Example
The following example shows the cumulative expenses attributable to a
$1,000 investment in each Class of shares of the Fund for the periods
specified, assuming a 5% annual return and, unless otherwise noted,
redemption at period end. The 5% return and expenses in this Example
should not be considered indicative of actual or expected Fund
performance, both of which will vary:
Class A Class B
Period
(6)
1 year $59 $70 $20
3 years 82 90 60
5 years 108 124 104
10 years 181 205(7) 205(7)
(6)Assumes no redemption.
(7)Class B shares convert to Class A shares after approximately 8
years; therefore years 9 and 10 reflect Class A expenses.
THE FUND'S FINANCIAL HISTORY
The following schedule of financial highlights for a share
outstanding throughout each period has been audited by Price
Waterhouse LLP, independent accountants. Their unqualified report is
included in the Fund's 1994 Annual Report and is incorporated by
reference into the Statement of Additional Information.
<TABLE>
<CAPTION>
Period Ended
Year ended November 30 November 30
1994 1993 1992(a)
Class A(b) Class B Class B Class B
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $9.800 $10.320 $10.070 $10.000
Income (loss) from investment operations:
Net investment income 0.188 0.605 0.609 0.338 (c)
Net realized and unrealized
gain (loss) on investments (0.496) (1.016) 0.277 0.041
Total from investment operations (0.308) (0.411) 0.886 0.379
Less distributions declared to shareholders:
From net investment income (0.162) (0.579) (0.636) (0.309)
Net asset value - End of period $9.330 $9.330 $10.320 $10.070
Total return (d) (3.15)%(e) (4.10)% 9.00% 3.80%(e)(f)
Ratios to average net assets:
Expenses 1.15%(g) 1.90% 1.94% 2.00%(g)
Fees waived by the Adviser --- --- --- 0.01%(g)
Net investment income 7.19%(g) 6.44% 5.95% 6.83%(g)
Portfolio turnover 25% 25% 31% 13%(g)
Net assets at end of period (000) $6,027 $113,549 $120,523 $63,390
___________________________
</TABLE>
(a) The Fund commenced investment operations on June 8, 1992.
(b) Class A shares were initially offered on September 1, 1994.
Per share amounts reflect activity from that date.
(c) Net of fees and expenses waived or borne by the Adviser which amounted
to $0.000.
(d) Total return at net asset value assuming all distributions reinvested
and no initial sales charge or contingent deferred sales charge.
(e) Not annualized.
(f) Had the Adviser not waived or reimbursed a portion of expenses, total
return would have been reduced.
(g) Annualized.
Further performance information is contained in the Fund's Annual
Report to shareholders, which is obtainable free of charge by calling
1-800-248-2828.
THE FUND'S INVESTMENT OBJECTIVE
The Fund seeks high current income generally exempt from ordinary
federal income taxes and relative stability of net asset value.
Effective May 31, 1995, the Fund's objective will be to seek a high
level of after-tax total return by pursuing current income exempt from
ordinary federal income tax and opportunities for long-term
appreciation from a portfolio primarily invested in medium- to lower-
grade municipal bonds.
HOW THE FUND PURSUES ITS OBJECTIVE
The Fund has a fundamental policy of investing at least 80% of its
total assets in tax-exempt securities (securities of any maturity
that, in the opinion of issuer's counsel, are exempt from ordinary
federal income tax). The Fund ordinarily invests primarily in
securities rated BBB through C by S&P, comparably rated by another
national rating service or unrated but considered by the Adviser to be
of similar quality. Securities rated lower than BBB by S&P,
comparably rated securities and similar unrated securities are
considered to be speculative. The value of debt securities (and
therefore of Fund shares) usually fluctuates inversely to changes in
interest rates. Many bonds have call features that require the Fund
to tender the bond back to the issuer at the issuer's request. If a
bond is called, the Fund may be able to invest the proceeds only at
lower yields.
The Fund may invest any or all of its assets in higher quality tax-
exempt securities when the Adviser expects interest rates to increase
or when yield spreads narrow. This may reduce the Fund's current
income. The Fund intends to hold short-term tax-exempt securities to
meet its operating needs, but when such securities are not available,
or are only available on a "when-issued" basis, the Fund may invest up
to 20% of its total assets in taxable high quality money market
instruments. In periods of unusual market conditions, for temporary
defensive purposes, the Fund may invest more than 20% of its total
assets in taxable securities.
Three common types of tax-exempt bonds are general obligation bonds
(GOs), revenue bonds (RBs) and industrial revenue bonds (IRBs). GOs
are payable from the issuer's unrestricted revenues and may depend on
appropriation by the applicable legislative body. RBs are payable
only from a specified revenue source, not the unrestricted revenues of
the issuer. An IRB generally is payable only from the revenues of the
corporate user of a facility and consequently its credit rating
relates to that of the corporate user. While the Fund may invest more
than 25% of its total assets in IRBs, it limits its investments in
IRBs which are based on the credit of private entities in any one
industry to 25% or less. The Fund may invest in a relatively high
percentage of tax-exempt securities issued by entities with similar
characteristics (i.e., location or revenue source), possibly making
the Fund more susceptible to economic, political or regulatory
occurrences.
The Fund may invest without limit in securities, the income from which
is subject to the individual alternative minimum tax; therefore, while
the Fund's distributions from tax-exempt securities are not subject to
regular federal income tax, a portion or all may be included in
determining a shareholder's federal alternative minimum tax. Social
security benefits may be taxed as a result of receiving tax-exempt
income.
Certain Investment Techniques And Risk Factors
Lower-Rated Debt Securities (commonly referred to as junk bonds).
Relative to comparable securities of higher quality:
1. the market price is likely to be more volatile because:
a. an economic downturn or increased interest rates may
have a more significant effect on the yield, price
and potential for default;
b. the secondary market may at times become less liquid
or respond to adverse publicity or investor
perceptions, increasing the difficulty of valuing or
disposing of the security;
c. existing and future legislation limits and may
further limit (i) investment by certain institutions
or (ii) tax deductibility of the interest by the
issuer, which may adversely affect value; and
d. certain lower-rated bonds do not pay interest in
cash on a current basis. However, the Fund will
accrue and distribute this interest on a current
basis, and may have to sell securities to generate
cash for distributions.
2. the Fund's achievement of its investment objective is
more dependent on the Adviser's credit analysis; and
3. lower-rated debt securities are less sensitive to
interest changes but are more sensitive to adverse
economic developments.
Weighted average composition of the Fund's portfolio at November 30,
1994:
Rated Unrated
Investment grade 31.20% 51.58%
B-BB and equivalent 5.79% 6.60%
Below B --- 1.75%
Total 36.99% 59.93%
This composition does not necessarily reflect the current or future
portfolio. The Fund is not required to sell a security when its
rating is reduced.
Money Market Instruments And Defensive Investing. The Fund may invest
temporarily available cash in certificates of deposit, bankers'
acceptances, high quality commercial paper, treasury bills and
repurchase agreements. Under unusual market conditions the Fund may
invest any or all of its assets in such instruments and U.S.
government securities.
Under a repurchase agreement, the Fund buys a security from a bank or
dealer, which is obligated to buy it back at a fixed price and time.,.
The security is held in a separate account at the Fund's custodian and
constitutes the Fund's collateral for the bank's or dealer's
repurchase obligation. Additional collateral may be added so that the
obligation will at all times be fully collateralized. However, if the
bank or dealer defaults or enters bankruptcy, the Fund may experience
costs and delays in liquidating the collateral and may experience a
loss if it is unable to demonstrate its right to the collateral in a
bankruptcy proceeding. While there is no limit on the Fund's
investment in repurchase agreements, not more than 10% of the Fund's
total assets will be invested in repurchase agreements maturing in
more than 7 days.
"When-Issued" and "Delayed Delivery" Securities. The Fund may without
limit acquire securities on a "when-issued" or "delayed delivery"
basis by contracting to purchase securities for a fixed price on a
date beyond the customary settlement time with no interest accruing
until settlement. If made through a dealer the contract is dependent
on the dealer completing the sale. The dealer's failure could deprive
the Fund of an advantageous yield or price. These contracts involve
the additional risk that the value of the underlying security changes
prior to settlement. The Fund may realize short-term gains or losses
if the contracts are sold. Transactions in when-issued securities may
be limited by certain Internal Revenue Code requirements.
Options and Futures. The Fund may write covered call and put options
on securities held in its portfolio and purchase call and put options
on debt securities. A call option gives the purchaser the right to
buy a security from, and a put option the right to sell a security to,
the option writer at a specified price, on or before a specified
date. The Fund will pay a premium when purchasing an option, which
reduces the Fund's return on the underlying security if the option is
exercised and results in a loss if the option expires unexercised.
The Fund will receive a premium from writing an option, which may
increase its return if the option expires or is closed out at a
profit. So long as the Fund is the writer of a call option it will
own the underlying securities subject to the option (or comparable
securities satisfying the cover requirements at securities exchange).
So long as the Fund is a writer of a put option it will hold cash and
/or high-grade debt obligations equal to the price to be paid if the
option is exercised. If the Fund is unable to close out an unexpired
option, the Fund must continue to hold the underlying security until
the option expires. Trading hours for options may differ from the
trading hours for the underlying securities. Thus significant price
movements may occur in the securities markets that are not reflected
in the options market. This may limit the effectiveness of options as
hedging devices. The Fund may buy or write options that are not
traded on national securities exchanges and not protected by the
Options Clearing Corporation. These transactions are effected
directly with a broker-dealer, and the Fund bears the risk that the
broker-dealer will fail to meet its obligations. The market value of
such options and other illiquid assets will not exceed 10% of the
Fund's total assets.
For hedging purposes the Fund may purchase or sell (1) interest rate
and tax-exempt bond index futures contracts, and (2) put and call
options on such contracts and on such indices. A futures contract
creates an obligation by the seller to deliver and the buyer to take
delivery of the type of instrument at the time and in the amount
specified in the contract. Although futures call for delivery (or
acceptance) of the specified instrument, futures are usually closed
out before the settlement date through the purchase (sale) of a
comparable contract. If the initial sale price of the future exceeds
(or is less than) the price of the offsetting purchase, the Fund
realizes a gain (or loss). Options on futures contracts operate in a
similar manner to options on securities, except that the position
assumed is in futures contracts rather than in the securities. The
Fund may not purchase or sell futures contracts or purchase related
options if immediately thereafter the sum of the amount of deposits
for initial margin or premiums on the existing futures and related
options positions would exceed 5% of the market value of the Fund's
total assets. Transactions in futures and related options involve the
risk of (1) imperfect correlation between the price movement of the
contracts and the underlying securities, (2) significant price
movement in one but not the other market because of different trading
hours, (3) the possible absence of a liquid secondary market at any
point in time, and (4) if the Adviser's prediction on interest rates
is inaccurate, the Fund may be worse off than if it had not hedged.
Other. The Fund may not always achieve its investment objective. The
Fund's investment objective and non-fundamental policies may be
changed without shareholder approval. The Fund will notify investors
at least 30 days prior to any material change in the Fund's investment
objective. If there is a change in the investment objective,
shareholders should consider whether the Fund remains an appropriate
investment in light of their current financial position and needs.
Shareholders may incur a contingent deferred sales charge if shares
are redeemed in response to a change in objective. The Fund's
fundamental policies listed in the Statement of Additional Information
cannot be changed without the approval of a majority of the Fund's
outstanding voting securities. Additional information concerning
certain of the securities and investment techniques described above is
contained in the Statement of Additional Information.
HOW THE FUND MEASURES ITS PERFORMANCE
Performance may be quoted in sales literature and advertisements.
Each Class's average total returns are calculated in accordance with
the Securities and Exchange Commission's formula, and assume the
reinvestment of all distributions, the maximum sales charge of 4.75%
on Class A shares and the contingent deferred sales charge applicable
to the time period quoted on Class B shares. Other total returns
differ from the average annual total return only in that they may
relate to different time periods, represent aggregate as opposed to
average annual total return, and may not reflect the initial or
contingent deferred sales charge.
Each Class's yield, which differs from total return because it does
not consider changes in net asset value, is calculated in accordance
with the Securities and Exchange Commission's formula. Each Class's
distribution rate is calculated by dividing the most recent month's
distribution, annualized, by the maximum offering price of that Class
at the end of the month. Each Class's performance may be compared to
various indices. Quotations from publications may be included in
sales literature and advertisements. See "Performance Measures" in
the Statement of Additional Information.
All performance information is historical and does not predict future
results.
HOW THE FUND IS MANAGED
The Trustees formulate the Fund's general policies and oversee the
Fund's affairs as conducted by the Adviser.
The Adviser is a subsidiary of The Colonial Group, Inc. The Colonial
Group, Inc. is also the parent of Colonial Investment Services, Inc.
(Distributor), which serves as the distributor for the Fund's shares,
and of Colonial Investors Service Center, Inc. (Transfer Agent) which
serves as the shareholder services and transfer agent for the Fund.
Liberty Financial Companies, Inc. is considered to be the controlling
person of The Colonial Group, Inc.
The Adviser furnishes the Fund with investment management, accounting
and administrative personnel and services, office space and other
equipment and services at the Adviser's expense. For these services,
the Fund paid the Adviser 0.55% of the Fund's average net assets for
fiscal year 1994.
Bonny E. Boatman, Senior Vice President and Director of the Adviser
and its Tax-Exempt Group, has managed the Fund since its inception
and various other Colonial tax-exempt funds since 1985.
The Adviser also provides pricing and bookkeeping services to the Fund
for a monthly fee of $2,250 plus a percentage of the Fund's average
net assets over $50 million. The Transfer Agent provides transfer
agency and shareholder services to the Fund for a fee of 0.14%
annually of average net assets plus out-of-pocket expenses.
Each of the foregoing fees is subject to any reimbursement or fee
waiver to which the Adviser may agree.
The Adviser places all orders for the purchase and sale of portfolio
securities. In selecting broker-dealers, the Adviser may consider
research and brokerage services furnished to it and its affiliates.
Subject to seeking best execution, the Adviser may consider sales of
shares of the Fund (and of certain other Colonial funds) in selecting
broker-dealers for portfolio security transactions.
HOW THE FUND VALUES ITS SHARES
Per share net asset value is calculated by dividing the total value of
each Class's net assets by its number of outstanding shares. Shares
are valued each day the New York Stock Exchange is open as of
approximately 4:00 p.m. Eastern time. Portfolio securities for which
market quotations are readily available are valued at market. Short-
term investments maturing in 60 days or less are valued at amortized
cost when it is determined, pursuant to procedures adopted by the
Trustees that such cost approximates market value. All other
securities and assets are valued at fair value following procedures
adopted by the Trustees.
DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code and to distribute to shareholders virtually
all net income and any net realized gain at least annually.
The Fund generally declares distributions daily and pays them monthly.
Distributions are invested in additional shares of the Fund at net
asset value unless the shareholder elects to receive cash. Regardless
of the shareholder's election, distributions of $10 or less will not
be paid in cash, but will be invested in additional shares of the same
Class of the Fund at net asset value. To change your election, call
the Transfer Agent for information. If the Fund makes taxable
distributions, they will generally be taxable whether you receive them
in cash or in additional Fund shares; you must report them as taxable
income unless you are a tax-exempt institution. Each January,
information on the amount and nature of distributions for the prior
year is sent to shareholders.
HOW TO BUY SHARES
Shares are offered continuously. Orders received in good form prior
to 4:00 p.m. Eastern time (or placed with a financial service firm
before such time and transmitted by the financial service firm before
the Fund processes that day's share transactions) will be processed
based on that day's closing net asset value, plus any applicable
initial sales charge.
The minimum initial investment is $1,000; subsequent investments may
be as small as $50. The minimum initial investment for the Colonial
Fundamatic program is $50. Certificates will not be issued for Class
B shares and there are some limitations on the issuance of Class A
certificates. The Fund may refuse any purchase order for its shares.
See the Statement of Additional Information for more information.
Class A Shares. Class A shares are offered at net asset value plus an
initial or contingent deferred sales charge as follows:
Initial Sales Charge
Retained
by
Financial
Service
Firm
as % of as % of
Amount Offering Offering
Amount Purchased Invested Price Price
Less than $50,000 4.99% 4.75% 4.25%
$50,000 to less than $100,000 4.71% 4.50% 4.00%
$100,00 to less than $250,000 3.63% 3.50% 3.00%
$250,000 to less than 2.56% 2.50% 2.00%
$500,000
$500,000 to less than 2.04% 2.00% 1.75%
$1,000,000
$1,000,000 or more 0.00% 0.00% 0.00%
On purchases of $1 million or more, the Distributor pays the financial
service firm a cumulative commission as follows:
Amount Purchased Commission
First $3,000,000 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25%(1)
(1) Paid over 12 months but only to the extent shares remain outstanding.
Purchases of $1 million to $5 million are subject to a 1.00%
contingent deferred sales charge payable to the Distributor on
redemptions within 18 months from the first day of the month following
the purchase. The contingent deferred sales charge does not apply to
the excess of any purchase over $5 million.
Class A shares bear a 0.25% annual service fee.
Class B Shares. Class B shares are offered at net asset value,
without an initial sales charge, subject to a 0.75% annual
distribution fee for approximately 8 years (at which time they convert
to Class A shares not bearing a distribution fee), a 0.25% annual
service fee and a contingent deferred sales charge if redeemed within
6 years after purchase. As shown below, the amount of the contingent
deferred sales charge depends on the number of years after purchase
that the redemption occurs:
Contingent
Years Deferred
After Purchase Sales Charge
0-1 5.00%
1-2 4.00
2-3 3.00
3-4 3.00
4-5 2.00
5-6 1.00
More than 6 0.00
Year one ends one year after the end of the month in which the
purchase was accepted and so on. The Distributor pays financial
service firms a commission of 4.00% on Class B share purchases.
General. All contingent deferred sales charges are deducted from the
redemption, not the amount remaining in the account, and are paid to
the Distributor. Shares issued upon distribution reinvestment and
amounts representing appreciation are not subject to a contingent
deferred sales charge. The contingent deferred sales charge is
imposed on redemptions which result in the account value falling below
its Base Amount (the total dollar value of purchase payments in the
account reduced by prior redemptions on which a contingent deferred
sales charge was paid and any exempt redemptions). See the Statement
of Additional Information for more information.
Which Class is more beneficial to an investor depends on the amount
and intended length of the investment. Large investments, qualifying
for a reduced Class A sales charge, avoid the distribution fee.
Investments in Class B shares have 100% of the purchase invested
immediately. Purchases of $250,000 or more must be for Class A
shares. Consult your financial service firm.
Financial service firms may receive different compensation rates for
selling different classes of shares. The Distributor may pay
additional compensation to financial service firms which have made or
may make significant sales.
Initial or contingent deferred sales charges may be reduced or
eliminated for certain persons or organizations purchasing Fund shares
alone or in combination with certain other Colonial Funds. See the
Statement of Additional Information for more information.
Shareholder Services. A variety of shareholder services are
available. For more information about these services or your account,
call 1-800-345-6611. Some services are described in the
attached account application. A shareholder's manual explaining all
available services will be provided upon request.
HOW TO SELL SHARES
Shares may be sold on any day the New York Stock Exchange is open
either directly to the Fund or through your financial service firm.
Sale proceeds generally are sent within seven days (usually on the
next business day after your request is received in good form).
However, for shares recently purchased by check, the Fund will send
proceeds as soon as the check has cleared (which may take up to 15
days).
Selling Shares Directly To The Fund. Send a signed letter of
instruction or stock power form to the Transfer Agent, along with any
certificates for shares to be sold. The sale price is the net asset
value (less any applicable contingent deferred sales charge) next
calculated after the Fund receives the request in proper form.
Signatures must be guaranteed by a bank, a member firm of a national
stock exchange or another eligible guarantor institution. Stock power
forms are available from your financial service firm, the Transfer
Agent and many banks. Additional documentation is required for sales
by corporations, agents, fiduciaries, surviving joint owners and
individual retirement account holders. For details contact:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Selling Shares Through Financial Service Firms. Financial service
firms must receive requests before 4:00 p.m. Eastern time to receive
that day's price, are responsible for furnishing all necessary
documentation to the Transfer Agent and may charge for this service.
General. The sale of shares is a taxable transaction for federal tax
purposes and may be subject to a contingent deferred sales charge. The
contingent deferred sales charge may be waived under certain
circumstances. See the Statement of Additional Information for more
information. Under unusual circumstances, the Fund may suspend
repurchases or postpone payment for up to seven days or longer, as
permitted by federal securities law. In June of any year, the Fund
may deduct $10 (payable to the Transfer Agent) from accounts valued at
less than $1,000 unless the account value has dropped below $1,000
solely as a result of share value depreciation. Shareholders will
receive 60 days' written notice to increase the account value before
the fee is deducted.
HOW TO EXCHANGE SHARES
Exchanges at net asset value may be made among shares of the same
class of shares of most Colonial funds. Shares will continue to age
without regard to the exchange for purposes of conversion and
determining the contingent deferred sales charge, if any, upon
redemption. Carefully read the prospectus of the fund into which the
exchange will go before submitting the request. Call 1-800-248-2828
to receive a prospectus and an exchange authorization form. Call 1-
800-422-3737 to exchange shares by telephone. An exchange is a
taxable capital transaction. The exchange service may be changed,
suspended or eliminated on 60 days' written notice.
Class A Shares. An exchange from a money market fund into a non-money
market fund will be at the applicable offering price next determined
(including sales charge), except for amounts on which an initial sales
charge previously was paid. Non-money market fund shares must be held
for five months before qualifying for exchange to a fund with a higher
sales charge, after which, exchanges are made at the net asset value
next determined.
Class B Shares. Exchanges of Class B shares are not subject to the
contingent deferred sales charge. However, if shares are redeemed
within six years after the original purchase, a contingent deferred
sales charge will be assessed using the schedule of the fund into
which the original investment was made.
TELEPHONE TRANSACTIONS
All shareholders may redeem up to $50,000 of Fund shares by telephone
and may elect telephone redemption privileges for larger amounts on
the account application. All exchanges may be accomplished by
telephone. See the Statement of Additional Information for more
information. The Adviser, the Transfer Agent and the Fund will not be
liable when following telephone instructions reasonably believed to be
genuine and a shareholder may suffer a loss from unauthorized
transactions. The Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine.
Shareholders will be required to provide their name, address and
account number. Proceeds and confirmations of telephone transactions
will be mailed or sent to the address of record. Telephone
redemptions are not available on accounts with an address change in
the preceding 60 days. All telephone transactions are recorded.
Shareholders are not obligated to transact by telephone.
12B-1 PLANS
Under 12b-1 Plans, the Fund pays the Distributor an annual service fee
of 0.25% of the Fund's average net assets attributed to each Class of
shares. The Fund also pays the Distributor an annual distribution fee
of 0.75% of the average net assets attributed to its Class B shares.
Because the Class B shares bear the additional distribution fee, their
dividends will be lower than the dividends of Class A shares. Class B
shares automatically convert to Class A shares, approximately eight
years after the Class B shares were purchased. The multiple class
structure could be terminated should certain Internal Revenue Service
rulings be rescinded. See the Statement of Additional Information for
more information. The Distributor uses the fees to defray the cost
of commissions and service fees paid to financial service firms which
have sold Fund shares, and to defray other expenses such as sales
literature, prospectus printing and distribution, shareholder
servicing costs and compensation to wholesalers. Should the fees
exceed the Distributor's expenses in any year, the Distributor would
realize a profit. The Plans also authorize other payments to the
Distributor and its affiliates (including the Adviser) which may be
construed to be indirect financing of sales of Fund shares.
ORGANIZATION AND HISTORY
The Trust is a "Massachusetts business trust" organized in 1978. The
Fund represents the entire interest in a separate portfolio of the
Trust.
The Trust is not required to hold annual shareholder meetings, but
special meetings may be called for certain purposes. You receive one
vote for each of your Fund shares. Shares of the Trust vote together
except when required by law to vote separately by fund or by class.
Shareholders owning in the aggregate ten percent of Trust shares may
call meetings to consider removal of Trustees. Under certain
circumstances, the Trust will provide information to assist
shareholders in calling such a meeting. See the Statement of
Additional Information for more information.
APPENDIX
DESCRIPTION OF BOND RATINGS
S&P
AAA Indicates an extremely strong capacity to pay principal and
interest.
AA Capacity to pay principal and interest is very strong, and in the
majority of instances, they differ from AAA only in small degree.
A Strong capacity to pay principal and interest, although they are
somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB Have an adequate capacity to pay principal and interest. Whereas
they normally exhibit protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay principal and interest than for bonds in the
A category.
BB, B, CCC and CC Regarded, on balance as predominantly speculative
with respect to capacity to pay principal and interest in accordance
with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest. While likely to have so have some
quality and protection characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
C Income bonds on which no interest is being paid.
D In default, and payment of interest and/or principal is in arrears.
Plus (+) or minus (-) are modifiers relative to the standing within
the major categories.
MOODY'S
Aaa Best quality carrying the smallest degree of investment risk and
generally referred to as "gilt edge." Interest payments are protected
by a large or exceptionally stable margin and principal is secure.
While various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally
strong position of the issue.
Aa High quality by all standards. Together with Aaa bonds they
comprise what are generally known as high-grade bonds. They are rated
lower than the best bonds because margins of protective elements may
be of greater amplitude or there may be other elements present which
make the long-term risk appear somewhat larger than in Aaa securities.
Aa through B securities which possess the strongest investment
attributes are designated by the symbol 1.
A Possess many of the favorable investment attributes and are to be
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa Medium grade, neither highly protected nor poorly secured.
Interest and principal payments appear adequate for the present but
certain protective elements are lacking or may be characteristically
unreliable over great lengths of time. Such bonds lack outstanding
investment characteristics and in fact, have speculative
characteristics as well.
Ba Judged to have speculative elements; their future cannot be
considered as well secured. Often, the protection of interest and
principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future.
Uncertainty of position characterize these bonds.
Caa Poor standing. They may be in default or there may be present
elements of danger with respect to principal or interest.
Ca Speculative in a high degree, often in default or having other
major shortcomings.
C Lowest rated class of bonds. Can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Investment Adviser
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Distributor
Colonial Investment Services, Inc.
One Financial Center
Boston, MA 02111-2621
Shareholder Services and Transfer Agent
Colonial Investors Service Center, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611
Custodian
United Missouri Bank, n.a.
928 Grand Avenue
Kansas City, MO 64106
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110-2624
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624
Your financial service firm is:
Printed in U.S.A.
March 30, 1995
COLONIAL HIGH YIELD MUNICIPAL FUND
PROSPECTUS
Colonial High Yield Municipal Fund seeks high current income generally
exempt from ordinary federal income taxes and relative stability of
net asset value. The Fund may invest a portion of its assets in lower-
rated tax-exempt bonds and therefore may not be suitable for all
investors. Effective May 31, 1995, the Fund's objective will be to
seek a high level of after-tax total return by pursuing current income
exempt from ordinary federal income tax and opportunities for long-
term appreciation from a portfolio primarily invested in medium- to
lower-grade municipal bonds.
For more detailed information about the Fund, call the Adviser at
1-800-248-2828 for the March 30, 1995 Statement of Additional
Information.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
COLONIAL TRUST IV
Cross Reference Sheet
Colonial Tax-Exempt Insured Fund
---------------------------------
Item Number of Form N-1A Location or Caption in Prospectus
- ------------------------ ---------------------------------
Part A
1. Cover Page
2. Summary of expenses
3. The Fund's financial history
4. The Fund's investment objectives;
Organization and history; How the
Fund pursues its objectives
5. Back cover; How the Fund is
managed; Organization and
history; The Fund's investment
objectives
6. Organization and history;
Distributions and taxes; How to
buy shares
7. How to buy shares; How the Fund
values its shares; 12b-1 plans;
Back cover
8. How to sell shares; How to
exchange shares; Telephone
transactions
9. Not Applicable
March 30, 1995
COLONIAL TAX-EXEMPT INSURED FUND
PROSPECTUS
BEFORE YOU INVEST
Colonial Management Associates, Inc. (Adviser) and your full-service
financial adviser want you to understand both the risks and benefits
of mutual fund investing.
While mutual funds offer significant opportunities and are
professionally managed, they also carry risk including possible loss
of principal. Unlike saving accounts and certificates of deposit,
mutual funds are not insured or guaranteed by any financial
institution or government agency.
Please consult your full-service financial adviser to determine how
investing in this mutual fund may suit your unique needs, time horizon
and risk tolerance.
Colonial Tax-Exempt Insured Fund (Fund), a diversified fund of
Colonial Trust IV (Trust), an open-end management investment company,
seeks, primarily, as high a yield exempt from federal income taxes as
is possible by investing primarily in high quality, insured tax-exempt
bonds and, secondarily, reduction of risk to principal from downward
movements in the market value of its portfolio securities during
periods of generally declining bond prices. Effective May 31, 1995,
the Fund's objective will be to seek as high a level of after-tax
total return, as is consistent with prudent risk, by pursuing current
income exempt from federal income tax and opportunities for long-term
appreciation from a portfolio primarily invested in insured municipal
bonds. See "How the Fund pursues its objective" for a detailed
discussion of the nature and limitations of portfolio insurance.
The Fund is managed by the Adviser, an investment adviser since 1931.
This Prospectus explains concisely what you should know before
investing in the Fund. Read it carefully and retain it for future
reference. More detailed information about the Fund is in the March
30, 1995 Statement of Additional Information which has been filed with
the Securities and Exchange Commission and is obtainable free of
charge by calling the Adviser at 1-800-248-2828. The Statement of
Additional Information is incorporated by reference in (which means it
is considered to be a part of) this Prospectus.
The Fund offers two classes of shares. Class A shares are offered at
net asset value plus a sales charge imposed at the time of purchase;
Class B shares are offered at net asset value plus an annual
distribution fee and a declining contingent deferred sales charge on
redemptions made within six years after purchase. Class B shares
automatically convert to Class A shares after approximately eight
years. See "How to buy shares."
Contents Page
Summary of expenses
The Fund's financial history
The Fund's investment objectives
How the Fund pursues its objectives
How the Fund measures its performance
How the Fund is managed
How the Fund values its shares
Distributions and taxes
How to buy shares
How to sell shares
How to exchange shares
Telephone transactions
12b-1 plans
Organization and history
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in the
Fund. The following tables summarize your maximum transaction costs
and annual expenses for an investment in each Class of the Fund's
shares.
Shareholder Transaction Expenses(1)(2)
Class A Class B
Maximum Initial Sales Charge Imposed on
a Purchase (as a % of offering 4.75% 0.00%(5)
price)(3)
Maximum Contingent Deferred Sales
Charge (as a % of offering price)(3) 1.00%(4) 5.00%
(1) For accounts less than $1,000 an annual fee of $10 may be
deducted. See "How to sell shares."
(2) Redemption proceeds exceeding $5,000 sent via federal funds wire
will be subject to a $7.50 charge per transaction.
(3) Does not apply to reinvested distributions.
(4) Only with respect to any portion of purchases of $1 million to
$5 million redeemed within approximately 18 months after
purchase. See "How to buy shares."
(5) Because of the 0.75% distribution fee applicable to Class B
shares, long-term Class B shareholders may pay more in aggregate
sales charges than the maximum initial sales charge permitted by
the National Association of Securities Dealers, Inc. However,
because the Fund's Class B shares automatically convert to Class
A shares after approximately 8 years, this is less likely for
Class B shares than for a class without a conversion feature.
Annual Operating Expenses (as a % of net assets)
Class A Class B
Management fee 0.55% 0.55%
12b-1 fees 0.25 1.00
Other expenses 0.25 0.25
Total expenses 1.05% 1.80%
Example
The following Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in each Class of shares of the Fund for
the periods specified, assuming a 5% annual return and, unless
otherwise noted, redemption at period end. The 5% return and expenses
used in this Example should not be considered indicative of actual or
expected Fund performance or expenses, both of which will vary:
Class A Class B
Period:
(6)
1 year $ 58 $ 68 $ 18
3 years 78 87 57
5 years 103 118 98
10 years 170 194(7) 194(7)
(6) Assumes no redemption.
(7) Class B shares convert to Class A shares after
approximately 8 years; therefore, years 9 and 10 reflect
Class A expenses.
THE FUND'S FINANCIAL HISTORY
The following schedule of financial highlights for a share outstanding
throughout each period has been audited by Price Waterhouse LLP
independent accountants. Their unqualified report is included in the
Fund's 1994 Annual Report and is incorporated
by reference into the Statement of Additional Information.
<TABLE>
<CAPTION>
Class A
Year ended November 30
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $8.420 $8.080 $7.880 $7.660 $7.680
Income (loss) from investment operations:
Net investment income 0.439 0.456 0.480 0.496 0.506
Net realized and unrealized
gain (loss) on investments (0.977) 0.338 0.200 0.222 (0.016)
Total from investment operations (0.538) 0.794 0.680 0.718 0.490
Less distributions declared to
shareholders:
From net investment income (0.432) (0.454) (0.480) (0.498) (0.510)
Net asset value - End of period $7.450 $8.420 $8.080 $7.880 $7.660
Total return (a) (6.61)% 10.00% 8.85% 9.66% 6.65%
Ratios to average net assets:
Expenses 1.05% 1.07% 1.10% 1.08% 1.10%
Net investment income 5.44% 5.44% 5.97% 6.35% 6.66%
From net realized gain ------ ------ ------ ------ ------
Portfolio turnover 36% 12% 7% 8% 15%
Net assets at end of period (000) $198,909 $241,610 $217,782 $189,483 $142,525
_________________________________
</TABLE>
<TABLE>
<CAPTION>
CLASS A
Year ended November 30
1989 1988 1987 1986 1985(c)
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $7.460 $7.260 $8.120 $7.150 $7.140
Income (loss) from investment operations:
Net investment income 0.508 0.510 0.501 0.546 (d) 0.003 (e)
Net realized and unrealized
gain (loss) on investments 0.222 0.201 (0.767) 0.966 0.007
Total from investment operations 0.730 0.711 (0.266) 1.512 0.010
Less distributions declared to
shareholders:
From net investment income (0.510) (0.511) (0.498) (0.542) -----
Net asset value - End of period $7.680 $7.460 $7.260 $8.120 $7.150
Total return (a) 10.07% 10.05% (3.35)% 21.70% -----
Ratios to average net assets:
Expenses 1.12% 1.12% 1.14% 1.10%(d) -----(e)
Net investment income 6.70% 6.85% 6.63% 6.95%(d) 1.49%(b)(e)
From net realized gain ------ ------ 0.096 ----- -----
Portfolio turnover 38% 78% 129% 130% -----
Net assets at end of period (000) $124,119 $104,074 $105,944 $97,208 $600,730
_________________________________
</TABLE>
(a) Total return at net asset value assuming all distributions
reinvested and no initial sales charge or contingent deferred
sales charge.
(b) Annualized.
(c) The Fund commenced investment operations on November 20, 1985.
(d) Net of fees and expenses waived or borne by the Adviser which
amounted to $0.010 per share and 0.13% of average net assets.
(e) Net of fees and expenses waived or borne by the Adviser which
amounted to $.006 per share.
THE FUND'S FINANCIAL HISTORY (CONT'D)
<TABLE>
<CAPTION>
Class B (a)
Year ended November 30
1994 1993 1992
<S> <C> <C> <C>
Net asset value - Beginning of period $8.420 $8.080 $7.910
Income (loss) from investment operations:
Net investment income 0.378 0.395 0.240
Net realized and unrealized
gain (loss) on investments (0.977) 0.338 0.170
Total from investment operations (0.599) 0.733 0.410
Less distributions declared to shareholders:
From net investment income (0.371) (0.393) (0.240)
Net asset value - End of period $7.450 $8.420 $8.080
Total return (b) (7.31)% 9.20% 5.23%(c)
Ratios to average net assets:
Expenses 1.80% 1.82% 1.85%(d)
Net investment income 4.69% 4.69% 5.22%(d)
From net realized gains ----- ----- -----
Portfolio turnover 36% 12% 7%
Net assets at end of period (000) $45,801 $46,035 $16,519
_________________________________
</TABLE>
(a) Class B shares were initially offered on May 5, 1992. Per
share amounts reflect activity from that date.
(b) Total return at net asset value assuming all distributions
reinvested and no intitial sales charge or contingent deferred
sales charge.
(c) Not annualized.
(d) Annualized.
Further performance information is contained in the Fund's Annual
Report to shareholders, which is obtainable free of charge by calling
1-800-248-2828.
THE FUND'S INVESTMENT OBJECTIVES
The Fund seeks, primarily, as high a yield exempt from federal income
taxes as is possible by investing primarily in high quality, insured
tax-exempt bonds and, secondarily, reduction of risk to principal from
downward movements in the market value of its portfolio securities
during periods of generally declining bond prices. Effective May 31,
1995, the Fund's objective will be to seek as high a level of after-
tax total return, as is consistent with prudent risk, by pursuing
current income exempt from federal income tax and opportunities for
long-term appreciation from a portfolio primarily invested in insured
municipal bonds.In this Prospectus, "tax-exempt bonds" means debt
securities of any maturity that, in the issuer's counsel's opinion,
are exempt from federal income taxes.
HOW THE FUND PURSUES ITS OBJECTIVES
The Fund normally invests at least 65% of its assets in high quality
tax-exempt bonds of any maturity that are fully insured as to the
payment of interest and principal. The balance of the Fund's assets
may be invested in uninsured debt securities of any maturity that are
rated BBB or Baa or higher, but no more than 20% of the Fund's assets
will be rated BBB or Baa. The Fund may invest in securities that do
not pay interest in cash on a current basis. The Fund will, however,
accrue and distribute this interest on a current basis and may have to
sell securities to generate cash for distributions. Many bonds have
call features that permit the issuer to repay the bond before
maturity. If this occurs, the Fund may only be able to invest the
proceeds at lower yields.
The Fund will generally buy tax-exempt bonds insured under an
insurance policy obtained by the issuer or underwriter at the time of
issuance. These bonds will all be rated AAA when acquired. The Fund
may also buy uninsured tax-exempt bonds and simultaneously buy
insurance on those bonds from an insurance company, but only if S&P
gives a AAA rating to bonds insured by that insurance company. The
Fund may also buy a portfolio insurance policy that covers its
holdings of uninsured tax-exempt bonds. Insurance reduces but does
not eliminate the credit risk of holding tax-exempt bonds, since an
insurer may not be able to meet its obligations. Insurance does not
reduce fluctuations in Fund share values resulting from changes in
market interest rates. Insured bonds generally have lower yields than
comparable uninsured bonds. Fund purchases of insurance to cover
uninsured bonds reduce the Fund's yield. Some forms of insurance
cover bonds only so long as the Fund holds them, so that, if the bond
issuer's creditworthiness declines, the bonds would be worth less to
other investors than to the Fund. Thus the Fund might not be able to
sell the bonds for an acceptable price and might continue to hold
bonds that it would otherwise sell to buy higher-yielding bonds. In
valuing such securities, the Fund values the insurance at the
difference between the market value of the security and the market
value of similar securities whose issuers' creditworthiness has not
substantially declined.
The value of debt securities (and thus Fund shares) usually fluctuates
inversely to changes in interest rates. A portion of the Fund's
assets may be held in cash or invested in short-term securities for
day-to-day operating purposes. The Fund intends that its short-term
investments will be tax-exempt, but if suitable tax-exempt securities
are not available or are available only on a when-issued basis, the
Fund may invest up to 20% of its assets (reduced by the percentage of
its total assets invested in "private activity bonds", which the Fund
intends will not exceed 20% of its assets) in repurchase agreements;
short-term taxable obligations rated A-1+ of banks which have or whose
parent holding companies have long-term debt ratings of AAA, or of
corporations with long-term debt ratings of AAA; and securities of the
U.S. government. The Fund may temporarily invest more than 20% of its
assets in such taxable obligations for defensive purposes. The Fund's
policy is not to concentrate in any industry, but it may invest up to
25% of its assets in industrial development revenue bonds based on the
credit of private entities in any one industry (governmental issuers
are not considered to be part of any "industry"). The Fund currently
limits investments in securities subject to the federal alternative
minimum tax to a maximum of 20% of total assets.
The Fund may acquire securities on a "when-issued" basis by
contracting to purchase securities for a fixed price on a date beyond
the customary settlement time with no interest accruing until
settlement. If made through a dealer the contract is dependent on the
dealer's consummation of the sale. The dealer's failure could deprive
the Fund of an advantageous yield or price. These contracts may be
considered securities and involve risk to the extent that the value of
the underlying security changes prior to settlement. The Fund may
realize short-term profits or losses if the contracts are sold.
Options and Futures. The Fund may write covered call and put options
on securities held in the portfolio and purchase call and put options
on debt securities. A call option gives the purchaser the right to
buy a security from, and a put option the right to sell a security to,
the option writer at a specified price, on or before a specified
date. The Fund will pay a premium when purchasing an option, which
reduces the Fund's return on the underlying security if the option is
exercised and results in a loss if the option expires unexercised.
The Fund will receive a premium from writing an option, which may
increase its return if the option expires or is closed out at a
profit. So long as the Fund is the writer of a call option it will
own the underlying securities subject to the option (or comparable
securities satisfying the cover requirements of securities exchanges).
So long as the Fund is a writer of a put option it will hold cash
and/or high-grade debt obligations equal to the price to be paid if
the option is exercised. If the Fund is unable to close out an
unexpired option, the Fund must continue to hold the underlying
security until the option expires. Trading hours for options may
differ from the trading hours for the underlying securities. Thus
significant price movements may occur in the securities markets that
are not reflected in the options market. This may limit the
effectiveness of options as hedging devices. The Fund may buy or
write options that are not traded on national securities exchanges and
not protected by the Option Clearing Corporation. These transactions
are effected directly with a broker-dealer, and the Fund bears the
risk that the broker-dealer will fail to meet its obligations. The
market value of such options and other illiquid assets will not exceed
105% of the Fund's total assets.
For hedging purposes the Fund may purchase or sell (1) interest rate
and tax-exempt bond index futures contracts, and (2) put and call
options on such contracts and on such indices. A future creates an
obligation by the seller to deliver and the buyer to take delivery of
the type of instrument at the time and in the amount specified in the
contract. Although futures call for delivery (or acceptance) of the
specified instrument, futures are usually closed out before the
settlement date through the purchase (sale) of a comparable contract.
If the initial sale price of the future exceeds (or is less than) the
price of the offsetting purchase, the Fund realizes a gain (or loss).
Options on futures contracts operate in a similar manner to options on
securities, except that the position assumed is in the futures
contracts rather than in the security. The Fund may not purchase or
sell futures contracts or purchase related options if immediately
thereafter the sum of the amount of deposits for initial margin or
premiums on the existing futures and related options positions would
exceed 5% of the market value of the Fund's total assets.
Transactions in futures and related options involve the risk of (1)
imperfect correlation between the price movement of the contracts and
the underlying securities, (2) significant price movement in one but
not the other market because of different trading hours, (3) the
possible absence of a liquid secondary market at any point in time,
and (4) if the Adviser's prediction on interest rates is inaccurate,
the Fund may be worse off than if it had not hedged.
Other. The Fund may not always achieve its investment objective. The
Fund's investment objective and non-fundamental policies may be
changed without shareholder approval. The Fund will notify investors
at least 30 days prior to any material change in the Fund's investment
objective. If there is a change in the investment objective,
shareholders should consider whether the Fund remains an appropriate
investment in light of their current financial position and needs.
Shareholders may incur a contingent deferred sales charge if shares
are redeemed in response to a change in objective. The Fund has a
fundamental policy of investing under normal circumstances at least
80% of its total assets in tax exempt bonds. This policy and the
Fund's other fundamental policies listed in the Statement of
Additional Information cannot be changed without the approval of a
majority of the Fund's outstanding voting securities. Additional
information concerning certain of the securities and investment
techniques described above is contained in the Statement of Additional
Information.
HOW THE FUND MEASURES ITS PERFORMANCE
Performance may be quoted in sales literature and advertisements.
Each Class's average annual total returns are calculated in accordance
with the Securities and Exchange Commission's formula, and assume the
reinvestment of all distributions, the maximum initial sales charge of
4.75% on Class A shares and the contingent deferred sales charge
applicable to the time period quoted on Class B shares. Other total
returns differ from the average annual total return only in that they
may relate to different time periods, represent aggregate as opposed
to average annual total return, and may not reflect the initial or
contingent deferred sales charge.
Each Class's yield and tax equivalent yield, which differ from total
return because they do not consider changes in net asset value, are
calculated in accordance with the Securities and Exchange Commission's
formula. Each Class's distribution rate is calculated by dividing the
most recent month's distribution, annualized, by the maximum offering
price of that Class at the end of the month. Each Class's performance
may be compared to various indices. Quotations from various
publications may be included in sales literature and advertisements.
See "Performance Measures" in the Statement of Additional Information.
All performance information is historical and does not predict future
results.
HOW THE FUND IS MANAGED
The Trustees formulate the Fund's general policies and oversee the
Fund's affairs as conducted by the Adviser.
The Adviser is a subsidiary of The Colonial Group, Inc. The Colonial
Group, Inc. is also the parent of Colonial Investment Services, Inc.
(Distributor), which serves as the distributor for the Fund's shares,
and of Colonial Investors Service Center, Inc. (Transfer Agent), which
serves as the shareholder services and transfer agent for the Fund.
Liberty Financial Companies, Inc. is considered to be the controlling
person of The Colonial Group, Inc.
The Adviser furnishes the Fund with investment management, accounting
and administrative personnel and services, office space and other
equipment and services at the Adviser's expense. For these services,
the Fund paid the Adviser 0.55% of the Fund's average net assets for
the fiscal year 1994.
William C. Loring, Vice President of the Adviser, has managed the Fund
since 1987 and has managed various other Colonial tax-exempt funds
since 1986.
The Adviser also provides pricing and bookkeeping services to the Fund
for a monthly fee of $2,250 plus a percentage of the Fund's average
net assets over $50 million. The Transfer Agent provides transfer
agency and shareholder services to the Fund for a fee of 0.14%
annually of average net assets plus out-of-pocket expenses.
Each of the foregoing fees is subject to any reimbursement or fee
waiver to which the Adviser may agree.
The Adviser places all orders for the purchase and sale of portfolio
securities. In selecting broker-dealers, the Adviser may consider
research and brokerage services furnished to it and its affiliates.
Subject to seeking best execution, the Adviser may consider sales of
shares of the Fund (and of certain other Colonial funds) in selecting
broker-dealers for portfolio security transactions.
HOW THE FUND VALUES ITS SHARES
Per share net asset value is calculated by dividing the total value of
each Class's net assets by its number of outstanding shares. Shares
are valued each day the New York Stock Exchange is open as of
approximately 4:00 p.m. Eastern time. Portfolio securities for which
market quotations are readily available are valued at market. Short-
term investments maturing in 60 days or less are valued at amortized
cost when it is determined, pursuant to procedures adopted by the
Trustees, that such cost approximates market value. All other
securities and assets are valued at fair value following procedures
adopted by the Trustees.
DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code and to distribute to shareholders virtually
all net income and any net realized gain at least annually.
The Fund generally declares distributions daily and pays them monthly.
Distributions are invested in additional shares of the same Class of
the Fund at net asset value unless the shareholder elects to receive
cash. Regardless of the shareholder's election, distributions of $10
or less will not be paid in cash but will be invested in additional
shares of the same class of the Fund at net asset value. To change
your election, call the Transfer Agent for information. If the Fund
makes taxable distributions, they will generally be taxable whether
you receive them in cash or in additional Fund shares; you must
report them as taxable income unless you are a tax-exempt institution.
While the Fund's distributions of tax-exempt bond interest are not
subject to regular federal income tax, a portion may be included in
computing a shareholder's federal alternative minimum tax liability.
Social security benefits may be taxed as a result of receiving tax-
exempt income. Each January, information on the amount and nature of
distributions for the prior year is sent to shareholders.
The Fund has a significant capital loss carry forward and until it is
exhausted, it is unlikely that capital gains distributions will be
made. Any capital gains will, however, be reflected in the net asset
value.
HOW TO BUY SHARES
Shares are offered continuously. Orders received in good form prior
to 4:00 p.m. Eastern time (or placed with a financial service firm
before such time and transmitted by the financial service firm before
the Fund processes that day's share transactions) will be processed
based on that day's closing net asset value, plus any applicable
initial sales charge. The minimum initial investment is $1,000;
subsequent investments may be as small as $50. The minimum initial
investment for the Colonial Fundamatic program is $50. Certificates
will not be issued for Class B shares and there are some limitations
on the issuance of Class A certificates. The Fund may refuse any
purchase order for its shares. See the Statement of Additional
Information for more information.
Class A Shares. Class A shares are offered at net asset value plus an
initial sales charge or a contingent deferred sales charge as follows:
Initial Sales Charge
Retained
by
Financial
Service
Firm
as
as % of as % of
Amount Offering Offering
Amount Purchased Invested Price Price
Less than $50,000 4.99% 4.75% 4.25%
$50,000 to less than $100,000 4.71% 4.50% 4.00%
$100,000 to less than
$250,000 3.63% 3.50% 3.00%
$250,000 to less than
$500,000 2.56% 2.50% 2.00%
$500,000 to less than
$1,000,000 2.04% 2.00% 1.75%
$1,000,000 or more 0.00% 0.00% 0.00%
On purchases of $1 million or more, the Distributor pays the financial
service firm a cumulative commission as follows:
Amount Purchased Commission
First $3,000,000 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25%(1)
(1) Paid over 12 months but only to the extent the shares
remain outstanding.
Purchases of $1 million to $5 million are subject to a 1.00%
contingent deferred sales charge payable to the Distributor on
redemptions within 18 months from the first day of the month following
the purchase. The contingent deferred sales charge does not apply to
the excess of any purchase over $5 million.
Class B Shares. Class B shares are offered at net asset value,
without an initial sales charge, subject to a 0.75% annual
distribution fee for approximately 8 years (at which time they convert
to Class A shares not bearing a distribution fee), a 0.25% annual
service fee and a contingent deferred sales charge if redeemed within
6 years after purchase. As shown below, the amount of the contingent
deferred sales charge depends on the number of years after purchase
that the redemption occurs:
Years Contingent Deferred
After Purchase Sales Charge
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
More than 6 0.00%
Year one ends one year after the end of the month in which the
purchase was accepted and so on. The Distributor pays financial
service firms a commission of 4.00% on Class B share purchases.
General. All contingent deferred sales charges are deducted from the
redemption, not the amount remaining in the account, and are paid to
the Distributor. Shares issued upon distribution reinvestment and
amounts representing appreciation are not subject to a contingent
deferred sales charge. The contingent deferred sales charge is
imposed on redemptions which result in the account value falling below
its Base Amount (the total dollar value of purchase payments in the
account reduced by prior redemptions on which a contingent deferred
sales charge was paid and any exempt redemptions). See the Statement
of Additional Information for more information.
Which Class is more beneficial to an investor depends on the amount
and intended length of the investment. Large investments, qualifying
for a reduced Class A sales charge, avoid the distribution fee.
Investments in Class B shares have 100% of the purchase invested
immediately. Purchases of $250,000 or more must be for Class A
shares. Consult your financial service firm.
Financial service firms may receive different compensation rates for
selling different classes of shares. The Distributor may pay
additional compensation to financial service firms which have made or
may make significant sales.
Initial or contingent deferred sales charges may be reduced or
eliminated for certain persons or organizations purchasing Fund shares
alone or in combination with certain other Colonial Funds. See the
Statement of Additional Information for more information.
Shareholder Services. A variety of shareholder services are
available. For more information about these services or your account,
call 1-800-345-6611. Some services are described in the attached
account application. A shareholder's manual explaining all available
services will be provided upon request.
HOW TO SELL SHARES
Shares may be sold on any day the New York Stock Exchange is open,
either directly to the Fund or through your financial service firm.
Sale proceeds generally are sent within seven days (usually on the
next business day after your request is received in good form).
However, for shares recently purchased by check, the Fund will send
proceeds as soon as the check has cleared (which may take up to 15
days).
Selling Shares Directly To The Fund. Send a signed letter of
instruction or stock power form to the Transfer Agent, along with any
certificates for shares to be sold. The sale price is the net asset
value (less any applicable contingent deferred sales charge) next
calculated after the Fund receives the request in proper form.
Signatures must be guaranteed by a bank, a member firm of a national
stock exchange or another eligible guarantor institution. Stock power
forms are available from financial service firms, the Transfer Agent
and many banks. Additional documentation is required for sales by
corporations, agents, fiduciaries, surviving joint owners and
individual retirement account holders. For details contact:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Selling Shares Through Financial Service Firms. Financial service
firms must receive requests before 4:00 p.m. Eastern time to receive
that day's price, are responsible for furnishing all necessary
documentation to the Transfer Agent, and may charge for this service.
General. The sale of shares is a taxable transaction for federal tax
purposes and may be subject to a contingent deferred sales charge.
The contingent deferred sales charge may be waived under certain
circumstances. See the Statement of Additional Information for more
information. Under unusual circumstances, the Fund may suspend
repurchases or postpone payment for up to seven days or longer, as
permitted by federal securities law. In June of any year, the Fund
may deduct $10 (payable to the Transfer Agent) from accounts valued at
less than $1,000 unless the account value has dropped below $1,000
solely as a result of share value depreciation. Shareholders will
receive 60 days' written notice to increase the account value before
the fee is deducted.
HOW TO EXCHANGE SHARES
Exchanges at net asset value may be made among shares of the same
class of most Colonial funds. Shares will continue to age without
regard to the exchange for purposes of conversion and determining the
contingent deferred sales charge, if any, upon redemption. Carefully
read the prospectus of the fund into which the exchange will go before
submitting the request. Call 1-800-248-2828 to receive a prospectus
and an exchange authorization form. Call 1-800-422-3737 to exchange
shares by telephone. An exchange is a taxable capital transaction.
The exchange service may be changed, suspended or eliminated on 60
days' written notice.
Class A Shares. An exchange from a money market fund into a non-money
market fund will be at the applicable offering price next determined
(including sales charge), except for amounts on which an initial sales
charge previously was paid. Non-money market fund shares must be held
for five months before qualifying for exchange to a fund with a higher
sales charge, after which exchanges are made at the net asset value
next determined.
Class B Shares. Exchanges of Class B shares are not subject to the
contingent deferred sales charge. However, if shares are redeemed
within six years after the original purchase, a contingent deferred
sales charge will be assessed using the schedule of the fund into
which the original investment was made.
TELEPHONE TRANSACTIONS
All shareholders may redeem up to $50,000 of Fund shares by telephone,
and may elect telephone redemption privileges for larger amounts on
the account application. All exchanges may be accomplished by
telephone. See the Statement of Additional Information for more
information. The Adviser, the Transfer Agent and the Fund will not be
liable when following telephone instructions reasonably believed to be
genuine and a shareholder may suffer a loss from unauthorized
transactions. The Fund will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine. Shareholders
will be required to provide their name, address and account number.
Proceeds and confirmations of telephone transactions will be mailed or
sent to the address of record. Telephone redemptions are not
available on accounts with an address change in the preceding 60 days.
All telephone transactions are recorded. Shareholders are not
obligated to transact by telephone.
12B-1 PLANS
Under 12b-1 Plans, the Fund pays the Distributor an annual service fee
of 0.25% of the Fund's average net assets attributed to each Class of
shares. The Fund also pays the Distributor an annual distribution fee
of 0.75% of the average net assets attributed to its Class B shares.
Because the Class B shares bear the additional distribution fee, their
dividends will be lower than the dividends of Class A shares. Class B
shares automatically convert to Class A shares, approximately eight
years after the Class B shares were purchased. The multiple class
structure could be terminated should certain Internal Revenue Service
rulings be rescinded. See the Statement of Additional Information for
more information. The Distributor may use the fees to defray the cost
of commissions and service fees paid to financial service firms which
have sold Fund shares, and to defray other expenses such as sales
literature, prospectus printing and distribution, shareholder
servicing costs and compensation to wholesalers. Should the fees
exceed the Distributor's expenses in any year, the Distributor would
realize a profit. The Plans also authorize other payments to the
Distributor and its affiliates (including the Adviser) which may be
construed to be indirect financing of sales of Fund shares.
ORGANIZATION AND HISTORY
The Trust is a Massachusetts business trust organized in 1978. The
Fund represents the entire interest in a separate portfolio of the
Trust.
The Trust is not required to hold annual shareholder meetings, but
special meetings may be called for certain purposes. You receive one
vote for each of your Fund shares. Shares of the Trust vote together
except when required by law to vote separately by fund or by class.
Shareholders owning in the aggregate ten percent of Trust shares may
call meetings to consider removal of Trustees. Under certain
circumstances, the Trust will provide information to assist
shareholders in calling such a meeting. See the Statement of
Additional Information for more information.
Investment Adviser
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Distributor
Colonial Investment Services, Inc.
One Financial Center
Boston, MA 02111-2621
Custodian
United Missouri Bank, n.a.
928 Grand Avenue
Kansas City, MO 64106
Shareholder Services and Transfer Agent
Colonial Investors Service Center, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110-2624
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624
Your financial service firm is:
Printed in U.S.A.
March 30, 1995
COLONIAL TAX-EXEMPT INSURED FUND
PROSPECTUS
Colonial Tax-Exempt Insured Fund seeks, primarily, as high a yield
exempt from federal income taxes as is possible by investing primarily
in high quality, insured tax-exempt bonds and, secondarily, reduction
of risk to principal from downward movements in the market value of
its portfolio securities during periods of generally declining bond
prices. Effective May 31, 1995, the Fund's objective will be to seek
as high a level of after-tax total return, as is consistent with
prudent risk, by pursuing current income exempt from federal income
tax and opportunities for long-term appreciation from a portfolio
primarily invested in insured municipal bonds.
For more detailed information about the Fund, call the Adviser at 1-
800-248-2828 for the March 30, 1995 Statement of Additional
Information.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
COLONIAL TRUST IV
Cross Reference Sheet
Colonial Tax-Exempt Money Market Fund
--------------------------------------
Item Number of Form N-1A Location or Caption in Prospectus
- ------------------------ ---------------------------------
Part A
1. Cover Page
2. Summary of expenses
3. The Fund's financial history
4. The Fund's investment objectives;
Organization and history; How the
Fund pursues its objectives
5. Back cover; How the Fund is
managed; Organization and
history; The Fund's investment
objectives
6. Organization and history;
Distributions and taxes; How to
buy shares
7. How to buy shares; How the Fund
values its shares; 12b-1 plans;
Back cover
8. How to sell shares; How to
exchange shares; Telephone
transactions
9. Not Applicable
March 30, 1995
COLONIAL
TAX-EXEMPT
MONEY MARKET FUND
PROSPECTUS
BEFORE YOU INVEST
Colonial Management Associates, Inc. (Adviser) and your full-service
financial adviser want you to understand both the risks and benefits
of mutual fund investing.
While mutual funds offer significant opportunities and are
professionally managed, they also carry risk including possible loss
of principal. Unlike savings accounts and certificates of deposit,
mutual funds are not insured or guaranteed by any financial
institution or government agency.
Please consult your full-service financial adviser to determine how
investing in this mutual fund may suit your unique needs, time horizon
and risk tolerance.
Contents Page
Summary of expenses
The Fund's financial history
The Fund's investment
objectives
How the Fund pursues its
objectives
How the Fund measures its
performance
How the Fund is managed
How the Fund values its
shares
Distributions and taxes
How to buy shares
How to sell shares
How to exchange shares
Telephone transactions
12b-1 plans
Organization and history
TMXX-XX
Colonial Tax-Exempt Money Market Fund (Fund), a non-diversified
portfolio of Colonial Trust IV (Trust), an open-end management
investment company, seeks current income exempt from federal income
tax, preservation of capital and liquidity.
The Fund is managed by the Adviser, an investment adviser since 1931.
This Prospectus explains concisely what you should know before
investing in the Fund. Read it carefully and retain it for future
reference. More detailed information about the Fund is in the March
30, 1995 Statement of Additional Information which has been filed with
the Securities and Exchange Commission and is obtainable free of
charge by calling the Adviser at 1-800-248-2828. The Statement of
Additional Information is incorporated by reference in (which means it
is considered to be a part of) this Prospectus.
An investment in the Fund is not insured or guaranteed by the U.S.
Government. There can be no assurance that the $1.00 net asset value
per share will be maintained.
The Fund offers two classes of shares. Class A shares are offered at
net asset value; Class B shares are offered at net asset value plus an
annual distribution fee and a declining contingent deferred sales
charge on redemptions made within six years after purchase. Class B
shares automatically convert to Class A shares after approximately
eight years. See "How to buy shares".
Class B shares of the Fund are only for temporary investment while,
for example, considering investments in Class B shares of other
Colonial funds because, unlike shares of most money market funds,
investments in the Fund's Class B shares are subject to contingent
deferred sales charges, a distribution fee and a service fee.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in the
Fund. The following tables summarize your maximum transaction costs
and annual expenses for an investment in each Class of the Fund's
shares.
Shareholder Transaction Expenses (1)(2)
Class A Class B
Maximum Contingent Deferred Sales Charge (as a % of 0.00% 5.00%(4)
offering price)(3)
(1) For accounts less than $1,000 an annual fee of $10 may be
deducted. See "How to sell shares."
(2) Redemption proceeds exceeding $5,000 sent via federal funds
wire will be subject to a $7.50 charge per transaction.
(3) Does not apply to reinvested distributions.
(4) Because of the 0.75% distribution fee applicable to Class B
shares, long-term Class B shareholders may pay more in aggregate
sales charges than the maximum sales charge permitted by the
National Association of Securities Dealers, Inc. However, because
the Fund's Class B shares automatically convert to Class A shares
after approximately 8 years, this is less likely for Class B shares
than for a class without a conversion feature.
Annual Operating Expenses (as a % of net assets)
Class A Class B
Management fee
(after expense waiver) 0.00% 0.00%
12b-1 fees 0.00 1.00
Other expenses 0.75 0.75
Total expenses 0.75%(5) 1.75%(5)
(5) The Adviser has voluntarily agreed to waive or bear certain Fund
expenses until further notice to the Fund. Absent such
agreement, the "Management fee" would have been 0.50% for each
Class and "Total expenses" would have been 1.25% for Class A and
2.25% for Class B.
Example
The following Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in each Class of shares of the Fund for
the periods specified, assuming a 5% annual return and, unless
otherwise noted, redemption at period end. The 5% return and expenses
used in this Example should not be considered indicative of actual or
expected Fund performance or expenses, both of which will vary.
Period: Class A Class B
(6)
1 year $ 8 $ 68 $ 18
3 years 24 86 56
5 years 42 116 96
10 years 93 188(7) 188(7)
Without voluntary fee reduction the amounts would be:
Period: Class A Class B
(6)
1 year $ 12 $ 72 $ 22
3 years 38 99 69
5 years 65 138 118
10 years 144 235(7) 235(7)
(6) Assumes no redemption.
(7) Class B shares convert to Class A shares after approximately
8 years; therefore, years 9 and 10 reflect Class A expenses.
THE FUND'S FINANCIAL HISTORY
The following schedule of financial highlights for a share outstanding
throughout each period, has been audited by Price Waterhouse LLP, independent
accountants. Their unqualified report is included in the Fund's 1994 Annual
Report and is incorporated by reference into the Statement of Additional
Information.
<TABLE>
<CAPTION>
CLASS A
Year Ended November 30
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of
period $1.000 $1.000 $1.000 $1.000 $1.000
Income from investment
operations:
Net investment income(a) 0.020 0.017 0.024 0.042 0.055
Less distributions declared to
shareholders:
From net investment income (0.020) (0.017) (0.024) (0.042) (0.055)
Net asset value - End of period $1.000 $1.000 $1.000 $1.000 $1.000
Total return(c)(d) 2.00% 1.73% 2.44% 4.26% 5.64%
Ratios to average net assets:
Expenses 0.60% 0.75% 0.75% 0.75% 0.75%
Fees and expenses waived
or borne by the Adviser 0.59% 0.50% 0.61% 0.53% 0.38%
Net investment income 2.05% 1.69% 2.42% 4.23% 5.50%
Net assets at end of period (000) $28,808 $18,618 $34,956 $28,355 $37,158
_________________________________
(a) Net of fees and expenses waived
or borne by the Adviser which
amounted to $0.006 $0.005 $0.006 $0.005 $0.004
</TABLE>
(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 annulized.
(f) Annualized.
(g) The Fund commenced investment operations on June 16, 1987.
<TABLE>
<CAPTION>
Class A
Year Ended November 30
1989 1988 1987(g)
<S> <C> <C> <C>
Net asset value - Beginning of
period $1.000 $1.000 $1.000
Income from investment
operations:
Net investment income(a) 0.059 0.050 0.022
Less distributions declared to
shareholders:
From net investment income (0.059) (0.050) (0.022)
Net asset value - End of period $1.000 $1.000 $1.000
Total return(c)(d) 6.11% 5.12% 2.19%
Ratios to average net assets:
Expenses 0.66% 0.39% ---
Fees and expenses waived
or borne by the Adviser 0.31% 0.49% 1.08%(f)
Net investment income 5.96% 4.95% 5.37%(f)
Net assets at end of period (000) $40,639 $53,758 $52,190
_________________________________
</TABLE>
(a) Net of fees and expenses waived
or borne by the Adviser which
amounted to $0.003 $0.005 $0.005
(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 annulized.
(f) Annulized.
(g) The Fund commenced investment operations on June 16, 1987.
<TABLE>
<CAPTION>
CLASS B
Year Ended November 30
1994 1993 1992(b)
<S> <C> <C> <C>
Net asset value - Beginning of
period $1.000 $1.000 $1.000
Income from investment
operations:
Net investment income(a) 0.010 0.009 0.007
Less distributions declared to
shareholders:
From net investment income (0.010) (0.009) (0.007)
Net asset value - End of period $1.000 $1.000 $1.000
Total return(c)(d) 1.01% 0.93% 0.68%(e)
Ratios to average net assets:
Expenses 1.60% 1.75% 1.75%(f)
Fees and expenses waived
or borne by the Adviser 0.59% 0.50% 0.79%(f)
Net investment income 1.05% 0.69% 1.42%(f)
Net assets at end of period (000) $3,867 $908 $135
_________________________________
</TABLE>
(a) Net of fees and expenses waived
or borne by the Adviser which
amounted to $0.006 $0.005 $0.003
(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 annulized.
(f) Annulized.
(g) The Fund commenced investment operations on June 16, 1987.
Further performance information is contained in the Fund's Annual Report to
shareholders, which is obtainable free of charge by calling 1-800-248-2828.
THE FUND'S INVESTMENT OBJECTIVES
The Fund seeks current income exempt from federal income tax, preservation
of capital and liquidity.
HOW THE FUND PURSUES ITS OBJECTIVES
The Fund invests primarily in high quality instruments - usually short-term
municipal obligations whose interest is exempt from federal income taxation
in the opinion of issuer's counsel - which the Adviser determines pursuant
to procedures approved by the Trustees present minimal credit risk. The
investments include high quality:
(i) tax anticipation notes
(TANs), revenue
anticipation notes (RANs),
bond anticipation notes
(BANs) and construction
loan notes (CLNs);
(ii) short-term discount notes
(tax-exempt commercial
paper);
(iii) municipal bonds; and
(iv) other tax-exempt
securities.
High quality instruments are those rated in the top two categories by
nationally recognized rating services or unrated securities considered by
the Adviser, pursuant to procedures adopted by the Trustees, to be of
comparable quality.
TANs, RANs and BANs are issued by state and local governments and public
authorities in anticipation of tax collections, revenue receipts or bond
sales, respectively. CLNs are issued primarily by housing agencies to
finance construction projects prior to a bond issue. All the Fund's
investments are U.S. dollar denominated and have remaining maturities of
397 days or less (except securities subject to repurchase agreements). The
dollar weighted average maturity of the Fund's investments will be 90 days
or less.
Fund investments may include those with floating or variable rates of
interest which permit the holders to demand payment at frequent intervals.
Not more than 20% of the Fund's total assets will be invested in municipal
obligations the interest on which is a preference item for purposes of the
federal alternative minimum tax (AMT obligations). Not more than 25% of
the Fund's total assets will be invested in industrial development bonds
based, directly or indirectly, on the credit of private entities in any one
industry or in securities of private issuers in any one industry
(governmental issuers are not considered to be part of any "industry").
The Fund may without limit acquire securities on a "when-issued" or delayed
delivery basis by contracting to purchase securities for a fixed price on a
date beyond the customary settlement time with no interest accruing until
settlement. If made through a dealer the contract is dependent on the
dealer's consummation of the sale. The dealer's failure could deprive the
Fund of an advantageous yield or price. These contracts may be considered
securities and involve risk to the extent that the value of the underlying
security changes prior to settlement. The Fund may realize short-term
profits or losses if the contracts are sold.
While the Fund's distributions of tax-exempt income are not taxable at the
federal level, a portion may be included in computing a shareholder's
federal alternative minimum tax liability. Social security benefits may be
taxed as a result of receiving tax-exempt income. If the Fund disposes of
an obligation prior to maturity, it may realize a taxable loss or gain.
Diversification. The Fund is a "non-diversified" management investment
company. Investment in a non-diversified fund may entail greater risk than
investment in a "diversified" fund.
A portion of the Fund's assets will be held in cash for day-to-day
operating purposes. The Fund's fundamental policies permit it to invest up
to 20% (reduced by the percentage of its assets invested in AMT
obligations) of its assets in cash or in taxable securities such as (i)
obligations issued or guaranteed as to interest or principal by the United
States Government or any agency or instrumentality thereof, (ii)
obligations of U.S. banks that are members of the Federal Deposit Insurance
Corporation, (iii) high quality commercial paper, (iv) high quality short-
term corporate obligations and (v) repurchase agreements. Under a
repurchase agreement, the Fund buys a security from a bank or dealer, which
is obligated to buy it back at a fixed price and time. The security is
held in a separate account at the Fund's custodian and constitutes the
Fund's collateral for the bank's or dealer's repurchase obligation.
Additional collateral may be added so that the obligation will at all times
be fully collateralized. However, if the bank or dealer defaults or enters
bankruptcy, the Fund may experience costs and delays in liquidating the
collateral and may experience a loss if it is unable to demonstrate its
right to the collateral in a bankruptcy proceeding.. The Fund may
temporarily invest for defensive purposes more than 20% of its assets in
cash or taxable obligations.
Other. The Fund may not always achieve its investment objective. The
Fund's investment objective and nonfundamental policies may be changed
without shareholder approval. The Fund will notify investors at least 30
days prior to any material change in the Fund's investment objective. If
there is a change in the investment objective, shareholders should consider
whether the Fund remains an appropriate investment in light of their
current financial position and needs. Shareholders may incur a contingent
deferred sales charge if shares are redeemed in response to a change in
objective. The Fund has a fundamental policy of investing under normal
circumstances at least 80% of its total assets in tax-exempt bonds. This
policy and the Fund's other fundamental policies listed in the Statement of
Additional Information cannot be changed without the approval of a majority
of the Fund's outstanding voting securities. Additional information
concerning certain of the securities and investment techniques described
above is contained in the Statement of Additional Information.
HOW THE FUND MEASURES ITS PERFORMANCE
Performance may be quoted in advertisements and sales literature. Each
Class's average annual total returns are calculated in accordance with the
Securities and Exchange Commission's formula and assume the reinvestment of
all distributions and the contingent deferred sales charge applicable to
the time period quoted on Class B shares. Other total returns differ from
average annual total return only in that they may relate to different time
periods, may represent aggregate rather than average annual total returns,
or may not reflect the contingent deferred sales charge.
Each Class's yield and tax-equivalent yield are calculated in accordance
with the Securities and Exchange Commission's formula for money market
funds. Each Class's performance may be compared to various indices.
Quotations from various publications may be included in sales literature
and advertisements. See "Performance Measures" in the Statement of
Additional Information.
Unlike bank deposits or other investments which pay a fixed yield for a
stated period of time, each Class's yield changes in response to
fluctuations in interest rates and Fund expenses. Therefore, past Fund
performance does not predict future performance. Yields on other
investments may be calculated differently. When comparing investments,
investors should consider the quality and maturity of the portfolio
securities involved.
HOW THE FUND IS MANAGED
The Trustees formulate the Fund's general policies, and oversee the Fund's
affairs as conducted by the Adviser.
The Adviser is a subsidiary of The Colonial Group, Inc. The Colonial
Group, Inc. is also the parent of Colonial Investment Services, Inc.
(Distributor), which serves as the distributor for the Fund's shares, and
of Colonial Investors Service Center, Inc. (Transfer Agent), which serves
as the shareholder services and transfer agent for the Fund. Liberty
Financial Companies, Inc. is considered to be the controlling person of The
Colonial Group, Inc.
The Adviser furnishes the Fund with investment management, accounting and
administrative personnel and services, office space and other equipment and
services at the Adviser's expense. For these services, the Fund paid the
Adviser 0.50% (before a fee reduction of 0.50%) of average net assets for
fiscal year 1994.
The Adviser also provides pricing and bookkeeping services to the Fund for
a monthly fee of $2,250 plus a percentage of the Fund's average net assets
over $50 million.
The Transfer Agent provides transfer agency and shareholder services to the
Fund for a fee of 0.20% annually of average net assets plus out-of-pocket
expenses.
Each of the foregoing fees is subject to any reimbursement or fee waiver to
which the Adviser may agree.
The Adviser places all orders for the purchase and sale of portfolio
securities. In selecting broker-dealers, the Adviser may consider research
and brokerage services furnished to it and its affiliates. Subject to
seeking best execution, the Adviser may consider sales of shares of the
Fund (and of certain other Colonial funds) in selecting broker-dealers for
portfolio security transactions.
HOW THE FUND VALUES ITS SHARES
Per share net asset value is calculated by dividing the total value of each
Class's net assets by its number of outstanding shares. Shares are valued
each day the New York Stock Exchange is open as of approximately 4:00 p.m.
Eastern time. Portfolio securities are valued using the "amortized cost"
method (when such cost approximates market value pursuant to procedures
adopted by the Trustees), which does not consider the effect of fluctuating
interest rates on the value of assets. The Fund intends to maintain a per
share net asset value of $1.00, but this cannot be assured.
DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code and to distribute to its shareholders virtually all
net income and any net realized gains at least annually.
The Fund generally declares distributions daily and pays them monthly.
Distributions are invested in additional shares of the same Class of the
Fund at net asset value unless the shareholder elects to receive cash. If
an investment is made by federal funds wire, dividends start accruing on
the next business day. Regardless of the shareholder's election,
distributions of $10 or less will not be paid in cash but will be invested
in additional shares of the same Class of the Fund at net asset value. To
change your election call the Transfer Agent for information. If the Fund
makes taxable distributions, they will generally be taxable whether you
receive them in cash or in additional Fund shares; you must report them as
taxable income unless you are a tax-exempt institution. Each January,
information on the amount and nature of distributions for the prior year is
sent to shareholders.
HOW TO BUY SHARES
Shares are offered continuously. Orders received in good form prior to
4:00 p.m. Eastern time (or placed with a financial service firm before such
time and transmitted by the financial service firm before the Fund
processes that day's share transactions) will be processed based on that
day's closing net asset value.
The minimum initial investment is $1,000; subsequent investments may be as
small as $50. The minimum initial investment for the Colonial Fundamatic
program is $50 and the minimum initial investment for a Colonial retirement
account is $25. Certificates will not be issued for Class B shares and
there are some limitations on the issuance of Class A certificates. The
Fund may refuse any purchase order for its shares. See the Statement of
Additional Information for more information.
Class A Shares. Class A shares are offered at net asset value. The
Distributor pays no commission on sales of Class A shares.
Class B Shares. Class B shares are offered at net asset value, without an
initial sales charge, subject to a 0.75% annual distribution fee and a
0.25% annual service fee for approximately 8 years (at which time they
convert to Class A shares not bearing a distribution or service fee), and a
contingent deferred sales charge if redeemed within 6 years after purchase.
As shown below, the amount of the contingent deferred sales charge depends
on the number of years after purchase that redemption occurs:
Years Contingent
After Deferred
Purchase Sales Charge
0-1 5.00%
1-2 4.00
2-3 3.00
3-4 3.00
4-5 2.00
5-6 1.00
More than 6 0.00
Year one ends one year after the end of the month in which the purchase was
accepted and so on. The Distributor pays financial service firms a
commission of 4.00% on Class B share purchases.
General. All contingent deferred sales charges are deducted from the
redemption, not the amount remaining in the account, and are paid to the
Distributor. Shares issued upon distribution reinvestment and amounts
representing appreciation are not subject to a contingent deferred sales
charge. The contingent deferred sales charge is imposed on redemptions
which result in the account value falling below its Base Amount (the total
dollar value of purchase payments in the account during the applicable
contingent deferred sales charge period, measured at the beginning of the
month in which the redemption is made reduced by prior redemptions on which
a continent deferred sales charge was paid and any exempt redemptions).
See the Statement of Additional Information for more information.
Which Class is more beneficial to an investor depends on the amount and
intended length of the investment. Class B shares of the Fund are only for
temporary investment while considering investments in Class B shares of
other Colonial funds. Purchases of $250,000 or more must be for Class A
shares. Consult your financial service firm.
Financial service firms receive compensation only on sales of Class B
shares. The Distributor may pay additional compensation to financial
service firms which have made or may make significant sales of Class B
shares. Contingent deferred sales charges may be reduced or eliminated for
certain persons or organizations purchasing Fund shares alone or in
combination with certain other Colonial funds. See the Statement of
Additional information for more information.
Shareholder Services. A variety of shareholder services are available.
For more information about these services or your account call 1-800-345-6611.
Some services are described in the attached account application. A
shareholder's manual explaining all available services will be provided upon
request.
HOW TO SELL SHARES
Shares may be sold on any day the New York Stock Exchange is open, either
directly to the Fund or through your financial service firm. Sale proceeds
generally are sent within seven days (usually on the next business day
after your request is received in good form). However, for shares recently
purchased by check, the Fund will send proceeds as soon as the check has
cleared (which may take up to 15 days).
Selling Shares Directly To The Fund. Send a signed letter of instruction
or stock power form to the Transfer Agent, along with any certificates for
shares to be sold. The sale price is the net asset value (less any
applicable contingent deferred sales charge) next calculated after the Fund
receives the request in proper form. Signatures must be guaranteed by a
bank, a member firm of a national stock exchange or another eligible
guarantor institution. Stock power forms are available from financial
service firms, the Transfer Agent and many banks. Additional documentation
is required for sales of shares by corporations, agents, fiduciaries,
surviving joint owners and individual retirement account holders. For
details contact:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Selling Shares Through Financial Service Firms. Financial service firms
must receive requests before 4:00 p.m. Eastern time to receive that day's
price, are responsible for furnishing all necessary documentation to the
Transfer Agent and may charge for this service.
General. The sale of shares is a taxable transaction for federal tax
purposes and may be subject to a contingent deferred sales charge. The
contingent deferred sales charge may be waived under certain circumstances.
See the Statement of Additional Information for more information. Under
unusual circumstances, the Fund may suspend repurchases or postpone payment
for up to seven days or longer, as permitted by federal securities law. In
June of any year, the Fund may deduct $10 (payable to the Transfer Agent)
from accounts valued at less than $1,000 unless the account value has
dropped below $1,000 solely as a result of share value depreciation.
Shareholders will receive 60 days' written notice to increase the account
value before the fee is deducted.
HOW TO EXCHANGE SHARES
Exchanges at net asset value may be made among shares of the same class of
shares of most other Colonial funds. Shares will continue to age without
regard to the exchange for purposes of conversion and in determining the
contingent deferred sales charge, if any, upon redemption. Carefully read
the prospectus of the fund into which the exchange will go before
submitting the request. Call 1-800-248-2828 to receive a prospectus and an
exchange authorization form. Call 1-800-422-3737 to exchange shares by
telephone. An exchange is a taxable capital transaction. The exchange
service may be changed, suspended or eliminated on 60 days' written notice.
Class A Shares. An exchange from a money market fund into a non-money
market fund will be at the applicable offering price next determined
(including sales charge), except for amounts on which an initial sales
charge was paid. Non-money market fund shares must be held for five months
before qualifying for exchange to a fund with a higher sales charge, after
which exchanges are made at the net asset value next determined.
Purchasers of $1 million or more Class A shares of other Colonial funds who
exchange their shares for Class A shares of the Fund and redeem those Fund
shares within 18 months after the original investment are subject to a
1.00% contingent deferred sales charge.
Class B Shares. Exchanges of Class B shares are not subject to the
contingent deferred sales charge. However, if shares are redeemed within
six years after the original purchase, a contingent deferred sales charge
will be assessed using the schedule of the fund in which the original
investment was made.
TELEPHONE TRANSACTIONS
All shareholders may redeem up to $50,000 of Fund shares by telephone and
may elect telephone redemption privileges for larger amounts on the account
application. All exchanges may be accomplished by telephone. See the
Statement of Additional Information for more information. The Adviser, the
Transfer Agent and the Fund will not be liable when following telephone
instructions reasonably believed to be genuine and a shareholder may suffer
a loss from unauthorized transactions. The Transfer Agent will employ
reasonable procedures to confirm that instructions communicated by
telephone are genuine. Shareholders will be required to provide their
name, address and account number. Proceeds and confirmations of telephone
transactions will be mailed or sent to the address of record. Telephone
redemptions are not available on accounts with an address change in the
preceding 60 days. All telephone transactions are recorded. Shareholders
are not obligated to transact by telephone.
12B-1 PLANS
Under the Class B 12b-1 Plan, the Fund pays the Distributor annual
distribution and service fees of 0.75% and 0.25%, respectively, of the
average net assets attributed to its Class B shares. Because the Class B
shares bear the additional fees, their dividends will be lower than the
dividends of Class A shares. Class B shares automatically convert to Class
A shares, approximately eight years after the Class B shares were
purchased. The multiple class structure could be terminated should certain
Internal Revenue Service rulings be rescinded. See the Statement of
Additional Information for more information. The Distributor uses the fees
to defray the cost of commissions and service fees paid to financial
service firms which have sold Fund shares, and to defray other expenses
such as sales literature, prospectus printing and distribution, shareholder
servicing costs and compensation to wholesalers. Should the fees exceed
the Distributor's expenses in any year, the Distributor would realize a
profit. The Plan also authorizes other payments to the Distributor and its
affiliates (including the Adviser) which may be construed to be indirect
financing of Fund share sales.
ORGANIZATION AND HISTORY
The Fund is the successor to Colonial Tax-Exempt Money Market Trust, which
was organized in 1987. The Fund represents the entire interest in a
separate portfolio of the Trust. The Trust is not required to hold annual
shareholder meetings, but special meetings may be called for certain
purposes. You receive one vote for each of your Fund shares. Shares of
the Trust vote together except when required by law to vote separately by
fund or by class. Shareholders owning in the aggregate ten percent of
Trust shares may call meetings to consider removal of Trustees. Under
certain circumstances, the Trust will provide information to assist
shareholders in calling such a meeting. See the Statement of Additional
Information for more information.
Investment Adviser
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Distributor
Colonial Investment Services, Inc.
One Financial Center
Boston, MA 02111-2621
Shareholder Services and Transfer Agent
Colonial Investors Service Center, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611
Custodian
United Missouri Bank, n.a.
928 Grand Avenue
Kansas City, MO 64106
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110-2624
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624
Your financial service firm is:
Printed in U.S.A.
March 30, 1995
COLONIAL
TAX-EXEMPT
MONEY MARKET FUND
PROSPECTUS
Colonial Tax-Exempt Money Market Fund seeks current income exempt from
federal income tax, preservation of capital and liquidity.
For more detailed information about the Fund, call the Adviser at
1-800-248-2828 for the March 30, 1995 Statement of Additional
Information.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
COLONIAL TRUST IV
Cross Reference Sheet
Colonial Utilities Fund
-----------------------
Item Number of Form N-1A Location or Caption in Prospectus
- ------------------------ ---------------------------------
Part A
1. Cover Page
2. Summary of expenses
3. The Fund's financial history
4. The Fund's investment objectives;
Organization and history; How the
Fund pursues its objectives
5. Back cover; How the Fund is
managed; Organization and
history; The Fund's investment
objectives
6. Organization and history;
Distributions and taxes; How to
buy shares
7. How to buy shares; How the Fund
values its shares; 12b-1 plans;
Back cover
8. How to sell shares; How to
exchange shares; Telephone
transactions
9. Not Applicable
March 30, 1995
COLONIAL
UTILITIES
FUND
PROSPECTUS
BEFORE YOU INVEST
Colonial Management Associates, Inc. (Adviser) and your full-service
financial adviser want you to understand both the risks and benefits
of mutual fund investing.
While mutual funds offer significant opportunities and are
professionally managed, they also carry risk including possible loss
of principal. Unlike savings accounts and certificates of deposit,
mutual funds are not insured or guaranteed by any financial
institution or government agency.
Please consult your full-service financial adviser to determine how
investing in this mutual fund may suit your unique needs, time horizon
and risk tolerance.
Colonial Utilities Fund (Fund), a diversified portfolio of Colonial
Trust IV (Trust), an open-end management investment company, seeks
primarily current income and secondarily long-term growth.
The Fund is managed by the Adviser, an investment adviser since 1931.
This Prospectus explains concisely what you should know before
investing in the Fund. Read it carefully and retain it for future
reference. More detailed information about the Fund is in the March
30, 1995 Statement of Additional Information which has been filed with
the Securities and Exchange Commission and is obtainable free of
charge by calling the Adviser at 1-800-248-2828. The Statement of
Additional Information is incorporated by reference in (which means it
is considered to be a part of) this Prospectus.
The Fund offers two classes of shares. Class A shares are offered at
net asset value plus a sales charge imposed at the time of purchase;
Class B shares are offered at net asset value plus an annual
distribution fee and a declining contingent deferred sales charge on
redemptions made within six years after purchase. Class B shares
automatically convert to Class A shares after approximately eight
years. See "How to buy shares."
Contents Page
Summary of expenses 2
The Fund's financial history 2
The Fund's investment objective 3
How the Fund pursues its objective 3
How the Fund measures its performance 3
How the Fund is managed 4
How the Fund values its shares 4
Distributions and taxes 4
How to buy shares 4
How to sell shares 5
How to exchange shares 6
Telephone transactions 6
12b-1 plans 6
Organization and history 6
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in the
Fund. The following tables summarize your maximum transaction costs
and annual expenses for an investment in each Class of the Fund's
shares.
Shareholder Transaction Expenses (1)(2)
Class A Class B
Maximum Initial Sales Charge
Imposed on a Purchase (as a % of offering
price)(3) 4.75% 0.00%(5)
Maximum Contingent
Deferred Sales Charge (as a % of offering
price)(3) 1.00%(4) 5.00%
(1) For accounts less than $1,000 an annual fee of $10 may be
deducted. See "How to sell shares."
(2) Redemption proceeds exceeding $5,000 sent via federal funds
wire will be subject to a $7.50 charge per transaction.
(3) Does not apply to reinvested distributions.
(4) Only with respect to any portion of purchases of $1 million to
$5 million redeemed within approximately 18 months after
purchase. See "How to buy shares."
(5) Because of the 0.75% distribution fee applicable to Class B
shares, long-term Class B shareholders may pay more in
aggregate sales charges than the maximum initial sales charge
permitted by the National Association of Securities Dealers,
Inc. However, because the Fund's Class B shares automatically
convert to Class A shares after approximately 8 years, this is
less likely for Class B shares than for a class without a
conversion feature.
Annual Operating Expenses (as a % of net assets)
Class A Class B
Management fee 0.64% 0.64%
12b-1 fee 0.25 1.00
Other expenses 0.34 0.34
---- ----
Total expenses 1.23% 1.98%
==== ====
Example
The following Example shows the cumulative expenses attributable to a
$1,000 investment in each class of shares of the Fund for the periods
specified, assuming a 5% annual return and, unless otherwise noted,
redemption at period end. The 5% return and the expenses used in this
Example should not be considered indicative of actual or expected Fund
performance or expenses, both of which will vary:
Class A Class B
Period: (6)
1 year $ 59 $ 70 $ 20
3 years 85 93 63
5 years 112 128 108
10 years 189 213(7) 213(7)
(6) Assumes no redemption.
(7) Class B shares convert to Class A shares after approximately 8
years; therefore, years 9 and 10 reflect Class A expenses.
THE FUND'S FINANCIAL HISTORY
The following schedule of financial highlights for a share outstanding
throughout each period has been audited by Price Waterhouse LLP,
independent accountants. Their unqualified report is included in the
Fund's 1994 Annual Report and is incorporated by reference into the
Statement of Additional Information. The schedule has been restated
to reflect the 4:1 split which occurred on February 10, 1992. The
Fund adopted the objectives of seeking current income and, to the
extent consistent with the objective, growth of income and long-term
capital appreciation on March 4, 1992. Effective February 28, 1995,
the wording of the Fund's objective was modified so that the Fund
seeks primarily current income and secondarily long-term growth. The
data presented below does not necessarily reflect results that would
have been achieved had the Fund's current objective and policies then
been in effect.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------
Year Ended November 30
---------------------------------------------------
1994 1993 1992(a) 1991(a) 1990(a)
---- ---- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of
period $13.600 $12.960 $11.440 $10.090 $11.600
Income (loss) from investment
operations:
Net investment income 0.681 0.713 0.741 0.917 0.930
Net realized and unrealized
gain (loss) on investments (1.896) 0.616 1.517 1.377 (1.472)
Total from investment
operations (1.215) 1.329 2.258 2.294 (0.542)
Less distributions declared to
shareholders:
From net investment income (0.665) (0.689) (0.727) (0.941) (0.968)
From net realized gains --- --- --- -- ---
From capital paid in --- --- (0.011)(b) (0.003)(b) ---
Total distributions declared to
shareholders (0.665) (0.689) (0.738) (0.944) (0.968)
Net asset value - End of period $11.720 $13.600 $12.960 $11.440 $10.090
Total return(c) (9.04)% 10.20% 20.21% 23.56% (4.74)%
Ratios to average net assets:
Expenses 1.23% 1.19% 1.16% 1.11% 1.17%
Net investment income 5.49% 4.92% 5.52% 8.50% 8.69%
Portfolio turnover 16% 6% 35% 1% 2%
Net assets at end of period (in millions) $373 $503 $232 $135 $162
_________________________________
</TABLE>
<TABLE>
<CAPTION>
Class A
-----------------------------------------------
Year ended November 30
-----------------------------------------------
1989(a) 1988(a) 1987(a) 1986(a) 1985(a)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of
period $10.710 $10.300 $12.560 $12.360 $11.680
Income (loss) from investment
operations:
Net investment income 0.939 0.851 0.988 1.044 1.301
Net realized and unrealized
gain (loss) on investments 0.927 0.529 (2.110) 0.402 0.762
Total from investment
operations 1.866 1.380 (1.122) 1.446 2.063
Less distributions declared to
shareholders:
From net investment income (0.932) (0.850) (0.973) (1.096) (1.248)
From net realized gains (0.044) (0.120) (0.165) (0.150) (0.135)
From capital paid in --- --- --- --- ---
Total distributions declared to
shareholders (0.976) (0.970) (1.138) (1.246) (1.383)
Net asset value - End of period $11.600 $10.710 $10.300 $12.560 $12.360
Total return(c) 17.94% 13.75% (9.84)% 12.24% 18.50%
Ratios to average net assets:
Expenses 1.12% 1.15% 1.09% 1.04% 1.02%
Net investment income 8.10% 7.94% 8.18% 8.44% 10.58%
Portfolio turnover 24% 11% 206% 255% 288%
Net assets at end of period (in millions) $141 $183 $288 $411 $281
_________________________________
</TABLE>
(a) All per share amounts have been restated to reflect the 4-for-1
stock split effective February 10, 1992.
(b) The return of capital is for book purposes only and is a result
of book-tax differences arising from the merger of Colonial Utilities
Fund (formerly Colonial Corporate Cash Trust I) and Colonial Corporate
Cash Trust II in a prior year. The 1992 amount represents a reclassifi-
cation for book purposes only relating to that merger.
(c) Total return at net asset value assuming all distributions
reinvested and no initial sales charge or contingent deferred sales
charge.
THE FUND'S FINANCIAL HISTORY(CONT'D)
<TABLE>
<CAPTION>
Class B
----------------------------------
Year ended November 30
----------------------------------
1994 1993 1992(a)
-------- ------- ---------
<S> <C> <C> <C>
Net asset value - Beginning of period $13.600 $12.960 $12.310
Income (loss) from investment operations:
Net investment income 0.587 0.612 0.296
Net realized and unrealized
gain (loss) on investments (1.896) 0.616 0.691
Total from investment
operations (1.309) 1.228 0.987
Less distributions declared to
shareholders:
From net investment income (0.571) (0.588) (0.337)
Total distributions declared to
shareholders (0.571) (0.588) (0.337)
Net asset value - End of period $11.720 $13.600 $12.960
Total return(b) (9.73)% 9.42% 6.06%(c)
Ratios to average net assets:
Expenses 1.98% 1.94% 1.91%(d)
Net investment income 4.74% 4.17% 4.77%(d)
Portfolio turnover 16% 6% 35%
Net assets at end of period (in millions) $744 $971 $156
_________________________________
</TABLE>
(a) Class B shares were initially offered on May 5, 1992. Per share
amounts reflect activity from that date.
(b) Total return at net asset value assuming all distributions
reinvested and no initial sales charge or contingent deferred sales
charge.
(c) Not annualized.
(d) Annualized.
Further performance information is contained in the Fund's Annual
Report to shareholders, which is obtainable free of charge by calling
1-800-248-2828.
THE FUND'S INVESTMENT OBJECTIVE
The Fund seeks primarily current income and secondarily long-term
growth.
HOW THE FUND PURSUES ITS OBJECTIVE
The Fund normally invests at least 65% of its total assets in common
and preferred equity securities of utility companies.
The Fund may write covered call options and purchase put options on
stocks and stock indexes to hedge. A call option gives the purchaser
the right to buy from the Fund and a put option gives the purchaser
the right to s
ell to the Fund, a specified security at the exercise
price at any time prior to the expiration of the contract. The Fund
will receive a premium from writing an option which increases its
return on the underlying security if the option expires or is closed
out at a profit. Written puts may require the Fund to pay an above
market price for the underlying security and written calls may
obligate the Fund to sell the underlying security at a below market
price. Both are exercisable at any time prior to expiration.
Utility Securities. The Fund will normally invest substantially all
of its total assets in the equity securities (preferred and common
stocks) of utility companies (including the manufacturing, production,
generation, transmission and sale of electricity, natural gas, water
or other sanitary services, telephone, telegraph, satellite, microwave
or other communication services to the public) except temporarily for
defensive purposes. The market price and dividends of securities in
the utilities industry may be adversely affected by fluctuating
economic conditions and interest rates, fuel availability and cost,
energy conservation, competition (particularly as a result of
deregulation), fluctuating prices of products and services sold by
utility companies and, while relating to utilities in general,
particularly to nuclear facilities: environmental regulations,
shortened economic life, and untimely or inadequate rate adjustments
by regulatory commissions.
The Fund may invest temporarily available cash in certificates of
deposit, bankers' acceptances, high quality commercial paper, treasury
bills and repurchase agreements. Under a repurchase agreement, is a
contract under which the Fund buys a security from a bank or dealer,
which is obligated to buy it back at a fixed price and time. The
security is held in a separate account at the Fund's custodian and
constitutes the Fund's collateral for the bank's or dealer's
repurchase obligation. Additional collateral may be added so that the
obligation will at all times be fully collateralized. However, if the
bank or dealer defaults or enters bankruptcy, the Fund may experience
costs and delays in liquidating the collateral and may experience a
loss if it is unable to demonstrate its right to the collateral in a
bankruptcy proceeding. Not more than 10% of the Fund's net assets will
be invested in repurchase agreements maturing in more than 7 days and
other illiquid assets.
In periods of unusual market conditions, when the Adviser considers it
appropriate, the Fund may invest all or any part of the Fund's assets
in cash, U.S. government securities, high quality commercial paper,
bankers' acceptances, repurchase agreements and certificates of
deposit.
Other. The Fund may not always achieve its investment objective. The
Fund's investment objective and non-fundamental policies may be
changed without shareholder approval. The Fund will notify investors
at least 30 days prior to any material change in the Fund's investment
objective. If there is a change in the investment objective,
shareholders should consider whether the Fund remains an appropriate
investment in light of their current financial position and needs.
Shareholders may incur a contingent deferred sales charge in response
to a change in objective. The Fund's fundamental policies listed in
the Statement of Additional Information cannot be changed without the
approval of a majority of the Fund's outstanding voting securities.
Additional information concerning certain of the securities and
investment techniques described above is contained in the Statement of
Additional Information.
HOW THE FUND MEASURES ITS PERFORMANCE
Performance may be quoted in sales literature and advertisements.
Each Class's average annual total returns are calculated in accordance
with the Securities and Exchange Commission's formula, and assume the
reinvestment of all distributions, the maximum initial sales charge of
4.75% on Class A shares and the contingent deferred sales charge
applicable to the time period quoted for Class B shares. Other total
returns differ from average annual total return only in that they may
relate to different time periods, may represent aggregate as opposed
to average annual total return, and may not reflect the initial or
contingent deferred sales charge.
Each Class's yield, which differs from total return because it does
not consider change in net asset value, is calculated in accordance
with the Securities and Exchange Commission's formula. Each Class's
distribution rate is calculated by dividing the most recent month's
distributions, annualized, by the maximum offering price of that Class
at the end of the month. Each Class's performance may be compared to
various indices. Quotations from various publications may be included
in sales literature and advertisements. See "Performance Measures" in
the Statement of Additional Information for more information.
All performance information is historical and does not predict future
results.
HOW THE FUND IS MANAGED
The Trustees formulate the Fund's general policies and oversee the
Fund's affairs as conducted by the Adviser.
The Adviser is a subsidiary of The Colonial Group, Inc. The Colonial
Group, Inc. is also the parent of Colonial Investment Services
Division, Inc. (Distributor), which serves as the distributor for the
Fund's shares, and of Colonial Investors Service Center, Inc.
(Transfer Agent), which serves as the shareholder services and
transfer agent for the Fund. Liberty Financial Companies, Inc. is
considered to be the controlling person of The Colonial Group, Inc.
The Adviser furnishes the Fund with investment management, accounting
and administrative personnel and services, office space and other
equipment and services at the Adviser's expense. For these services,
the Fund paid the Adviser 0.64% of the Fund's average net assets for
fiscal year 1994.
John E. Lennon, Vice President of the Adviser, has managed the Fund
since 1984 and various Colonial tax-exempt funds since 1982.
The Adviser also provides pricing and bookkeeping services to the Fund
for a monthly fee of $2,250 plus a percentage of the Fund's average
net assets over $50 million.
The Transfer Agent provides transfer agency and shareholder services
to the Fund for a fee of 0.20% annually of average net assets plus out-
of-pocket expenses.
Each of the foregoing fees is subject to any reimbursement or fee
waiver to which the Adviser may agree.
The Adviser places all orders for the purchase and sale of portfolio
securities. In selecting broker-dealers, the Adviser may consider
research and brokerage services furnished to it and its affiliates.
Subject to seeking best execution, the Adviser may consider sales of
shares of the Fund (and of certain other Colonial funds) in selecting
broker-dealers for security portfolio transactions.
HOW THE FUND VALUES ITS SHARES
Per share net asset value is calculated by dividing the total value of
each Class's net assets by its number of outstanding shares. Shares
are valued each day the New York Stock Exchange is open as of
approximately 4:00 p.m. Eastern time. Portfolio securities for which
market quotations are readily available are valued at market. Short-
term investments maturing in 60 days or less are valued at amortized
cost when it is determined, pursuant to procedures adopted by the
Trustees, that such cost approximates market value. All other
securities and assets are valued at fair value following procedures
adopted by the Trustees.
DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code and to distribute to shareholders virtually
all net income and any net realized gain at least annually.
The Fund generally declares distributions daily and pays them monthly.
Distributions are invested in additional shares of the same Class of
the Fund at net asset value unless the shareholder elects to receive
cash. Regardless of the shareholder's election, distributions of $10
or less will not be paid in cash but will be invested in additional
shares of the same Class of the Fund at the net asset value. To
change your election, call the Transfer Agent for information. Whether
you receive distributions in cash or in additional Fund shares, you
must report them as taxable income unless you are a tax-exempt
institution. If you buy shares shortly before a distribution is
declared, the distribution will be taxable although it is in effect a
partial return of the amount invested. Each January, information on
the amount and nature of the Fund's distributions for the prior year
is sent to shareholders.
Distributions will qualify for the federal corporate dividends-
received deduction only to the extent of aggregate qualifying
dividends received by the Fund. Corporate shareholders must hold
shares of the Fund for 46 days to be eligible for the deduction. The
amount of dividends qualifying for the deduction will be reduced if a
shareholder has indebtedness "directly attributable" to the shares
owned. A corporate shareholder's distributions from the Fund are
includable in its adjusted current earnings for purposes of computing
the corporate alternative minimum tax (AMT) and may result in AMT
liability.
HOW TO BUY SHARES
Shares are offered continuously. Orders received in good form prior
to 4:00 p.m. Eastern time (or placed with a financial service firm
before such time and transmitted by the financial service firm before
that day's share transactions are processed) will be processed based
on that day's closing net asset value, plus any applicable initial
sales charge.
The minimum initial investment is $1,000; subsequent investments may
be as small as $50. The minimum initial investment for the Colonial
Fundamatic program is $50. Certificates will not be issued for Class
B shares and there are some limitations on the issuance of Class A
certificates. The Fund may refuse any purchase order for its shares.
See the Statement of Additional Information for more information.
Class A Shares. Class A shares are offered at net asset value plus an
initial or a contingent deferred sales charge as follows:
Initial Sales Charge
Retained
by
Financial
Service
Firm as
as % of % of
Amount Offering Offering
Amount Purchased Invested Price Price
Less than $50,000 4.99% 4.75% 4.25%
$50,000 to less than $100,000 4.71% 4.50% 4.00%
$100,000 to less than $250,000 3.90% 3.50% 3.00%
$250,000 to less than $500,000 3.09% 2.50% 2.00%
$500,000 to less than $1,000,000 2.04% 2.00% 1.75%
$1,000,000 or more 0.00% 0.00% 0.00%
On purchases of $1 million or more, the Distributor pays the financial
service firm a cumulative commission as follows:
Amount Purchased Commission
First $3,000,000 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25% (1)
(1) Paid over 12 months but only to the extent the shares remain
outstanding.
Purchases of $1 million to $5 million are subject to a 1.00%
contingent deferred sales charge payable to the Distributor on
redemptions within 18 months from the first day of the month following
the purchase. The contingent deferred sales charge does not apply to
the excess of any purchases over $5 million.
Class A shares bear a 0.25% annual service fee.
Class B Shares. Class B shares are offered at net asset value,
without an initial sales charge, subject to a 0.75% annual
distribution fee for approximately 8 years (at which time they convert
to Class A shares not bearing a distribution fee), a 0.25% annual
service fee and a contingent deferred sales charge if redeemed within
6 years after purchase. As shown below, the amount of the contingent
deferred sales charge depends on the number of years after purchase
that the redemption occurs:
Years Contingent Deferred
After Purchase Sales Charge
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
More than 6 0.00%
Year one ends one year after the end of the month in which the
purchase was accepted and so on.
The Distributor pays financial service firms a commission of 4.00% on
Class B share purchases.
General. All contingent deferred sales charges are deducted from the
redemption, not the amount remaining in the account, and are paid to
the Distributor. Shares issued upon distribution reinvestment and
amounts representing appreciation are not subject to a contingent
deferred sales charge. The contingent deferred sales charge is
imposed on redemptions which result in the account value falling below
its Base Amount (the total dollar value of purchase payments in the
account reduced by prior redemptions on which a contingent deferred
sales charge was paid and any exempt redemptions). See the Statement
of Additional Information for more information.
Which Class is more beneficial to an investor depends on the amount
and intended length of the investment. Large investments, qualifying
for a reduced Class A sales charge, avoid the distribution fee.
Investments in Class B shares have 100% of the purchase invested
immediately. Purchases of $250,000 or more must be for Class A
shares. Consult your financial service firm.
Financial service firms may receive different compensation rates for
selling different classes of shares. The Distributor may pay
additional compensation to financial service firms which have made or
may make significant sales.
Initial or contingent deferred sales charges may be reduced or
eliminated for certain persons or organizations purchasing Fund shares
alone or in combination with certain other Colonial funds. See the
Statement of Additional Information for more information.
Shareholder Services. A variety of shareholder services are
available. For more information about these services or your account,
call 1-800-345-6611. Some services are described in the attached account
application. A shareholder's manual explaining all available services
will be provided upon request.
HOW TO SELL SHARES
Shares may be sold on any day the New York Stock Exchange is open,
either directly to the Fund or through your financial service firm.
Sale proceeds generally are sent within seven days (usually on the
next business day after your request is received in good form).
However, for shares recently purchased by check, the Fund will send
proceeds as soon as the check has cleared (which may take up to 15
days).
Selling Shares Directly To The Fund. Send a signed letter of
instruction or stock power form to the Transfer Agent, along with any
certificates for shares to be sold. The sale price you will receive is
the net asset value (less any applicable contingent deferred sales
charge) next calculated after the Fund receives the request in proper
form. Signatures must be guaranteed by a bank, a member firm of a
national stock exchange or another eligible guarantor institution.
Stock power forms are available from financial service firms, the
Transfer Agent and many banks. Additional documentation is required
for sales by corporations, agents, fiduciaries, surviving joint
owners and individual retirement account holders. For details
contact:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Selling Shares Through Financial Service Firms. Financial service
firms must receive requests before 4:00 p.m. Eastern time to receive
that day's price, are responsible for furnishing all necessary
documentation to the Transfer Agent and may charge for this service.
General. The sale of shares is a taxable transaction for federal tax
purposes and may be subject to a contingent deferred sales charge.
The contingent deferred sales charge may be waived under certain
circumstances. See the Statement of Additional Information for more
information. Under unusual circumstances, the Fund may suspend
repurchases or postpone payment for up to seven days or longer, as
permitted by federal securities law.
In June of any year, the Fund may deduct $10 (payable to the Transfer
Agent) from accounts valued at less than $1,000 unless the account
value has dropped below $1,000 solely as a result of share value
depreciation. Shareholders will receive 60 days' written notice to
increase the account value before the fee is deducted.
HOW TO EXCHANGE SHARES
Exchanges at net asset value may be made among shares of the same
class of shares of most Colonial funds. Shares will continue to age
without regard to the exchange for purposes of conversion and
determining the contingent deferred sales charge, if any, upon
redemption. Carefully read the prospectus of the fund into which the
exchange will go before submitting the request. Call 1-800-248-2828
to receive a prospectus and an exchange authorization form. Call
1-800-422-3737 to exchange shares by telephone. An exchange is a
taxable capital transaction for federal tax purposes. The exchange
service may be changed, suspended or eliminated upon 60 days' written
notice.
Class A Shares. An exchange from a money market fund into a non-money
market fund will be at the applicable offering price next determined
(including sales charge), except for amounts on which a sales charge
previously had been paid. Non-money market fund shares must be held
for five months before qualifying for exchange to a fund with a higher
sales charge, after which they and all other exchanges are made at the
net asset value next determined.
Class B Shares. Exchanges of Class B shares are not subject to the
contingent deferred sales charge. However, if shares are redeemed
within six years after the original purchase, a contingent deferred
sales charge will be assessed using the schedule of the fund in which
the original investment was made.
TELEPHONE TRANSACTIONS
All shareholders may redeem up to $50,000 by telephone, and may elect
telephone redemption privileges for larger amounts on the account
application. All exchanges may be accomplished by telephone. See the
Statement of Additional Information for more information. The
Adviser, the Transfer Agent and the Fund will not be liable when
following telephone instructions reasonably believed to be genuine and
a shareholder may suffer a loss from unauthorized transactions. The
Transfer Agent will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Shareholders will
be required to provide their name, address and account number.
Proceeds and confirmations of telephone transactions will be mailed or
sent to the address of record. Telephone redemptions are not
available on accounts with an address change in the preceding 60 days.
All telephone transactions are recorded. Shareholders are not
obligated to transact by telephone.
12B-1 PLANS
Under 12b-1 Plans, the Fund pays the Distributor an annual service fee
of 0.25% of average net assets attributed to each Class of shares.
The Fund also pays the Distributor an annual distribution fee of 0.75%
of the average net assets attributed to its Class B shares. Because
the Class B shares bear the additional distribution fee, their
dividends will be lower than the dividends of Class A shares. Class B
shares automatically convert to Class A shares, approximately eight
years after the Class B shares were purchased. The multiple class
structure could be terminated should certain Internal Revenue Service
rulings be rescinded. See the Statement of Additional Information for
more information. The Distributor uses the fees to defray the cost of
commissions and service fees paid to financial service firms which
have sold Fund shares, and to defray other expenses such as sales
literature, prospectus printing and distribution, shareholder
servicing costs and compensation to wholesalers. Should the fees
exceed the Distributor's expenses in any year, the Distributor would
realize a profit. The Plans also authorize other payments to the
Distributor and its affiliates (including the Adviser) which may be
construed to be indirect financing of sales of Fund shares.
ORGANIZATION AND HISTORY
The Fund is the successor to Colonial Corporate Cash Trust I organized
in 1981. The Fund represents an entire interest in a separate
portfolio of the Trust which is a Massachusetts business trust
organized in 1978.
The Trust is not required to hold annual shareholder meetings, but
special meetings may be called for certain purposes. You receive one
vote for each of your Fund shares. Shares of the Trust vote together
except when required by law to vote separately by fund or by class.
Shareholders owning in the aggregate ten percent of Trust shares may
call meetings to consider removal of Trustees. Under certain
circumstances, the Trust will provide information to assist
shareholders in calling such a meeting. See the Statement of
Additional Information for more information.
Investment Adviser
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Distributor
Colonial Investment Services, Inc.
One Financial Center
Boston, MA 02111-2621
Custodian
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108-2624
Shareholder Services and Transfer Agent
Colonial Investors Service Center, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110-2624
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624
Your financial service firm is:
Printed in U.S.A.
March 30, 1995
COLONIAL
UTILITIES
FUND
PROSPECTUS
Colonial Utilities Fund seeks primarily current income and secondarily
long-term growth.
For more detailed information about the Fund, call the Adviser at
1-800-248-2828 for the March 30, 1995 Statement of Additional Information.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
COLONIAL TRUST IV
Cross Reference Sheet
Colonial Intermediate Tax-Exempt Fund
Colonial Short-Term Tax-Exempt Fund
--------------------------------------
Location or Caption in Statement
Item Number of Form N-1A of Additional Information
- ------------------------ --------------------------------
Part B
10. Cover Page
11. Table of Contents
12. Not Applicable
13. Investment Objectives and
Policies of the Funds;
Fundamental Investment Policies
of the Funds; Other Investment
Policies of the Funds;
Miscellaneous Investment
Practices; Portfolio Turnover
14. Management of the Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses;
Management of the Funds
17. Fund Charges and Expenses;
Management of the Funds
18. Shareholder Liability
19. How to Buy Shares; Determination
of Net Asset Value; Suspension of
Redemptions; Investor Services
20. Taxes
21. Fund Charges and Expenses;
Management of the Funds
22. Fund Charges and Expenses;
Management of the Funds
23. Independent Accountants
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
COLONIAL SHORT-TERM TAX-EXEMPT FUND
Statement of Additional Information
March 30, 1995
This Statement of Additional Information (SAI) contains information which
may be useful to investors but which is not included in the Prospectus of
Colonial Intermediate Tax-Exempt and Colonial Short-Term Tax-Exempt Fund
(Funds). This SAI is not a prospectus and is authorized for distribution
only when accompanied or preceded by the Prospectus of the Funds dated
March 30, 1995. This SAI should be read together with the Prospectus.
Investors may obtain a free copy of the Prospectus from Colonial Investment
Services, Inc., One Financial Center, Boston, MA 02111-2621.
Part 1 of this SAI contains specific information about the Funds. Part 2
of this SAI includes information about the Colonial funds generally and
additional information about certain securities and investment techniques
described in the Funds' Prospectus.
TABLE OF CONTENTS
Part 1 Page
Definitions b
Investment Objective and Policies of the Funds b
Fundamental Investment Policies of the Funds b
Other Investment Policies of the Funds b
Special Tax Considerations c
Portfolio Turnover c
Fund Charges and Expenses c
Investment Performance e
Custodian e
Independent Accountant e
Part 2
Miscellaneous Investment Practices 1
Taxes 9
Management of the Fund 11
Determination of Net Asset Value 14
How to Buy Shares 14
Investor Services 17
Suspension of Redemptions 19
Shareholder Liability 20
Performance Measures 20
Appendix I 22
Appendix II 23
IS-16/724A-0395
Part 1
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
COLONIAL SHORT-TERM TAX-EXEMPT FUND
Statement of Additional Information
March 30, 1995
DEFINITIONS
"Trust" Colonial Trust IV
"Intermediate Fund" Colonial Intermediate Tax-Exempt Fund
or "Fund"
"Short-Term Fund" Colonial Short-Term Tax-Exempt Fund
or "Fund"
"Colonial" Colonial Management Associates, Inc., the
Fund's investment manager
"CISI" Colonial Investment Services, Inc., the
Fund's distributor
"CISC" Colonial Investors Service Center, Inc.,
the Fund's investor services and transfer
agent
INVESTMENT OBJECTIVE AND POLICIES
The Prospectus describes each Fund's investment objective and investment
policies. Part 1 of this SAI includes additional information concerning,
among other things, the fundamental investment policies of the Funds. Part
2 of this SAI contains additional information about the following
securities and investment techniques :
Short-Term Trading
Zero Coupon
Securities
Forward Commitments
Repurchase
Agreements
Options on
Securities
Futures Contracts
and Related Options
Inverse Floating
Obligations
Except as described below under "Fundamental Investment Policies of the
Funds," the Funds' investment policies are not fundamental, and the
Trustees may change the policies without shareholder approval.
FUNDAMENTAL INVESTMENT POLICIES OF THE FUNDS
The Investment Company Act of 1940 (Act) provides that a "vote of a
majority of the outstanding voting securities" means the affirmative vote
of the lesser of (1) more than 50% of the outstanding shares of the Fund,
or (2) 67% or more of the shares present at a meeting if more than 50% of
the outstanding shares are represented at the meeting in person or by
proxy. The following fundamental investment policies can not be changed
without such a vote.
Total assets and net assets are determined at current value for purposes of
compliance with investment restrictions and policies. All percentage
limitations will apply at the time of investment and are not violated
unless an excess of deficiency occurs as a result of such investment. For
the purpose of the Act diversification requirement, an issuer is the entity
whose revenues support the security.
Each Fund may:
1. Issue senior securities only through borrowing from banks for temporary
or emergency purposes up to 10% of its net assets; however, the Fund
will not purchase additional portfolio securities while borrowings
exceed 5% of net assets;
2. Invest up to 5% of its net assets in real estate as a result of owning
securities (i.e., foreclosing and collateral);
3. Purchase and sell futures contracts and related options so long as the
total initial margin and premiums on the contracts does not exceed 5%
of its total assets;
4. Underwrite securities issued by others only when disposing of portfolio
securities;
5. Make loans through lending of securities not exceeding 30% of total
assets, through the purchase of debt instruments or similar evidences
of indebtedness typically sold privately to financial institutions and
through repurchase agreements;
6. Not concentrate more than 25% of its total assets in any one industry,
or with respect to 75% of total assets purchase any security (other
than obligations of the U.S. Government and cash items including
receivables) if as a result more than 5% of its total assets would then
be invested in securities of a single issuer, or purchase voting
securities of an issuer if, as a result of such purchase the Fund would
own more than 10% of the outstanding voting shares of such issuer;
7. And will, under normal circumstances, invest at least 80% of its total
assets in tax-exempt bonds.
OTHER INVESTMENT POLICIES OF THE FUNDS
As non-fundamental investment policies which may be changed without a
shareholder vote, each Fund may not:
1. Purchase securities on margin, but it may receive short-term credit
to clear securities transactions and may make initial or maintenance
margin deposits in connection with futures transactions;
2. Have a short securities position, unless the Fund owns, or owns
rights (exercisable without payment) to acquire, an equal amount of
such securities;
3. Invest more than 15% of its net assets in illiquid assets;
4. Own voting securities of any company if the Trust knows that officers
and Trustees of the Trust or officers and directors of Colonial who
individually own more than 0.5% of such securities together own more
than 5% of such securities;
5. Invest in interests in oil, gas or other mineral exploration or
development programs, including leases;
6. Purchase any security resulting in the Fund having more than 5% of
its total assets would then be invested in securities of companies
(including predecessors) less than three years old;
7. Pledge more than 33% of its total assets;
8. Purchase any security if, as a result of such purchase, more than 10%
of its total assets would then be invested in securities which are
restricted as to disposition; and
9. Invest in warrants if, immediately after giving effect to any such
investment, the Fund's aggregate investment in warrants, valued at
the lower of cost or market, would exceed 5% of the value of the
Fund's net assets. Included within that amount, but not to exceed 2%
of the value of the Fund's net assets, may be warrants which are not
listed on the New York Stock Exchange or the American Stock Exchange.
Warrants acquired by the Fund in units or attached to securities will
be deemed to be without value.
PORTFOLIO TURNOVER
Intermediate Fund Short-Term Fund
February 1, 1993 February 1, 1993
(commencement of (commencement of
Year ended operations)through Year ended operations)
November 30, November 30, 1993 November 30, through
1994 1994 November 30, 1993
26% 5% (annualized) 16% 22% (annualized)
FUND CHARGES AND EXPENSES
Under each Funds' management contract, each Fund pays Colonial a monthly
fee based on the average net assets of the Fund, determined at the close
of each business day during the month at the annual rates of 0.55% in the
case of Intermediate Fund and 0.50% in the case of Short-Term Fund (subject
to reductions that Colonial may agree to periodically).
Recent Fees paid to Colonial, CISI and CISC (dollars in thousands)
Intermediate Fund Short-Term Fund
February 1, 1993 February 1, 1993
Year ended (commencement of Year ended (commencement of
November operation) November operation)
30, 1994 through November 30, 1994 through November
30, 1994 30, 1994
Management Fee $ 162 $ 68 $ 63 $ 17
Bookkeeping fee 27 22 27 23
Shareholder services
and transfer
agent fee 46 18 19 5
12b-1 fees:
Service fee 59 25 12 3
Distribution fee
(Class B) 83 26 N/A N/A
Fees and expenses
waived or borne
by Colonial (317) (165) (108) (64)
Brokerage Commissions (dollars in thousands)
Intermediate Fund Short-Term Fund
February 1, 1993 February 1, 1993
Year ended (commencement of Year (commencement of
November operations) ended operations)
30, 1994 through November November through November
30, 1994 30, 1994 30, 1994
Total commissions $ 662 $0 $0 $0
Directed transactions(a) 0 0 0 0
Commissions on directed
transactions 0 0 0 0
(a) See "Management of the Funds-Portfolio Transactions-Brokerage and
Research Services" in Part 2 of this SAI.
Trustees and Trustees Fees
For the calendar year ended December 31, 1994, the Trustees received the
following compensation for serving as Trustees:
Pension or
Aggregate Aggregate Retirement Estimate Total
Compensati Compensati Benefits d Annual Compensa-
on on Accrued As Benefits tion
Trustee From From Part of Upon From Fund
Interme- Short-Term Fund Retirement and Fund
diate Fund Fund Expense nt Complex(d)
Tom Bleasdale $1,107(b) $1,036(c) $0 $0 $101,000
Lora S. Collins 1,044 974 0 0 95,000
William D. Ireland,
Jr. 1,205 1,126 0 0 110,000
William E. Mayer 987 921 0 0 89,752
John A. McNeice,
Jr. 0 0 0 0 0
James L. Moody,
Jr. 1,209 1,129 0 0 109,000
John J. Neuhauser 1,042 974 0 0 95,000
George L. Shinn 1,229 1,147 0 0 112,000
Robert L. Sullivan 1,162 1,085 0 0 104,561
Sinclair Weeks, Jr. 1,273 1,186 0 0 116,000
(b) Includes $536 as deferred compensation.
(c) Includes $499 as deferred compensation.
(d) The Colonial Funds Complex consists of 31 open-end and 5 closed-end
management investment company portfolios.
The following table sets forth the amount of compensation paid to Messrs.
Birnbaum, Grinnell and Lowry in their capacities as Trustees of the Liberty
All-Star Equity Fund, The Charles Allmon Trust, Inc., Liberty Financial
Trust and LFC Utilities Trust (together, Liberty Funds) for service during
the calendar year ended December 31, 1994:
Aggregate Pension or
Compensa- Retirement Estimated Total
tion Benefits Annual Compensation
From Fund Accrued As Benefits From Liberty
for the Part of Upon Funds for the
Trustee fiscal year Fund Retirement calendar year
ended Expense ended 12/31/94(e)
11/30/94
Robert J. Birnbaum $0 $0 $0 $ 0
James E. Grinnell 0 0 0 31,032
Richard W. Lowry 0 0 0 31,282
(e) The Liberty Funds consists of 5 open-end and 2 closed-end
management investment company portfolios, each of which is advised
by Stein Roe & Farnham Incorporated, an indirect wholly-owned
subsidiary of Liberty Financial Companies, Inc., which in turn is
an indirect subsidiary of Liberty Mutual Insurance Company.
Ownership of the Fund
At February 28, 1995, the officers and Trustees of the Trust owned less
than 1% of the then outstanding shares of the Fund.
At February 28, 1995, the following shareholders owned 5% or more of the
Funds' outstanding shares:
Intermediate Fund:
Class B shares: Merrill Lynch, Pierce, Fenner & Smith, Inc. Attn: Book
Entry, Mutual Funds Operations, 4800 Deer Lake Drive East, 3rd Floor,
Jacksonville, FL 32216, owned 11.30%.
Short-Term Fund:
Class A shares; Colonial Management Associates, Inc., Attn: Jane Salloway,
Controller, One Financial Center, Boston, MA 02111, owned 53.95%; Louis
Betrand, 406 N. Cunningham, Rayne, LA 70578-6514, owned 5.88%; Oveta Culp
Hobby Trust, U/A DTD 1/3/63, U/W WP Hobby Trust, 2131 San Felipe, Houston
TX 77019-5626, owned 8.59%.
At February 28, 1995 there were 401 Class A and 415 shareholders Class B of
the Intermediate Fund and 136 shareholders of Class A of the Short-Term Fund.
Sales Charges (dollars in thousands)
Intermediate Fund Short-Term Fund
Class A Class A
February 1,
1993
(commencement February 1,
of 1993
Year investment Year (commencement
ended operations) ended of investment
November through November operations)
30, 1994 November 30, 30, through
1994 1994 November 30,
1994
Aggregate initial
sales charges
on Fund share sales $ 74 $ 179 $ 12 $22
Initial sales charges
retained by CISI 4 12 2 2
Intermediate Fund
Class B
February 1, 1993
(commencement of
Year ended operations) through
November 30, November 30, 1993
1994
Aggregate contingent deferred
sales charges (CDSC) on Fund
redemptions retaind by CISI $30 $9
12b-1 Plans, CDSCs and Conversion of Shares
The Intermediate Fund offers two classes of shares - Class A and Class B.
The Short-Term Fund currently offers only one class of shares. Each Fund
may in the future offer other classes of shares. The Trustees have
approved 12b-1 plans pursuant to Rule 12b-1 under the Act. Under the
Plans, the Short-Term Fund pays CISI a service fee at an annual rate of
0.10% of average net assets attributed to its Class A shares and the
Intermediate Fund pays CISI a service fee at an annual rate of 0.20% of
average net assets attributed to each Class of shares. The Intermediate
Fund also pays CISI a distribution fee at an annual rate of 0.65% of
average net assets attributed to Class B shares. CISI may use the entire
amount of such fees to defray the costs of commissions and service fees
paid to financial service firms (FSFs) and for certain other purposes.
Since the distribution and service fees are payable regardless of the
amount of CISI's expenses, CISI may in some cases realize a profit from the
fees.
The Plans authorize any other payments by each Fund to CISI and its
affiliates (including Colonial) to the extent that such payments might be
construed to be indirect financing of the distribution of each Fund's
shares.
The Trustees believe the Plans could be a significant factor in the growth
and retention of Fund assets resulting in a more advantageous expense ratio
and increased investment flexibility which could benefit each class of Fund
shareholders. The Plans will continue in effect from year to year so long
as continuance is specifically approved at least annually by a vote of the
Trustees, including the Trustees who are not interested persons of the
Trust and have no direct or indirect financial interest in the operation of
the Plans or in any agreements related to the Plans (Independent Trustees),
cast in person at a meeting called for the purpose of voting on the Plans.
The Plans may not be amended to increase the fee materially without
approval by vote of a majority of the outstanding voting securities of the
relevant class of shares and all material amendments of the Plans must be
approved by the Trustees in the manner provided in the foregoing sentence.
The Plans may be terminated at any time by vote of a majority of the
independent Trustees or by vote of a majority of the outstanding voting
securities of the relevant class of shares. The continuance of the Plans
will only be effective if the selection and nomination of the Trustees who
are non-interested Trustees is effected by such non-interested Trustees.
Class A shares are offered at net asset value plus varying sales charges
which may include a CDSC. Class B shares are offered at net asset value
subject to a CDSC if redeemed within four years after purchase. The CDSCs
are described in the Prospectus.
No CDSC will be imposed on an amount which represents an increase in the
value of the shareholder's account resulting from capital appreciation
above the amount paid for the shares. In determining the applicability and
rate of any CDSC, it will be assumed that a redemption is made first of
shares representing capital appreciation, next of shares representing
reinvestment of distributions and finally of other shares held by the
shareholder for the longest period of time.
Eight years after the end of the month in which a Class B share is
purchased, such share and a pro rata portion of any shares issued on the
reinvestment of distributions will be automatically converted into Class A
shares having an equal value, which are not subject to the distribution
fee.
Sales-related expenses (dollars in thousands) of CISI relating to the Funds
for the fiscal year ended November 30, 1994, were:
Intermediate Fund Short-Term
Fund
Class A Class B Class A
shares shares shares
Fees to FSFs $ 22 $197 $ 60
Cost of sales material
relating to the Funds 12 24 62
Allocated travel,
entertainment and
other promotional 16 30 116
INVESTMENT PERFORMANCE
The Funds' yields for the month ended November 30, 1994 were:
Intermediate Fund
Class A Class B
-------------------------------- --------------------------------
Yield Tax- Adjusted Yield Tax- Adjusted
Equivalent Yield Equivalent Yield
Yield Yield
5.36% 8.87% 4.46% 4.89% 8.10% 3.96%
Short-Term Fund
Class A
--------------------------------
Yield Tax- Adjusted
Equivalent Yield
Yield
3.35% 5.55% 2.31%
The Funds' average annual total returns at November 30, 1994, were:
Intermediate Fund Short-Term Fund
Class A Class A
February 1, February 1,
1993 1993
(commencement (commencement
of investment of investment
operations) operations)
1 Year through 1 Year through
November 30, November 30,
1994 1994
With sales charge of
of 3.25% (6.20)% 0.80% 0.47% 1.78%
Without sales charge (3.05)% 2.63% 1.48% 2.34%
Intermediate Fund
Class B
February 1, 1993
(commencement of
operations)
through November
1 Year 30, 1993
With CDSC of 4% (7.38)% 0.41%
Without CDSC (3.68)% 1.97%
The Funds' rates at November 30, 1994, based on the most recent month's
distributions, annualized, and the maximum offering price (net asset value
for Class B shares of the Intermediate Fund) at the end of the month, were:
Class A Class B
Intermediate Fund 5.33% 4.66%
Short-Term Fund 3.15% N/A
See Part 2 of this SAI, "Performance Measures," for how calculations are
made.
CUSTODIAN
United Missouri Bank, n.a. is the Funds' custodian. The custodian is
responsible for safeguarding each Fund's cash and securities, receiving and
delivering securities and collecting each Fund's interest and dividends.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP are the Funds' independent accountants providing audit
and tax return preparation services and assistance and consultation in
connection with the review of various SEC filings. The financial
statements incorporated by reference in this SAI have been so incorporated,
and the schedules of financial highlights included in the Prospectus have
been so included, in reliance upon the report of Price Waterhouse LLP given
on the authority of said firm as experts in accounting and auditing.
The financial statements and Report of Independent Accountants appearing on
pages 4 through 19 of the Funds' November 30, 1994 Annual Report, are
incorporated in this SAI by reference.
<PAGE>
CITEF INVESTMENT PORTFOLIO (in thousands) NOVEMBER 30, 1994
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 92.5% PAR VALUE
- ----------------------------------------------------------------
<S> <C> <C>
EDUCATION - 7.8%
CA State Public Works,
Various Projects University of
California, Series 1993 B,
5.100% 06/01/04(a) . . . $ 500 $ 438
CT State,
Higher Education Supplemental Loan,
Series 1993-A,
5.375% 11/15/03 . . . . 390 356
MA New England Educational Loan Marketing
Corp. Student Loan, Series 1985-A,
5.800% 03/01/02. . . . . 500 487
MD University Systems Auxiliary Facilities
Tuition Revenue Bonds, Series 1993-A,
4.625% 04/01/01. . . . . 170 156
ME Health and Higher Educational
Facilities Authority, Series 1993-D,
5.100% 07/01/04(a) . . . 500 439
NY New York Dormitory Authority
State University of New York,
Series 1989-B,
7.100% 05/15/01. . . . . 100 104
SC State Education Assistance Authority
Student Loan Revenue Bonds, Series 1991,
6.200% 09/01/99. . . . . 50 50
TX Brazos
Higher Education Authority, Inc.,
Student Loan, Series 1992-A,
6.600% 03/01/00. . . . . 380 380
------
2,410
- ----------------------------------------------------------------
ELECTRIC - 10.3%
GA Municipal Electric Authority
General Power, Series 1993-C,
5.250% 01/01/04. . . . . 500 451
IL Chicago Public Commerce Building
Series 1993-A,
5.250% 12/01/03(a) . . . 500 458
NC Municipal Power Agency Number 1
Catawba Revenue Bonds, Series 1993,
4.900% 01/01/03. . . . . 200 182
OH Municipal Electric Generation Agency
Beneficial Interest Certificates,
Series 1993,
5.000% 02/15/02. . . . . 500 469
SC Piedmont Municipal Power Agency,
Electric Revenue, Series 1991-A,
6.000% 01/01/02. . . . . 1,500 1,498
WA Grant County Public Utilities,
District Number 002, Electric System,
Series 1993-E,
5.300% 01/01/03. . . . . 50 47
WA Snohomish County Washington
Public Utilities Generation System Revenue
Bonds, District Number 001, Series 1993,
5.250% 01/01/02. . . . . 80 76
------
3,181
- ----------------------------------------------------------------
GENERAL OBLIGATIONS - 28.8%
AK Anchorage,
General Obligation, Series 1993-B,
5.000% 08/01/05(a) . . . 500 447
AZ Glendale,
7.000% 07/01/95. . . . . 450 457
AZ Phoenix, General Obligation,
6.125% 07/01/03. . . . . 500 502
CT Development Authority
Government Obligation,
Series 1993-A,
4.800% 11/15/03. . . . . 400 355
DC District of Columbia:
Series 1993-A,
5.625% 06/01/02. . . . . 500 467
Series 1993-D,
4.700% 12/01/99(a) . . . 500 473
IL Cook County High School, District
Number 205, Thornton Township,
Series 1993,
4.900% 12/01/00(a) . . . 300 284
IL Joliet,
General Obligation,
Series 1993-A,
5.300% 01/01/02. . . . . 65 62
IN Pike Township Industrial School Building
First Mortgage Bonds, Series 1992-A,
5.500% 02/01/97. . . . . 45 45
LA State, General Obligation,
Series 1993-A,
5.300% 08/01/04. . . . . 145 135
MA Haverhill,
General Obligation, Municipal Purpose
Loan of 1992, Series A,
5.900% 06/15/02. . . . . 200 197
MA State, General Obligation:
4.800% 08/01/03. . . . . 500 449
Series 1993-A,
4.625% 02/01/01. . . . . 200 181
NJ Ocean County General Improvement,
Series 1991-A,
6.250% 10/01/02. . . . . 1,000 1,021
</TABLE>
See notes to investment portfolio.
4
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ----------------------------------------------------------------
<S> <C> <C>
GENERAL OBLIGATIONS - CONT.
NJ State, General Obligation,
Series D,
(b) 02/15/04. . . . . $ 90 $ 51
NY General Obligation Bonds,
Fiscal 1993-A,
6.250% 08/01/03. . . . . 50 48
NY New York, Series H,
5.700% 08/01/03. . . . . 1,000 920
OH Big Walnut Local School District
Delaware County, Series 1993,
5.200% 06/01/02(a) . . . 585 553
OH State Public Facilities
Higher Education,
5.750% 11/01/04. . . . . 500 486
TX State, Series A,
5.800% 10/01/04. . . . . 1,000 969
WA Snohomish County Washington School
District, Number 001, Series 1993,
5.200% 12/01/02. . . . . 300 280
WI Racine, General Obligation,
District Number 8:
5.400% 12/01/03. . . . . 375 346
Series 1993-A,
5.200% 12/01/02. . . . . 200 185
------
8,913
- ----------------------------------------------------------------
HOSPITALS & HEALTH CARE - 10.9%
AL East Health Care Authority,
Health Care Facilities and Tax
Anticipation, Series 1993,
5.625% 09/01/04. . . . . 50 48
CA San Bernardino County Certificate
of Participation, Medical Center
Financing, Series 1994,
6.000% 08/01/09. . . . . 500 430
HI State Department Budget and Finance
Special Purpose Mortgage,
Kapiolani Health Care System,
Series 1993,
5.500% 07/01/01. . . . . 110 104
MA Health and Educational Facilities,
Falmouth Hospital, Series C:
5.100% 07/01/02. . . . . 100 95
5.200% 07/01/03. . . . . 100 94
Metropolitan West Health Inc.,
Series C,
6.000% 11/15/04. . . . . 200 196
North Shore Medical Center Inc.,
Series A,
5.300% 07/01/06(a) . . . 1,000 882
MI Dickinson County Memorial Hospital,
7.625% 11/01/05. . . . . 300 296
MN Brainerd Health Care Facilities,
St. Joseph Medical Center, Series 1993-D,
5.300% 02/15/02. . . . . 50 47
NJ Health Care Facilities Financing
Authority,
5.800% 07/01/97. . . . . 100 98
OH Clermont County Hospital Facilities
Mercy Health System,
Series 1993-B,
4.850% 09/01/00(a) . . . 500 472
OH Franklin County Hospital,
Riverside United Methodist Hospital,
Series 1993-A,
5.300% 05/15/02. . . . . 300 281
OH Green Springs Health Care
Facilities, St. Francis Health Care
Center, Series A,
7.000% 05/15/04. . . . . 100 98
PA Philadelphia Hospitals and Higher
Educational Facilities, Temple
University Hospital, Series 1993,
5.750% 11/15/99. . . . . 100 96
TX Health Facilities Development
Corp. Hospital, All Saints
Episcopal Hospitals, Series 1993-A,
5.800% 08/15/04. . . . . 80 77
TX Tarrant County Health Facilities
Development Corp. Hospital, Fort
Worth Osteopathic Hospital, Series 1993,
5.800% 05/15/04. . . . . 50 49
------
3,363
- ----------------------------------------------------------------
HOUSING - 4.9%
CT State Housing Finance Authority,
Series 1993-B,
5.200% 05/15/02. . . . . 75 70
MA State Housing Finance Agency,
Housing Project,
Series 1993-A:
5.150% 04/01/01. . . . . 65 62
5.150% 10/01/01. . . . . 500 471
Residential Development Bonds,
Series 1992-C,
6.350% 05/15/03. . . . . 200 198
MI State Housing Development Authority,
Rental Housing, Series 1992-A,
6.200% 04/01/03. . . . . 165 163
</TABLE>
See notes to investment portfolio.
5
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ----------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
NH State Housing Finance Authority,
Single Family Mortgage, Series 1990-A,
6.850% 07/01/98. . . . . $ 165 $ 168
NJ State Housing and Mortgage Finance
Agency,
6.500% 05/01/03. . . . . 85 85
RI Housing and Mortgage Finance
Corp., Homeownership
Opportunity, Series 6-B:
6.500% 04/01/03. . . . . 100 98
6.500% 10/01/03. . . . . 200 196
------
1,511
- ----------------------------------------------------------------
NURSING HOMES - 0.4%
KY Jefferson County Health Facilities
Beverly Enterprises, Inc., Series 1985-B,
9.750% 08/01/07. . . . . 100 108
- ----------------------------------------------------------------
POLLUTION - 1.8%
IN Bond Bank Special Program,
Series 1993-B,
5.500% 02/01/01. . . . . 500 471
OH Lake County Economic Development
Authority, North Madison Properties,
8.069% 09/01/01. . . . . 100 97
------
568
- ----------------------------------------------------------------
PUBLIC FACILITY & IMPROVEMENT - 13.8%
FL Homestead Special Insurance Assessment
Hurricane Andrew Covered Claim Assisted
Program, Series 1993:
4.900% 09/01/00. . . . . 65 62
5.125% 09/01/02. . . . . 600 567
KS State Development Authority
Lease Juvenile Detention Facility
Project, Series 1992-H,
5.750%0 06/01/02. . . . . 60 59
KY State Property and Building Commission,
Project Number 55,
4.700% 09/01/04. . . . . 750 662
LA Baton Rouge Sales and Use Tax,
Series 1992-A,
6.000% 08/01/03. . . . . 50 50
LA Bossier City
Public Improvement Sales & Use Tax,
Series ST-1992,
5.750% 11/01/01. . . . . 100 99
LA State Correctional Facilities
Corp. Lease, Series 1993,
5.400% 12/15/01(a) . . . 65 63
LA Sulphur Public Import Sales and Use
Tax, Series 1993-ST,
5.650% 04/01/04. . . . . 50 48
MA State Industrial Finance Agency
Resource Recovery, Refusetech,
Series 1993-A,
5.350% 07/01/00. . . . . 100 97
OH State Building Authority,
5.750% 10/01/05. . . . . 750 713
PA Philadelphia Municipal Authority,
Lease Revenue, Series A,
4.950% 11/15/02. . . . . 500 457
SC Rock Hill Tax Increment Revenue
Manchester Redevelopment Project,
Series 1992-B,
5.500% 05/01/03. . . . . 450 433
VA State Public Building Authority
5.625% 08/01/02. . . . . 1,000 973
------
4,283
- ----------------------------------------------------------------
REDEVELOPMENT AGENCIES & TAX ALLOCATION - 1.7%
FL Lake County Resources Industrial
Development, Recovery Group,
Series 1993-A,
5.400% 10/01/03. . . . . 500 444
IA Finance Authority Economic Development:
6.000% 12/01/95. . . . . 40 40
8.000% 12/01/04. . . . . 50 50
------
534
- ----------------------------------------------------------------
TRANSPORTATION - 5.3%
AZ Tucson Airport Authority Inc.
Series 1993,
5.300% 06/01/03. . . . . 425 400
CO Denver City & County Airport
Airport System, Series 1992-C,
6.250% 11/15/00. . . . . 50 46
FL Seminole County Local Option Gas Tax,
Series 1993,
4.750% 10/01/00. . . . . 175 164
KY State Turnpike Authority Economic
Development Revitalization Projects
Series 1992,
5.500% 01/01/01. . . . . 50 49
MA State Port Authority,
Series 1993-B,
5.300% 07/01/04. . . . . 300 277
NV Clark County Highway,
5.700% 07/01/03(a) . . . 500 479
NV Washoe County Airport Authority System,
Series 1993-B,
5.000% 07/01/01. . . . . 225 212
------
1,627
- ----------------------------------------------------------------
See notes to investment portfolio.
6
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ----------------------------------------------------------------
<S> <C> <C>
WASTE DISPOSAL-0.9%
MA State Industrial Finance Agency,
Resource Recovery,
Series 1993-A,
5.450% 07/01/01. . . . . $ 300 $ 291
- ----------------------------------------------------------------
WATER & SEWER - 5.9%
AZ Phoenix Civic Improvement Corp.,
Waste Water Lease, Series 1993,
5.750% 07/01/04. . . . . 50 48
CT Regional Water Authority System,
Series 11th,
5.400% 08/01/02. . . . . 50 48
MA State Water Pollution Abatement Trust,
Massachusetts Water Resources Authority
Loan Program, Series 1993-A,
4.750% 02/01/02. . . . . 300 272
TX Houston Water Revenue, Series C,
5.900% 12/01/05(a) . . . 1,500 1,448
------
1,816
- ----------------------------------------------------------------
Total investments (cost $30,506)(c) 28,605
- ----------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 6.5%
- ----------------------------------------------------------------
VARIABLE RATE DEMAND NOTES(d)
CA Newport Beach Hoag Hospital,
3.550% 10/01/22. . . . . 100 100
NY New York City, General Obligation,
Series B,
3.700% 10/01/22. . . . . 700 700
NY New York City Water and Sewer,
Series G,
3.400% 06/15/24. . . . . 800 800
NY Triborough Bridge & Tunnel
Authority,
3.500% 01/01/24. . . . . 400 400
- ----------------------------------------------------------------
Total short-term obligations 2,000
- ----------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 1.0% 324
- ----------------------------------------------------------------
NET ASSETS - 100.0% $30,929
- ----------------------------------------------------------------
Notes to investment portfolio:
(a) These securities, or a portion thereof, with a total market
value of $4,774, are being used to collateralize open
futures contracts.
(b) Zero coupon bond.
(c) Cost for federal income tax purposes is the same.
(d) 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 November
30, 1994.
Short futures contracts open at November 30:
Unrealized
Par value appreciation
covered Expiration (depreciation)
Type by contracts month at 11/30/94
- ----------------------------------------------------------------
Treasury bond $1,500 December 94 $ 55
Treasury bond $1,600 March 95 $(18)
- ----------------------------------------------------------------
See notes to financial statements.
7
<PAGE>
CSTTEF INVESTMENT PORTFOLIO (IN THOUSANDS) NOVEMBER 30, 1994
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 91.9% PAR VALUE
- ----------------------------------------------------------------
<S> <C> <C>
CERTIFICATES OF PARTICIPATION - 0.3%
NY New York Certificates of Participation,
4.250% 02/01/95. . . . . $ 40 $ 40
- ----------------------------------------------------------------
EDUCATION - 19.4%
CA Los Angeles University
School District Series B,
5.000% 12/01/95(a) . . . 600 602
FL Brevard County Educational Facilities,
Florida Institute of Technology
Series 1992,
5.750% 11/01/95. . . . . 45 45
GA Private Colleges & University
Facilities, Emory University,
Series 1986,
5.600% 05/01/95. . . . . 50 50
IN Clay School Building Corp.,
First Mortgage, Series 1993,
4.000% 07/01/95. . . . . 60 60
MI Keansburg New Jersey School District,
5.800% 01/15/96. . . . . 45 46
MO Higher Education Loan Authority,
Student Loan Senior Lien Bonds,
Series 1992-A,
4.875% 02/15/96. . . . . 500 497
OH Big Walnut Local School District
Delaware County, Series 1993,
3.700% 06/01/95(b) . . . 200 199
TX Dallas Independent School District
Series 1985,
7.100% 08/15/96. . . . . 600 621
WI Green Bay Area Public School District
General Obligation, Series 1993,
3.600% 04/01/96. . . . . 555 546
------
2,666
- ----------------------------------------------------------------
ELECTRIC - 10.3%
MA Municipal Wholesale Electrical Company
Power Supply System, Series 1993-A,
3.400% 07/01/95. . . . . 150 149
NC Municipal Power Agency Number 1
Catawba Revenue Bonds, Series 1993,
3.500% 01/01/95. . . . . 600 599
NE Public Power Distribution Revenue,
Power Supply System,
Series 1993-C,
3.700% 01/01/97. . . . . 600 578
WA State Public Power Supply System
Nuclear Project Number 1,
Series 1993-A,
4.200% 07/01/96. . . . . 100 98
------
1,424
- ----------------------------------------------------------------
GENERAL OBLIGATIONS - 35.3%
AK North Slope Boro General Obligation,
Series 1990,
6.550% 06/30/95. . . . . 55 56
CT State, General Obligation,
Economic Recovery,
5.500% 06/15/96. . . . . 600 607
CT State, General Obligation,
Series 1993-B,
3.500% 09/15/95. . . . . 95 95
DC District of Columbia,
General Obligation Series 1993-A,
4.000% 06/01/95. . . . . 200 198
IL Chicago Metropolitan Reclamation
District of Greater Chicago,
General Obligation, Series 1993-A,
3.600% 12/01/95. . . . . 600 593
LA State General Obligation,
Series 1993-A,
3.750% 08/01/95. . . . . 125 124
NY General Obligation Bonds
Fiscal 1993-A,
4.600% 08/01/95. . . . . 150 150
OR Salem, General Obligation,
Water and Sewer, Series 1993-B,
3.300% 11/01/96. . . . . 400 386
PA General Obligation, Second Series,
4.700% 07/01/96. . . . . 500 498
PA Pleasant Valley School District,
General Obligations, Series 1992-A,
4.350% 09/01/95. . . . . 60 60
PA Reading General Obligation,
Second Series 1992,
3.900% 11/15/95(b) . . . 600 596
RI Newport General Obligation
Series 1993-B,
3.600% 05/15/96(b). . . . 500 491
WA Everett Ltd., Tax Levy
General Obligation, Series 1993,
3.800% 12/01/95 . . . . . 65 64
WI Milwaukee County, General Obligation
Corporate Purpose Bonds,
Series 1993-A,
4.200% 12/01/95. . . . . 160 159
WI Racine General Obligation,
Series 1993-A,
3.700% 12/01/95. . . . . 150 148
WI State General Obligation Bonds:
Series 1991-D,
5.700% 05/01/95. . . . . 45 45
Series 1994-B,
4.500% 05/01/97. . . . . 600 588
------
4,858
- ----------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
8
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ----------------------------------------------------------------
<S> <C> <C>
HOSPITALS AND HEALTH CARE - 7.0%
AL Lauderdale County & Florence Public
Hospital Board of Education, Eliza
Coffee Memorial Hospital Series 1991-A,
5.800% 07/01/95. . . . . $ 65 $ 65
CO Poudre Valley Hospital District
Hospital Revenue, Series 1993,
3.300% 12/01/95. . . . . 600 593
IL Health Facilities Authority
Hinsdale Hospital, Series 1993-A,
5.000% 11/15/95. . . . . 50 50
OH Franklin County Hospital Facilities
Riverside United Methodist Hospital
Series 1993-A,
3.600% 05/15/95. . . . . 100 100
SC Richland County Hospital Facilities
Richland Memorial Hospital,
Series 1993-A,
3.900% 06/01/96. . . . . 150 148
-------
956
- ----------------------------------------------------------------
HOUSING - 0.8%
MA State Housing Finance Agency,
Housing Project, Series 1993-A,
3.900% 04/01/95. . . . . 60 60
FL Homestead Special Insurance
Assessment, Hurricane Andrew Covered
Claim Assesment Program Series 1993,
3.850% 09/01/95. . . . . 50 50
-------
110
- ----------------------------------------------------------------
INDUSTRIAL DEVELOPMENT REVENUE - 0.4%
IA Finance Authority Economic Development
Revenue,
6.250% 12/01/96. . . . . 50 50
- ----------------------------------------------------------------
POLLUTION - 0.7%
OH State Air Quality Development,
4.250% 08/01/96. . . . . 100 98
- ----------------------------------------------------------------
PUBLIC FACILITY & IMPROVEMENT - 5.3%
IL Chicago Public Commerce Building
Series 1993-A,
3.450% 12/01/95(b) . . . 200 197
LA State Correctional Facilities
Corp. Lease, Series 1993,
4.100% 12/15/95. . . . . 60 60
ME Municipal Series 1990-A&B,
6.500% 11/01/95. . . . . 270 275
PA Philadelphia Municipal Authority,
Lease Revenue Series A,
3.400% 11/15/95. . . . . 200 198
-------
730
- ----------------------------------------------------------------
TRANSPORTATION - 4.3%
AZ Phoenix Street and Highway User,
Junior Lien Street, Series 1992,
5.450% 07/01/96. . . . . 140 140
CA Riverside County Transportation
Sales Tax Revenue, Series 1993-A,
4.100% 06/01/95. . . . . 60 60
FL Dade County Aviation
Miami International Airport
Series 1993-Y,
3.700% 10/01/95. . . . . 200 199
KY State Turnpike Authority, Economic
Development Road Revitalization Projects
Series 1993,
3.500% 07/01/95. . . . . 200 199
-------
598
- ----------------------------------------------------------------
WATER & SEWER - 8.1%
OH Clyde Waterworks,
5.600% 05/01/97(a) . . . 580 581
TX Water Development Board,
4.900% 07/15/97. . . . . 500 494
WI Milwaukee Metropolitan Sewer
Distribution, General Obligation,
Capital Purpose Bonds, Series 1985-A,
8.800% 05/01/95. . . . . 45 46
-------
1,121
- ----------------------------------------------------------------
Total investments (cost $12,834)(c) 12,651
- ----------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 15.3%
- ----------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (d)
CA Pollution Control Financing Authority
Resources Recovery Revenue:
3.600% 08/01/19. . . . . 200 200
3.650% 04/01/17. . . . . 200 200
FL Pinellas County Health Facilities
Authority,
3.650% 12/01/15. . . . . 600 600
IL Health Facilities Authority
Central Dupage Hospital,
3.600% 11/01/20. . . . . 200 200
NC Halifax County Industrial Facilities
& Pollution Control Authority,
Westmoreland Coal Co.,
3.700% 12/01/19. . . . . 600 600
WA State Health Care Facilities Authority
3.600% 01/01/18. . . . . 100 100
WY City of Green River,
3.650% 06/01/07. . . . . 200 200
- ----------------------------------------------------------------
Total short-term obligations 2,100
- ----------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - (7.2)% (988)
- ----------------------------------------------------------------
NET ASSETS - 100.0% $13,763
- ----------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
9
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
Notes to investment portfolio:
(a) This security has been purchased on a delayed delivery
basis, whereby the terms that are fixed are the purchase
price, interest rate, and the settlement date. The exact
quantity purchased may be slightly more or less than the
amount shown.
(b) These securities, or a portion thereof, are being used to
collateralize delayed delivery purchases indicated in note
(a) above.
(c) Cost for federal income tax purposes is the same.
(d) 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 November
30, 1994.
See notes to financial statements.
10
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS & LIABILITIES
November 30, 1994
(in thousands except for per share amounts and footnotes)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Colonial Colonial
Intermediate Short-Term
Tax-Exempt Tax-Exempt
Fund Fund
------------ ----------
<S> <C> <C>
ASSETS
Investments at cost.................................. $30,506 $12,834
Unrealized depreciation.............................. (1,901) (183)
------- -------
Investments at value................................. 28,605 12,651
Short-term obligations .............................. 2,000 2,100
Cash................................................. 28 89
Receivable for:
Interest.......................................... 530 174
Fund shares sold.................................. 424 49
Expense reimbursement due from adviser............... 9 1
Deferred organization expenses....................... 48 29
------- -------
Total assets................................ 31,644 15,093
------- -------
LIABILITIES
Payable for:
Investments purchased............................. 389 1,237
Fund shares repurchased........................... 166 55
Distributions..................................... 128 36
Variation margin on futures....................... 20 --
Accrued:
Deferred Trustees fees............................ 1 --
Other............................................. 11 2
------- -------
Total liabilities........................... 715 1,330
------- -------
Net assets........................................... $30,929 $13,763
======= =======
Net assets - Class A................................. $16,791 $13,763
======= =======
Net assets - Class B................................. $14,138 N/A
======= =======
Shares of beneficial interest outstanding - Class A.. 2,329 1,854
======= =======
Shares of beneficial interest outstanding - Class B.. 1,961 N/A
======= =======
Net asset value & redemption price
per share - Class A ............................... $7.21 $7.42
======= =======
Maximum offering price per share - Class A
($7.21/0.9675 and $7.42/0.9900, respectively) $7.45* $7.49**
======= =======
Net asset value & offering price
per share - Class B ............................... $7.21 N/A
======= =======
COMPOSITION OF NET ASSETS
Capital paid in................................... $33,027 $13,943
Undistributed net investment income............... 33 24
Accumulated net realized loss..................... (267) (21)
Net unrealized appreciation (depreciation) on:
Investments..................................... (1,901) (183)
Open futures contracts.......................... 37 --
------- -------
$30,929 $13,763
======= =======
</TABLE>
* On sales of $100,000 or more the offering price is reduced.
** On sales of $1,000,000 or more the offering price is reduced.
See notes to financial statements.
11
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
STATEMENT OF OPERATIONS
Year ended November 30, 1994
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Colonial Colonial
Intermediate Short-Term
Tax-Exempt Tax-Exempt
Fund Fund
------------ ----------
<S> <C> <C>
INVESTMENT INCOME
Interest................................................ $ 1,495 $ 438
------- -----
EXPENSES
Management fee.......................................... 162 63
Service fee............................................. 59 12
Distribution fee - Class B.............................. 83 --
Transfer agent.......................................... 46 19
Bookkeeping fee......................................... 27 27
Trustees fees........................................... 12 11
Audit fee............................................... 11 9
Legal fee............................................... 7 6
Registration fees....................................... 28 9
Reports to shareholders................................. 7 4
Amortization of deferred organization expenses 15 9
Other................................................... 2 2
------- -----
459 171
Fees and expenses waived or borne by the adviser........ (317) (108)
------- -----
142 63
------- -----
Net investment income......................... 1,353 375
------- -----
NET REALIZED & UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments........................................... (433) (20)
Closed futures contracts.............................. 167 --
------- -----
Net realized loss............................... (266) (20)
------- -----
Net unrealized appreciation (depreciation) during the
period on:
Investments........................................... (2,205) (190)
Open futures contracts................................ 37 --
------- -----
Net unrealized depreciation..................... (2,168) (190)
------- -----
Net loss...................................... (2,434) (210)
------- -----
Net increase (decrease) in net assets from
operations............................................ $(1,081) $ 165
======= =====
</TABLE>
See notes to financial statements.
12
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Colonial Intermediate Colonial Short-Term
Tax-Exempt Fund Tax-Exempt Fund
-------------------------------- ----------------------------
Year Year
ended Period ended ended Period ended
November 30 November 30 November 30 November 30
1994 1993 (a) 1994 1993 (a)
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income.................................. $ 1,353 $ 535 $ 375 $ 96
Net realized loss...................................... (266) (1) (20) (1)
Net unrealized appreciation (depreciation)............. (2,168) 304 (190) 7
------- ------- ------- -------
Net increase (decrease) from operations.......... (1,081) 838 165 102
Distributions
From net investment income - Class A................... (818) (368) (372) (92)
From net investment income - Class B................... (543) (154)
------- ------- ------- -------
(2,442) 316 (207) 10
Fund share transactions
Receipts for shares sold - Class A..................... 6,586 17,023 29,830 7,567
Value of distributions reinvested - Class A............ 578 228 295 74
Cost of shares repurchased - Class A................... (3,713) (2,795) (21,116) (2,690)
------- ------- ------- -------
3,451 14,456 9,009 4,951
------- ------- ------- -------
Receipts for shares sold - Class B..................... 7,656 10,069
Value of distributions reinvested - Class B............ 338 85
Cost of shares repurchased - Class B................... (2,170) (830)
------- ------- ------- -------
5,824 9,324
------- ------- ------- -------
Net increase from Fund share transactions....... 9,275 23,780 9,009 4,951
------- ------- ------- -------
Total increase............................... 6,833 24,096 8,802 4,961
NET ASSETS
Beginning of period................................... 24,096 4,961
------- ------- ------- -------
End of period......................................... $30,929 $24,096 $13,763 $ 4,961
======= ======= ======= =======
Undistributed net investment income at end of period..... $ 33 $ 26 $ 24 $ 12
======= ======= ======= =======
NUMBER OF FUND SHARES
Sold - Class A........................................ 862 2,211 3,954 1,006
Issued for distributions reinvested - Class A......... 76 29 39 10
Repurchased - Class A................................. (492) (357) (2,798) (357)
------- ------- ------- -------
446 1,883 1,195 659
------- ------- ------- -------
Sold - Class B........................................ 1,004 1,300
Issued for distributions reinvested - Class B......... 45 11
Repurchased - Class B................................. (291) (108)
------- ------- ------- -------
758 1,203
------- ------- ------- -------
Net increase in shares outstanding.............. 1,204 3,086 1,195 659
Outstanding at
Beginning of period................................ 3,086 659
------- ------- ------- -------
End of period...................................... 4,290 3,086 1,854 659
======= ======= ======= =======
</TABLE>
(a) The Funds commenced investment operations on February 1, 1993.
See notes to financial statements.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
Colonial Intermediate Tax-Exempt Fund (CITEF) and Colonial Short-Term
Tax-Exempt Fund (CSTTEF)(the Funds), each a series of Trust IV, are
Massachusetts business trust, registered under the Investment Company
Act of 1940, as amended, as diversified, open-end, management investment
companies. The Funds may issue an unlimited number of shares. CITEF offers
Class A shares sold with a front-end sales charge and Class B shares which 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. CSTTEF offers Class A shares with a front-end sales
charge. The following significant accounting policies are consistently
followed by the Funds in the preparation of their financial statements and
conform to generally accepted accounting principles.
- --------------------------------------------------------------------------------
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.
Futures contracts are valued based on the difference between the last sale
price and the opening price of the contract.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued at
fair value under procedures approved by the Trustees.
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.
The Funds 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 Funds to subsequently invest at less advantageous prices.
- --------------------------------------------------------------------------------
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS
For CITEF, all income, expenses (other than the Class B distribution fee),
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 entire period by the
distribution fee applicable to Class B shares only.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES
Consistent with each 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.
- --------------------------------------------------------------------------------
DEFERRED ORGANIZATION EXPENSES
CITEF and CSTTEF incurred $75,021 and $45,089 of expenses, respectively, in
connection with their organization, initial registration with the Securities
and Exchange Commission and with various states, and the initial public offering
of their shares. These expenses were deferred and are being amortized on a
straight-line basis over five years.
- --------------------------------------------------------------------------------
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 Funds declare and record distributions daily and pay monthly.
The amount and character of income and gains to be distributed are
determined in accordance with income tax regulations which
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
may differ from generally accepted accounting principles.
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE
Colonial Management Associates, Inc. (the Adviser) is the investment
adviser of the Funds and furnishes accounting and other services and office
facilities for a monthly fee based on the average net assets of each Fund as
follows:
<TABLE>
<CAPTION> Annual
Fund Percentage
---- ----------
<S> <C>
Colonial Intermediate Tax-Exempt Fund.......... 0.55%
Colonial Short-Term Tax-Exempt Fund............ 0.50%
</TABLE>
- --------------------------------------------------------------------------------
BOOKKEEPING FEE
The Adviser provides bookkeeping and pricing services for $27,000 per
year, per Fund, plus 0.035% of each 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 0.14% annually of each Fund's average net assets, and receives a
reimbursement for certain out of pocket expenses.
- --------------------------------------------------------------------------------
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
The Adviser, through its Colonial Investment Services (the Distributor)
division, is each Fund's principal underwriter. During the year ended November
30, 1994, the Distributor retained net underwriting discounts on CITEF and
CSTTEF of $4,211 and $1,699, respectively. The Distributor received contingent
deferred sales charges (CDSC) of $30,447 on CITEF 's Class B share redemptions.
CITEF and CSTTEF have adopted a 12b-1 plan which requires each to pay the
Distributor a service fee equal to 0.20% and 0.10%, respec- tively, annually of
each Fund's net assets as of the 20th of each month. CITEF's plan also re-
quires the payment of a distribution fee to the Distributor equal to 0.65% of
the average net assets attributable to Class B 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 Distri- butor to
dealers who sold such shares.
- --------------------------------------------------------------------------------
EXPENSE LIMITS
The Adviser has agreed to reimburse CITEF for all expenses and has agreed
to waive fees and bear certain CSTTEF expenses to the extent that total
expenses exceed 0.40% annually of CSTTEF's average net assets, until further
notice. Both Funds' expense limit is exclusive of service fees, distribution
fees, brokerage commissions interest, taxes and extraordinary expenses, if any.
- --------------------------------------------------------------------------------
OTHER
The Funds pay no compensation to their officers, all of whom are
employees of the Adviser.
Each Fund's Trustees may participate in a deferred compensation plan which
may be terminated at any time. The compensation deferred earns interest
quarterly based on the 90-day U.S. Treasury bill rate. Obligations of the plan
will be paid solely out of each Fund's assets.
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
During the year ended November 30, 1994, purchases and sales of
investments, other than short-term obligations, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
--------- -----
<S> <C> <C>
Colonial Intermediate
Tax-Exempt Fund..... $15,624,492 $7,075,909
----------- ----------
Colonial Short-Term
Tax-Exempt Fund..... $10,265,399 $1,796,660
----------- ----------
</TABLE>
Unrealized appreciation (depreciation) at November 30, 1994, based on cost of
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
investments for both financial statement and federal income tax purposes were
as follows:
<TABLE>
<CAPTION>
Colonial Colonial
Intermediate Short-Term
Tax-Exempt Tax-Exempt
Fund Fund
------------ ----------
<S> <C> <C>
Gross unrealized
appreciation............. $ 22,298 $ 1,668
Gross unrealized
depreciation............. (1,923,426) (185,155)
----------- ---------
Net unrealized
depreciation........ $(1,901,128) $(183,487)
=========== =========
</TABLE>
- --------------------------------------------------------------------------------
CAPITAL LOSS CARRYFORWARDS
At November 30, 1994, capital loss carryforwards available (to the
extent provided in regulations) to offset future realized gains were
approximately as follows:
Colonial Intermediate Tax-Exempt Fund:
<TABLE>
<CAPTION>
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- ------------
<S> <C>
2002.............. $151,000
========
</TABLE>
Colonial Short Term Tax Exempt-Fund:
<TABLE>
<CAPTION>
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- ------------
<S> <C>
2001................ $1,000
2002................ 1,000
------
$2,000
======
</TABLE>
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
At November 30, 1994, CITEF had greater than 10% of its net assets
invested in Massachusetts and Ohio. CSSTEF had greater than 10% of its net
assets invested in Wisconsin.
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 Funds may focus their investments in certain industries, subjecting
them to greater risk than a fund that is more diversified.
Entering into futures contracts has risks, including the possibility that
there may be an illiquid market and that the changes in the value of the
contract may not directly correlate to the changes in the value of the
underlying securities.
- --------------------------------------------------------------------------------
NOTE 4. OTHER RELATED PARTY TRANSACTIONS
At November 30, 1994, CITEF and CSTTEF each had one shareholder who owned
greater than 5% of the Funds' shares outstanding.
- --------------------------------------------------------------------------------
NOTE 5. CONTINGENT LIABILITY
The Adviser insures itself and all funds that it advises under a policy
with ICI Mutual Insurance Company. The annual premium is allocated among the
funds and the Adviser. Additionally, the Adviser and the funds have committed
up to 300% of the annual premium, a portion of which has been secured with an
rrevocable letter of credit.
16
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are as follows:
- --------------------------------------------------------------------------------------------------------------------------
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
---------------------------------------------------------
YEAR ENDED PERIOD ENDED
NOVEMBER 30 NOVEMBER 30
---------------------- ------------------------
1994 1993(b)
---------------------- ------------------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value - Beginning of period.................. $ 7.810 $ 7.810 $ 7.500 $7.500
------- ------- ------- ------
Income/(loss) from investment operations:
Net investment income(a)........................... 0.366 0.317 0.305 0.263
Net realized and
unrealized gain (loss) on investments............. (0.596) (0.596) 0.302 0.302
------- ------- ------- ------
Total from investment operations.......... (0.230) (0.279) 0.607 0.565
------- ------- ------- ------
Less distributions declared to shareholders:
From net investment income......................... (0.370) (0.321) (0.297) (0.255)
------- ------- ------- ------
Net asset value - End of period........................ $ 7.210 $ 7.210 $ 7.810 $7.810
======= ======= ======= ======
Total return(c)(d)..................................... (3.05)% (3.68)% 8.18 %(e) 7.61 %(e)
======= ======= ======= ======
Ratios to average net assets:
Expenses........................................... 0.20 % 0.85 % 0.20 %(f) 0.85 %(f)
Fees and expenses waived or
borne by the adviser............................. 1.07 % 1.07 % 1.33 %(f) 1.33 %(f)
Net investment income.............................. 4.85 % 4.20 % 4.53 %(f) 3.88 %(f)
Portfolio turnover..................................... 26 % 26 % 5 %(f) 5 %(f)
Net assets at end of period ($000)..................... $16,791 $14,138 $14,700 $9,396
(a) Net of fees and expenses waived or borne
by the adviser which amounted to.................. $ 0.080 $ 0.080 $ 0.090 $0.090
(b) The Fund commenced investment operations on February 1, 1993.
(c) Total return at net asset value assuming all distributions reinvested and no initial sales
charge or 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.
- --------------------------------------------------------------------------------
17
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period are as follows:
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
COLONIAL SHORT-TERM
TAX EXEMPT FUND
----------------------------------
YEAR ENDED PERIOD ENDED
NOVEMBER 30 NOVEMBER 30
----------- ------------
1994 1993(b)
----------- ------------
CLASS A CLASS A
----------- ------------
<S> <C> <C>
Net asset value - Beginning of period...................................... $ 7.530 $ 7.500
------- -------
Income from investment operations:
Net investment income(a)................................................. 0.215 0.196
Net realized and unrealized gain (loss) on investments................... (0.105) 0.012
------- -------
Total from investment operations......................................... 0.110 0.208
------- -------
Less distributions declared to shareholders:
From net investment income............................................... (0.220) (0.178)
======= =======
Net asset value - End of period............................................ $ 7.420 $ 7.530
======= =======
Total return(c)(d)......................................................... 1.48 % 2.80 %(e)
======= =======
Ratios to average net assets:
Expenses................................................................. 0.50 % 0.50 %(f)
Fees and expenses waived or borne by the adviser......................... 0.85 % 1.92 %(f)
Net investment income.................................................... 2.97 % 2.85 %(f)
Portfolio turnover......................................................... 16 % 22 %(f)
Net assets at end of period (000).......................................... $13,763 $ 4,961
(a) Net of fees and expenses waived or borne
by the adviser which amounted to...................................... $ 0.063 $ 0.132
(b) The Fund commenced investment operations on February 1, 1993.
(c) Total return at net asset value assuming all distributions reinvested and no
initial sales charge.
(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.
- --------------------------------------------------------------------------------
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST IV AND THE SHAREHOLDERS OF COLONIAL
INTERMEDIATE TAX-EXEMPT FUND AND COLONIAL SHORT-TERM TAX-EXEMPT FUND
In our opinion, the accompanying statements of assets and liabilities,
including the investment portfolios, 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 Intermediate Tax-Exempt
Fund and Colonial Short-Term Tax-Exempt Fund (each a series of Colonial Trust
IV) at November 30, 1994, the results of their operations, the changes in their
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 Funds' 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 November 30, 1994
by correspondence with the custodian and brokers, and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 11, 1995
COLONIAL TRUST IV
Cross Reference Sheet
Colonial High Yield Municipal Fund
-----------------------------------
Location or Caption in Statement
Item Number of Form N-1A of Additional Information
- ------------------------- --------------------------------
Part B
10. Cover Page
11. Table of Contents
12. Not Applicable
13. Investment Objective and
Policies; Fundamental Investment
Policies; Other Investment
Policies; Miscellaneous
Investment Practices; Portfolio
Turnover
14. Management of the Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses;
Management of the Funds
17. Fund Charges and Expenses;
Management of the Funds
18. Shareholder Liability
19. How to Buy Shares; Determination
of Net Asset Value; Suspension of
Redemptions; Investor Services;
Programs Not Available
20. Taxes
21. Fund Charges and Expenses;
Management of the Funds
22. Fund Charges and Expenses;
Investment Performance
23. Independent Accountants
COLONIAL HIGH YIELD MUNICIPAL FUND
Statement of Additional Information
March 30, 1995
This Statement of Additional Information (SAI) contains
information which may be useful to investors but which is not
included in the Prospectus of Colonial High Yield Municipal Fund
(Fund). This SAI is not a prospectus and is authorized for
distribution only when accompanied or preceded by the Prospectus
of the Fund dated March 30, 1995 This SAI should be read
together with the Prospectus. Investors may obtain a free copy
of the Prospectus from Colonial Investment Services, Inc., One
Financial Center, Boston, MA 02111-2621.
Part 1 of this SAI contains specific information about the Fund.
Part 2 includes information about the Colonial funds generally
and additional information about certain securities and
investment techniques described in the Fund's Prospectus.
TABLE OF CONTENTS
Part 1 Page
Definitions
Investment Objective and Policies
Fundamental Investment Policies
Other Investment Policies
Portfolio Turnover
Fund Charges and Expenses
Ivestment Performance
Custodian
Independent Accounts
Part 2
Miscellaneous Investment Practices
Taxes
Management of the Funds
Determination of New Asset Value
How to Buy Shares
Investor Services
Suspension of Redemptions
Shareholder Liability
Performance Measures
Appendix I
Appendix II
HM-16/725A-0395
Part 1
COLONIAL HIGH YIELD MUNICIPAL FUND
Statement of Additional Information
March 30, 1995
DEFINITIONS
"Trust" Colonial Trust IV
"Fund" Colonial High Yield Municipal Fund
"Colonial" Colonial Management Associates, Inc., the
Fund's investment manager
"CISI" Colonial Investment Services, Inc., the
Fund's distributor
"CISC" Colonial Investors Service Center, Inc.,the
Fund's shareholder services and transfer agent
INVESTMENT OBJECTIVES AND POLICIES
The Fund's Prospectus describes the Fund's investment objectives
and policies. Part 1 includes additional information concerning,
among other things, the fundamental investment policies of the
Fund. Part 2 of this SAI contains additional information about
the following securities and investment techniques:
Short-Term Trading
High Yield Bonds
Zero Coupon Securities
Step Coupon Bonds
Forward Commitments
Repurchase Agreements
Futures Contracts and Related Options
Options
Except as described below under "Fundamental Investment
Policies", the Fund's investment policies are not fundamental,
and the Trustees may change the policies without shareholder
approval.
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (Act) provides that a "vote of
a majority of the outstanding voting securities" means the
affirmative vote of the lesser of (1) more that 50% of the
outstanding shares of the Fund, or (2) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares
are represented at the meeting in person or by proxy. The
following fundamental investment policies can not be changed
without such a vote.
The Fund may:
1. Only issue senior securities through borrowing money from
banks for temporary or emergency purposes up to 10% of its
net assets;
2. Invest in real estate only up to 5% of its net assets;
3. Invest in illiquid assets only up to 10% of its net
assets;
4. Purchase and sell futures contracts and related options
only so long as the total initial margin and premiums on
the contracts do not exceed 5% of its total assets;
5. Only underwrite securities issued by others when disposing
of portfolio securities;
6. Make loans only through lending of securities not
exceeding 30% of total assets, through the purchase of
debt instruments or similar evidences of indebtedness
typically sold privately to financial institutions and
through repurchase agreements;
7. Not concentrate more than 25% of its total assets in any
one industry or with respect to 75% of total assets,
purchase any security (other than obligations of the U.S.
Government and cash items including receivables) if as a
result more than 5% of its total assets would then be
invested in securities of a single issuer or purchase the
voting securities of an issuer if, as a result of such
purchases, the Fund would own more than 10% of the
outstanding voting shares of such issuer.; and
8. Ordinarily invest at least 80% of its total assets in tax-
exempt securities.
OTHER INVESTMENT POLICIES
As non-fundamental investment policies which may be changed
without a vote of a majority of the outstanding voting
securities, the Fund may not:
1. Purchase securities on margin, but it may receive short-
term credit to clear securities transactions and may make
initial or maintenance margin deposits in connection with
futures transactions;
2. Have a short securities position, unless the Fund owns,
or owns rights (exercisable without payment) to acquire,
an equal amount of such securities;
3. Own voting securities of any company if the Trust knows
that officers and Trustees of the Trust or officers and
directors of Colonial who individually own more than 0.5%
of such securities together own more than 5% of such
securities;
4. Invest in interests in oil, gas or other mineral
exploration or development programs, including leases;
5. Purchase any security resulting in the Fund having more
than 5% of its total assets invested in securities of
companies (including predecessors) less than three years
old;
6. Pledge more than 33% of its total assets;
7. Purchase the securities of an issuer if, as a result of
such purchase, more than 10% of its total assets would be
invested in the securities of issuers which are
restricted as to disposition; and
8 Invest in warrants if, immediately after giving effect to
any such investment, the Fund's aggregate investment in
warrants, valued at the lower of cost or market, would
exceed 5% of the value of the Fund's net assets.
Included within that amount but not to exceed 2% of the
value of the Fund's net assets, may be warrants which are
not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the Fund in units
or attached to securities will be deemed to be without
value.
Total assets and net assets are determined at current value for
purposes of compliance with investment restrictions and policies.
All percentage limitations will apply at the time of investment
and are not violated unless an excess or deficiency occurs as a
result of such investment. For the purpose of the Act
diversification requirement, an issuer is the entity whose
revenues support the security.
PORTFOLIO TURNOVER
Year ended November 30,
1994 1993
25% 31%
FUND CHARGES AND EXPENSES
Under the Fund's management agreement, the Trust pays Colonial a
monthly fee based on the average daily net assets allocated
among among the Fund, the Colonial Tax-Exempt Fund and the
Colonial Tax-Exempt Insured Fund at the following annual rates:
0.60% on the first $1 billion, 0.55% on the next $2 billion,
0.50% of the next $1 billion and 0.45% of any excess over $4
billion.
Recent Fees paid to Colonial, CISI and CISC (for the fiscal years
ended November 30) (dollars in thousands)
June 8, 1992
(commencement of
investment operations)
Year ended November 30 through November 30,
1994 1993 1992
Management fee $651 $502 $174
Bookkeeping fee 51 41 16
Shareholder service and 193 147 55(a)
transfer agent fee
12b-1 fees:
Service fee (b) 297 228 77
Distribution fee
(Class B) 882 683 232
(a) Under a prior fee schedule.
(b) Class A shares were offered for sale to the general public
commencing September 1, 1994. The amounts in the previous
periods reflect the Class B service fee only.
Brokerage Commissions (for the fiscal years ended November 30)
(dollars in thousands)
June 8, 1992
(commencement of
investment operations)
through November 30,
1994 1993 1992
Total commissions $0 $0 $0
Directed transactions (c) 0 0 0
Commissions on directed
transactions 0 0 0
(c) See "Management of the Funds - Portfolio Transactions - Brokerage
and research services" in Part 2 of this SAI.
Trustees Fees
For the calendar year ended December 31, 1994, the Trustees
received the following compensation for serving as Trustees .
Pension or
Retirement Estimated Total
Benefits Annual Compensation
Aggregate Accrued As Benefits From Fund
Compensation Part of Fund Upon and
Trustee From Fund Expense Retirement Fund Complex(e)
Tom Bleasdale $1552(d) $0 $0 $101,000
Lora S. Collins 1458 0 0 95,000
William D. Ireland,Jr. 1687 0 0 110,000
William E. Mayer 1381 0 0 89,752
John A. McNeice, Jr. 0 0 0 0
James L. Moody, Jr. 1684 0 0 109,000
John J. Neuhauser 1459 0 0 95,000
George L. Shinn 1721 0 0 112,000
Robert L. Sullivan 1614 0 0 104,561
Sinclair Weeks, Jr. 1779 0 0 116,000
(d) Includes $768 payable as deferred compensation.
(e) The Colonial Funds Complex consists of 31 open-end and 5 closed-end
management investment company portfolios.
The following table sets forth the amount of compensation paid to
Messrs. Birnbaum, Grinnell and Lowry in their capacities as
Trustees of the Liberty All-Star Equity Fund, The Charles Allmon
Trust, Inc., Liberty Financial Trust and LFC Utilities Trust
(together, Liberty Funds) for service during the calendar year
ended December 31, 1994:
Total
Compensation
Pension or From
Aggregate Retirement Estimated Liberty
Compensation Benefits Annual Funds for
From Fund for Accrued As Benefits fiscal
the fiscal year Part of Fund Upon year ended
Trustee 11/30/94 Expense Retirement 12/31/94(f)
Robert J. Birnbaum $0 $0 $0 $ 0
James E. Grinnell 0 0 0 31,032
Richard W. Lowry 0 0 0 31,282
(f) The Liberty Funds consist of 5 open-end and 2 closed-end
management investment company portfolios, each of which is
advised by Stein Roe & Farnham Incorporated, an indirect
wholly-owned subsidiary of Liberty Financial Companies,
Inc., which in turn is an indirect subsidiary of Liberty
Mutual Insurance Company.
Ownership of the Fund
At February 28, 1995, the officers and Trustees of the Fund as a
group owned 26,256.458 shares of the Fund representing 3.06% of
the then outstanding Class A shares. The largest single holding
was by Colonial.
At February 28, 1995, Merrill Lynch, Pierce, Fenner & Smith,
Inc., Attn: Book Entry, Mutual Fund Operations, 4800 Deer Lake
Drive, E. 3rd Floor, Jacksonville, FL 32216 owned 9.54% of the
Fund's outstanding Class B shares.
At February 28, 1995, there were 216 Class A and 3,772 Class B
shareholders.
Sales Charges (for the fiscal year ended November 30) (dollars in
thousands)
Class A Shares
September 1, 1994
(commencement of investment operations)
through November 30, 1994
Aggregate initial sales charges
on Fund share sales $110
Initial sales charges
retained by CISI 12
Class B Shares
June 8, 1992
(commencement of investment
operations)
1994 1993 through November 30, 1992
Aggregate contingent
deferred sales
charges (CDSC)
on Fund redemptions
retained by CISI 278 $119 $72
12b-1 Plans, CDSC and Conversion of Shares
The Fund offers two classes of shares - Class A and Class B. The
Fund may in the future offer other classes of shares. The
Trustees have approved 12b-1 Plans pursuant to Rule 12b-1 under
the Act. Under the Plans, the Fund pays CISI a service fee at an
annual rate of 0.25% of the average net assets attributed to each
Class of shares, and a distribution fee at an annual rate of
0.75% of the average net assets attributed to Class B shares.
CISI may use the entire amount of such fees to defray the cost of
commissions and service fees paid to financial service firms
(FSFs) and for certain other purposes. Since the distribution
and service fees are payable regardless of the amount of CISI's
expenses, CISI may realize a profit from the fees.
The Plans authorize any other payments by the Fund to CISI and
its affiliates (including Colonial) to the extent that such
payments might be construed to be indirect financing of the
distribution of Fund shares.
The Trustees believe the Plans could be a significant factor in
the growth and retention of Fund assets resulting in a more
advantageous expense ratio and increased investment flexibility
which could benefit each class of Fund shareholders. The Plans
will continue in effect from year to year so long as continuance
is specifically approved at least annually by a vote of the
Trustees, including the Trustees who are not interested persons
of the Trust and have no direct or indirect financial interest in
the operation of the Plans or in any agreements related to the
Plans (Independent Trustees), cast in person at a meeting called
for the purpose of voting on the Plans. The Plans may not be
amended to increase the fee materially without approval by vote
of a majority of the outstanding voting securities of the
relevant class of shares and all material amendments of the Plans
must be approved by the Trustees in the manner provided in the
foregoing sentence. The Plans may be terminated at any time by
vote of a majority of the Independent Trustees or by vote of a
majority of the outstanding voting securities of the relevant
class of shares. The continuance of the Plans will only be
effective if the selection and nomination of the Trustees who are
not interested persons is effected by such non-interested
Trustees.
Class A shares are offered at net asset value plus varying sales
charges which may include a CDSC. Class B shares are offered at
net asset value subject to a CDSC if redeemed within six years
after purchase. The CDSCs are described in the Prospectus.
No CDSC will be imposed on shares derived from reinvestment of
distributions or on amounts representing capital appreciation.
In determining the applicability and rate of any CDSC, it will be
assumed that a redemption is made first of shares representing
capital appreciation, next of shares representing reinvestment of
distributions and finally of other shares held by the shareholder
for the longest period of time.
Eight years after the end of the month in which a Class B share
is purchased, such share and a pro rata portion of any shares
issued on the reinvestment of distributions will be automatically
converted into Class A shares having an equal value, which are
not subject to the distribution fee.
Sales-related expenses (dollars in thousands) of CISI for the
fiscal year ended November 30, 1994, were:
Class A Class B
Shares Shares
September 1, 1994
(commencement of
investment
operations) through
November 30, 1994
Fees to FSFs $0 $866
Cost of sales material relating
to the Fund 0 53
Allocated travel, entertainment
and other promotional 0 84
INVESTMENT PERFORMANCE
The Fund's Class A and Class B yields for the month ended
November 30, 1994, were:
Class A Class B
Tax- Tax-
Equivalent Equivalent
Yield Yield Yield Yield
6.99% 11.57% 6.59% 10.91%
The Fund's average annual total returns at November 30, 1994
were:
Class A Shares
September 1, 1994
(commencement of investment
operations)
through November 30, 1994
With sales charge of (7.75)%
4.75%
Without sales charge (3.15)%
Class B Shares
Since inception
1 Year 6/8/92 to 11/30/94
With CDSC of 5.00% (8.62)% 2.26%
Without CDSC (4.10)% 3.34%
The Fund's Class A and Class B distribution rates at November 30,
1994, based on the most recent month's distribution, annualized,
and the maximum offering price at the end of the month, were
6.96% and 6.17%, respectively.
See Part 2 of this SAI, "Performance Measures," for how
calculations are made.
CUSTODIAN
United Missouri Bank, n.a. is the Fund's custodian. The custodian
is responsible for safeguarding the Fund's cash and securities,
receiving and delivering securities and collecting the Fund's
interest and dividends.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP are the Fund's independent accountants
providing audit and tax return preparation services and
assistance and consultation in connection with the review of
various SEC filings. The financial statements incorporated by
reference in this SAI have been so incorporated, and the schedule
of financial highlights included in the Prospectus has been so
included, in reliance upon the report of Price Waterhouse LLP
given on the authority of said firm as experts in accounting and
auditing.
The financial statements and Report of Independent Accountants
appearing on pages 3 through 15 of the November 30, 1994 Annual
Report, are incorporated in this SAI by reference.
<PAGE>
INVESTMENT PORTFOLIO (IN THOUSANDS) NOVEMBER 30, 1994
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 97.6% PAR VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER PRODUCTS - 0.4%
MN Buffalo Individual,
10.500% 09/01/14 . . . . . . . . . . . . . . . $ 485 $ 495
- ----------------------------------------------------------------------------------------------
ELECTRIC - 2.5%
CA Pleasanton Joint Powers Financing
Authority Revenue,
Series 1993-B,
6.750% 09/02/17 . . . . . . . . . . . . . . . 1,960 1,786
FL Martin County Indiantown,
7.875% 12/15/25 . . . . . . . . . . . . . . . 1,000 987
TX Brazos River Authority,
Collateralized Pollution Control Bonds,
Texas Utilities Electric Co., Series 1988-A,
9.250% 03/01/18 . . . . . . . . . . . . . . . 250 267
------
3,040
- ----------------------------------------------------------------------------------------------
GENERAL OBLIGATIONS - 0.5%
AZ Apache County School District,
Number 010 Round Valley,
Project of 1987, Series 1990-C,
9.875% 07/01/05 . . . . . . . . . . . . . . . 500 497
PR Puerto Rico Commonwealth,
Series 1993,
2.960% 07/01/08 (a). . . . . . . . . . . . . 415(b) 151
------
648
- ----------------------------------------------------------------------------------------------
HOSPITALS & HEALTH CARE - 19.0%
AL Alabama Special Care Facilities Authority,
Montgomery Health Care, Series 1989,
11.000% 10/01/19 . . . . . . . . . . . . . . . 300 290
AL Marshall County Health Care Authority
Hospital, Guntersville-Arab Medical
Center, Series 1988,
10.250% 10/01/13 . . . . . . . . . . . . . . . 500 567
CO Health Facility, Rocky Mountain
Adventist Health, Series 1993,
6.625% 02/01/13 . . . . . . . . . . . . . . . 1,000 862
DC District of Columbia Hospital,
Washington Hospital Center
Corp., Series 1990-A,
8.750% 01/01/15 . . . . . . . . . . . . . . . 750 857
DE State Economic Development,
Riverside Hospital, Series 1992-A,
9.500% 01/01/22 . . . . . . . . . . . . . . . 615 656
DE Wilmington, Riverside Hospital,
Series 1988-A,
10.000% 10/01/03 . . . . . . . . . . . . . . . 150 177
FL Tarpon Springs Health Facilities
Authority Hospital, Tarpon Springs
Hospital Foundation, Series 1988,
8.750% 05/01/12 . . . . . . . . . . . . . . . 1,000 1,029
GA Clayton Hospital Authority,
The Woodlands Foundation, Inc.,
Series 1991-A,
9.800% 05/01/21 (c) . . . . . . . . . . . . . 1,500 975
IA Des Moines Hospital,
Des Moines General Hospital,
Series 1983,
10.125% 12/01/11 . . . . . . . . . . . . . . . 595 609
IA Finance Authority Health Care Facility,
Mercy Health Initiatives, Series 1989,
9.950% 07/01/19 . . . . . . . . . . . . . . . 500 490
IL Champaign First Mortgage,
Hoosier Care, Inc., Series 1989,
9.750% 08/01/19 . . . . . . . . . . . . . . . 500 506
IL Health Facilities Authority,
Edgewater Medical Center, Series A,
9.250% 07/01/24 . . . . . . . . . . . . . . . 2,000 1,860
KY Development Finance Authority,
Good Samaritan Hospital Lexington,
Series 1985,
10.250% 12/01/11 . . . . . . . . . . . . . . . 980 1,051
MA State Health and Educational Facility
Authority, St. Joseph's Hospital, Series C,
9.500% 10/01/20 . . . . . . . . . . . . . . . 790 924
MI State Hospital Finance Authority:
Detroit Osteopathic Hospital,
Series 1987-A,
7.500% 11/01/10 . . . . . . . . . . . . . . . 500 456
Saratoga Community Hospital,
Series 1992,
8.750% 06/01/10 . . . . . . . . . . . . . . . 295 299
MN St. Louis Park Health Care Facilities,
Park Nicollet Medical Center,
Series 1990-A,
9.250% 01/01/20 . . . . . . . . . . . . . . . 200 232
MO Hannibal Industrial Development,
Medical Systems of Northeast
Missouri, Series 1992,
9.500% 03/01/22 . . . . . . . . . . . . . . . 1,000 1,119
NC Lincoln County Hospital Project,
9.000% 05/01/07 . . . . . . . . . . . . . . . 350 365
</TABLE>
3
See notes to investment portfolio.
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONTINUED PAR VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Hospitals & health care - cont.
NJ Health Care Facilities Financing
Authority, Raritan Bay Medical Center,
7.250% 07/01/27 . . . . . . . . . . . . . . . $ 2,000 $ 1,733
PA Cambria County Hospital Authority,
Conemaugh Valley Memorial Hospital,
Series 1988-A,
8.875% 07/01/18 . . . . . . . . . . . . . . . 165 171
PA Montgomery County Higher Educational
and Health Authority, United Hospitals
Inc., Project, Series 1989-A,
8.375% 11/01/11 . . . . . . . . . . . . . . . 4,520 4,537
TN Chattanooga Health Education
and Housing Facilities Board,
North Park Hospital Project, Series 1993,
8.500% 02/01/23 . . . . . . . . . . . . . . . 1,000 897
VA Dickenson County Industrial
Development, Volunteer Health Care
Systems, Inc., Series 1988-A,
10.750% 06/01/18(c). . . . . . . . . . . . . . . 500 150
VT Educational & Health Buildings
Financing Agency,
7.750% 01/01/13 . . . . . . . . . . . . . . . . 855 766
WA Washington State Health Care
Facility, Grays Harbor Community
Hospital:
Series 1993,
7.200% 07/01/03 . . . . . . . . . . . . . . . . 210 194
Series 1993,
8.025% 07/01/20 . . . . . . . . . . . . . . . . 960 895
-------
22,667
- ---------------------------------------------------------------------------------------
HOUSING - 18.0%
MULTI-FAMILY - 16.2%
AK State Housing Finance Corp.,
Collateralized Bonds, Veteran
Mortgage Program, Series 1992-A2,
6.750% 12/01/24 . . . . . . . . . . . . . . . . 1,810 1,692
CT Church Street Housing Authority,
South Apartments Section 8, Series 1983,
11.000% 03/01/01 . . . . . . . . . . . . . . . 400 340
CT State Development Authority, First Mortgage
Gross Health Care, Church-Avery Project,
Series 1990,
9.000% 04/01/20 . . . . . . . . . . . . . . . . 500 524
FL Clearwater Housing Authority,
Hampton Apartments,
8.250% 05/01/24 . . . . . . . . . . . . . . . . 2,000 2,005
FL Dade County Housing Finance
Authority Multi-family, Arena Square, Series 1989,
10.250% 05/01/19(c). . . . . . . . . . . . . . . 1,000 150
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 . . . . . . . . . . . . . . . . 2,000 1,988
FL Housing Finance Agency,
10.000% 10/01/20 . . . . . . . . . . . . . . . 300 290
FL Walton County, Industrial
Development, Villa Bay Gardens,
Series 1986,
10.500% 01/01/17(c) . . . . . . . . . . . . . . 500 200
MN Lakeville Multi-family Housing,
Southfork Apartment Project,
Series 1989-A,
9.875% 02/01/20 . . . . . . . . . . . . . . . . 700 671
MN White Bear Lake Multi-family Housing,
Birch Lake Townhomes Project,
Series 1988-A,
9.750% 07/15/19 . . . . . . . . . . . . . . . . 750 758
NC Eastern Carolina Regional Housing
Multi-family, Mortgage New Apartments
Jacksonville,
8.250% 09/01/14 . . . . . . . . . . . . . . . . 1,500 1,438
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993-A,
8.250% 05/01/23 . . . . . . . . . . . . . . . . 620 566
PA Philadelphia Redevelopment
Authority, Multi-family Housing,
School Lane House Apartments,
Series 1988,
9.000% 10/01/09(c)(d) . . . . . . . . . . . . . 700 210
Pass Through Certificates,
Series 1993-A,
8.500% 12/01/16(e). . . . . . . . . . . . . . . 5,000 4,550
SC State Housing Finance and Development,
Multi-family Housing Finance Revenue,
Westbridge Apartments, Series A,
9.500% 09/01/20 . . . . . . . . . . . . . . . . 650 635
TN Memphis Center City Finance Corp.,
Multiple Family Housing Board, Riverset
Apartments-Phase II Project, Series 1989-A,
9.500% 10/01/19 . . . . . . . . . . . . . . . . 500 480
See notes to investment portfolio.
</TABLE>
4
<PAGE>
INVESTMENT PORTFOLIO - continued
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONTINUED PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
MULTI-FAMILY - CONT.
TX Galveston Pass Through Certificates,
Health Facilities Center,
8.000% 08/01/23 . . . . . . . . . . . . . . . $ 1,000 $ 954
VA Alexandria Redevelopment & Housing,
Multiple Family Housing, Courthouse
Commons Apartments, Series 1990-A,
10.000% 01/01/21 . . . . . . . . . . . . . . . 500 482
VA Roanoke Redevelopment & Housing
Authority, First Mortgage, Mountain Ridge,
9.250% 11/01/22 . . . . . . . . . . . . . . . 500 484
-------
18,417
-------
SINGLE-FAMILY - 2.6%
CA Orange County Single Family Residential,
Series 1983, Issue 1,
9.250% 09/01/16 . . . . . . . . . . . . . . . 90 88
FL Housing Finance Authority,
Windsong Apartments, Series 1993-C,
9.250% 01/01/19 . . . . . . . . . . . . . . . 750 716
MN Roseville Elderly Care Facility
Care Institute, Inc., Series 1993,
7.750% 11/01/23 . . . . . . . . . . . . . . . 1,270 1,135
MN Washington County Housing &
Redevelopment Authority, Cottages of
Aspen Project,
9.250% 06/01/22 . . . . . . . . . . . . . . . 500 473
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19. . . . . . . . . . . . . . . . 335 355
Series 1992-C,
9.750% 08/01/19 . . . . . . . . . . . . . . . 330 352
-------
3,119
- -----------------------------------------------------------------------------------
INDUSTRIAL DEVELOPMENT REVENUE - 4.5%
IA Ellsworth Industrial Development,
Bagel Works Project, Series 1990,
10.500% 01/15/12 . . . . . . . . . . . . . . . 475 425
LA Port New Orleans Industrial Development,
Continental Grain Co., Series 1993,
7.500% 07/01/13 . . . . . . . . . . . . . . . 2,000 1,835
MN Brooklyn Park Industrial Development
Systems Corp., Series 1991,
10.000% 09/01/16 . . . . . . . . . . . . . . . 540 517
NY New York City Industrial Development
Authority, American Airlines,
6.900% 08/01/24. . . . . . . . . . . . . . . . 2,000 1,805
Morse Nursing Home, Series 1991-I,
10.000% 01/01/21 . . . . . . . . . . . . . . . 500 521
TN McKenzie Individual Development
Board,
10.500% 05/01/16 . . . . . . . . . . . . . . . 480 475
VA Beach Development Authority,
Beverly Enterprises, Series 1985,
10.000% 04/01/10 . . . . . . . . . . . . . . . 240 262
-------
5,319
- -----------------------------------------------------------------------------------
NURSING HOMES - 14.3%
AZ Tucson Industrial Development
Authority, Villa Maria Care Center,
10.125% 11/01/21 . . . . . . . . . . . . . . . 350 332
CO Health Facilities Authority:
Denver,
10.500% 05/01/19(c) . . . . . . . . . . . . . . 450 405
Liberty Heights Project, Series 1991-B,
(f) 07/15/24 . . . . . . . . . . . . . . . 6,850 796
CT State Development Authority
Health Care Facilities, Windsor, Inc.,
Series 1992-A,
9.500% 01/01/22 . . . . . . . . . . . . . . . 700 722
DE State Economic Development,
Health Care Facility,
10.000% 03/01/21 . . . . . . . . . . . . . . . 750 753
DE Sussex County, Health Care Facility,
Delaware Health Corp., Series 1994-A,
7.600% 01/01/24 . . . . . . . . . . . . . . . 1,000 861
FL Broward County Industrial
Development, Beverly Enterprises,
9.800% 11/01/10 . . . . . . . . . . . . . . . 615 666
FL Flagler County Industrial,
Redevelopment Authority,
South Florida Properties, Series 1988,
10.500% 12/01/18 . . . . . . . . . . . . . . . 935 935
FL Gadsden County Industrial Development,
Florida Housing Properties, Inc.,
Series 1988-A,
10.450% 10/01/18 . . . . . . . . . . . . . . . 340 344
FL Palm Beach County Industrial
Development, Hillcrest Manor Project,
10.250% 12/01/16 . . . . . . . . . . . . . . . 680 711
IN Wabash First Mortgage, Hoosier
Care, Inc., Series 1989-A,
9.750% 08/01/19 . . . . . . . . . . . . . . . 500 507
KS Halstead Industrial Health Care
Project,
10.250% 08/01/13 . . . . . . . . . . . . . . . 340 345
MA Industrial Finance Agency, Health
Care Revenue Bonds, Mary Ann
Morse Nursing Home, Series 1991-1,
10.000% 01/01/21. . . . . . . . . . . . . . . . 500 521
</TABLE>
See notes to investment portfolio.
5
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONTINUED PAR VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------------
Nursing homes - cont.
MA State Industrial Finance Agency,
GF/Massachusetts, Inc., Series 1994,
8.300% 07/01/23 . . . . . . . . . . . . . . . $ 1,000 $ 894
MI Cheboygan County Economic
Development Corp., Metro Health
Foundation Project,
10.000% 11/01/22 . . . . . . . . . . . . . . . 600 625
MO Mountain Grove Industrial Development
Authority, First Mortgage Health Care
Facility, Heritage Manor, Series 1988,
10.250% 11/01/13 . . . . . . . . . . . . . . . 440 451
NJ Economic Development Authority, Inc.,
Geriatric and Medical Service,
Series A,
10.500% 05/01/04 . . . . . . . . . . . . . . . 115 124
NM Espanola, First Mortgage Medical
Facilities, Pilot Development, Southwest,
Series 1988,
10.250% 05/01/13 . . . . . . . . . . . . . . . 155 132
NM Silver City First Leasehold Mortgage
Medical Facilities, RC Development,
Series 1988,
10.250% 11/01/13 . . . . . . . . . . . . . . . 660 548
OH Lucas County Health Facilities,
Villa North Nursing Home,
Series 1988-B,
10.500% 06/01/18 . . . . . . . . . . . . . . . 300 270
PA Berkshire County Industrial Development
Authority, Lehigh & Berkshire Manors:
Series 1993-A,
4.270% 05/01/23 . . . . . . . . . . . . . . . 400 398
Series 1993-B,
4.270% 06/01/23 . . . . . . . . . . . . . . . 100 100
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19 . . . . . . . . . . . . . . . 450 450
PA Delaware County Authority,
Main Line and Haverford Nursing,
Series 1992,
9.000% 08/01/22 . . . . . . . . . . . . . . . 50 50
PA Gettysburg Area Industrial Authority,
Village Green Health Care Association,
10.750% 06/01/16 . . . . . . . . . . . . . . . 750 750
PA Lackawanna County Industrial Authority,
10.500% 12/01/10 . . . . . . . . . . . . . . . 205 209
PA Luzerne County Industrial
Development Authority, First Mortgage,
10.500% 12/01/12 . . . . . . . . . . . . . . . 235 234
PA Montgomery County Higher Education
& Health Authority, Roslyn-Hatboro,
Inc. Project,
9.000% 11/15/22 . . . . . . . . . . . . . . . 300 284
PA Philadelphia Authority for Industrial
Development, First Mortgage, Series 1988,
10.250% 11/01/18 . . . . . . . . . . . . . . . 745 745
PA York County Industrial Development
Authority, Fairview Village Associates,
Series 1986,
10.750% 06/01/16 . . . . . . . . . . . . . . . 800 888
TN McMinnville Health and Educational
Housing Facilities Board, Middle Tennessee
Health Care Center, Series 1989-A,
10.375% 01/01/12 . . . . . . . . . . . . . . . 560 560
TN Wilson County Health and Educational
Facilities, First Mortgage, Quality Care
Health Center, Series 1986,
10.250% 07/01/16 . . . . . . . . . . . . . . . 350 315
TX Bell County Health Facility Elderly Care,
9.000% 11/01/24 . . . . . . . . . . . . . . . 1,000 1,001
WV Lewis County, Crestview Manor,
Series 1989-A,
10.375% 08/01/19 . . . . . . . . . . . . . . . 245 247
-------
17,173
- ---------------------------------------------------------------------------------------
POLLUTION CONTROL - 2.1%
AR Pope County Park Pollution Control,
Arkansas Power & Light Company,
Series 1985,
11.000% 12/01/15 . . . . . . . . . . . . . . . 175 187
GA Wayne County Development Authority,
Solid Waste Disposal, ITT Royonier
Inc., Series 1990,
8.000% 07/01/15 . . . . . . . . . . . . . . . 500 526
OH State Water Development Pollution
Control, Pennsylvania Power Company,
8.100% 01/15/20 . . . . . . . . . . . . . . . 500 511
TX Matagorda County NAV Distribution #1,
Collateralized Pollution Control, Houston
Lighting and Power Co., Series 1986-A,
7.875% 11/01/16 . . . . . . . . . . . . . . . 800 831
WV Weirton Pollution Control, Weirton
Steel Corp., Series 1989,
8.625% 11/01/14 . . . . . . . . . . . . . . . 500 507
-------
2,562
- --------------------------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
6
<PAGE>
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONTINUED PAR VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Public facility & improvement - 9.7%
CO Denver City and County
Special Facilities Airport,
United Air Lines, Series 1992-A,
6.875% 10/01/32 . . . . . . . . . . . . . . . $ 5,000 $ 4,169
MN Burnsville Commercial Development,
Holiday Inn,
10.600% 06/01/06 . . . . . . . . . . . . . . . 500 502
MN Mille Lacs Capital Improvement
Infrastructure, Band of Chippewa,
Series 1992-A,
9.250% 11/01/12 . . . . . . . . . . . . . . . 670 703
OH Cuyahoga County Industrial Development
Authority, Joy Technologies, Inc.,
8.750% 09/15/07 . . . . . . . . . . . . . . . 360 369
PA Philadelphia Municipal Authority
Lease Revenue, Series B,
6.400% 05/15/16 . . . . . . . . . . . . . . . 1,490 1,263
TX Dallas-Fort Worth International Airport
American Airlines, Inc., Series 1990,
7.500% 11/01/25 . . . . . . . . . . . . . . . 5,000 4,588
-------
11,594
- ----------------------------------------------------------------------------------------
REDEVELOPMENT AGENCIES
& TAX ALLOCATION - 1.8%
CA Carson Improvement, Series 1992,
7.375% 09/02/22 . . . . . . . . . . . . . . . 985 980
IL Development Finance Authority,
City of Marion Project, Series 1991,
9.625% 09/15/21 . . . . . . . . . . . . . . . 1,200 1,125
-------
2,105
- ----------------------------------------------------------------------------------------
TRANSPORTATION - 12.1%
CA San Joaquin Hills Transcorridor
Agency, Senior Lien Toll Road:
Series 1993,
(f) 01/01/23 . . . . . . . . . . . . . . . 5,250 571
Current Interest Bonds, Series 1993,
5.000% 01/01/33 . . . . . . . . . . . . . . . 2,000 1,333
CO Denver City & County Airport:
Airport System, Series 1992-C,
6.750% 11/15/22 . . . . . . . . . . . . . . . 1,250 1,056
Denver International Airport,
Series 1991-D,
7.750% 11/15/21 . . . . . . . . . . . . . . . 2,000 1,910
Stapleton International Airport,
Series 1990-A,
8.500% 11/15/23 . . . . . . . . . . . . . . . 250 251
IL Chicago O'Hare International Airport,
Special Facility, United Airlines, Inc.,
Series 1988-A,
8.400% 05/01/18 . . . . . . . . . . . . . . . 980 987
IN Airport Authority,
7.100% 01/15/17 . . . . . . . . . . . . . . . 2,000 1,872
MA Industrial Finance Agency,
Tunnel Revenue Bonds,
Series 1990,
9.000% 10/01/20 . . . . . . . . . . . . . . . 950 982
PR Commonwealth of Puerto Rico,
Highway & Transportation Authority,
3.215% 07/01/09 (a). . . . . . . . . . . . . . . 140(b) 54
TX Alliance Airport Authority, Inc.,
Special Facilities, American Airlines
Inc., Project,
7.500% 12/01/29 . . . . . . . . . . . . . . . 3,000 2,730
TX Harris County Industrial Development
Corporate, Continental Airlines,
7.950% 07/01/19 . . . . . . . . . . . . . . . 3,000 2,696
-------
14,442
- ----------------------------------------------------------------------------------------
WASTE DISPOSAL - 7.7%
GA Fulton County Industrial
Development Authority,
10.500% 12/01/07 . . . . . . . . . . . . . . . 125 129
GA Rockdale County Development
Authority, Solid Waste Disposal,
Paper, Inc., Series 1993,
7.500% 01/01/26 . . . . . . . . . . . . . . . 2,500 2,312
IL Development Financial Authority,
Solid Waste Disposal,
Ford Heights Waste Project, Series 1994,
7.875% 04/01/11 . . . . . . . . . . . . . . . 2,000 1,897
MI State Strategic Fund, Blue Water
Fiber Project, Series 1994,
8.000% 01/01/12 . . . . . . . . . . . . . . . 2,000 1,863
NJ Economic Development Authority,
Hills Development Company-1987,
Series 1988,
10.500% 09/01/08 . . . . . . . . . . . . . . . 400 398
PA Economic Development Finance
Authority, Colver Project, Series D,
7.150% 12/01/18 . . . . . . . . . . . . . . . 2,900 2,639
-------
9,238
-------
</TABLE>
See notes to investment portfolio.
7
<PAGE>
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONTINUED PAR VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Water & sewer - 1.8%
LA Public Facility Belmont Water Authority,
14.000% 03/15/24 . . . . . . . . . . . . . . . $ 630 $ 581
MA Industrial Finance Agency Septage
Treatment Facility Bonds, Environmental
Service Project, Series 1994-A,
8.750% 11/01/21 . . . . . . . . . . . . . . . 1,000 929
MS Lakes Utility District,
8.250% 07/15/24 . . . . . . . . . . . . . . . 400 372
OH State Water Development Pollution
Collateralized Control, The Cleveland
Electric Illumination, Series 1987-A2,
9.750% 11/01/22 . . . . . . . . . . . . . . . 250 264
---------
2,146
- ---------------------------------------------------------------------------------------
OTHER - 3.2%
MA Health and Educational Facilities
Corp., Independent Living Bonds,
Series 1993-A,
8.100% 07/01/18 . . . . . . . . . . . . . . . 600 545
MD Baltimore Economic Development,
Park Charles Project, Series 1986,
8.000% 01/01/10 . . . . . . . . . . . . . . . 720 700
OH Lake County Economic Development,
North Madison Properties, Series 1993,
8.819% 09/01/11 . . . . . . . . . . . . . . . 545 529
PA Chartiers Valley Industrial and
Commercial Authority, Beverly
Enterprises, Inc., Series 1985,
10.000% 06/01/07 . . . . . . . . . . . . . . . 1,850 1,996
---------
3,770
- ---------------------------------------------------------------------------------------
Total investments (cost $125,329) (g) 116,735
- ---------------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET-2.4% 2,841
- ---------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 119,576
- ---------------------------------------------------------------------------------------
<FN>
Notes to investment portfolio:
(a) This security is a variable rate instrument. Interest income is accrued daily on the
notional amount and applicable interest rates.
(b) Notional amount.
(c) Non-income producing.
(d) The interest rate shown is the average rate over the life of the security.
(e) This is a restricted security which was acquired at a cost of $4,739. This
security represents 3.8% of the Fund's net assets at November 30, 1994.
(f) Zero coupon bond.
(g) Cost for federal income tax purposes is the same.
</TABLE>
See notes to financial statements.
8
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1994
(IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS AND FOOTNOTE)
- -----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments at value (cost $125,329)............................. $116,735
Receivable for:
Interest........................................ $2,795
Investments sold................................ 926
Fund shares sold................................ 203
Deferred organization expenses..................... 48
Other.............................................. 1 3,973
-------- --------
Total assets............................................ 120,708
LIABILITIES
Payable to custodian bank.......................... 58
Payable for:
Distributions................................... 619
Fund shares repurchased......................... 242
Accrued:
Management & bookkeeping
fee........................................... 59
Service fee..................................... 24
Distribution fee - Class B...................... 71
Transfer agent fee.............................. 14
Deferred Trustees fees.......................... 1
Other.............................................. 44
--------
Total liabilities....................................... 1,132
NET ASSETS at value for 12,820 --------
shares of beneficial interest outstanding..................... $119,576
========
Net asset value & redemption price per share -
Class A ($6,027/646)......................................... $ 9.33
========
Maximum offering price per share - Class A
($9.33/0.9525)................................................ $ 9.80*
========
Net asset value & offering price per share -
Class B ($113,549/12,174).................................... $ 9.33
========
COMPOSITION OF NET ASSETS
Capital paid in............................................... $129,780
Undistributed net investment income........................... 432
Accumulated net realized loss................................. (2,042)
Net unrealized depreciation................................... (8,594)
--------
$119,576
========
<FN>
* On sales of $50,000 or more the offering price is reduced.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1994
(IN THOUSANDS)
- -----------------------------------------------------------------------------------
<S> <C> <C>
Investment income
Interest......................................................... $ 9,557
EXPENSES
Management fee..................................... $ 651
Service fee........................................ 297
Distribution fee - Class B......................... 882
Transfer agent..................................... 193
Bookkeeping fee.................................... 51
Trustees fees...................................... 17
Custodian fee...................................... 14
Audit fee.......................................... 33
Legal fee.......................................... 36
Registration fees.................................. 41
Reports to shareholders............................ 5
Amortization of deferred
organization expenses........................... 19
Other.............................................. 13 2,252
-------- --------
Net investment income.................................... 7,305
NET REALIZED AND UNREALIZED LOSS
ON PORTFOLIO POSITIONS
Net realized loss.................................. (1,389)
Net unrealized depreciation
during the period............................... (11,175)
--------
Net loss................................................. (12,564)
Net decrease in net assets from --------
operations.................................................... $ (5,259)
========
</TABLE>
See notes to financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS - CONTINUED
- ---------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- ---------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30
-----------------------
1994(a) 1993
--------- ---------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income............................................. $ 7,305 $ 5,433
Net realized loss................................................. (1,389) (351)
Net unrealized appreciation (depreciation)........................ (11,175) 2,379
-------- --------
Net increase (decrease) from operations....................... (5,259) 7,461
Distributions
From net investment income - Class A.............................. (79)
From net investment income - Class B.............................. (6,882) (5,574)
-------- --------
(12,220) 1,887
-------- --------
Fund share transactions
Receipts for shares sold - Class A................................ 7,128
Value of distributions reinvested - Class A....................... 11
Cost of shares repurchased - Class A.............................. (862)
-------- --------
6,277
-------- --------
Receipts for shares sold - Class B................................ 17,113 60,821
Value of distributions reinvested - Class B....................... 3,138 2,648
Cost of shares repurchased - Class B.............................. (15,255) (8,223)
-------- --------
4,996 55,246
-------- --------
Net increase from Fund share transactions..................... 11,273 55,246
-------- --------
Total increase (decrease)........................... (947) 57,133
NET ASSETS
Beginning of period............................................... 120,523 63,390
End of period (including undistributed net investment -------- --------
income of $432 and $69, respectively)............................ $119,576 $120,523
======== ========
NUMBER OF FUND SHARES
Sold - Class A.................................................... 735
Issued for distributions reinvested - Class A..................... 1
Repurchased - Class A............................................. (90)
-------- --------
646
-------- --------
Sold - Class B.................................................... 1,738 5,927
Issued for distributions reinvested - Class B..................... 317 257
Repurchased - Class B............................................. (1,558) (799)
-------- --------
497 5,385
-------- --------
Net increase in shares outstanding............................ 1,143 5,385
Outstanding at
Beginning of period.............................................. 11,677 6,292
-------- --------
End of period.................................................... 12,820 11,677
======== ========
<FN>
(a) Class A shares were initially offered on September 1, 1994.
</TABLE>
See notes to financial statements.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES
Colonial High Yield Municipal 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 diversified, open-end, management
investment company. The Fund may issue an unlimited number of shares. The Fund
offers Class A shares sold with a front-end sales charge and Class B shares
which 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. 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.
- --------------------------------------------------------------------------------
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.
Futures contracts are valued based on the difference between the last
sale price and the opening price of the contract.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are
valued at fair value under procedures approved by the Trustees.
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.
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 distribution fee),
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 distribution fee 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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
DEFERRED ORGANIZATION EXPENSES
The Fund incurred $95,525 of expenses, in connection with its organization,
initial registration with the Securities and Exchange Commission and with
various states, and the initial public offering of its shares. These expenses
were deferred and are being amortized on a straight-line basis over five years.
- --------------------------------------------------------------------------------
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS
The Fund declares and records distributions daily and pays monthly.
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.
- --------------------------------------------------------------------------------
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 based on each fund's pro rata portion of the
combined average net assets of the Fund, Colonial Tax-Exempt Fund, and Colonial
Tax-Exempt Insured Fund as follows:
<TABLE>
<CAPTION>
Average Net Assets Annual Fee Rate
- ------------------ ---------------
<S> <C>
First $1 billion............... 0.60%
Next $2 billion............... 0.55%
Next $1 billion............... 0.50%
Over $4 billion............... 0.45%
</TABLE>
- --------------------------------------------------------------------------------
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 0.14%
annually of the Fund's average net assets, and receives a reimbursement for
certain out of pocket expenses.
- --------------------------------------------------------------------------------
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
The Adviser, through its Colonial Investment Services (the Distributor)
division, is the Fund's principal underwriter. During the year ended November
30, 1994, the Distributor retained net underwriting discounts of $12,031 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $278,175 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor
a service fee equal to 0.25% annually of the Fund's net assets as of the 20th
of each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% of the average net assets attributable to Class B
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 Adviser.
The Fund's Trustees may participate in a deferred compensation plan which
may be terminated at any time. The compensation deferred earns interest
quarterly based on the 90-day U.S. Treasury bill rate. Obligations of the plan
will be paid solely out of the Fund's assets.
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
During the year ended November 30, 1994, purchases and sales of
investments, other than short-term obligations, were $40,671,036 and
$29,503,734, respectively.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Unrealized appreciation (depreciation) at November 30, 1994, based on cost
of investments for both financial statement and federal income tax purposes
was:
<TABLE>
<S> <C>
Gross unrealized appreciation....................$ 1,471,123
Gross unrealized depreciation.................... (10,064,851)
-------------
Net unrealized depreciation...................$ ( 8,593,728)
=============
</TABLE>
- --------------------------------------------------------------------------------
CAPITAL LOSS CARRYFORWARDS
At November 30, 1994, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
<TABLE>
<CAPTION>
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- ------------
<S> <C>
1996 $ 57,000
1997 186,000
1998 590,000
1999 364,000
2000 302,000
2002 1,731,000
----------
$3,230,000
==========
</TABLE>
The loss carryfowards expiring in 1996, 1997, 1998, and 1999, respectively,
were acquired in the merger with Colonial VIP High Yield Municipal Bond Fund.
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 has greater than 10% of its net assets at November 30, 1994
invested in Pennsylvania and Texas, respectively.
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.
Entering into futures contracts has risks, including the possibility that
there may be an illiquid market and that the changes in the value of the
contract may not directly correlate to the changes in the value of the
underlying securities.
- --------------------------------------------------------------------------------
NOTE 4. CONTINGENT LIABILITY
The Adviser insures itself and all funds that it advises under a policy
with ICI Mutual Insurance Company. The annual premium is allocated among the
funds and the Adviser. Additionally, the Adviser and the funds have committed
up tO 300% of the annual premium, one-third of which was provided in cash, with
the Fund's pro rata portion recorded as an asset. The remainder is secured with
an irrevocable letter of credit.
13
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are as follows:
- -------------------------------------------------------------------------------------------------------
<CAPTION>
PERIOD ENDED
YEAR ENDED NOVEMBER 30, NOVEMBER 30,
---------------------------------------- -------------
1994 1993 1992(a)
---------------------------------------- -------------
CLASS A(B) CLASS B CLASS B CLASS B
---------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period................ $ 9.800 $ 10.320 $ 10.070 $10.000
------- -------- -------- -------
Income (loss) from investment
operations:
Net investment income............ 0.188 0.605 0.609 0.338(c)
Net realized and unrealized
gain (loss) on investments.. (0.496) (1.016) 0.277 0.041
------- -------- -------- -------
Total from investment
operations........ (0.308) (0.411) 0.886 0.379
------- -------- -------- -------
Less distributions declared to
shareholders:
From net investment income....... (0.162) (0.579) (0.636) (0.309)
------- -------- -------- -------
Net asset value - End of period........ $ 9.330 $ 9.330 $ 10.320 $10.070
======= ======== ======== ========
Total return(d)......................... (3.15)%(e) (4.10)% 9.00% 3.80%(e)(f)
======= ======== ======== =========
Ratios to average net assets:
Expenses........................... 1.15%(g) 1.90% 1.94% 2 .00%(g)
Fees waived by the adviser......... -- -- -- 0.01%(g)
Net investment income.............. 7.19%(g) 6.44% 5.95% 6.83%(g)
Portfolio turnover...................... 25% 25% 31% 13%(g)
Net assets at end of period
(000).............................. $ 6,027 $113,549 $120,523 $63,390
<FN>
(a) The Fund commenced investment operations on June 8, 1992.
(b) Class A shares were initially offered on September 1, 1994. Per share amounts
reflect activity from that date.
(c) Net of fees and expenses waived or borne by the adviser which amounted
to $0.000.
(d) Total return at net asset value assuming all distributions reinvested and no initial
sales charge or CDSC.
(e) Not annualized.
(f) Had the adviser not waived or reimbursed a portion of expenses, total return would
have been reduced.
(g) Annualized.
</TABLE>
- -------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
All of the distributions will be treated as exempt income for federal income
tax purposes.
- -------------------------------------------------------------------------------
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
TO THE TRUSTEES OF COLONIAL TRUST IV AND THE SHAREHOLDERS OF COLONIAL HIGH
YIELD MUNICIPAL 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 High Yield Municipal
Fund (a series of Colonial Trust IV), at November 30, 1994, 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 November 30, 1994 by correspondence with the custodian,
provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 11, 1995
15
COLONIAL TRUST IV
Cross Reference Sheet
Colonial Tax-Exempt Fund
-------------------------
Location or Caption in Statement
Item Number of Form N-1A of Additional Information
- ------------------------ ---------------------------------
Part B
10. Cover Page
11. Table of Contents
12. Not Applicable
13. Investment Objectives and
Policies; Fundamental Investment
Policies; Other Investment
Policies; Miscellaneous
Investment Practices; Portfolio
Turnover
14. Management of the Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses;
Management of the Funds
17. Fund Charges and Expenses;
Management of the Funds
18. Shareholder Liability
19. How to Buy Shares; Determination
of Net Asset Value; Suspension of
Redemptions; Investor Services
20. Taxes
21. Fund Charges and Expenses;
Management of the Funds
22. Fund Charges and Expenses;
Management of the Funds
23. Independent Accountants
COLONIAL TAX-EXEMPT FUND
Statement of Additional Information
March 30, 1995
This Statement of Additional Information (SAI) contains
information which may be useful to investors but which is not
included in the Prospectus of Colonial Tax-Exempt Fund (Fund).
This SAI is not a prospectus and is authorized for distribution
only when accompanied or preceded by the Prospectus of the Fund
dated March 30, 1995. This SAI should be read together with the
Prospectus. Investors may obtain a free copy of the Prospectus
from Colonial Investment Services, Inc., One Financial Center,
Boston, MA 02111-2621.
Part 1 of this SAI contains specific information about the Fund.
Part 2 includes information about the Colonial funds generally
and additional information about certain securities and
investment techniques described in the Fund's Prospectus.
TABLE OF CONTENTS
Part 1 Page
Definitions
Fundamental Investment Policies
Investment Objectives and Policies
Other Investment Policies
Portfolio Turnover
Fund Charges and Expenses
Investment Performance
Custodian
Independent Accountants
Part 2
Miscellaneous Investment Practices
Taxes
Management of the Funds
Determination of Net Asset Value
How to Buy Shares
Investor Services
Suspension of Redemptions
Shareholder Liability
Performance Measures
Appendix I
Appendix II
TE-16/723A-0395
COLONIAL TAX-EXEMPT FUND
Statement of Additional Information
March 30, 1995
DEFINITIONS
"Fund" Colonial Tax-Exempt Fund
"Trust" Colonial Trust IV
"Colonial" Colonial Management Associates, Inc., the Fund's investment
manager
"CISI" Colonial Investment Services, Inc., the Fund's distributor
"CISC" Colonial Investors Service Center, Inc., the Fund's
shareholder services and transfer agent
INVESTMENT OBJECTIVES AND POLICIES
The Fund's Prospectus describes its investment objectives and
policies. Part 1 includes additional information concerning,
among other things, the fundamental investment policies of the
Fund. Part 2 of this SAI contains additional information about
the following securities and investment techniques:
Short-Term Trading
High Yield Bonds
Zero Coupon Securities
Step Coupon Bonds
Forward Commitments
Repurchase Agreements
Options on Securities
Futures Contracts and Related Options
Except as described below under "Fundamental Investment
Policies," the Fund's investment policies are not fundamental,
and the Trustees may change the policies without shareholder
approval.
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (Act) provides that a "vote of
a majority of the outstanding voting securities" means the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund, or (2) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares
are represented at the meeting in person or by proxy. The
following fundamental investment policies can not be changed
without such a vote.
Total assets and net assets are determined at current value for
purposes of compliance with investment restrictions and policies.
All percentage limitations will apply at the time of investment
and are not violated unless an excess or deficiency occurs as a
result of such investment. For the purpose of the Act
diversification requirement, an issuer is the entity whose
revenues support the security.
The Fund may:
1. Issue senior securities only through borrowing money from
banks for temporary or emergency purposes up to 10% of its
net assets; however, the Fund will not purchase additional
portfolio securities while borrowings exceed 5% of net
assets;
2. Only own real estate acquired as the result of owning
securities and not more than 5% of total assets;
3. Invest up to 10% of net assets in illiquid assets;
4. Purchase and sell futures contracts and related options so
long as the total initial margin and premiums on the
contracts do not exceed 5% of its total assets;
5. Underwrite securities issued by others only when disposing
of portfolio securities;
6. Make loans through lending of securities not exceeding 30%
of total assets, through the purchase of debt instruments
or similar evidences of indebtedness typically sold
privately to financial institutions and through repurchase
agreements;
7. Not concentrate more than 25% of its total assets in any
one industry or, with respect to 75% of net assets,
purchase any security (other than obligations of the U.S.
Government and cash items including receivables) if as a
result more than 5% of its total assets would then be
invested in securities of a single issuer or purchase the
voting securities of an issuer if, as a result of such
purchase, the Fund would own more than 10% of the
outstanding voting shares of such issuer; and
8. Will, under normal circumstances, invest at least 80% of
its total assets in tax-exempt securities.
OTHER INVESTMENT POLICIES
As non-fundamental investment policies which may be changed
without a shareholder vote, the Fund may not:
1. Purchase securities on margin, but it may receive short-
term credit to clear securities transactions and may make
initial or maintenance margin deposits in connection with
futures transactions;
2. Have a short securities position, unless the Fund owns, or
owns rights (exercisable without payment) to acquire, an
equal amount of such securities;
3. Own voting securities of any company if the Trust knows
that officers and Trustees of the Trust or officers and
directors of Colonial who individually own more than 0.5%
of such securities together own more than 5% of such
securities;
4. Invest in interests in oil, gas or other mineral
exploration or development programs, including leases;
5. Purchase any security resulting in the Fund having more
than 5% of its total assets invested in securities of
companies (including predecessors) less than three years
old;
6. Pledge more than 33% of its total assets;
7. Purchase any security if, as a result of such purchase,
more than 10% of its total assets would be invested in
securities which are restricted as to disposition;
8. Purchase or sell real estate (including limited partnership
interests) although it may purchase and sell (a) securities
which are secured by real estate and (b) securities of
companies which invest or deal in real estate; provided,
however, that nothing in this restriction shall limit the
Fund's ability to acquire or take possession of or sell
real estate which it has obtained as a result of
enforcement of its rights and remedies in connection with
securities it is otherwise permitted to acquire; and
9. Invest in warrants if, immediately after giving effect to
any such investment, the Fund's aggregate investment in
warrants, valued at the lower of cost or market, would
exceed 5% of the value of the Fund's net assets. Included
within that amount, but not to exceed 2% of the value of
the Fund's net assets, may be warrants which are not listed
on the New York Stock Exchange or the American Stock
Exchange. Warrants acquired by the Fund in units or
attached to securities will be deemed to be without value.
PORTFOLIO TURNOVER (for the fiscal years ended November 30)
1994 1993
56% 28%
FUND CHARGES AND EXPENSES
Under the Fund's management agreement, the Trust pays Colonial a
monthly fee based on the average daily net assets allocated among
the Fund, the Colonial Tax-Exempt Insured Fund and the Colonial
High Yield Municipal Fund at the following annual rates: 0.60% on
the first $1 billion, 0.55% of the next $2 billion, 0.50% of the
next $1 billion and 0.45% of any excess over $4 billion.
Recent Fees paid to Colonial, CISI and CISC (for the fiscal years
ended November 30) (in thousands)
1994 1993 1992
Management fee $20,098 $19,169 $15,489
Bookkeeping fee $ 766 $ 764 $ 720
Shareholder service and
transfer agent fee $ 5,864 $ 5,521 $ 4,379(a)
12b-1 fees:
Service fee $ 9,151 $ 8,688 $ 6,850
Distribution fee
(Class B)(b) $ 3,540 $ 2,143 $ 254
(a) Under a prior fee schedule.
(b) Class B shares were initially offered on May 5, 1992.
Brokerage Commissions (for the fiscal years ended November 30)
(in thousands)
1994 1993 1992
Total Commissions (c) $37 $0 $0
(c) See "Management of the Funds - Portfolio Transactions -
Brokerage and research services" in Part 2 of this SAI.
Trustees Fees
For the calendar year ended December 31, 1994, the Trustees
received the following compensation for serving as Trustees:
Pension or
Retirement Estimated
Benefits Annual Total
Aggregate Accrued As Benefits Compensation
Compensation Part of Fund Upon From Fund and
Trustee From Fund Expense Retirement Fund Complex(e)
Tom Bleasdale $18,416(d) $0 $0 $101,000
Lora S. Collins 17,069 0 0 95,000
William D. Ireland, Jr. 19,760 0 0 110,000
William E. Mayer 16,143 0 0 89,752
John A. McNeice, Jr. 0 0 0 0
James L. Moody, Jr. 19,596 0 0 109,000
John J. Neuhauser 17,064 0 0 95,000
George L. Shinn 20,120 0 0 112,000
Robert L. Sullivan 18,803 0 0 104,561
Sinclair Weeks, Jr. 20,837 0 0 116,000
(d) Includes $8,799 payable as deferred compensation.
(e) The Colonial Funds Complex consists of 31 open-end and 5
closed-end management investment company portfolios.
The following table sets forth the amount of compensation paid to
Messrs. Birnbaum, Grinnell and Lowry in their capacities as
Trustees of the Liberty All-Star Equity Fund, The Charles Allmon
Trust, Inc., Liberty Financial Trust and LFC Utilities Trust
(together, Liberty Funds) for service during the calendar year
ended December 31, 1994:
Pension or Total
Aggregate Retirement Estimated Compensation
Compensation Benefits Annual From Liberty Funds
From Fund for Accrued As Benefits for the calendar
the fiscal year Part of Upon year ended
Trustee ended 11/30/94 Fund Expense Retirement 12/31/94 (f)
Robert J. Birnbaum $0 $0 $0 $ 0
James E. Grinnell 0 0 0 31,032
Richard W. Lowry 0 0 0 31,282
(f) The Liberty Financial Trust consists of 5 open-end and 2 closed-end
management investment company portfolios, each of which is
advised by Stein Roe & Farnham Incorporated, an indirect
wholly-owned subsidiary of Liberty Financial Companies,
Inc., which in turn is an indirect subsidiary of Liberty
Mutual Insurance Company.
Ownership of the Fund
At February 28, 1995, the officers and Trustees of the Trust as
a group owned less than 1% of the outstanding shares of the Fund.
At February 28, 1995, Merrill Lynch, Pierce, Fenner & Smith,
Inc., Attn: Book Entry, Mutual Funds Operations, 4800 Deer Lake
Dr. E. 3rd FL, Jacksonville, FL 32216, owned 6.39% of the Fund's
outstanding Class B shares.
At February 28, 1995, there were 81,411 Class A and 14,233 Class B
shareholders.
Sales Charges (for the fiscal years ended November 30) (in
thousands)
Class A Shares
1994 1993 1992
Aggregate initial sales
charges on Fund share sales $6,172 $16,294 $17,959
Initial sales charges
retained by CISI $ 468 $ 2,021 $ 2,060
Class B Shares
May 5, 1992
(commencement of
investment operations)
through November 30,
1994 1993 1992
Aggregate contingent deferred
sales charges
(CDSC) on Fund redemptions
retained by CISI $1,272 $338 $19
12b-1 Plans, CDSCs and Conversion of Shares
The Fund offers two classes of shares - Class A and Class B. The
Fund may in the future offer other classes of shares. The
Trustees have approved 12b-1 Plans pursuant to Rule 12b-1 under
the Act. Under the Plans, the Fund pays CISI a service fee at an
annual rate of 0.25% of average net assets attributed to each
class of shares and a distribution fee at an annual rate of 0.75%
of average net assets attributed to Class B shares. CISI may use
the entire amount of such fees to defray the costs of commissions
and service fees paid to financial service firms (FSFs) and for
certain other purposes. Since the distribution and service fees
are payable regardless of the amount of CISI's expenses, CISI may
realize a profit from the fees.
The Plans authorize any other payments by the Fund to CISI and
its affiliates (including Colonial) to the extent that such
payments might be construed to be indirect financing of the
distribution of Fund shares.
The Trustees believe the Plans could be a significant factor in
the growth and retention of Fund assets resulting in a more
advantageous expense ratio and increased investment flexibility
which could benefit each class of Fund shareholders. The Plans
will continue in effect from year to year so long as continuance
is specifically approved at least annually by a vote of the
Trustees, including the Trustees who are not interested persons
of the Trust and have no direct or indirect financial interest in
the operation of the Plans or in any agreements related to the
Plans (independent Trustees), cast in person at a meeting called
for the purpose of voting on the Plans. The Plans may not be
amended to increase the fee materially without approval by vote
of a majority of the outstanding voting securities of the
relevant class of shares and all material amendments of the Plans
must be approved by the Trustees in the manner provided in the
foregoing sentence. The Plans may be terminated at any time by
vote of a majority of the independent Trustees or by vote of a
majority of the outstanding voting securities of the relevant
class of shares. The continuance of the Plans will only be
effective if the selection and nomination of the Trustees who are
non-interested Trustees is effected by such non-interested
Trustees.
Class A shares are offered at net asset value plus varying sales
charges which may include a CDSC. Class B shares are offered at
net asset value subject to a CDSC if redeemed within six years
after purchase. The CDSCs are described in the Prospectus.
No CDSC will be imposed on shares derived from reinvestment of
distributions or on amounts representing capital appreciation.
In determining the applicability and rate of any CDSC, it will be
assumed that a redemption is made first of shares representing
capital appreciation, next of shares representing reinvestment of
distributions and finally of other shares held by the shareholder
for the longest period of time.
Eight years after the end of the month in which a Class B share
is purchased, such share and a pro rata portion of any shares
issued on the reinvestment of distributions will be automatically
converted into Class A shares having an equal value, which are
not subject to the distribution fee.
Sales-related expenses (for the fiscal year ended November 30,
1994) (in thousands) of CISI were:
Class A Shares Class B Shares
Fees to FSFs $7,598 $6,473
Cost of sales material
relating to the Fund $ 580 $ 288
Allocated travel, entertainment
and other promotional $1,178 $ 456
INVESTMENT PERFORMANCE
The Fund's yields for the month ended November 30, 1994, were:
Tax-equivalent
Yield Yield
Class A Shares 6.10% 10.10%
Class B Shares 5.66% 9.37%
The Fund's average annual total returns at November 30, 1994,
were:
Class A Shares
1 year 5 years 10 years
With sales charge of 4.75% (11.49)% 4.58% 7.79%
Without sales charge (7.08)% 5.60% 8.32%
Class B Shares
May 5, 1992
(commencement of
investment operations)
1 year November 30, 1994
With CDSC of 5.00% (12.16)% (1.23)%
Without CDSC 7.78% 2.28%
The Fund's Class A and Class B distribution rates at November 30,
1994, which are based on the most recent month's distribution,
annualized, and maximum offering price (net asset value for Class
B) at the end of the month, were 6.39% and 5.63%, respectively.
See Part 2 of this SAI, "Performance Measures," for how
calculations are made.
CUSTODIAN
United Missouri Bank, n.a. is the Fund's custodian. The custodian
is responsible for safeguarding the Fund's cash and securities,
receiving and delivering securities and collecting the Fund's
interest and dividends.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP are the Fund's independent accountants
providing audit and tax return preparation services and
assistance and consultation in connection with the review of
various SEC filings. The financial statements incorporated by
reference in this SAI have been so incorporated, and the schedule
of financial highlights included in the Prospectus have been so
included, in reliance upon the report of Price Waterhouse LLP
given on the authority of said firm as experts in accounting and
auditing.
The financial statements and Report of Independent Accountants
appearing on pages 3 through 27 of the November 30, 1994 Annual
Report are incorporated in this SAI by reference.
<PAGE>
INVESTMENT PORTFOLIO (IN THOUSANDS) NOVEMBER 30, 1994
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 98.2% PAR VALUE
- ---------------------------------------------------------------
<S> <C> <C>
CONSUMER PRODUCTS - 0.5%
AK Industrial Development Authority,
Lots 1-19 Series 1986:
8.625% 04/01/02(a) . . . $ 3,115 $ 3,350
8.750% 04/01/07. . . . . 3,915 4,221
IA Ellsworth Industrial Development,
Bagel Works Project Series 1990,
10.500% 01/15/12. . . . . 1,610 1,441
MN Buffalo Industrial,
Von Ruden Manufacturing, Inc.
10.500% 09/01/14. . . . . 1,475 1,506
PA Philadelphia Authority for
Industrial Development, Hechinger
Company, Series 1983,
11.375% 12/01/04. . . . . 4,000 4,210
VA Halifax County Industrial Development,
Authority O'Sullivan Industries Project,
Series 1988,
8.250% 10/01/08. . . . . 1,000 1,059
-------
15,787
- ---------------------------------------------------------------
EDUCATION - 9.4%
AL Jefferson County Board of Education,
Series 1993,
5.875% 02/15/20. . . . . 22,615 19,336
AZ Apache County School District
Number 010 Round Valley,
Project of 1987 Series 1987-C:
9.875% 07/01/05. . . . . 1,500 1,491
10.800% 07/01/96. . . . . 800 825
10.800% 07/01/97. . . . . 800 834
10.800% 07/01/98. . . . . 1,000 1,052
10.800% 07/01/99. . . . . 1,000 1,056
10.850% 07/01/95. . . . . 300 304
AZ Maricopa County School District,
Number 028 Kyrene Elementary,
Series 1993 C:
(b) with various maturities from
07/01/07 to 01/01/11 . . . . . 18,000 6,908
DC Georgetown University,
Series 1990 B,
7.150% 04/01/21. . . . . 2,500 2,500
FL State Board of Education Capital,
Outlay Series 1993-D:
5.125% 06/01/22. . . . . 14,500 11,074
5.200% 06/01/23. . . . . 10,140 7,808
IL Chicago Board of Education,
General Obligation Lease Certificates,
Series 1992-A:
6.000% 01/01/20. . . . . 4,000 3,475
6.250% 01/01/15. . . . . 4,400 4,010
IL Education Facilities,
Northwestern University Series 1985,
6.900% 12/01/21. . . . . 16,440 17,447
IN Purdue University,
Dormitory System,
7.000% 07/01/14. . . . . 3,500 3,745
MI Huron Valley School District,
Series 1991,
(b) 05/01/20. . . . . 95,750 16,756
NY State Dormitory Authority:
6.000% 07/01/20. . . . . 21,850 18,272
Series 1989-B,
7.250% 05/15/15. . . . . 4,150 4,466
Series 1990-A,
7.500% 05/15/13. . . . . 8,000 8,230
Series 1990-A,
7.625% 07/01/20. . . . . 11,500 12,593
Series 1990-B,
7.000% 05/15/16. . . . . 1,000 961
Series 1990-B,
7.375% 05/15/14. . . . . 6,190 6,450
Series 1990-C:
7.000% 07/01/14. . . . . 2,050 2,065
7.500% 07/01/10. . . . . 13,000 13,374
7.500% 07/01/20. . . . . 6,615 7,243
Series 1991-A,
7.250% 05/15/18. . . . . 3,850 4,163
Series 1993-A:
5.500% 05/15/08. . . . . 6,000 5,063
5.500% 05/15/13. . . . . 33,805 27,255
5.625% 05/15/13. . . . . 8,000 6,510
5.750% 07/01/13. . . . . 5,000 4,138
6.000% 07/01/20. . . . . 6,140 5,373
Series 1993-B,
5.250% 05/15/19. . . . . 12,230 9,157
Series 1993-F,
5.000% 07/01/20. . . . . 15,000 10,631
Series 1994-A,
5.625% 07/01/14. . . . . 11,500 9,301
Series A,
5.875% 05/15/17. . . . . 22,000 18,150
Series C,
5.400% 05/15/23. . . . . 20,625 15,391
PA State University,
5.500% 08/15/16. . . . . 15,145 12,324
</TABLE>
See notes to investment portfolio.
3
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------
<S> <C> <C>
EDUCATION - CONT.
TX Grapevine Colleyville Independent,
School District, Series 1994,
5.125% 08/15/22. . . . . $10,000 $ 7,725
TX Ysleta Independent School District,
Series 1993,
(b) 08/15/12. . . . . 6,240 1,810
--------
309,266
- -----------------------------------------------------------------
ELECTRIC - 16.1%
AZ Salt River Project, Agricultural
Improvement & Power District
Electric System:
Series 1992-D,
5.500% 01/01/25. . . . . 17,615 14,026
Series 1993-B,
5.250% 01/01/19. . . . . 18,500 14,545
CA Northern California Power Agency
Public Power, Hydroelectric Project
Number One, Series 1993-A,
5.500% 07/01/24. . . . . 10,000 8,075
CA Southern California Public Power
Authority:
Series 1993, Sub A,
5.250% 07/01/20. . . . . 10,000 7,838
Series 1993-A,
5.500% 07/01/12. . . . . 7,000 5,889
FL Gainesville Utilities,
Series 1993-B,
5.500% 10/01/13. . . . . 10,000 8,637
FL Martin County Indiantown,
7.875% 12/15/25. . . . . 7,500 7,406
FL Orlando Utilities Commission:
RIB (variable rate), Series 1993-B,
7.390% 10/06/13. . . . . 5,000 3,550
Series 1993-A,
5.250% 10/01/23. . . . . 11,525 9,004
Series 1993-B,
5.250% 10/01/23. . . . . 14,835 11,701
FL Power Agency, St. Lucie Project,
5.250% 10/01/21. . . . . 12,000 9,495
FL State Municipal Power Agency,
Series 1993,
5.100% 10/01/25(a) . . . 24,000 18,300
GA Municipal Electric Authority Power:
Series Z,
5.500% 01/01/20(c) . . . 39,000 32,468
Series 1993 C,
5.700% 01/01/19(a) . . . 20,000 17,075
Special Obligation, Second Crossover,
8.125% 01/01/17. . . . . 10,000 10,788
IL Development Financial Authority,
Pollution Control Series 1991,
7.250% 06/01/11. . . . . 5,625 5,365
IL Du Page County General Obligation,
Series 1993,
5.600% 01/01/21. . . . . 5,000 4,163
IN Petersburg Pollution Control,
Indianapolis Power & Light Company,
Series 1993-B,
5.400% 08/01/17. . . . . 5,000 3,950
IN Sullivan Pollution Control, Hoosier
Station Project, Series 1991,
7.100% 04/01/19. . . . . 10,000 9,937
KS Burlington Pollution Control
Kansas Gas & Electric Co., Series 1991,
7.000% 06/01/31. . . . . 10,500 10,474
MA General Obligations Bonds,
Consolidated Loan:
Series 1991-A,
6.000% 06/01/11. . . . . 8,750 7,897
Series 1991-B,
(b) 06/01/07. . . . . 5,500 2,482
Series 1991 C,
6.750% 08/01/09. . . . . 3,865 3,860
MA Holyoke, General Obligation,
School Project Loan,
7.650% 08/01/09. . . . . 1,250 1,270
MA Lowell General Obligation:
8.000% 01/15/00. . . . . 1,665 1,798
8.400% 01/15/09. . . . . 1,000 1,096
MA Municipal Wholesale Electric and
Power Supply System, STRIP (variable rate),
Series 1994 A,
6.226% 07/01/16(a) . . . 22,900 13,282
MA Springfield, General Obligation,
School Project Loan Act of 1948,
Series B,
7.100% 09/01/11. . . . . 3,000 2,899
MA State General Obligation Series 1989 C,
7.000% 06/01/04. . . . . 6,500 6,809
MS Jackson County Pollution Control,
Gulf Power Company Series 1991,
7.125% 04/01/21. . . . . 10,000 9,925
MT Forsyth Pollution Control,
Colstrip Project Series 1993,
6.125% 05/01/23. . . . . 3,000 2,524
NC Eastern Municipal Power Agency,
Power System, Series 1993-B,
6.125% 01/01/09. . . . . 14,695 13,281
NC Municipal Power Agency Number One,
Catawba Electric Utilities System:
Series 1988,
7.875% 01/01/19. . . . . 4,000 4,345
</TABLE>
See notes to investment portfolio.
4
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ---------------------------------------------------------------
<S> <C> <C>
ELECTRIC - CONT.
Series 1993,
5.000% 01/01/15. . . . . $20,000 $ 14,900
NE Omaha Public Power System, Electric
System, Series 1993-C,
5.500% 02/01/14. . . . . 20,000 16,975
NV Clark County Industrial Development,
Nevada Power Company, Series 1990,
7.800% 06/01/20. . . . . 4,250 4,548
NY State Energy Research & Development
Authority, Electrical Facilities:
Consolidated Edison Company:
5.250% 08/15/20. . . . . 23,500 17,743
Series 1989-A,
7.750% 01/01/24. . . . . 5,000 5,062
Long Island Lighting Company, Series 1990-A,
7.150% 06/01/20. . . . . 5,750 5,204
PA Beaver County,
Industrial Development Pollution Control,
Beaver Valley Project Series 1984-A,
13.250% 11/15/14. . . . . 3,000 3,131
SC Oconee County Pollution Control,
Duke Power Company, Series 1987-B,
7.750% 02/01/17. . . . . 2,000 2,110
SC Piedmont Municipal Power Agency,
Electric System:
Series 1986-A,
7.250% 01/01/22. . . . . 2,000 2,035
Series 1988,
(b) 01/01/13. . . . . 44,455 12,281
Series 1993,
5.375% 01/01/25. . . . . 14,055 11,209
SC State Public Service Authority:
Series A,
5.500% 07/01/21. . . . . 12,900 10,562
Series C,
5.125% 01/01/21. . . . . 23,300 17,504
SC State Public Service Authority,
Santee Cooper:
Series B,
6.000% 07/01/31. . . . . 3,485 2,923
Series 1993-C,
5.125% 01/01/32. . . . . 27,150 19,446
SD Heartland Consumers Power District,
Series 1992,
6.000% 01/01/12. . . . . 3,650 3,317
TX Austin Utilities System:
Series 1985-A,
9.500% 05/15/15. . . . . 6,000 6,998
Series 1992,
(b) 11/15/12. . . . . $18,200 $ 5,210
TX Brazos River Authority
Collateralized Pollution Control Bonds
Texas Utilities Electric Co. Series 1988-A,
9.250% 03/01/18. . . . . 9,200 9,809
TX Municipal Power Agency, Series 1993,
(b) 09/01/16. . . . . 32,095 6,941
TX San Antonio Electric and Gas:
5.000% 02/01/12. . . . . 25,000 20,125
Series 1989-A,
(b) 02/01/05. . . . . 5,850 3,049
UT Intermountain Power Agency
Power Supply:
Series A,
5.500% 07/01/20. . . . . 31,365 25,131
Series 1993-A,
(b) 07/01/17. . . . . 19,000 3,539
WA Chelan County Public Utilities,
District Number 001 Consolidated
Series 1989-A Division I,
7.750% 07/01/21. . . . . 4,500 4,719
WA Lewis County Public Utility District,
Number 001 Cowlitz Falls Hydroelectric,
Series 1991,
7.000% 10/01/22. . . . . 4,000 4,285
WA Tacoma Electric System, RIB
(variable rate), Series 1991-C,
9.245% 01/02/15. . . . . 10,000 8,900
--------
531,810
- ---------------------------------------------------------------
GENERAL OBLIGATIONS - 6.9%
AL Birmingham,
General Obligation,
Series 1993:
5.000% 07/01/13. . . . . 4,000 3,210
5.125% 07/01/17. . . . . 4,500 3,527
CA Metropolitan Water District,
Series B,
5.550% 03/01/20. . . . . 13,000 10,887
DC District of Columbia,
General Obligation, Series 1991 A,
6.875% 06/01/11. . . . . 10,000 10,575
GA De Kalb County,
5.250% 01/01/20. . . . . 5,000 3,994
MA General Obligation Bonds:
Series 1989-C,
7.000% 06/01/09. . . . . 500 534
Series 1990-C,
7.000% 12/01/10. . . . . 5,350 5,671
Series 1991 A,
7.625% 06/01/08. . . . . 5,000 5,525
</TABLE>
See notes to investment portfolio.
5
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------
<S> <C> <C>
GENERAL OBLIGATIONS - CONT.
MI Brighton Area School District,
General Obligation,
Series 1992-II,
(b) 05/01/16. . . . . $ 8,695 $ 1,935
MI Detroit General Obligation:
Series 1990 A,
8.700% 04/01/10. . . . . 10,000 10,763
Series 1990 B,
8.250% 04/01/10. . . . . 5,000 5,250
NJ State General Obligation, Series D,
6.000% 02/15/11. . . . . 5,000 4,675
NV State General Obligation,
Municipal Bond Bank Project 38-39,
Series 1992-A,
6.800% 07/01/12. . . . . 2,500 2,509
NY New York City General Obligation,
Series 1991-D:
7.000% 04/01/18. . . . . 8,000 8,570
8.000% 08/01/16. . . . . 3,055 3,405
8.000% 08/01/18. . . . . 5,160 5,786
NY State Various Purpose,
3.000% 03/15/01. . . . . 405 332
PA Westmoreland County Municipal
Authority, Special Obligation,
Series 1985,
9.125% 07/01/10. . . . . 5,000 5,875
Series 1993-C,
(b) with various maturities from
08/15/15 to 08/15/17 . . . . . 30,140 6,463
PR Commonwealth of Puerto Rico:
5.500% 07/01/08. . . . . 10,170 8,835
5.500% 07/01/09. . . . . 44,240 38,434
SD Sioux Falls School District Number
49-5, Capital Outlay Certificates of
1992, Series 1992-B,
5.750% 07/01/12. . . . . 5,640 4,963
TN Metropolitan Government Nashville &
Davidson County,
6.150% 05/15/25. . . . . 52,220 46,802
TN Shelby County, General Obligation,
School, Series 1992-A,
(b) with various maturities from
05/01/09 to 05/01/13 . . . . . 16,565 5,583
TN Shelby County, Public Improvement,
Series 1992-A,
(b) with various maturities from
05/01/08 to 05/01/13 . . . . . 59,110 19,312
VA Fairfax County Economic Development,
Ogden Martin Systems Series 1987 A,
7.750% 02/01/11. . . . . 1,000 1,049
WI Milwaukee County, General
Obligation, Corporate Purpose,
Series 1992-A,
6.500% 12/01/11. . . . . 3,375 3,459
--------
227,923
- -----------------------------------------------------------------
HOSPITALS & HEALTH CARE - 13.4%
AL Alabama Special Care Facilities
Authority, Montgomery Health Care
Series 1989,
11.000% 10/01/19. . . . . 15,955 15,416
AL Selma Special Care Facilities
Finance Authority, Vaughan Regional
Medical Center, Series 1987,
9.400% 06/01/07. . . . . 4,000 4,465
CA Health Facilities Financing Authority,
Kaiser Permanente, Series 1989-A,
7.000% 10/01/18. . . . . 6,250 6,187
CA San Bernardino County, Certificates
of Participation, Medical Center
Financing, Series 1994,
4.750% 08/01/28. . . . . 15,000 9,206
CO Health Facility,
Rocky Mountain Adventist Health,
Series 1993,
6.625% 02/01/13. . . . . 4,950 4,269
CT State Health & Educational Facility,
New Britain Memorial Hospital,
Series 1991-A,
7.750% 07/01/22. . . . . 905 864
DC District of Columbia Hospital,
Washington Hospital Center Corp.,
Series 1990-A:
8.750% 01/01/15. . . . . 10,000 11,425
9.000% 01/01/08. . . . . 1,935 2,235
DE Wilmington, Riverside Hospital,
Series 1988A,
10.000% 10/01/03. . . . . 300 354
</TABLE>
See notes to investment portfolio.
6
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------
<S> <C> <C>
HOSPITALS & HEALTH CARE - CONT.
DE State Economic Development,
Riverside Hospital, Series 1992 A,
9.500% 01/01/22. . . . . . $ 1,175 $ 1,253
FL Brevard County Health Facilities,
Holmes Regional Medical Center,
Series 1993,
5.750% 10/01/13. . . . . . 1,250 1,056
FL St. Petersburg Health Facilities
Authority, Alleghany Health System,
St. Joseph's Hospital, Inc., Series 1985-A,
7.000% 12/01/15. . . . . . 2,000 2,028
GA Clayton Hospital Authority,
The Woodlands Foundation Incorporated,
Series 1991 A,
9.800% 05/01/21(d) . . . . 6,680 4,342
IA Ottumwa Hospital Facilities,
Ottumwa Regional Health Center,
Series 1985,
9.625% 11/01/10. . . . . . 3,025 3,301
IL Alton Health Facilities Revenue
Barnes-Jewish, Incorporated
Christian Series 1993-B,
5.500% 05/15/21. . . . . . 5,000 3,912
IL Health Facility Authority:
Series A,
9.250% 07/01/24. . . . . . 8,435 7,845
Series 1989 A,
7.375% 04/01/08. . . . . . 3,000 3,236
Series 1989 B,
7.375% 04/01/08. . . . . . 5,055 5,434
Series 1991:
8.125% 07/01/06. . . . . . 3,350 3,719
8.375% 07/01/12. . . . . . 1,500 1,706
Series 1992,
7.000% 02/15/22. . . . . . 1,000 951
Series 1993 A,
6.300% 08/01/13. . . . . . 500 420
Series 1993 C,
6.000% 04/01/18. . . . . . 3,000 2,512
IL Health Facilities Authority,
RIB (variable rate), Series 1992-B,
9.983% 05/01/21. . . . . . 4,800 4,422
IL Naperville Economic Development,
Series 81,
13.000% 08/01/08. . . . . . 5,830 6,056
MA Boston
Boston City Hospital:
Series-B:
5.750% 02/15/13. . . . . . 8,000 6,860
5.750% 02/15/23. . . . . . 2,000 1,633
Series 1990-A,
7.625% 02/15/21(a) . . . . 12,000 13,215
MA Health and Educational Facilities:
Hillcrest Hospital,
13.000% 07/01/18. . . . . . 2,800 2,901
Lowell General Hospital,
Series 1991-A,
8.400% 06/01/11. . . . . . 2,500 2,612
St. Joseph's Hospital Series C,
9.500% 10/01/20. . . . . . 3,785 4,428
MI State Hospital Finance Authority:
Central Michigan Community Hospital,
Series 1993-A,
6.000% 10/01/08. . . . . . 1,500 1,335
Henry Ford Health System,
Series 1992-A,
5.750% 09/01/17. . . . . . 5,000 4,131
MO Hannibal Industrial Development,
Medical Systems of Northeast
Missouri, Series 1992,
9.500% 03/01/22. . . . . . 4,250 4,755
MO State Health & Educational
Facilities Authority, Series 1988-A,
7.750% 06/01/16. . . . . . 2,000 2,178
MS Hospital Equipment & Facilities
Authority, Pooled Loan Program,
7.500% 08/01/16. . . . . . 18,900 18,333
MT State Health Facility Authority,
Hospital Facilities, RIB (variable rate),
Series 1994,
6.902% 02/15/25. . . . . . 6,000 3,158
NC Lincoln County Hospital Project,
9.000% 05/01/07. . . . . . 530 553
NC State Medical Care Commission,
Scotland Memorial Hospital Project,
Series 1993,
5.375% 10/01/11. . . . . . 500 419
NJ Health Care Facilities Financing
Authority, Raritan Bay Medical Center,
7.250% 07/01/14. . . . . . 4,000 3,555
NM Grant County Hospital Facility,
Gila Regional Medical Center,
Series 1986,
10.000% 02/01/12. . . . . . 2,235 2,380
NV Reno Hospital, St. Mary's Regional
Medical Center, Series 1991-A,
6.700% 07/01/21. . . . . . 1,700 1,687
</TABLE>
See notes to investment portfolio.
7
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------
<S> <C> <C>
HOSPITALS & HEALTH CARE - CONT.
NY State Medical Care Facilities
Finance Agency:
Good Samaritan Hospital,
Series 1988-A,
7.625% 02/15/23. . . . . . $ 2,500 $ 2,531
Mental Health Facilities Improvement:
Series 1989-B,
7.450% 02/15/29. . . . . . 5,000 5,438
Series 1991-A,
7.500% 02/15/21. . . . . . 15,375 16,484
Series 1993-F,
5.375% 02/15/14. . . . . . 15,000 11,794
Presbyterian Hospital,
Series 1994-A,
5.375% 02/15/25. . . . . . 35,485 27,279
St. Luke's-Roosevelt Hospital,
5.625% 08/15/18. . . . . . 8,500 6,896
OH Alliance First Mortgage Medical,
Facility,
10.125% 02/01/13. . . . . . 2,455 2,455
OH Cuyahoga County Industrial
Development Authority,
Joy Technologies, Inc.,
8.750% 09/15/07. . . . . . 690 706
OH Perry County First Mortgage,
New Lexington Health,
9.875% 09/01/10. . . . . . 2,545 2,634
OK Development Finance Authority,
Hospital Facilities, Baptist
Healthcare of Oklahoma, Series 1990-A,
8.250% 08/01/09. . . . . . 6,250 6,328
PA Allegheny County Hospital Development,
The Western Pennsylvania Hospital,
Series 1985,
8.250% 07/01/12(a) . . . . 3,000 3,206
PA Erie County Hospital Authority,
Metro Health Center Series 1992,
7.375% 07/01/22. . . . . . 5,000 4,594
PA Lehigh County,
Healtheast Incorporated Series 1987 B,
9.000% 07/01/15. . . . . . 12,000 13,215
PA Montgomery County Higher Education
& Health Authority, United Hospitals,
Incorporated Project, Series 1989-B,
8.375% 11/01/11. . . . . . 2,525 2,534
PA Philadelphia Hospitals & Higher
Educational Facilties Authority,
MR Project, Series 1986,
8.625% 08/01/11. . . . . . 1,000 1,078
PA Somerset County Hospital Authority,
Somerset Community Hospital,
Series 1991,
7.500% 03/01/17. . . . . . 4,535 4,223
PA Westmoreland County Redevelopment
Authority, First Mortgage, Harmon
House, Series A,
(b) 08/15/28. . . . . . 37,300 2,937
PA York County Industrial Development
Authority, Fairview Village
Associates, Series 1986,
10.750% 06/01/16. . . . . . 700 777
RI Housing & Mortgage Finance
Corporation, Homeownership
Opportunity, Series 1-B-1,
8.400% 10/01/21. . . . . . 2,905 2,963
SC Greenville Hospital System,
Series 1993 C,
5.500% 05/01/11. . . . . . 7,900 6,438
SC Greenwood County Hospital,
Self Memorial Hospital Series 1993,
5.875% 10/01/17. . . . . . 5,000 4,344
TN Chattanooga Health Education
and Housing Facilities Board,
North Park Hospital Project, Series 1993,
8.500% 06/01/18(d) . . . . 42,795 38,408
TN Metropolitan Government, Nashville
& Davidson Counties, Volunteer
Healthcare Systems, Series 1988-A,
10.750% 06/01/18(d) . . . . 18,880 5,664
TN Nashville & Davidson, Meharry
Medical Project,
6.875% 12/01/24(e) . . . . 29,750 29,378
TN Sumner County, Health, Education,
& Housing Facilities Board, Gallatin
Health Care, Series 1986:
9.750% 12/01/03. . . . . . 160 114
9.750% 12/01/04. . . . . . 175 145
9.750% 12/01/05. . . . . . 225 187
9.750% 12/01/06. . . . . . 220 183
10.250% 12/01/16. . . . . . 2,400 1,992
TX Edinburg Hospital Authority,
Edinburg General Hospital,
Series 1986,
10.000% 07/01/11. . . . . . 5,300 5,340
TX Harris County Health Facility,
Herman Hospital, Series 1987,
9.000% 10/01/17. . . . . . 10,000 11,088
TX Hidalgo County Health Services,
Mission Hospital Incorporated,
Series A,
10.250% 02/01/25. . . . . . 4,785 5,431
</TABLE>
See notes to investment portfolio.
8
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------
<S> <C> <C>
HOSPITALS & HEALTH CARE - CONT.
TX Montgomery County Health Facilities
Development Corporation, Heritage
Manor-Woodlands Project, Series 1990,
(b) 07/15/23. . . . . . $30,000 $ 3,712
TX Tarrant County, Health Facilities
Development Corporation,
10.125% 04/01/21. . . . . . 9,200 9,280
VA Dickenson County Industrial,
Development Volunteer Healthcare,
Systems Inc., Series 1988 A,
10.750% 06/01/18(d) . . . . 2,500 750
VA Southampton County Industrial
Authority, Medical Facility of
America XLIII Project, Series 1986,
8.375% 12/15/26. . . . . . 3,050 3,126
VT Educational & Health Buildings
Financing Agency,
7.750% 01/01/13. . . . . . 2,085 1,869
WA State Health Care Facility,
Grays Harbor Community
Hospital, Series 1993:
7.200% 07/01/03. . . . . . 1,285 1,189
8.025% 07/01/20. . . . . . 6,380 5,949
WI State Health & Educational
Facilities Authority, St. Luke's
Medical Center Project, Series 1991,
7.100% 08/15/19. . . . . . 2,550 2,569
WV State Hospital Finance Authority,
West Virginia University Medical
Corporation,
6.100% 01/01/18. . . . . . 5,000 4,569
--------
440,544
- -------------------------------------------------------------------
HOUSING - 12.8%
AK State Housing Financing Corporation:
Series 1991,
7.800% 12/01/30. . . . . . 2,430 2,500
Series 1992 A,
6.600% 12/01/23. . . . . . 11,750 12,175
AZ Maricopa County Industrial Development,
Single Family Series 1984,
(b) 02/01/16. . . . . . 10,005 2,225
AZ Mohave County Industrial Devlopment
Authority, Multifamily, Kingman
Station Apartments,
8.125% 10/01/26. . . . . . 2,895 2,931
AZ Phoenix Industrial Development
Authority, Chris Ridge Village
Project, Series 1992:
6.750% 11/01/12. . . . . . 650 613
6.800% 11/01/25. . . . . . 2,750 2,530
CA Housing Finance Agency,
Home Mortgage Series 1984-B,
(b) 08/01/16. . . . . . 480 44
CO El Paso County Home Mortgage:
Series 1987 C,
8.300% 09/20/18. . . . . . 3,346 3,467
Series 1987 D,
8.150% 09/20/14. . . . . . 1,464 1,491
Series 1988 A,
8.375% 03/25/19. . . . . . 2,784 2,910
CO Health Facility,
Birchwood Manor Series 1991 A,
7.625% 04/01/26. . . . . . 1,835 1,851
CO Housing Financing Authority,
Single Family:
Series 1990 B-1,
7.950% 08/01/10. . . . . . 1,695 1,710
Series 1991 A,
7.500% 05/01/29. . . . . . 4,745 4,810
Series 1991 C-1,
7.200% 02/01/18. . . . . . 900 882
CT Church Street Housing Authority,
South Apartments, Section 8, Series 1983,
11.000% 03/01/01. . . . . . 2,020 1,717
DE Quaker Hill Housing Corporation,
Multifamily Housing, Quaker Hill
Apartments, Series A,
7.550% 08/01/21. . . . . . 6,225 6,443
FL Brevard County
Housing Finance Authority,
Single Family Mortgage Series, 1985,
(b) 04/01/17. . . . . . 9,785 1,003
FL Clearwater Housing Authority,
Hampton Apartments,
8.250% 05/01/24. . . . . . 3,475 3,484
FL Collier County Retirement Rental
Housing, Beverly Retirement Naples,
Series 1991,
10.750% 03/01/03. . . . . . 1,170 1,335
FL Housing Finance Authority,
Windsong Apartments, Series 1993-C,
9.250% 01/01/19. . . . . . 1,230 1,175
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21. . . . . . 10,600 10,534
FL Housing Finance Agency,
10.000% 10/01/20. . . . . . 915 884
</TABLE>
See notes to investment portfolio.
9
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
FL Walton County, Industrial
Development, Villa Bay Gardens,
Series 1986,
10.500% 01/01/17(d) . . . . $ 2,700 $1,080
GA Atlanta Urban Residential
Finance Authority, Single Family
Housing Mortgage, Series 1988,
8.250% 10/01/21. . . . . . 1,335 1,325
GA Augusta Housing Authority Mortgage,
Mountain Ridge Holdings II Series A,
8.960% 09/01/24. . . . . . 3,620 3,480
GA Savannah Housing Authority,
Multi-family Housing, Plantation Oaks
Apartments Project, Series 1986,
9.625% 02/01/27. . . . . . 2,905 3,014
GA State Residential Financing,
Authority, Series 1989 C,
SubSeries C-3,
7.800% 06/01/21. . . . . . 5,950 6,136
IA Finance Authority Single-family,
Series 1992 B,
6.950% 07/01/24. . . . . . 10,000 9,412
IA Marion,
Kentucky Iowa Corporation Project,
Series 1990,
10.250% 01/01/20. . . . . . 1,000 1,004
IL Carbondale Mortgage Revenue,
Mill Street Apartments Series 1979,
7.375% 09/01/20. . . . . . 866 806
IL Charleston Non-Profit Corporation,
Cougills Manor Project,
6.875% 07/01/20. . . . . . 1,835 1,622
IL Chicago Multiple Family Housing,
Jeffrey Apartments Series 1987,
8.125% 08/01/30. . . . . . 2,410 2,446
IL Development Finance Authority,
Retirement Housing Redevelopment,
Regency Park at Lincolnwood,
(b) 07/15/25. . . . . . 79,550 8,651
IL East Moline Housing Finance,
Corporation Deerfield Woods Apartments,
7.500% 08/01/21. . . . . . 2,446 2,275
IL Housing Development Authority,
Series 1990 A,
8.000% 06/01/26. . . . . . 1,500 1,513
IL Rockford:
8.700% 08/20/07. . . . . . 635 646
8.700% 08/20/26. . . . . . 4,455 4,533
9.250% 02/01/00. . . . . . 1,260 1,249
IN State Housing Finance Authority,
Single-family Housing:
Series 1984 C,
10.625% 01/01/16. . . . . . 800 810
Series 1987 C,
9.125% 07/01/18. . . . . . 4,730 4,943
KY Louisville Residential,
Series 1984,
(b) 07/01/16. . . . . . 2,500 234
LA Housing Financing Agency,
Series 1988,
8.300% 11/01/20. . . . . . 2,930 2,981
LA Jefferson Housing Development,
Corp. Multiple Family,
Concordia Project Series A,
7.700% 08/01/22. . . . . . 2,570 2,676
LA Jefferson Parish Home Mortgage
Authority, Single-family,
Series 1988 A,
8.300% 04/01/20. . . . . . 2,435 2,517
LA New Orleans Home Mortgage Authority,
Special Obligation Refunding, Series
1992,
6.250% 01/15/11. . . . . . 2,500 2,294
LA New Orleans Housing Development
Corp., Multi-family Housing
Mortgage, Southwood Patio,
Series 1990-A,
7.700% 02/01/22. . . . . . 2,375 2,402
MA Housing Finance Agency:
Series 1987-A,
9.000% 12/01/18. . . . . . 1,595 1,661
Series 1988-A,
8.400% 08/01/21. . . . . . 740 745
Series 1988-B,
8.100% 08/01/23. . . . . . 840 855
MD Frederick,
Willowdale Garden Apartments,
Series 1993 A,
6.300% 04/01/26. . . . . . 1,850 1,610
MN Roseville Elderly Care Facility,
Care Institute, Inc.,
Series 1993,
7.750% 11/01/23. . . . . . 2,975 2,659
MN State Housing Finance Agency,
Single-family Mortgage, Series
1988-D,
8.250% 08/01/20. . . . . . 1,950 1,972
</TABLE>
See notes to investment portfolio.
10
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
MN Washington County Housing &
Redevelopment Authority, Cottages of
Aspen Project,
9.250% 06/01/22. . . . . . $ 1,980 $ 1,871
MN White Bear Lake Multi-family Housing,
Birch Lake Townhomes Project:
Series 1988-A,
9.750% 07/15/19. . . . . . 2,185 2,209
Series 1989-B,
10.125% 07/15/19(f) . . . . 310 411
MO St. Louis Area Housing Finance
Corp., Wellington Arms III,
Series 1979,
7.500% 01/01/21. . . . . . 2,101 1,954
MS Biloxi Urban Renewal,
Biloxi Apartment Project,
Series 1985:
9.500% with various maturities from
12/01/05 to 12/01/15. . . . . . . . . 4,390 4,295
MS Canton Housing,
8.400% 08/15/21. . . . . . 1,567 1,524
MS Home Corp. Residual,
Series 1990-C,
(b) 09/01/13. . . . . . 20,000 5,275
MS Lamar County Wesley Manor II:
8.750% 08/01/20. . . . . . 1,000 1,046
(b) 02/01/29. . . . . . 1,610 1,684
NC Eastern Carolina Regional Housing
Multi-family, Mortgage New Apartments
Jacksonville
8.250% 09/01/14. . . . . . 2,915 2,795
NE Investment Finance Authority,
Single-family Mortgage:
RIB (variable rate), Series 1990-B,
10.660% 03/15/22. . . . . . 9,100 9,293
RIB (variable rate), Series 1990-2,
11.432% 09/10/30. . . . . . 4,300 4,445
Series 1988-1,
8.125% 08/15/38. . . . . . 6,180 6,327
NE Omaha Housing Development
Corporation, Mortgage Notes, North
Omaha Homes,
7.375% 03/01/21. . . . . . 1,454 1,407
NH State Housing Finance Authority,
Single-family Resources Mortgage:
Series 1989-B,
7.700% 07/01/29. . . . . . 2,855 2,830
NJ State Housing & Mortgage Finance
Agency,
6.950% 11/01/13. . . . . . 5,090 4,956
NY Nyack Housing Assistance
Corp., Plaza Apartments,
7.375% 06/01/21. . . . . . 3,169 2,947
NY State Dormitory Authority University
Educational Facilities, Series B,
5.750% 05/15/24. . . . . . 12,000 9,525
NY State Mortgage Agency Home Owner
Mortgage, Series HH-2,
7.850% 04/01/22. . . . . . 1,500 1,536
NY State Mortgage Finance Agency,
Series BB-2,
7.950% 10/01/15. . . . . . 1,395 1,437
NY Yorktown Housing Corp.,
Beaveridge Apartments,
7.375% 06/01/21. . . . . . 3,498 3,410
OH Housing Finance Agency, Single-
family Mortgage:
RIB (variable rate), Series A-2,
9.230% 03/24/31. . . . . . 6,550 5,936
Series 1988-C,
8.125% 03/01/20. . . . . . 1,145 1,178
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993-A,
8.250% 05/01/23. . . . . . 1,470 1,341
PA Philadelphia Redevelopment
Authority, Multi-family Housing,
Series 1988:
9.000% 10/01/09(d)(g). . . 2,300 690
9.375% 10/01/04. . . . . . 1,495 1,474
9.375% 10/01/18. . . . . . 3,915 3,842
Pass Through Certificates, Series
1993-A,
8.500% 12/01/16(h) . . . . 72,635 66,098
PA Pittsburgh Urban Redevelopment
Authority, Sidney Square Project,
7.800% 08/01/28. . . . . . 5,345 5,392
PA Warren County Housing Finance
Corp., Allegheny Manor,
7.500% 02/01/21. . . . . . 1,458 1,400
SC State Housing Authority,
Homeownership Mortgage, Series 1988-A,
8.500% 07/01/08. . . . . . 2,000 2,067
TN Housing Development Agency,
Homeownership Program, Issue I,
8.375% 07/01/19. . . . . . 1,050 1,070
</TABLE>
See notes to investment portfolio.
11
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
TN Knox County Industrial Board,
Multiple Family Redevelopment,
Waterford Village Project Series 1986:
8.750% with various maturities from
03/01/96 to 03/01/26. . . . . . . . $ 5,490 $ 5,714
TN Knoxville Community Development,
Corp. Multiple Family Housing,
Maple Oak Apartment Project Series 1992,
6.375% 10/15/08. . . . . . 2,510 2,363
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19. . . . . . 4,340 4,595
Series 1992-C,
9.750% 08/01/19. . . . . . 4,335 4,622
TX Bell County Health Facility Elder Care,
9.000% 11/01/24. . . . . . 7,585 7,594
TX Bexar County Housing Finance Corp.,
GNMA Collateralized Mortgage,
Series 1989-A,
8.200% 04/01/22. . . . . . 4,055 4,121
TX Corpus Christi Housing Finance Corp.,
Single-family Mortgage,
Lomas and Nettleton, Series C,
10.000% 10/01/07. . . . . . 1,435 1,480
TX Galveston Health Facilities Center,
Pass Through,
8.000% 08/01/23. . . . . . 1,850 1,764
TX Harris County Housing Finance
Corp., Single-family, Series 1987,
8.875% 12/01/17. . . . . . 3,110 3,161
TX Housing Agency, Single-family
Mortgage:
Series 1985-A,
9.375% 09/01/16. . . . . . 2,340 2,419
Series 1985-B,
9.375% 09/01/15. . . . . . 345 355
TX Laredo Housing Development Corp.,
Number 1,
7.375% 03/05/21. . . . . . 2,164 2,034
TX Lubbock Housing Finance Corp.,
Single-family:
Series 1988 C,
8.375% 12/01/20. . . . . . 7,025 7,086
Series 1988 D,
8.375% 12/01/20. . . . . . 1,360 1,384
TX Montgomery County Housing Finance
Corp., Multi-family Holly Creek
II Development, Series 1993-A,
5.900% 07/01/25. . . . . . 2,500 2,156
TX Panhandle Regional Housing Finance
Corp., Single-family Mortgage,
Series 1984,
11.375% 04/01/05. . . . . . 260 263
TX State Department Housing &
Community Affairs, Collateralized
Home Mortgage, RIB (variable rate),
Series 1992-B2,
9.349% 06/18/23. . . . . . 9,000 8,145
UT State Housing Finance Agency,
Single-family Mortgage, Series
1990-C2,
7.950% 07/01/10. . . . . . 510 536
VA Alexandria Redevelopment & Housing,
Multiple Family Housing,
Courthouse Commons Apartments:
Series 1990 A,
10.000% 01/01/21. . . . . . 760 732
Series 1990 B,
10.500% 01/01/21(f) . . . . 987 1,263
VA Beach Development Authority,
Beverly Enterprises, Series 1985,
10.000% 04/01/10. . . . . . 960 1,050
VA Harrisonburg Redevelopment and,
Multiple Family Housing Authority,
Series 1991 A,
7.375% 11/20/28. . . . . . 1,750 1,785
VA Norfolk Redevelopment Housing
Authority, Multi-family Housing,
Dockside, Series 1991-A:
7.300% 12/01/16. . . . . . 1,315 1,331
7.375% 12/01/28. . . . . . 1,940 1,972
VA Roanoke Redevelopment & Housing
Authority, First Mortgage, Mountain
Ridge,
9.250% 11/01/22. . . . . . 1,800 1,741
VA State Housing Development
Authority, Commonwealth Mortgage:
Series C, Subseries C-2,
8.000% 01/01/38. . . . . . 1,000 1,001
Series 1988-C, Subseries C-1,
7.800% 01/01/38. . . . . . 11,500 11,514
</TABLE>
See notes to investment portfolio.
12
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
VT Housing Finance Agency, Home
Mortgage Purchase, Series 1989-A,
7.850% 12/01/29. . . . . . $ 3,920 $ 4,052
WA Housing Development
Corp., Parkview Apartments
Project,
7.500% 04/01/21. . . . . . 1,722 1,610
WA State Housing Finance
Commission, Multi-family Housing,
Series 1988-A,
7.900% 07/01/30. . . . . . 1,470 1,481
WI Milwaukee Housing Authority
Mortgage, Windsor Court Project,
Series 1986:
8.700% 08/20/11. . . . . . 1,055 1,083
8.700% 08/21/21. . . . . . 1,985 2,037
WV Hancock County,
Weirton Geriatric,
10.000% 10/01/16. . . . . . 2,215 2,292
WV Harrison County,
First Mortgage Medical Facilities,
Salem Health Care Corp., Series 1986,
9.875% 06/01/10. . . . . . 2,320 2,395
WV State Housing Development Fund,
Series 1992-B,
7.200% 11/01/20. . . . . . 10,000 9,700
WY Community Development Authority,
Single-family Mortgage:
Series 1987-A,
7.875% 06/01/18. . . . . . 2,535 2,564
Series 1988-G,
7.250% 06/01/21. . . . . . 4,500 4,331
WY Rock Springs Housing Finance
Corp., Bicentennial Association II,
7.500% 05/01/20. . . . . . 1,175 1,136
--------
420,792
- -------------------------------------------------------------------
IN-SUBSTANCE DEFEASED (i) - 0.7%
NY Triborough Bridge & Tunnel
Authority, Special Obligation
Mortgage Recording, Series 1989-A,
7.125% 01/01/19. . . . . . 4,230 4,505
NY Triborough Bridge & Tunnel
Authority, General Purpose, Series
1991-T,
7.000% 01/01/20. . . . . . 6,350 6,795
PA Washington County Industrial
Development Authority, Central
States, Series 1989,
10.250% 11/01/19. . . . . . 3,440 3,337
UT Salt Lake City Housing Authority,
Multifamily Mortgage, Hartland
Apartments Project, Series 1987-A,
8.875% 12/20/27. . . . . . 7,720 7,788
--------
22,425
- -------------------------------------------------------------------
NURSING HOMES - 7.8%
AL Daphine Special Care Facilities,
Financing Authority
Presbyterian,
(b) 07/01/18(a) . . . . 200,000 22,000
AZ Tucson Industrial Development
Authority, Villa Maria Care Center,
10.125% 11/01/21. . . . . . 640 608
CA Bakersfield Certificate of
Participation, Bakersfield Assistant
Living Care, Series 1991,
(b) 04/15/21. . . . . . 70,000 10,675
CA San Diego Industrial Development,
8.750% 12/01/16. . . . . . 5,600 5,712
CO Health Facility Authority,
Liberty Heights Project, Series 1991 B,
(b) 07/15/24. . . . . . 28,990 3,370
CO Health Facility,
American Housing Foundation I,
Series 1990,
10.250% 12/01/20. . . . . . 2,500 2,516
CT State Development Authority,
Health Care Facilities,
AHF/Windsor, Inc., Series 1992 A,
9.500% 01/01/22. . . . . . 3,500 3,609
CT State Development Authority,
Waterbury Health Care Center,
Series 1984,
13.500% 11/01/14. . . . . . 1,965 2,044
DE State Economic Development
Healthcare, Facility,
10.000% 03/01/21. . . . . . 7,245 7,272
DE Sussex County, Economic Development,
Rehoboth Mall Project,
7.250% 10/15/12. . . . . . 4,885 4,580
DE Sussex County, Healthcare Facility,
Delaware Health Corporation, Series
1994-A,
7.600% 01/01/24. . . . . . 14,230 12,256
</TABLE>
See notes to investment portfolio.
13
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------
<S> <C> <C>
NURSING HOMES - CONT.
FL Flagler County Industrial,
Redevelopment Authority, South
Florida Properties, Series 1988,
10.500% 12/01/18. . . . . . $ 9,030 $ 9,030
FL Gadsden County Industrial Development,
Florida Housing Properties Inc.,
Series 1988 A,
10.450% 10/01/18. . . . . . 6,205 6,275
FL Palm Beach County Industrial
Development Authority:
Beverly Enterprises, Series 1984-1,
10.000% 06/01/11. . . . . . 2,825 3,093
Hillcrest Manor Project,
10.250% 12/01/16. . . . . . 3,235 3,381
FL Volusia County Industrial
Development Authority, Beverly
Enterprises, Series 1987,
9.800% 12/01/07. . . . . . 915 963
IA Finance Authority Healthcare Facility,
Mercy Health Initiatives, Series 1989,
9.950% 07/01/19. . . . . . 7,600 7,448
IL Champaign First Mortgage
Hoosier Care Inc., Series 1989-A,
9.750% 08/01/19. . . . . . 1,500 1,519
IN Gary Industrial Economic Development,
West Side Health Care Center,
Series 1987 A,
11.500% 10/01/17. . . . . . 1,985 1,886
IN Wabash First Mortgage, Hoosier
Care, Inc., Series 1989-A,
9.750% 08/01/19. . . . . . 5,960 6,049
MA Boston Nursing Home,
10.000% 01/01/20(j) . . . . 320 342
MA Industrial Finance Agency:
Mary Ann Morse Nursing Home 1991-I,
10.000% 01/01/21. . . . . . 1,715 1,786
Seacoast Nursing Retirement Series 1991,
9.625% 12/01/21. . . . . . 4,945 5,025
Series 1989,
10.125% 03/01/19. . . . . . 3,250 3,254
MA State Industrial Finance Agency,
GF/Massachusetts Inc.,
Series 1994,
8.300% 07/01/23. . . . . . 13,000 11,619
MA Health and Educational Facilities
Corp., Independent Living Bonds,
Series 1993-A,
8.100% 07/01/18. . . . . . 1,300 1,181
MN Brooklyn Park Industrial Development,
TL Systems Corp., Series 1991,
10.000% 09/01/16. . . . . . 330 316
MO St. Charles County Industrial
Development Authority,
8.700% 06/01/11. . . . . . 2,755 2,769
MO St. Louis County Industrial
Development Authority, Nursing Home,
Cardinal Carberry Health Center,
Series 1991,
7.125% 03/20/23. . . . . . 2,000 1,997
NJ Economic Development Authority,
First Mortgage, Trenton Convalescent
Center, Series A,
9.500% 01/01/16. . . . . . 1,950 1,933
NM Albuquerque Industrial Development,
Manor Nursing,
12.000% 05/15/14. . . . . . 3,248 3,751
OH Ashtabula County, First Mortgage,
Village Square Nursing Center, Inc.,
1985,
12.000% 12/01/15. . . . . . 1,290 1,354
OH Franklin County, Columbus
West Health Care Co., Series 1986,
10.000% 09/01/16. . . . . . 3,015 2,713
OH Lucas County Health Facilities,
Villa North Nursing Home,
Series 1988-B,
10.500% 06/01/18. . . . . . 2,995 2,695
OH Montgomery County Economic
Development Authority, Grafton Oaks,
Series 1986,
9.750% 12/01/16(d) . . . . 695 660
OH Trumbull County,
12.000% 12/01/15. . . . . . 2,240 2,408
OH Washington County Industrial
Development, Marie Antoinette Care
Center, Series 1983,
6.867% 12/01/13. . . . . . 5,370 4,457
OH Wayne County Nursing Home First
Mortgage, D & M Realty, Series 1985,
12.250% 12/01/15. . . . . . 2,510 2,635
PA Berkshire County Industrial
Development Authority,
Lehigh & Berkshire Manors:
Series 1993-A,
4.270% 05/01/23. . . . . . 15,165 15,108
Series 1993-B,
4.270% 06/01/23. . . . . . 1,400 1,395
</TABLE>
See notes to investment portfolio.
14
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------
<S> <C> <C>
NURSING HOMES - CONT.
PA Bucks County
Industrial Development:
Jorgensen Steel,
9.000% 06/01/05. . . . . . $ 4,000 $ 4,000
Hechinger Co., Series 1984,
11.375% 11/15/04. . . . . . 2,500 2,622
PA Cambria County Industrial Development,
Beverly Enterprises,
10.000% 06/18/12. . . . . . 2,100 2,494
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19. . . . . . 10,730 10,730
PA Delaware County Authority,
Main Line and Haverford Nursing,
Series 1992,
9.000% 08/01/22. . . . . . 9,420 9,502
PA Gettysburg Area Industrial,
Authority Village Green Healthcare,
Association,
10.750% 06/01/16. . . . . . 1,500 1,500
PA Lackawanna County Industrial
Authority,
10.500% 12/01/10. . . . . . 2,005 2,040
PA Luzerne County Industrial
Development Authority, First
Mortgage,
10.500% 12/01/12. . . . . . 3,955 3,930
PA Luzerne County Industrial,
Development Beverly Enterprises,
Pennsylvania Series 1983,
10.125% 11/01/08. . . . . . 905 992
PA Montgomery County Higher Education
& Health Authority, AHF/Roslyn-
Hatboro, Inc. Project,
9.000% 11/15/22. . . . . . 12,580 11,919
PA Philadelphia Authority for
Industrial Development, First
Mortgage:
The Care Pavillion, Series 1988,
10.250% 02/01/18. . . . . . 6,020 6,118
RHA/PA Nursing Home, Series 1988,
10.250% 11/01/18. . . . . . 9,560 9,560
PA Wilkins Area Industrial Development
Authority, Oakmont Nursing Center,
Series 1984,
10.000% 07/01/11. . . . . . 1,175 1,297
SC Charleston County,
First Mortgage Gross,
Driftwood Health Care Center,
Series 1984,
12.500% 12/01/14. . . . . . 1,425 1,480
TN Metropolitan Government, Nashville
& Davidson Counties, Health &
Education Facilities, Central States,
Series 1989,
10.250% 11/01/19. . . . . . 770 747
TN Sullivan County, Health, Education,
& Housing Facilities Board,
10.250% 04/01/15. . . . . . 2,865 3,055
TX Whitehouse Health Facilities
Development Corp., Oak Brook
Health Care Center, Series 1989,
10.000% 12/01/19. . . . . . 1,830 1,823
WV Lewis County,
Crestview Manor Series 1989 A,
10.375% 08/01/19. . . . . . 1,000 1,009
--------
256,502
- -------------------------------------------------------------------
POLLUTION CONTROL REVENUE - 3.2%
AR Pope County Park Pollution Control,
Arkansas Power & Light Co.,
Series 1985,
11.000% 12/01/15. . . . . . 3,110 3,316
KY Jefferson County Pollution Control,
Louisville Gas and Electric Company,
Series 1993 B,
5.625% 08/15/19. . . . . . 26,010 21,458
LA West Feliciana Parish Pollution
Control, Gulf States Utilities Company:
Series 1984-B,
12.000% 05/01/14. . . . . . 5,170 5,338
Series 1984-C,
12.000% 05/01/14. . . . . . 2,265 2,339
MO State Environmental Improvement &
Energy Resources Pollution Control
Authority:
Series 1984-G1,
8.250% 11/15/14. . . . . . 4,975 5,255
Series 1984-G4,
8.250% 11/15/14. . . . . . 5,545 5,857
MS Claiborne County Pollution Control,
Middle South Energy, Inc.,
Series 1984 C,
9.875% 12/01/14. . . . . . 1,250 1,391
NY State Environmental Facilities
Corp., Pollution Control, New
York City Municipal Water Finance
Authority,
5.750% 06/15/12. . . . . . 19,260 16,949
TX Brazos River Authority
Collateralized Pollution Control Bonds:
Series 1986-A,
7.875% 11/01/18. . . . . . 2,500 2,525
Series 1989-C,
8.250% 01/01/19. . . . . . 13,000 13,487
</TABLE>
See notes to investment portfolio.
15
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------
<S> <C> <C>
POLLUTION CONTROL REVENUE - CONT.
UT Utah County Pollution Control,
Series 1984-F2,
10.500% 06/15/14. . . . . . . $ 6,900 $ 8,556
VA Alexandria Industrial Authority,
Pollution Control Potomac Electric and
Power Company, Series 1994,
5.375% 02/15/24. . . . . . . 24,250 18,642
--------
105,113
- ------------------------------------------------------------------
PUBLIC FACILITY & IMPROVEMENT - 7.8%
CA Los Angeles County Transportation,
Authority Proposition A:
Series 1993 A,
5.000% 07/01/21(a) . . . . . 36,600 27,496
Series A,
5.500% 07/01/13. . . . . . . 14,385 12,191
Series B
5.250% 07/01/23. . . . . . . 10,000 7,763
CA San Jose Redevelopment Tax Allocation,
5.000% 08/01/21(a) . . . . . 30,000 22,538
CT State Development,
First Mortgage Gross Health Care Project,
Series 1985,
12.500% 05/01/15. . . . . . . 1,320 1,389
FL Orlando & Orange County Expressway,
Series A,
5.125% 07/01/20. . . . . . . 10,455 8,076
FL State Mid-Bay Bridge Authority,
Series A,
6.875% 10/01/22. . . . . . . 2,000 1,955
FL Tampa Capital Improvement Program,
Series 1988-B,
8.375% 10/01/18. . . . . . . 3,260 3,358
IL Chicago Public Commerce Building,
Series 1990 A,
7.125% 01/01/15. . . . . . . 4,010 4,331
IL Kendall County Public Building,
Commission Series 1993 B,
5.875% 12/01/12. . . . . . . 3,000 2,651
IL Metropolitan Pier & Exposition
Authority, McCormick Place Expansion
Project, Series 1992-A:
(b) 06/15/10. . . . . . . 9,220 3,123
(b) 06/15/11. . . . . . . 23,915 7,503
IL State Sales Tax, Series K,
7.000% 06/15/19. . . . . . . 7,000 7,464
IN Bond Bank,
State Revolving Fund Program:
Series 1988 A,
6.250% 08/01/09. . . . . . . 2,450 2,315
Series 1993 A,
6.000% 02/01/15. . . . . . . 10,715 9,362
IN Hamilton County Public Building,
Corp.,
7.000% 02/01/12. . . . . . . 2,525 2,680
MD Baltimore,
Economic Development,
Park Charles Project, Series 1986,
8.000% 01/01/10. . . . . . . 1,755 1,707
MI Detroit Economic Development,
District Court Madison Center,
Series 1984,
10.625% 02/01/11. . . . . . . 5,000 5,181
MN Burnsville Commercial,
10.600% 06/01/06. . . . . . . 1,400 1,407
MN Mille Lacs Capital Improvement
Infrastructure, Band of Chippewa,
Series 1992-A,
9.250% 11/01/12. . . . . . . 1,520 1,596
MN Minneapolis Commercial Development,
Hometel Associates,
Series 1988,
10.500% 06/01/03. . . . . . . 1,500 1,511
MO State Regional Convention & Sports
Complex Project, Series 1991-A,
6.900% 08/15/21. . . . . . . 3,000 3,169
NH Industrial Development Authority,
15.000% 12/01/94. . . . . . . 1,707 1,707
NM Red River Sports Facility, Red
River Ski Area, Series 1985,
12.000% 06/01/07. . . . . . . 3,260 3,354
NY New York State Urban Development
Corporation, Correctional Facilities:
Series 1990-1,
7.500% 01/01/20. . . . . . . 7,750 8,438
Series 1991,
7.500% 04/01/20. . . . . . . 4,950 4,956
Series 1993-A:
5.250% 01/01/21. . . . . . . 35,000 25,856
5.500% 01/01/14. . . . . . . 10,000 7,975
5.500% 01/01/16. . . . . . . 10,000 7,888
</TABLE>
See notes to investment portfolio.
16
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------
<S> <C> <C>
PUBLIC FACILITY & IMPROVEMENT - CONT.
Series 2,
7.500% 01/01/18. . . . . . . $ 500 $ 548
Series 4,
5.375% 01/01/23. . . . . . . 10,000 7,463
NY State Dormitory Authority,
Series 1991-A,
9.500% 04/15/14. . . . . . . 9,000 10,069
PA Convention Center Authority, Series
1989-A,
6.000% 09/01/19. . . . . . . 5,000 4,438
PA Philadelphia Municipal Authority,
Criminal Justice Lease, Series
1991-B,
7.100% 11/15/11. . . . . . . 3,750 4,055
PA State Industrial Development
Authority, Economic Development,
Series A,
7.000% 01/01/11. . . . . . . 5,595 5,973
PR Commonwealth Infrastructure,
7.900% 07/01/07. . . . . . . 2,500 2,653
SC State Public Service Authority Revenue,
Series C,
5.000% 01/01/18. . . . . . . 10,000 7,625
UT West Jordan Industrial Development,
7.875% 12/15/11. . . . . . . 2,000 2,105
VA Richmond, General Obligation, Public
Improvement:
Series A,
6.250% 01/15/21. . . . . . . 9,580 8,574
Series B,
6.250% 01/15/18. . . . . . . 3,400 3,086
WV States Parkways Economic
and Tourism Authority, Series 1989,
7.125% 07/01/19. . . . . . . 1,990 2,134
--------
257,663
- ------------------------------------------------------------------
REDEVELOPMENT AGENCIES & TAX ALLOCATION - 1.4%
HI State Department of Budget and Finance,
RIB (variable rate), Series 1993B,
7.141% 12/15/23. . . . . . . 10,000 6,138
NY State Energy Research & Development
Authority, Series 1993-B, RIB (variable
rate),
8.801% 04/01/20. . . . . . . 13,000 10,774
NY State Local Government Assistance
Corporation:
Series 1993-C,
5.500% 04/01/17. . . . . . . 18,475 15,103
Series 1993-E,
5.000% 04/01/21. . . . . . . 22,745 16,661
--------
48,676
- ------------------------------------------------------------------
TRANSPORTATION - 8.0%
CA Los Angeles County Transportation,
Series 1988 A,
8.000% 07/01/18. . . . . . . 3,500 3,841
CA Los Angeles Regional Airport,
Improvement, Los Angeles International
Airport, Series 1985,
11.250% 11/01/25. . . . . . . 10,000 10,675
CA San Joaquin Hills Transportation
Corridor Agency Toll, Senior Lien
Road, Series 1993,
(b) 01/01/20. . . . . . . 4,600 638
6.750% 01/01/32. . . . . . . 4,500 3,982
CO Denver City and County Airport,
Stapleton International Airport:
Series 1990 A,
8.500% 11/15/23. . . . . . . 5,000 5,019
Series 1991 A,
8.750% 11/15/23. . . . . . . 5,485 5,595
Series 1992 B,
7.250% 11/15/23. . . . . . . 10,500 9,437
FL State Turnpike Authority,
Department of Transportation,
Series 1989 A,
7.500% 07/01/19. . . . . . . 5,000 5,444
IL Chicago O'Hare International Airport
Series A,
5.000% 01/01/16. . . . . . . 15,000 11,437
IN Transportation Finance Authority,
Airport Facility Series A,
6.250% 11/01/16. . . . . . . 6,675 5,949
IN Airport Authority,
7.100% 01/15/17. . . . . . . 2,000 1,872
LA Calcasieu Parish:
Series 1987-A,
8.125% 12/01/12. . . . . . . 1,533 1,550
Series 1988-B,
8.250% 06/01/12. . . . . . . 4,087 4,153
MA Bay Transportation Authority:
Series 1989-A,
7.100% 03/01/12. . . . . . . 8,540 9,148
Series 1990 A,
7.000% 03/01/10. . . . . . . 1,500 1,581
Series 1990-B:
7.800% 03/01/10. . . . . . . 3,000 3,334
7.875% 03/01/21(a) . . . . . 11,950 13,324
MA State Turnpike Authority,
Series 1993 A,
5.000% 01/01/20. . . . . . . 30,765 23,112
</TABLE>
See notes to investment portfolio.
17
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - CONT.
MI State Trunk Line,
Series A,
5.500% 10/01/21. . . . . . . $21,520 $ 17,404
NH State Turnpike System, Series 1992,
6.000% 04/01/08. . . . . . . 3,500 3,268
NY Port Authority, Cons- Ninety-Second
Series,
4.750% 01/15/29. . . . . . . 21,320 14,817
NY State Thruway Authority Service
Contract, Local Highway,
5.250% 04/01/13. . . . . . . 10,000 8,025
NY Triborough Bridge & Tunnel
Authority:
Series 1993-B,
(b) 01/01/21. . . . . . . 11,000 1,677
Series A:
5.000% 01/01/24. . . . . . . 12,000 8,715
5.200% 01/01/20. . . . . . . 15,095 11,566
PA Erie-Western Port Authority,
Series 1990,
8.625% 06/15/10. . . . . . . 1,850 1,917
PR Commonwealth of Puerto Rico,
Highway & Transportation Authority:
5.500% 07/01/09. . . . . . . 16,790 14,292
Series W,
5.500% 07/01/17. . . . . . . 13,000 10,530
TN Memphis-Shelby County, Airport
Authority Special Facilities, Express
Airlines I, Inc., Series 1986,
10.000% 12/01/16. . . . . . . 750 752
TN Metropolitan Nashville Airport
Authority, Special Facilities,
9.875% 10/01/05. . . . . . . 10,000 10,437
TX Grapevine Industrial Development,
Corp. American Airlines,
Inc., Series 1985,
9.250% 12/01/12. . . . . . . 3,025 3,161
TX Harris County Toll Road Utility,
Series 1991,
6.750% 08/01/14. . . . . . . 15,000 14,813
Series 1994,
5.375% 08/01/20(a) . . . . . 16,250 12,959
TX Lone Star Airport Improvement,
Authority American Airlines Inc.,
Series 1985,
9.125% 12/01/15. . . . . . . 8,150 8,517
--------
262,941
- ------------------------------------------------------------------
WASTE DISPOSAL - 2.6%
CA Los Angeles Wastewater Systems,
Series 1993 D,
5.200% 11/01/21. . . . . . . 10,000 7,738
FL Reedy Creek Improvement District,
Series 1,
5.000% 10/01/19(a) . . . . . 23,190 17,769
GA Rockdale County Development
Authority, Solid Waste Disposal, Visy
Paper, Inc., Series 1993,
7.500% 01/01/26. . . . . . . 14,000 12,950
GA Wayne County Development Authority,
Solid Waste Disposal, ITT Royonier
Inc., Series 1990,
8.000% 07/01/15. . . . . . . 2,500 2,631
IL Development Financial Authority,
Solid Waste Disposal:
City of Marion Project, Series 1991,
9.625% 09/15/21. . . . . . . 5,800 5,438
Ford Heights Waste Project, Series 1994,
7.875% 04/01/11. . . . . . . 3,000 2,846
MA Boston Industrial Development
Financing, Solid Waste Disposal,
10.500% 01/01/11. . . . . . . 1,500 1,637
MA Industrial Finance Agency
Refusetech, Series 1993-A,
6.300% 07/01/05. . . . . . . 2,000 1,848
MI State Strategic Fund,
Blue Water Fiber Project, Series 1994,
8.000% 01/01/12. . . . . . . 16,200 15,086
PA Economic Development Finance
Authority, Colver Project, Series D,
7.150% 12/01/18. . . . . . . 10,000 9,100
PA Lancaster County Solid Waste,
Management Authority Resource,
Recovery Series 1988 A:
8.375% 12/15/04. . . . . . . 3,000 3,124
8.500% 12/15/10. . . . . . . 2,000 2,048
WA Spokane Regional Solid Waste
Management System, Series 1989-A:
7.750% 01/01/11. . . . . . . 3,000 3,169
7.875% 01/01/07. . . . . . . 2,500 2,644
--------
88,028
- ------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
18
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------
<S> <C> <C>
WATER & SEWER - 7.6%
AL Citronelle Utilities Water, Sewer, and
Gas Series 1985,
11.000% 05/01/13. . . . . . . $ 1,500 $ 1,615
CA Los Angeles County Sanitation,
Series 1993 A,
5.250% 10/01/19. . . . . . . 10,000 7,700
CA Metropolitan Water District,
Southern California Waterworks,
Series 1992,
5.500% 07/01/19. . . . . . . 14,000 11,533
CA State Department Water Resources,
Central Valley Project,
5.500% 12/01/23. . . . . . . 23,835 19,366
GA De Kalb County Water and Sewer,
Redevelopment Series 1993,
5.250% 10/01/23. . . . . . . 30,905 23,797
ID State Water Resource Board,
Boise Water Corp., Series 1991,
7.250% 12/01/21. . . . . . . 6,000 5,925
IL Southwestern Illinois Development
Authority, Sewer Facilities, Monsanto
Company, Series 1991,
7.300% 07/15/15. . . . . . . 3,000 3,071
LA Public Facility Belmont Water,
Authority,
14.000% 03/15/24. . . . . . . 1,460 1,347
MA State Water Resources Authority:
Series 1990 A,
7.625% 04/01/14. . . . . . . 2,000 2,195
Series 1993-B:
5.000% 03/01/22. . . . . . . 36,200 26,652
5.250% 03/01/13. . . . . . . 12,500 10,109
5.500% 03/01/17. . . . . . . 10,150 8,260
Series 1993-C:
4.750% 12/01/23. . . . . . . 15,680 10,917
5.250% 12/01/15. . . . . . . 24,825 19,674
MD Northeast Maryland Waste Disposal
Authority, Solid Waste, Montgomery
County Resource Recovery Project,
Series 1993-A,
6.300% 07/01/16. . . . . . . 7,000 6,090
MS Five Lakes Utility District,
8.250% 07/15/24. . . . . . . 760 708
NC Charlotte Water & Sewer System,
Series 1994:
5.800% 02/01/15. . . . . . . 3,830 3,452
5.800% 02/01/16(a) . . . . . 5,630 5,060
5.900% 02/01/18. . . . . . . 5,765 5,196
NJ Union County Utilities Authority,
Solid Waste System, Series 1991-A,
7.200% 06/15/14. . . . . . . 8,350 7,964
NY New York City Municipal Water
Finance Authority, Water & Sewer
System, Series 1994-B:
5.375% 06/15/19. . . . . . . 10,350 8,280
5.500% 06/15/19. . . . . . . 30,975 25,361
TN Jackson Water and Sewer Revenue,
Series 1984,
10.375% 07/01/12. . . . . . . 2,000 2,382
TX Coastal Industrial Water Authority,
Bayport Water System, Series 1978,
7.000% 12/15/03. . . . . . . 2,590 2,596
TX Coastal Water Authority,
Water Conveyance System Series 1991,
6.125% 12/15/09. . . . . . . 3,500 3,229
TX Houston Water and Sewer System,
Series 1992 B,
5.000% 12/01/18. . . . . . . 24,755 18,814
UT Associated Municipal Power System,
Hunter Project, Series A,
5.500% 07/01/12. . . . . . . 8,000 6,900
WA Seattle Water System,
5.250% 12/01/23. . . . . . . 5,000 3,888
----------
252,081
- ------------------------------------------------------------------
Total investments (cost $3,434,035)(k) 3,239,551
- ------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 1.8% 58,637
- ------------------------------------------------------------------
NET ASSETS - 100.0% $3,298,188
- ------------------------------------------------------------------
</TABLE>
Notes to investment portfolio:
(a) These securities, or a portion thereof, with a total market value of
$174,778, are being used to collaterize open futures contracts.
(b) Zero coupon bond.
(c) This security, with a total market value of $32,468 is being used to
collateralize the delayed delivery indicated in note (e) below.
(d) Non-income producing.
(e) This security has been purchased on a delayed delivery basis, for
settlement at a future date beyond the customary settlement time.
(f) Accrued interest accumulates in the value of the security and is payable
at redemption.
(g) The interest rate shown is the average rate over the life of the security.
(h) This is a restricted security which was acquired at a cost of $68,854.
This security represents 2.0% of the Fund's net assets at November 30,
1994.
See notes to investment portfolio.
19
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
Notes to investment portfolio continued:
(i) The Fund has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
the interest and principal.
(j) This is a restricted security which was acquired on April 2, 1990, at a
cost of $320. This security represents 0.0% of the Fund's net assets at
November 30, 1994.
(k) Cost for federal income tax purposes is approximately the same.
Short futures contracts open at November 30, 1994:
<TABLE>
<CAPTION>
Unrealized
Par value appreciation
covered Expiration (depreciation)
Type by contracts month at 11/30/94
- -------------------------------------------------------------------
<S> <C> <C> <C>
Treasury bond $75,000 December $ 460
Treasury bond $75,000 March $(840)
- -------------------------------------------------------------------
</TABLE>
ACRONYM NAME
------- ------------------------
RIB Residual Interest Bond
STRIP Short Term Reset Inverse
Payment Securities
See notes to financial statements.
20
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS & LIABILITIES
November 30, 1994
(in thousands except for per share amounts and footnote)
<TABLE>
<S> <C>
Assets
Investments at value (cost $3,434,035)............. $3,239,551
Receivable for:
Investments sold.............. $ 77,501
Interest...................... 72,959
Fund shares sold.............. 5,947
Other............................ 85 156,492
--------- ----------
Total assets.............................. 3,396,043
Liabilities
Payable for:
Investments purchased......... 56,038
Distributions................. 17,417
Fund shares repurchased....... 11,832
Variation margin on futures... 984
Payable to custodian bank........ 11,419
Accrued:
Deferred Trustees fees........ 30
Other......................... 135
---------
Total liabilities......................... 97,855
----------
Net assets at value for 270,676
shares of beneficial interest outstanding...... $3,298,188
==========
Net asset value & redemption price per share -
Class A ($2,858,340/234,576).................. $12.18
==========
Maximum offering price per share - Class A
($12.18/0.9525)................................ $12.78*
==========
Net asset value & offering price per share -
Class B ($439,848/36,100)..................... $12.18
==========
Composition of net assets
Capital paid in................................ $3,554,789
Undistributed net investment income............ 1,059
Accumulated net realized loss.................. (62,796)
Net unrealized depreciation on:................
Investments............................... (194,484)
Open futures contracts.................... (380)
----------
$3,298,188
==========
</TABLE>
STATEMENT OF OPERATIONS
Year ended November 30, 1994
(in thousands)
<TABLE>
<S> <C>
Investment income
Interest.......................................... $ 256,970
Expenses
Management fee................... $ 20,098
Service fee...................... 9,151
Distribution fee - Class B....... 3,540
Transfer agent................... 5,864
Bookkeeping fee.................. 766
Trustees fees.................... 196
Custodian fee.................... 190
Audit fee........................ 71
Legal fee........................ 58
Registration fees................ 93
Reports to shareholders.......... 47
Other............................ 499 40,573
--------- ---------
Net investment income..................... 216,397
---------
Net realized and unrealized loss
on portfolio positions
Net realized loss on:
Investments.................... (56,783)
Closed futures contracts....... (2,458)
---------
Net realized loss............................. (59,241)
Net unrealized depreciation
during the period on:
Investments................... (420,571)
Open futures contracts........ (380)
---------
Net unrealized depreciation................... (420,951)
Net loss.................................. (480,192)
---------
Net decrease in net assets from
operations..................................... $(263,795)
=========
</TABLE>
* On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
21
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
Year ended November 30
------------------------
1994 1993
---------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................................... $ 216,397 $ 208,527
Net realized gain (loss).................................................. (59,241) 43,313
Net unrealized appreciation (depreciation)................................ (420,951) 62,151
---------- ----------
Net increase (decrease) from operations............................ (263,795) 313,991
Distributions
From net investment income - Class A...................................... (190,943) (195,842)
In excess of net investment income - Class A.............................. (33)
From net investment income - Class B...................................... (24,339) (15,129)
In excess of net investment income - Class B.............................. (3)
---------- ----------
(479,077) 102,984
---------- ----------
Fund share transactions
Receipts for shares sold - Class A........................................ 325,549 581,666
Value of distributions reinvested - Class A............................... 107,226 105,412
Cost of shares repurchased - Class A...................................... (515,463) (325,792)
---------- ----------
(82,688) 361,286
---------- ----------
Receipts for shares sold - Class B........................................ 122,043 298,996
Value of distributions reinvested - Class B............................... 13,678 7,922
Cost of shares repurchased - Class B...................................... (62,729) (20,395)
---------- ----------
72,992 286,523
---------- ----------
Net increase (decrease) from Fund share transactions............... (9,696) 647,809
---------- ----------
Total increase (decrease).................................. (488,773) 750,793
NET ASSETS
Beginning of period....................................................... 3,786,961 3,036,168
---------- ----------
End of period (including undistributed and net of overdistributed
net investment income of $1,059 and $36, respectively).................. $3,298,188 $3,786,961
========== ==========
NUMBER OF fUND SHARES
Sold - Class A............................................................ 24,361 42,058
Issued for distributions reinvested - Class A............................. 8,084 7,622
Repurchased - Class A..................................................... (39,148) (23,514)
---------- ----------
(6,703) 26,166
---------- ----------
Sold - Class B............................................................ 9,017 21,565
Issued for distributions reinvested - Class B............................. 1,033 570
Repurchased - Class B..................................................... (4,820) (1,465)
---------- ----------
5,230 20,670
---------- ----------
Net increase (decrease) in shares outstanding...................... (1,473) 46,836
Outstanding at
Beginning of period................................................... 272,149 225,313
---------- ----------
End of period......................................................... 270,676 272,149
========== ==========
</TABLE>
See notes to financial statements.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
Colonial Tax Exempt 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 diversified, open-end, management investment company. The
Fund may issue an unlimited number of shares. The Fund offers Class A shares
sold with a front-end sales charge and Class B shares, which 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. 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.
- --------------------------------------------------------------------------------
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.
Equity securities 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.
Futures contracts are valued based on the difference between the last sale
price and the opening price of the contract.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued at
fair value under procedures approved by the Trustees.
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.
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 distribution fee), 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 distribution fee 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.
- --------------------------------------------------------------------------------
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 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.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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 based on each fund's pro rata portion of the
combined average net assets of the Fund, Colonial Tax-Exempt Insured Fund and
Colonial High Yield Municipal Fund as follows:
Average Net Assets Annual Fee Rate
- ------------------ ---------------
First $1 billion.......... 0.60%
Next $2 billion.......... 0.55%
Next $1 billion.......... 0.50%
Over $4 billion.......... 0.45%
- --------------------------------------------------------------------------------
BOOKKEEPING FEE
The Adviser provides bookkeeping and pricing services for $27,000 per year
plus a percentage of the Fund's average net assets as follows:
Average Net Assets Annual Fee Rate
- ------------------ ---------------
First $50 million......... No charge
Next $950 million........ 0.035%
Next $1 billion.......... 0.025%
Next $1 billion.......... 0.015%
Over $3 billion.......... 0.001%
- --------------------------------------------------------------------------------
TRANSFER AGENT
Colonial Investors Service Center, Inc. (the Transfer Agent), an affiliate
of the Adviser, provides shareholder services for a monthly fee equal to 0.14%
annually of the Fund's average net assets, and receives a reimbursement for
certain out of pocket expenses.
- --------------------------------------------------------------------------------
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
The Adviser, through its Colonial Investment Services (the Distributor)
division, is the Fund's principal underwriter. During the year ended November
30, 1994, the Distributor retained net underwriting discounts of $467,510 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $1,272,099 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor
a service fee equal to 0.25% annually of the Fund's net assets as of the 20th of
each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% of the average net assets attributable to Class B
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.
- --------------------------------------------------------------------------------
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. The compensation deferred earns interest
quarterly based on the 90-day U.S. Treasury bill rate. Obligations of the plan
will be paid solely out of the Fund's assets.
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
During the year ended November 30, 1994, purchases and sales of
investments, other than short-term obligations, were $2,037,824,429 and
$2,067,520,546, respectively.
Unrealized appreciation (depreciation) at November 30, 1994, based on cost
of investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation.............. $ 60,082,091
Gross unrealized depreciation.............. (254,566,668)
-------------
Net unrealized depreciation.............. $(194,484,577)
=============
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
CAPITAL LOSS CARRYFORWARDS
At November 30, 1994, 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
---------- ------------
1999................. $ 3,641,000
2002................. 58,218,000
-----------
$61,859,000
===========
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 has greater than 10% of its net assets at November 30, 1994
invested in New York.
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.
Entering into futures contracts has risks, including the possibility that
there may be an illiquid market and that the changes in the value of the
contract may not directly correlate to the changes in the value of the
underlying securities.
- --------------------------------------------------------------------------------
NOTE 4. CONTINGENT LIABILITY
The Adviser insures itself and all funds that it advises under a policy
with ICI Mutual Insurance Company. The annual premium is allocated among the
funds and the Adviser. Additionally, the Adviser and the funds have committed up
to 300% of the annual premium, one third of which was provided in cash, with the
Fund's pro-rata portion recorded as an asset. The remainder is secured with an
irrevocable letter of credit.
25
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30
-------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
------------------ ------------------ ------------------ ------- -------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B(a) CLASS A CLASS A
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning
of period...................... $13.920 $13.920 $13.480 $13.480 $13.190 $13.230 $12.890 $13.020
------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income ......... 0.795 0.695 0.842 0.740 0.913 0.462 0.955 0.986
Net realized and
unrealized gain (loss)....... (1.744) (1.744) 0.451 0.451 0.277 0.248 0.305 (0.120)
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations................... (0.949) (1.049) 1.293 1.191 1.190 0.710 1.260 0.866
------- ------- ------- ------- ------- ------- ------- -------
Less distributions declared
to shareholders:
From net investment income..... (0.791) (0.691) (0.853) (0.751) (0.900) (0.460) (0.955) (0.996)
From capital paid in(b)........ -- -- -- -- -- -- (0.005) --
------- ------- ------- ------- ------- ------- ------- -------
Total distributions
declared to shareholders..... (0.791) (0.691) (0.853) (0.751) (0.900) (0.460) (0.960) (0.996)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value - End of period.. $12.180 $12.180 $13.920 $13.920 $13.480 $13.480 $13.190 $12.890
======= ======= ======= ======= ======= ======= ======= =======
Total return(c).................. (7.08)% (7.78)% 9.80 % 9.00 % 9.29 % 9.29 %(d) 10.12 % 6.95 %
======= ======= ======= ======= ======= ======= ======= =======
Ratios to average net assets:
Expenses....................... 1.01 % 1.76 % 1.02 % 1.77 % 1.05 % 1.80 %(e) 1.03 % 1.05 %
Net investment income.......... 6.00 % 5.25 % 6.06 % 5.31 % 6.81 % 6.06 %(e) 7.29 % 7.64 %
Portfolio turnover............... 56 % 56 % 28 % 28 % 14 % 14 % 10 % 10 %
Net assets at end of period
(in millions).................. $ 2,858 $ 440 $ 3,357 $ 430 $ 2,899 $ 137 $ 2,486 $ 1,886
</TABLE>
(a) Class B shares were initially offered on May 5, 1992. Per share amounts
reflect activity from that date.
(b) Because of differences between book and tax basis accounting, there was no
return of capital for federal income tax purposes.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or CDSC.
(d) Not annualized.
(e) Annualized.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
All of the distributions will be treated as exempt income for federal income tax
purposes.
26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST IV AND THE SHAREHOLDERS OF COLONIAL TAX-EXEMPT
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 Fund (a series
of Colonial Trust IV) at November 30, 1994, 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 November 30, 1994 by correspondence with the custodian and brokers, and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 11, 1995
COLONIAL TRUST IV
Cross Reference Sheet
Colonial Tax-Exempt Insured Fund
--------------------------------
Location or Caption in Statement
Item Number of Form N-1A of Additional Information
- ------------------------ ---------------------------------
Part B
10. Cover Page
11. Table of Contents
12. Not Applicable
13. Investment Objectives and
Policies; Fundamental Investment
Policies; Other Investment
Policies; Miscellaneous
Investment Practices; Portfolio
Turnover
14. Management of the Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses;
Management of the Funds
17. Fund Charges and Expenses;
Management of the Funds
18. Shareholder Liability
19. How to Buy Shares; Determination
of Net Asset Value; Suspension of
Redemptions; Investor Services
20. Taxes
21. Fund Charges and Expenses;
Management of the Funds
22. Fund Charges and Expenses;
Management of the Funds
23. Independent Accountants
COLONIAL TAX-EXEMPT INSURED FUND
Statement of Additional Information
March 30, 1995
This Statement of Additional Information (SAI) contains
information which may be useful to investors but which is not
included in the Prospectus of Colonial Tax-Exempt Insured Fund
(Fund). This SAI is not a prospectus and is authorized for
distribution only when accompanied or preceded by the Prospectus
of the Fund dated March 30, 1995. This SAI should be read
together with the Prospectus. Investors may obtain a free copy
of the Prospectus from Colonial Investment Services, Inc., One
Financial Center, Boston, MA 02111-2621.
Part 1 of this SAI contains specific information about the Fund.
Part 2 includes information about the Colonial funds generally
and additional information about certain securities and
investment techniques described in the Fund's Prospectus.
TABLE OF CONTENTS
Part 1 Page
Definitions
Investment Objectives and Policies
Fundamental Investment Policies
Other Investment Policies
Portfolio Turnover
Fund Charges and Expenses
Investment Performance
Custodian
Independent Accountants
Part 2
Miscellaneous Investment Practices
Taxes
Management of the Funds
Determination of Net Asset Value
How to Buy Shares
Investor Services
Suspension of Redemptions
Shareholder Liability
Performance Measures
Appendix I
Appendix II
TI-16/745A-0395
Part 1
COLONIAL TAX-EXEMPT INSURED FUND
Statement of Additional Information
March 30, 1995
DEFINITIONS
"Fund" Colonial Tax-Exempt Insured Fund
"Trust" Colonial Trust IV
"Colonia Colonial Management Associates, Inc., the Fund's
l" investment manager
"CISI" Colonial Investment Services, Inc., the Fund's
distributor
"CISC" Colonial Investors Service Center, Inc., the
Fund's
shareholder services and transfer agent
INVESTMENT OBJECTIVES AND POLICIES
The Fund's Prospectus describes the Fund's investment objectives
and policies. Part 1 includes additional information concerning,
among other things, the fundamental investment policies of the
Fund. Part 2 of this SAI contains additional information about
the following securities and investment techniques:
Zero Coupon Securities
Forward Commitments
Repurchase Agreements
Options on Securities
Futures Contracts and Related Options
Except as described below under "Fundamental Investment
Policies," the Fund's investment policies are not fundamental,
and the Trustees may change the policies without shareholder
approval.
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (Act) provides that a "vote of
a majority of the outstanding voting securities" means the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund, or (2) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares
are represented at the meeting in person or by proxy. The
following fundamental investment policies can not be changed
without such a vote.
Total assets and net assets are determined at current value for
purposes of compliance with investment restrictions and policies.
All percentage limitations will apply at the time of investment
and are not violated unless an excess or deficiency occurs as a
result of such investment. For the purpose of the Act
diversification requirement, an issuer is the entity whose
revenues support the security.
The Fund may:
1. Issue senior securities only through borrowing money from
banks for temporary or emergency purposes up to 10% of its
net assets; however, the Fund will not purchase additional
portfolio securities while borrowings exceed 5% of net
assets;
2. Only own real estate acquired as the result of owning
securities and not more than 5% of total assets;
3. Invest up to 10% of net assets in illiquid assets ;
4. Purchase and sell futures contracts and related options so
long as the total initial margin and premiums on the
contracts do not exceed 5% of its total assets;
5. Underwrite securities issued by others only when disposing
of portfolio securities;
6. Make loans through lending of securities not exceeding 30%
of total assets, through the purchase of debt instruments
or similar evidences of indebtedness typically sold
privately to financial institutions and through repurchase
agreements;
7. Not concentrate more than 25% of its total assets in any
one industry or, with respect to 75% of net assets,
purchase any security (other than obligations of the U.S.
Government and cash items including receivables) if as a
result more than 5% of its total assets would then be
invested in securities of a single issuer or purchase the
voting securities of an issuer if, as a result of such
purchases, the Fund would own more than 10% of the
outstanding voting shares of such issuer; and
8. Will, under normal circumstances, invest at least 80% of
its total assets in tax-exempt securities.
OTHER INVESTMENT POLICIES
As non-fundamental investment policies which may be changed
without a shareholder vote, the Fund may not:
1. Purchase securities on margin, but it may receive short-
term credit to clear securities transactions and may make
initial or maintenance margin deposits in connection with
futures transactions;
2. Have a short securities position, unless the Fund owns, or
owns rights (exercisable without payment) to acquire, an
equal amount of such securities;
3. Own voting securities of any company if the Trust knows
that officers and Trustees of the Trust or officers and
directors of Colonial who individually own more than 0.5%
of such securities together own more than 5% of such
securities;
4. Invest in interests in oil, gas or other mineral
exploration or development programs, including leases;
5. Purchase any security resulting in the Fund having more
than 5% of its total assets invested in securities of
companies (including predecessors) less than three years
old;
6. Pledge more than 33% of its total assets;
7. Purchase any security if, as a result of such purchase,
more than 10% of its total assets would be invested in
securities which are restricted as to disposition; and
8. Purchase or sell real estate (including limited partnership
interests) although it may purchase and sell (a) securities
which are secured by real estate and (b) securities of
companies which invest or deal in real estate; provided,
however, that nothing in this restriction shall limit the
Fund's ability to acquire or take possession of or sell
real estate which it has obtained as a result of
enforcement of its rights and remedies in connection with
securities it is otherwise permitted to acquire.
9. Invest in warrants if, immediately after giving effect to
any such investment, the Fund's aggregate investment in
warrants, valued at the lower of cost or market, would
exceed 5% of the value of the Fund's net assets. Included
within that amount, but not to exceed 2% of the value of
the Fund's net assets, may be warrants which are not listed
in the
New York Stock Exchange or the American Stock Exchange.
Warrants acquired by the Fund in units or attached to
securities will be deemed to be without value.
PORTFOLIO TURNOVER (for the fiscal years ended November 30)
1994 1993
36% 12%
FUND CHARGES AND EXPENSES
Under the Fund's management agreement, the Trust pays Colonial a
monthly fee based on the average daily net assets allocated among
the Fund, the Colonial Tax-Exempt Fund and the Colonial High
Yield Municipal Fund at the following annual rates: 0.60% on the
first $1 billion, 0.55% of the next $2 billion, 0.50% of the next
$1 billion and 0.45% of any excess over $4 billion.
Recent Fees paid to Colonial, CISI and CISC (for the fiscal year
ended November 30) (dollars in thousands)
1994 1993 1992
Management fee $1,506 $1,469 $1,185
Bookkeeping fee 106 103 83
Shareholder service and 436 424
transfer agent fee 316(a)
12b-1 fees:
Service fee 685 666 524
Distribution fee (Class B) 372 239 33
(a) Under a prior fee schedule
Brokerage Commissions (for the fiscal year ended November 30)
(dollars in thousands)
1994 1993 1992
Total commissions $2 $0 $0
Directed transactions(b) 0 0 0
Commissions on directed 0 0 0
transactions
(b) See "Management of the Funds - Portfolio Transactions -
Brokerage and Research Services" in Part 2 of this SAI.
Trustees Fees
For the calendar year ended December 31, 1994, the Trustees
received the following compensation for serving as Trustees:
Pension
or
Retiremen Estimate
t d Annual Total
Aggregate Benefits Benefits Compensation
Compensati Accrued Upon From Fund and
Trustee on As Part Retireme Fund Complex
From Fund of Fund nt (d)
Expense
Tom Bleasdale $2,271(c) $0 $0 $101,000
Lora S. Collins 2,136 0 0 95,000
William D. Ireland, 2,471 0 0 110,000
Jr.
William E. Mayer 2,019 0 0 89,752
John A. McNeice, 0 0 0 0
Jr.
James L. Moody, Jr. 2,461 0 0 109,000
John J. Neuhauser 2,133 0 0 95,000
George L. Shinn 2,517 0 0 112,000
Robert L. Sullivan 2,363 0 0 104,561
Sinclair Weeks, Jr. 2,606 0 0 116,000
(c) Includes $1,100 payable as deferred compensation.
(d) The Colonial Funds Complex consists of 31 open-end and 5
closed-end management investment company portfolios.
The following table sets forth the amount of compensation paid to
Messrs. Birnbaum, Grinnell and Lowry in their capacities as
Trustees of the Liberty All-Star Equity Fund, The Charles Allmon
Trust, Inc., Liberty Financial Trust and LFC Utilities Trust
(together, Liberty Funds) for service during the calendar year
ended December 31, 1994:
Pension or
Aggregate Retirement Total
Compensation Benefits Estimated Compensation
From Fund Accrued As Annual From Liberty
for the Part of Benefits Funds for the
fiscal year Fund Upon calendar year
Trustee ended 11/30/94 Expense Retirement ended 12/31/94(e)
Robert J. $0 $0 $0 $ 0
Birnbaum
James E. 0 0 0 31,032
Grinnell
Richard W. Lowry 0 0 0 31,282
(e) The Liberty Financial Trust consists of 5 open-end and 2
closed-end management investment company portfolios, each
of which is advised by Stein Roe & Farnham Incorporated,
an indirect wholly-owned subsidiary of Liberty Financial
Companies, Inc., which in turn is an indirect subsidiary
of Liberty Mutual Insurance Company.
Ownership of the Fund
At February 28, 1995, the officers and Trustees of the Trust as a
group owned less than 1% of the outstanding shares of the Fund.
At February 28, 1995, Merrill Lynch, Pierce, Fenner & Smith,
Inc., Attn: Book Entry, Mutual Fund Operations, 4800 Deer Lake
Drive, E. 3rd Floor, Jacksonville, FL 32216 owned 5.80% of the
Fund's outstanding Class A shares.
At February 28, 1995, there were 5,336 Class A and 1,246 Class B
shareholders.
Sales Charges (for the fiscal year ended November 30) (dollars in
thousands)
Class A Shares
1994 1993 1992
Aggregate initial sales $384 $1,132 $1,393
charges on Fund share sales
Initial sales charges $ 34 $ 136 $ 164
retained by CISI
Class B Shares
Period May 5, 1992
(commencement of
investment
operations)
through November
1994 1993 30, 1992
Aggregate contingent deferred
sales charges (CDSC) on Fund
redemptions retained by CISI
charges (CDSC) on Fund $187 $66 $606
12b-1 Plans, CDSC and Conversion of Shares
The Fund offers two classes of shares - Class A and Class B. The
Fund may in the future offer other classes of shares. The
Trustees have approved 12b-1 Plans pursuant to Rule 12b-1 under
the Act. Under the Plans, the Fund pays CISI a service fee at
an annual rate of 0.25% of average net assets attributed to each
class of shares and a distribution fee at the annual rate of
0.75% of average net assets attributed to Class B shares. CISI
may use the entire amount of such fees to defray the cost of
commissions and service fees paid to financial service firms
(FSFs) and for certain other purposes. Since the distribution
and service fees are payable regardless of the amount of CISI's
expenses, CISI may realize a profit from the fees.
The Plans authorize any other payments by the Fund to CISI and
its affiliates (including Colonial) to the extent that such
payments might be construed to be indirect financing of the
distribution of Fund shares.
The Trustees believe the Plans could be a significant factor in
the growth and retention of Fund assets resulting in a more
advantageous expense ratio and increased investment flexibility
which could benefit each class of Fund shareholders. The Plans
will continue in effect from year to year so long as continuance
is specifically approved at least annually by a vote of the
Trustees, including the Trustees who are not interested persons
of the Trust and have no direct or indirect financial interest in
the operation of the
Plans or in any agreements related to the Plans (Independent
Trustees), cast in person at a meeting called for the purpose of
voting on the Plans. The Plans may not be amended to increase
the fee materially without approval by vote of a majority of the
outstanding voting securities of the relevant class of shares and
all material amendments of the Plans must be approved by the
Trustees in the manner provided in the foregoing sentence. The
Plans may be terminated at any time by vote of a majority of the
Independent Trustees or by vote of a majority of the outstanding
voting securities of the relevant class of shares. The
continuance of the Plans will only be effective if the selection
and nomination of the Trustees who are non-interested Trustees of
the Trust is effected by such non-interested Trustees.
Class A shares are offered at net asset value plus varying sales
charges which may include a CDSC. Class B shares are offered at
net asset value subject to a CDSC if redeemed within six years
after purchase. The CDSCs are described in the Prospectus.
No CDSC will be imposed on shares derived from reinvestment of
distributions or on amounts representing capital appreciation.
In determining the applicability and rate of any CDSC, it will be
assumed that a redemption is made first of shares representing
capital appreciation, next of shares representing reinvestment of
distributions and finally of other shares held by the shareholder
for the longest period of time.
Eight years after the end of the month in which a Class B share
is purchased, such share and a pro rata portion of any shares
issued on the reinvestment of distributions will be automatically
converted into Class A shares having an equal value, which are
not subject to the distribution fee.
Sales-related expenses (dollars in thousands) of CISI for the
fiscal year ended November 30, 1994, were:
Class A Class B
Shares Shares
Fees to FSFs $517 $570
Cost of sales material relating
to the Fund $ 43 $ 29
Allocated travel, entertainment
and other promotional $ 65 $ 46
INVESTMENT PERFORMANCE
The Fund's Class A and Class B yields for the month ended
November 30, 1994, were:
Class A Shares Class B Shares
Tax- Tax-
equivalent equivalent
Yield Yield Yield Yield
5.18% 8.58% 4.69% 8.58%
The Fund's average annual total returns at November 30, 1994,
were:
Class A Shares
Since inception
1 year 5 years 11/20/85 to 11/30/94
With sales charge of 4.75% (11.04)% 4.49% 6.57%
of 4.75%
Without sales
charge (6.61)% 5.51% 7.15%
Class B Shares
Since inception
1 year 5/5/92 to 11/30/94
With CDSC of 5.00% (11.74)% 1.42%
Without CDSC (7.31)% 2.48%
The Fund's Class A and Class B distribution rates at November 30,
1994, which are based on the most recent month's distribution,
annualized and maximum offering price (net asset value for Class
B) at the end of the month, were 5.80% and 5.03%, respectively.
See Part 2 of this SAI, "Performance Measures," for how
calculations are made.
CUSTODIAN
United Missouri Bank, n.a. is the Fund's custodian. The custodian
is responsible for safeguarding the Fund's cash and securities,
receiving and delivering securities and collecting the Fund's
interest and dividends.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP are the Fund's independent accountants
providing audit and tax return preparation services and
assistance and consultation in connection with the review of
various SEC filings. The financial statements incorporated by
reference in this SAI have been so incorporated, and the schedule
of financial highlights in the Prospectus has been so included,
in reliance upon the report of Price Waterhouse LLP given on the
authority of said firm as experts in accounting and auditing.
The financial statements and Report of Independent Accountants
appearing on pages 3 through 14 of the November 30, 1994 Annual
Report, are incorporated in this SAI by reference.
<PAGE>
INVESTMENT PORTFOLIO (IN THOUSANDS) NOVEMBER 30, 1994
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 98.4% PAR VALUE
- ------------------------------------------------------------
<S> <C> <C>
EDUCATION - 9.2%
CA University Revenues, 1989
Multiple Purpose Projects,
Series 1989-B,
6.750% 09/01/23 ............... $ 1,000 $1,060
IL State University, Auxiliary Facilities
System, Series 1993,
5.750% 04/01/14 ............... 1,350 1,178
IN University, Student Fee,
Series 1991-H,
(a) 08/01/07................ 3,000 1,297
IN Whitko Middle School Building,
Corporation First Mortgage,
Series 1991,
6.750% 07/15/12 ............... 1,000 1,003
MA Educational Loan Authority
Issue D, Series 1991-A,
7.250% 01/01/09 ............... 920 917
MA Health and Educational
Facilities, Northeastern University,
Series E,
6.550% 10/01/22 ............... 1,500 1,410
MA University Building Authority Project,
University of Massachusetts,
Series 1988-A,
7.500% 05/01/14 ............... 1,000 1,030
MI Brighton Area School District,
School Building and Site,
Series 1990-I,
(a) 05/01/15 ............... 11,350 2,880
MI Howell Public Schools,
Series 1991,
(a) 05/01/17 ............... 6,750 1,477
NH Higher Educational and Health
Facilities, University System of
New Hampshire, Series 1992,
6.250% 07/01/20 ............... 2,000 1,812
NY State Dormitory Authority, City
University System:
Series 1990-F,
7.500% 07/01/20 ............... 2,000 2,190
Series 1993-A,
6.000% 07/01/20 ............... 2,000 2,625
PA State Higher Education Assistance,
Student Loan RIB, Series 1990-B,
11.123% (variable rate), 03/01/20.. 2,000 2,060
PA State Higher Educational Facilities,
College and University Revenue,
Hahnemann University, Series 1989,
7.200% 07/01/19 ............... 500 516
UT State Municipal Finance,
Co-operative Local Government,
Pooled Capital Improvement,
6.800% 05/01/12 ................ 1,000 999
-------
22,454
- ------------------------------------------------------------
ELECTRIC - 19.9%
CA Power Agency Public Power,
Hydroelectric Project #1,
Series 1992-A,
5.500% 07/01/23 ................ 3,000 2,426
DE State Economic Development
Authority, New Castle County Gas
Systems, Series 1991-C,
7.150% 07/01/21 ................ 1,000 1,029
FL State Municipal Power Agency,
Series 1993,
5.100% 10/01/25 ................ 5,000 3,813
GA Municipal Electrical Authority,
Special Obligation, Project One,
Fifth Cross,
6.400% 01/01/13 ................ 1,000 951
IN Jasper County Industry Pollution
Control, Northern Indiana Public
Services, Series 1991,
7.100% 07/01/17 ................ 1,000 1,005
IN Municipal Power Agency Supply
System, Series 1990-A,
7.100% 01/01/15 ................ 1,000 1,069
KS Burlington, Pollution Control, Kansas
Gas & Electric Co., Series 1991,
7.000% 06/01/31 ................ 2,000 1,995
MI St. Clair County Economic
Development Corp., Detroit Edison Co.,
Series 1993-AA
6.400% 08/01/24 ................ 1,000 928
MI State Strategic Fund Limited
Obligation, Pollution Control,
Series 1991-CC
6.950% 09/01/21 ................ 2,000 1,992
NC Municipal Power Agency Number 1,
Catawba Electric Revenue Bonds,
Series 1992,
5.750% 01/01/15 ................ 3,000 2,576
NV Clark County Pollution Control,
Nevada Power Company,
Series 1992-B,
6.600% 06/01/19 ................ 2,000 1,885
New York State Power Authority,
General Purpose Bonds, Series 5,
7.875% 01/01/13 (b) ............ 3,950 4,128
SC State Public Service Authority,
5.125% 01/01/32 ................ 5,000 3,631
</TABLE>
3
See notes to investment portfolio.
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO - CONTINUED
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------
<S> <C> <C>
ELECTRIC - CONT.
TX Austin Utilities System,
5.750% 05/15/24 . . . . . . . . $5,000 $ 4,162
TX Brazos River Authority,
Collateralized Pollution Control Bonds,
Texas Utilities Electric, Series 1987-A,
9.875% 10/01/17 . . . . . . . . 1,300 1,441
TX Brazos River Authority, Houston
Lighting and Power Co.,
Series 1988-B,
8.250% 05/01/15 . . . . . . . . 1,000 1,072
TX Matagorda County, Houston
Lighting and Power Company, 1989-C,
7.125% 07/01/19 . . . . . . . . 1,000 1,030
TX Municipal Power Agency:
(a) 09/01/10 . . . . . . . . 5,000 1,700
(a) 09/01/11 . . . . . . . . 7,900 2,488
(a) 09/01/12 . . . . . . . . 3,000 874
UT Intermountain Power Agency
Power Supply, Series 1987-D,
8.375% 07/01/12 (b) . . . . . . 4,500 4,843
UT State Municipal Power Agency,
Electric Systems, Series 1993-A,
5.250% 07/01/18 . . . . . . . . 3,000 2,411
WA Snohomish County Public Utilities,
Generation System, District
Number 001, 1993,
5.500% 01/01/20 . . . . . . . . 1,500 1,239
--------
48,688
- ------------------------------------------------------------
GENERAL OBLIGATIONS - 8.3%
DC District of Columbia, General
Obligation:
Series 1988-C,
8.000% 06/01/08 . . . . . . . . 1,500 1,635
Series 1993-B1,
5.500% 06/01/09 . . . . . . . . 1,000 875
IL Chicago Board of Education, General
Obligation, Leases Certificates,
Series 1992-A:
6.000% 01/01/20 . . . . . . . . 2,000 1,737
6.250% 01/01/15 . . . . . . . . 6,000 5,467
LA General Obligation, Series 1991,
(a) 09/01/16 . . . . . . . . 2,000 432
LA State General Obligation,
Series 1992-A,
6.500% 05/01/12 . . . . . . . . 2,000 1,925
MI Romulus Community Schools,
School Building and Site,
Series 1992-II,
(a) 05/01/22 . . . . . . . . 4,120 670
MI Royal Oak City School District,
Building and Site, General Obligation,
(a) 05/01/08 . . . . . . . . 3,500 1,409
NY State Local Government,
Assistance Corporation, Series 1993-E,
5.000% 04/01/21 . . . . . . . 3,175 2,326
TX Grapevine Colleyville Independent,
School District, Series 1994,
5.125% 08/15/22 . . . . . . . 5,000 3,863
-------
20,339
- ------------------------------------------------------------
HOSPITALS & HEALTH-CARE - 12.1%
AZ Scottsdale Industrial Development
Authority, Scottsdale Memorial
Hospital, Series 1987-A,
8.500% 09/01/17 . . . . . . . 500 544
IL Health Facilities Authority,
Methodist Health Services Corp.:
RIB, Series 1992-B,
9.983% (variable rate), 05/01/21 500 461
Series 1985-G,
8.000% 08/01/15 . . . . . . . 975 1,047
MA Health and Educational Facilities:
McLean Hospital, Series 1992-C,
6.625% 07/01/15 . . . . . . . 500 477
New England Deaconess Hospital,
Series D,
6.875% 04/01/22 . . . . . . . 2,500 2,478
Northeastern University,
Series 1988-B,
7.600% 10/01/10 . . . . . . . 1,000 1,042
North Shore Medical Center Inc.,
Series A:
5.300% 07/01/06 (b) . . . . . 2,400 2,118
5.625% 07/01/14 (b) . . . . . 10,000 8,462
NH Higher Educational and Health
Facilities, Lakes Region Hospital
Association, Series 1993,
5.500% 01/01/17 . . . . . . . 3,000 2,501
NV Reno Hospital, St. Mary's Regional
Medical Center, Series 1991-A,
6.700% 07/01/21 . . . . . . . 1,000 992
NY State Medical Care Facilities
Finance Agency, St. Luke's-Roosevelt
Hospital Center, Series 1989-B,
7.450% 02/15/29 . . . . . . . 500 544
PA Dauphin County Hospital Authority,
Harrisburg Hospital, Series 1987,
8.250% 07/01/14 . . . . . . . 1,500 1,597
</TABLE>
See notes to investment portfolio.
4
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO - CONTINUED
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------
<S> <C> <C>
HOSPITALS & HEALTH-CARE - CONT.
TN Chattanooga-Hamilton County, RIB,
Series 1991-B,
9.987% (variable rate), 05/25/21. . $ 1,000 $ 1,140
TN Knox City Health, Education and
Housing Facilities,
5.250% 01/01/15. . . . . . . . 5,000 4,075
WI State Health and Educational
Facilities, Waukesha Memorial Hospital:
Series 1990,
7.500% 08/01/11 . . . . . . . 1,000 1,035
Series 1990-B,
7.250% 08/15/19 . . . . . . . 1,000 1,016
------
29,529
- --------------------------------------------------------------
HOUSING - 5.9%
FL Duval County Housing Finance
Authority, Single-family Mortgage,
Series 1991,
7.350% 07/01/24 . . . . . . . 860 874
IL Onterie Center Housing Finance,
Series 1992-A,
7.050% 07/01/27 . . . . . . . 2,000 1,870
KY Greater Housing Assistance
Corporate Mortgage, Section 8
Assisted Projects, Series A,
6.250% 07/01/24 . . . . . . . 2,855 2,490
KY Housing Corporation, Multi-family,
Series 1985-A,
8.875% 07/01/19 . . . . . . . 355 359
MA State Housing Finance Agency:
Series 1985-A,
9.250% 12/01/14 . . . . . . . 25 26
Series 1993-A,
6.150% 10/01/15 . . . . . . . 3,000 2,640
Single-family Housing, Series 21:
6.300% 06/01/25 . . . . . . . 445 383
7.125% 06/01/25 . . . . . . . 1,310 1,256
MD Howard County Medical Mortgage,
Heartlands Elderly Apartments,
Series 1985,
8.875% 12/01/10 . . . . . . . 495 506
MS Housing Finance Corporation,
Single-family Mortgage,
8.250% 10/15/18 . . . . . . . 3,525 3,622
NM Mortgage Finance Authority,
Single-family Mortgage Program:
Series 1985-A,
9.250% 07/01/12 . . . . . . . 10 10
Series 1987 C,
8.625% 07/01/17 . . . . . . . 540 537
------
14,574
- --------------------------------------------------------------
IN-SUBSTANCE DEFEASED (C) - 1.9%
IN State Educational Facilities Authority,
Butler University, Project Number 2,
Series 1988-B,
8.000% 11/01/09 . . . . . . . 1,000 1,100
MO Little Blue Sewer District System,
Series 1985,
9.000% 10/01/07 . . . . . . . 500 559
OH Hamilton Electric System,
Series 1988-B,
8.000% 10/15/22 . . . . . . . 2,750 3,028
-------
4,687
- --------------------------------------------------------------
NURSING HOMES - 0.9%
WA State Housing Finance Commision,
Franciscan Elder Care, Series 1991,
6.875% 01/01/21 . . . . . . . 2,250 2,228
- --------------------------------------------------------------
POLLUTION CONTROL - 0.8%
NY New York Energy Research &
Development, Adjusted Gas Facilities,
Brooklyn Union Gas Company,
Series 1989-B,
6.750% 02/01/24 . . . . . . . 2,000 1,883
- --------------------------------------------------------------
PUBLIC FACILITY & IMPROVEMENT - 8.4%
AL Birmingham Jefferson Civil Center
Authority, Series 1992,
5.500% 09/01/14 . . . . . . . 2,500 2,144
CA Alameda County,
Certificates of Participation,
Series 1985-1,
7.250% 12/01/08 . . . . . . . 1,300 1,412
CA Fairs Finance Authority,
Series 1991,
6.500% 07/01/11 . . . . . . . 1,300 1,259
FL Gulf Breeze, Local Government
Loan Program, Series 1985-B,
8.000% 12/01/15 . . . . . . . 1,000 1,089
IL Chicago,
Series 1988-C,
6.850% 01/01/17 . . . . . . . 1,000 1,058
IL Chicago Public Commerce Building,
Series 1993-A,
5.750% 12/01/18 . . . . . . . 2,000 1,678
IN Marion County Convention and
Recreational Facilities Authority,
Excise Taxes Lease Rental,
Series 1991-B,
7.000% 06/01/21 . . . . . . . 1,000 1,070
MI Municipal Bond Authority, Local
Government Loan Program,
Series 1991-C,
(a) 06/15/15 . . . . . . . 3,380 794
</TABLE>
See notes to investment portfolio.
5
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO -- CONTINUED
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------
<S> <C> <C>
PUBLIC FACILITY & IMPROVEMENT - CONT.
NC Charlotte Certificates of
Participation, Convention Facilities
Project, Series 1993-C,
5.250% 12/01/13 . . . . . . . . $ 400 $ 330
NY State Urban Development
Corporation, Correctional Facilities
Capital, Series 1990-1,
7.500% 01/01/20 . . . . . . . . 1,400 1,524
SC Charleston County Certificate
of Participation, Series 1991,
7.100% 06/01/11 . . . . . . . . 2,000 2,155
SC State Ports Authority,
Series 1991,
6.750% 07/01/21 . . . . . . . . 3,000 2,839
TX Dallas County, Utilities and
Reclamation District, Series 1987,
8.300% 02/15/16 . . . . . . . . 1,000 1,081
WV School Building Authority,
Series 1990-B,
6.750% 07/01/17 . . . . . . . . 1,000 970
WV States Parkways Economic
& Tourism Authority, Series 1989,
7.125% 07/01/19 . . . . . . . . 1,000 1,073
-------
20,476
- --------------------------------------------------------------
TRANSPORTATION - 14.9%
CA Los Angeles County Transportation
Commission, Sales Tax, Metropolitan
Train, Series 1991-A,
6.750% 07/01/18 . . . . . . . . 1,000 1,059
IL Regional Transportation Authority,
7.750% 06/01/20 . . . . . . . . 5,000 5,462
KY Louisville and Jefferson County,
Regional Airport Authority, Standiford
Field, Series 1987-A,
8.500% 07/01/17 . . . . . . . . 1,750 1,877
KY State Turnpike Authority, Economic
Development Road Revitalization
Projects, Series 1993,
5.500% 07/01/09 . . . . . . . . 500 448
LA New Orleans International Airport,
Series 1987-A,
8.875% 08/01/17 (b) . . . . . . 5,000 5,488
MA Bay Transportation Authority:
Certificates of Participation,
Series 1990-A,
7.650% 08/01/15 . . . . . . . . 1,000 1,053
General Transportation System,
Series 1990-A,
7.625% 03/01/15 . . . . . . . . 2,000 2,193
MA State Port Authority Revenue:
7.500% 07/01/20 . . . . . . . . 1,000 1,028
Series 1988-A,
7.750% 07/01/18 . . . . . . . . 1,000 1,026
MA State Turnpike Authority,
Series 1993-A,
5.125% 01/01/23 . . . . . . . . 5,000 3,800
NV Clark County, Airport Improvement,
McCarren International Airport, Las
Vegas, Series 1988,
8.250% 07/01/15 . . . . . . . . 3,500 3,784
OR Portland International Airport,
Series Seven-B,
7.100% 07/01/21 . . . . . . . . 1,000 1,039
PA Allegheny County Airport, Greater
Pittsburgh International Airport:
Series 1988-C,
8.250% 01/01/16 . . . . . . . . 3,250 3,453
Series 1992-B,
6.625% 01/01/22 . . . . . . . . 1,000 943
PR Commonwealth of Puerto Rico,
Highway & Transportation Authority,
3.215% 07/01/09 (d) . . . . . . 2,300(e) 888
TX Harris County, Series 1994,
5.375% 08/15/20 . . . . . . . . 3,000 2,393
UT Salt Lake City Airport,
Salt Lake City International,
Series A,
7.875% 12/01/18 . . . . . . . . 500 540
-------
36,474
- --------------------------------------------------------------
WASTE DISPOSAL - 0.4%
FL Palm Beach County Solid Waste
Authority, Series 1984,
8.375% 07/01/10 . . . . . . . . 1,000 1,085
- --------------------------------------------------------------
WATER & SEWER - 15.7%
CA Contra Costa Water District,
5.500% 10/01/19 . . . . . . . . 5,000 4,100
CA East Bay Municipal Utilities District
Water System, Series 1990,
7.500% 06/01/18 . . . . . . . . 2,500 2,734
CA Los Angeles Waste Water System:
Series A,
5.700% 06/01/20 . . . . . . . . 5,000 4,219
Series 1993-C,
5.600% 06/01/15 . . . . . . . . 3,000 2,554
</TABLE>
See notes to investment portfolio.
6
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO -- CONTINUED
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------
<S> <C> <C>
WATER & SEWER - CONT.
FL Hollywood Water and Sewer,
Series 1991,
6.875% 10/01/21 . . . . . . . . $2,000 $ 2,135
FL Reedy Creek Improvement District,
Series 1,
5.000% 10/01/19 . . . . . . . . 5,000 3,831
FL Saint John's County Water and
Sewer, Saint Augustine Shores
System, Series 1991-A:
(a) 06/01/13 . . . . . . . . 2,600 728
(a) 06/01/14 . . . . . . . . 1,500 392
GA Fulton County Water and Sewer,
6.375% 01/01/14 (b) . . . . . . 5,950 5,727
IL Kankakee Sewer,
Series 1991,
7.000% 05/01/16 . . . . . . . . 1,000 1,003
NJ Camden County Municipal Utilities
Authority, Series 1987,
8.250% 12/01/17 . . . . . . . . 3,400 3,664
NY New York City Municipal Finance
Authority, Water and Sewer Systems,
Series 1991-C,
7.000% 06/15/16 . . . . . . . . 1,500 1,603
OH State Water Development,
Series 1985,
9.375% 12/01/18 . . . . . . . . 5 5
PA Philadelphia Water and Waste Water,
Series 1993,
5.250% 06/15/23 . . . . . . . . 1,150 887
PA Pottstown Borough Authority
Sewer, Guaranteed Sewer Revenue,
Series 1991,
(a) 11/01/16 . . . . . . . . 1,000 215
TX Coastal Water Authority,
Water Conveyance System Series 1991,
6.250% 12/15/17 . . . . . . . . 1,750 1,617
TX Colorado River Municipal Water
District, Water Transmission Facilities,
Series 1991-A,
6.625% 01/01/21 . . . . . . . . 1,000 1,034
UT State Municipal Cooperative Local
Government, Series 1991,
7.000% 06/01/16 . . . . . . . . 1,750 1,859
--------
38,307
- --------------------------------------------------------------
Total investments (cost $247,217) (f) 240,724
- --------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 2.2%
- --------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (G)
NY General Obligation,
3.500% 08/15/03 . . . . . . . . 1,300 1,300
NY New York City General Obligation:
3.800% 10/01/20 . . . . . . . . $2,900 $ 2,900
3.800% 10/01/21 . . . . . . . . 1,250 1,250
--------
5,450
- --------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - (0.6)% (1,464)
- --------------------------------------------------------------
NET ASSETS - 100.0% $244,710
- --------------------------------------------------------------
<FN>
Notes to investment portfolio:
(a) Zero coupon bond.
(b) These securities, or a portion thereof, with
a total market value of $26,993, are being
used to collaterize open futures contracts.
(c) The Fund has been informed that the issuer
has placed direct obligations of the U.S.
Government in an irrevocable trust, solely
for the payment of the interest and principal.
(d) This security is a variable rate instrument.
Interest income is accrued daily on the
notional amount at the applicable interest
rate.
(e) Notional amount.
(f) Cost for federal income tax purposes
is the same.
(g) 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
November 30, 1994.
</TABLE>
<TABLE>
Short futures contracts open at
November 30, 1994:
<CAPTION>
Par value Unrealized
covered Expiration depreciation
Type by contracts month at 11/30/94
- -----------------------------------------------------------
<S> <C> <C> <C>
Treasury bond $19,400 March $121
- -----------------------------------------------------------
ACRONYM NAME
- ---------- --------------------------
RIB Residual Interest Bond
</TABLE>
<TABLE>
SUMMARY OF SECURITIES BY INSURER
<CAPTION>
% of
Insurer net assets
------- ----------
<S> <C>
Municipal Bond.............................. 39
Financial Guarantee Insurance Company....... 30
AMBAC Indemnity Corporation................. 21
Financial Security Assurance................ 3
Uninsured Securities........................ 3
Capital Guarantee Insurance Company......... 2
Bond Investment Guarantee Insurance......... 2
---
100
===
</TABLE>
See notes to financial statements.
7
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
November 30, 1994
(in thousands except for per share amounts and footnote)
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments at value (cost $247,217).............................. $240,724
Short-term obligations............................................ 5,450
--------
246,174
Receivable for:
Interest................................................ $5,593
Fund shares sold........................................ 422
Investments sold........................................ 10
Other...................................................... 46 6,071
------ --------
Total assets............................................. 252,245
LIABILITIES
Payable for:
Investments purchased................................... 5,406
Distributions........................................... 1,157
Fund shares repurchased................................. 792
Variation margin on futures............................. 127
Accrued:
Deferred Trustees fees.................................. 4
Other...................................................... 49
------
Total liabilities........................................ 7,535
--------
Net assets at value for 32,850
shares of beneficial interest outstanding...................... $244,710
========
Net asset value & redemption price per share -
Class A ($198,909/26,701)..................................... $ 7.45
========
Maximum offering price per share - Class A
($7.45/0.9525)................................................. $ 7.82*
========
Net asset value & offering price per share -
Class B ($45,801/6,149)....................................... $ 7.45
========
COMPOSITION OF NET ASSETS
Capital paid in................................................ $258,252
Undistributed net investment income........................... 397
Accumulated net realized loss.................................. (7,325)
Net unrealized depreciation on:................................
Investments............................................... (6,493)
Open futures contracts..................................... (121)
--------
$244,710
========
<FN>
* On sales of $50,000 or more the offering price is reduced.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
Year ended November 30, 1994
(in thousands)
- ------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest..................................................... $ 17,838
EXPENSES
Management fee........................... $ 1,506
Service fee.............................. 685
Distribution fee - Class B............... 372
Transfer agent........................... 436
Bookkeeping fee.......................... 106
Trustees fees............................ 25
Custodian fee............................ 11
Audit fee................................ 37
Legal fee................................ 8
Registration fees........................ 43
Reports to shareholders.................. 10
Other.................................... 23 3,262
-------- --------
Net investment income................................ 14,576
--------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments............................ (3,257)
Closed futures contracts............... 531
--------
Net realized loss.................................... (2,726)
Net unrealized depreciation
during the period on:
Investments............................ (30,492)
Open futures contracts................. (121)
--------
Net unrealized depreciation.......................... (30,613)
--------
Net loss.......................................... (33,339)
--------
Net decrease in net assets from
operations................................................ $(18,763)
=========
</TABLE>
See notes to financial statements.
8
<PAGE>
<TABLE>
FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year ended November 30
-------------------------
1994 1993
-------- --------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income............................................................. $ 14,576 $ 14,260
Net realized gain (loss).......................................................... (2,726) 1,326
Net unrealized appreciation (depreciation)........................................ (30,613) 8,989
-------- --------
Net increase (decrease) from operations....................................... (18,763) 24,575
Distributions
From net investment income - Class A.............................................. (12,079) (12,703)
From net investment income - Class B.............................................. (2,287) (1,464)
-------- --------
(33,129) 10,408
-------- --------
Fund share transactions
Receipts for shares sold - Class A................................................ 23,583 39,448
Value of distributions reinvested - Class A....................................... 6,917 7,148
Cost of shares repurchased - Class A.............................................. (46,210) (32,273)
-------- --------
(15,710) 14,323
-------- --------
Receipts for shares sold - Class B................................................ 12,774 31,139
Value of distributions reinvested - Class B....................................... 1,291 809
Cost of shares repurchased - Class B.............................................. (8,161) (3,334)
-------- --------
5,904 28,614
-------- --------
Net increase (decrease) from Fund share transactions......................... (9,806) 42,937
-------- --------
Total increase (decrease)............ (42,935) 53,345
NET ASSETS
Beginning of period............................................................... 287,645 234,300
-------- --------
End of period (including undistributed net investment
income of $397 and $183, respectively).......................................... $244,710 $287,645
======== ========
NUMBER OF FUND SHARES
Sold - Class A.................................................................... 2,945 4,714
Issued for distributions reinvested - Class A..................................... 858 856
Repurchased - Class A............................................................. (5,793) (3,848)
-------- --------
(1,990) 1,722
-------- --------
Sold - Class B.................................................................... 1,552 3,721
Issued for distributions reinvested - Class B..................................... 161 97
Repurchased - Class B............................................................. (1,031) (396)
-------- --------
682 3,422
-------- --------
Net increase (decrease) in shares outstanding................................ (1,308) 5,144
Outstanding at
Beginning of period.............................................................. 34,158 29,014
-------- --------
End of period.................................................................... 32,850 34,158
======== ========
</TABLE>
See notes to financial statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES
Colonial Tax-Exempt Insured 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 diversified, open-end, management investment
company. The Fund may issue an unlimited number of shares. The Fund offers
Class A shares sold with a front-end sales charge and Class B shares which 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. 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.
- --------------------------------------------------------------------------------
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.
Futures contracts are valued based on the difference between the last
sale price and the opening price of the contract.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued
at fair value under procedures approved by the Trustees.
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.
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 distribution fee), 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 distribution fee 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.
- --------------------------------------------------------------------------------
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 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.
- --------------------------------------------------------------------------------
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
<TABLE>
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 based on each fund's pro rata portion of the
combined average net assets of the Fund, Colonial Tax-Exempt Fund, and Colonial
High Yield Municipal Fund as follows:
<CAPTION>
Average Net Assets Annual Fee Rate
- ------------------ ---------------
<S> <C>
First $1 billion..................... 0.60%
Next $2 billion..................... 0.55%
Next $1 billion..................... 0.50%
Over $4 billion..................... 0.45%
</TABLE>
- --------------------------------------------------------------------------------
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 0.14% annually of the Fund's average net assets, and receives a reimbursement
for certain out of pocket expenses.
- --------------------------------------------------------------------------------
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
The Adviser, through its Colonial Investment Services (the Distributor)
division, is the Fund's principal underwriter. During the year ended November
30, 1994, the Distributor retained net underwriting discounts of $34,298 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $187,454 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the
Distributor a service fee equal to 0.25% annually of the Fund's net assets as
of the 20th of each month. The plan also requires the payment of a distribution
fee to the Distributor equal to 0.75% annually of the average net assets
attributable to Class B shares.
The CDSC and the fees received from the 12b-1 plan are used principally
as repayment to the Distributor for amounts paid by the Distributor to dealers
who sold such shares.
- --------------------------------------------------------------------------------
OTHER
The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan
which may be terminated at any time. The compensation deferred earns interest
quarterly based on the 90-day U.S. Treasury bill rate. Obligations of the plan
will be paid solely out of the Fund's assets.
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
During the year ended November 30, 1994, purchases and sales of
investments, other than short-term obligations, were $97,069,544 and
$103,743,097, respectively.
Unrealized appreciation (depreciation) at November 30, 1994, based on
cost of investments for both financial statement and federal income tax
purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation..... $ 6,021,168
Gross unrealized depreciation..... (12,514,426)
------------
Net unrealized depreciation.... $ (6,493,258)
============
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
CAPITAL LOSS CARRYFORWARDS
At November 30, 1994, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
<CAPTION>
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- ------------
<S> <C>
1995................ $3,650,000
1996................ 414,000
1998................ 180,000
2000................ 171,000
2002................ 2,571,000
----------
$6,986,000
==========
</TABLE>
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 has greater than 10% of its net assets at November 30, 1994,
invested in Massachusetts.
There are certain risks arising from geo- graphic 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.
Entering into futures contracts has risks, including the possibility
that there may be an illiquid market and that the changes in the value of the
contract may not directly correlate to the changes in the value of the
underlying securities.
- --------------------------------------------------------------------------------
NOTE 4. CONTINGENT LIABILITY
The Adviser insures itself and all funds that it advises under a policy
with ICI Mutual Insurance Company. The annual premium is allocated among the
funds and the Adviser. Additionally, the Adviser and the funds have committed
up to 300% of the annual premium, one-third of which was provided in cash, with
the Fund's pro rata portion recorded as an asset. The remainder is secured
with an irrevocable letter of credit.
- --------------------------------------------------------------------------------
12
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED NOVEMBER 30
--------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
--------------------------------------------------------------------------------------
Class A Class B Class A Class B Class A Class B(a) Class A Class A
-------- -------- ------- -------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value
Beginning of period............. $ 8.420 $ 8.420 $ 8.080 $ 8.080 $ 7.880 $ 7.910 $ 7.660 $ 7.680
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income......... 0.439 0.378 0.456 0.395 0.480 0.240 0.496 0.506
Net realized and unrealized
gain (loss) on investments.. (0.977) (0.977) 0.338 0.338 0.200 0.170 0.222 (0.016)
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations.......... (0.538) (0.599) 0.794 0.733 0.680 0.410 0.718 0.490
-------- -------- -------- -------- -------- -------- -------- --------
Less distributions declared to
shareholders:
From net investment income.. (0.432) (0.371) (0.454) (0.393) (0.480) (0.240) (0.498) $(0.510)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value - End of period.... $ 7.450 $ 7.450 $ 8.420 $ 8.420 $ 8.080 $ 8.080 $ 7.880 $ 7.660
======== ======== ======== ======== ======== ======== ======== ========
Total return (b).................... (6.61)% (7.31)% 10.00% 9.20% 8.85% 5.23%(c) 9.66% 6.65%
======== ======== ======== ======== ======== ======== ======== ========
Ratios to average net assets:
Expenses........................ 1.05% 1.80% 1.07% 1.82% 1.10% 1.85%(d) 1.08% 1.10%
Net investment income........... 5.44% 4.69% 5.44% 4.69% 5.97% 5.22%(d) 6.35% 6.66%
Portfolio turnover.................. 36% 36% 12% 12% 7% 7% 8% 15%
Net assets at end of period
(000)........................... $198,909 $ 45,801 $241,610 $ 46,035 $217,782 $ 16,519 $189,483 $142,525
<FN>
(a) Class B shares were initially offered on May 5, 1992. Per share amounts
reflect activity from that date.
(b) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or CDSC.
(c) Not annualized.
(d) Annualized.
13
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ------------------------------------------------------------------------------
TO THE TRUSTEES OF COLONIAL TRUST IV AND THE SHAREHOLDERS
OF COLONIAL TAX-EXEMPT INSURED 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 Insured
Fund (a series of Colonial Trust IV) at November 30, 1994, 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 November 30, 1994 by correspondence with the custodian
and brokers, and the application of alternative auditing procedures where
confirmations from brokers were not received, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 11, 1995
14
COLONIAL TRUST IV
Cross Reference Sheet
Colonial Tax-Exempt Money Market Fund
--------------------------------------
Location or Caption in Statement
Item Number of Form N-1A of Additional Information
- ------------------------ ---------------------------------
Part B
10. Cover Page
11. Table of Contents
12. Not Applicable
13. Investment Objectives and
Policies; Fundamental Investment
Policies; Other Investment
Policies; Miscellaneous
Investment Practices; Portfolio
Turnover
14. Management of the Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses;
Management of the Funds
17. Fund Charges and Expenses;
Management of the Funds
18. Shareholder Liability
19. How to Buy Shares; Determination
of Net Asset Value; Suspension of
Redemptions; Investor Services
20. Taxes
21. Fund Charges and Expenses;
Management of the Funds
22. Fund Charges and Expenses;
Management of the Funds
23. Independent Accountants
COLONIAL TAX-EXEMPT MONEY MARKET FUND
Statement of Additional Information
March 30, 1995
This Statement of Additional Information (SAI) contains information
which may be useful to investors but which is not included in the
Prospectus of Colonial Tax-Exempt Money Market Fund (Fund). This SAI
is not a prospectus and is authorized for distribution only when
accompanied or preceded by the Prospectus of the Fund dated March 30,
1995. This SAI should be read together with the Prospectus.
Investors may obtain a free copy of the Prospectus from Colonial
Investment Services, Inc., One Financial Center, Boston, MA
02111-2621.
Part 1 of this SAI contains specific information about the Fund. Part
2 includes information about the Colonial funds generally and
additional information about certain securities and investment
techniques described in the Fund's Prospectus.
TABLE OF CONTENTS
Part 1 Page
Definitions
Investment Objectives and Policies
Fundamental Investment Policies
Other Investment Policies
Fund Charges and Expenses
Investment Performance
Custodian
Independent Accountants
Part 2
Miscellaneous Investment Practices
Taxes
Management of the Funds
Determination of Net Asset Value
How to Buy Shares
Investor Services
Suspension of Redemptions
Shareholder Liability
Performance Measures
Appendix I
Appendix II
TEM-xx-xx
PART 1
COLONIAL TAX-EXEMPT MONEY MARKET FUND
Statement of Additional Information
March 30, 1995
DEFINITIONS
"Trust" Colonial Trust IV
"Fund" Colonial Tax-Exempt Money Market Fund
"Colonial" Colonial Management Associates, Inc., the Fund's investment manager
"CISI" Colonial Investment Services, Inc., the Fund's distributor
"CISC" Colonial Investors Service Center, Inc., the Fund's shareholder
services and transfer agent
INVESTMENT OBJECTIVES AND POLICIES
The Fund's prospectus describes its objective and policies. Part
1 includes additional information concerning, among other things,
the fundamental investment policies of the Fund. Part 2 of this
SAI contains additional information about the following
securities and investment techniques :
Short-term Trading
Repurchase Agreements
Money Market Instruments
Forward Commitments
Participation Interests
Stand-by Commitments
Except as described below under "Fundamental Investment
Policies," the Fund's investment policies are not fundamental,
and the Trustees may change the policies without shareholder
approval.
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (Act) provides that a "vote of
a majority of the outstanding voting securities" means the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund, or (2) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares
are represented at the meeting in person or by proxy. The
following fundamental investment policies can not be changed
without such a vote.
Total assets and net assets are determined at current value for
purposes of compliance with investment restrictions and policies.
All percentage limitations will apply at the time of investment
and are not violated unless an excess or deficiency occurs as a
result of such investment. For the purpose of the Act
diversification requirement, an issuer is the entity whose
revenues support the security.
The Fund may:
1. Issue senior securities only through borrowing money from
banks for temporary or emergency purposes up to 10% of its
net assets; however, the Fund will not purchase additional
portfolio securities while borrowings exceed 5% of net
assets;
2. Not invest in real estate;
3. Invest up to 10% of its net assets in illiquid assets;
4. Purchase and sell futures contracts and related options so
long as the total initial margin and premiums on the
contracts do not exceed 5% of its total assets;
5. Underwrite securities issued by others only when disposing
of portfolio securities;
6. Make loans through lending of securities not exceeding 30%
of total assets, through the purchase of debt instruments
or similar evidences of indebtedness typically sold
privately to financial institutions and through repurchase
agreements;
7. Not concentrate more than 25% of its total assets in any
one industry;
8. And will, under normal circumstances, invest at least 80%
of its total assets in tax-exempt securities.
OTHER INVESTMENT POLICIES
As non-fundamental investment policies which may be changed
without a shareholder vote, the Fund may not:
1. Purchase securities on margin, but it may receive short-
term credit to clear securities transactions and may make
initial or maintenance margin deposits in connection with
futures transactions;
2. Have a short securities position, unless the Fund owns, or
owns rights (exercisable without payment) to acquire, an
equal amount of such securities;
3. Own voting securities of any company if the Fund knows that
officers and Trustees of the Trust or officers and
directors of Colonial who individually own more than 0.5%
of such securities together own more than 5% of such
securities;
4. Invest in interests in oil, gas or other mineral
exploration or development programs, including leases;
5. Purchase any security resulting in the Fund having more
than 5% of its total assets invested in securities of
companies (including predecessors) less than three years
old;
6. Pledge more than 33% of its total assets;
7. Purchase any security if, as a result of such purchase,
more than 10% of its total assets would be invested in
securities which are restricted as to disposition; and
8. Invest in warrants if, immediately after giving effect to
any such investment, the Fund's aggregate investment in
warrants, valued at the lower of cost or market, would
exceed 5% of the value of the Fund's net assets. Included
within that amount but not to exceed 2% of the value of the
Fund's net assets, may be warrants which are not listed on
the New York Stock Exchange or the American Stock Exchange.
Warrants acquired by the Fund in units or attached to
securities will be deemed to be without value.
FUND CHARGES AND EXPENSES
Under the Fund's management agreement, the Fund pays Colonial a
monthly fee based on the average daily net assets of the Fund, at
the annual rate of 0.50% (subject to reductions that Colonial may
agree to periodically).
Recent Fees paid to Colonial, CISI and CISC (for the fiscal year
ended November 30) (in thousands)
1994 1993 1992
Management fee $131 $129 $144
Bookkeeping fee 27 27 27
Shareholder service and
transfer agent fee (a) 59 60 73(a)
Amount of above fees waived (153) (129) (174)
12b-1 fees:
Service fee (Class B)(c) 4 1 (b)
Distribution fee (Class B)(c) 14 2 (b)
(a) Under a prior fee schedule.
(b) Rounds to less than one.
(c) Class B shares were initially offered on May 5, 1992.
Trustees Fees
For the calendar year ended December 31, 1994, the Trustees
received the following compensation for serving as Trustees:
Pension or
Retirement
Benefits Estimated Total
Accrued As Annual Compensation
Aggregate Part of Benefits From Fund and
Compensation Fund Upon Fund
Trustee From Fund Expense Retirement Complex(e)
Tom Bleasdale $1,096(d) $0 $0 $101,000
Lora S. Collins 1,029 0 0 95,000
William D. Ireland, Jr. 1,191 0 0 110,000
William E. Mayer 975 0 0 89,752
John A. McNeice, Jr. 0 0 0 0
James L. Moody, Jr. 1,194 0 0 109,000
John J. Neuhauser 1,029 0 0 95,000
George L. Shinn 1,214 0 0 112,000
Robert L. Sullivan 1,142 0 0 104,561
Sinclair Weeks, Jr. 1,256 0 0 116,000
(d) Includes $532 payable as deferred compensation.
(e) The Colonial Funds Complex consists of 31 open-end and 5 closed-
end management investment company portfolios.
The following table sets for the amount of compensation paid to
Messrs. Birnbaum, Grinnell and Lowry in their capacities as
Trustees of the Liberty All-Star Equity Fund, The Charles Allmon
Trust, Inc., Liberty Financial Trust and LFC Utilities Trust
(together, Liberty Funds) for service during the calendar year
ended December, 31, 1994:
Pension or
Aggregate Retirement Total
Compensation Benefits Estimated Compensation
From Fund Accrued As Annual From Liberty
for the fisal Part of Benefits Funds for the
year ended Fund Upon calendar year
Trustee 11/30/94 Expense Retirement ended 12/31/94(f)
Robert J. Birnbaum $0 $0 $0 $ 0
James E. Grinnell 0 0 0 31,032
Richard W. Lowry 0 0 0 31,282
(f) The Liberty Financial Trust consists of 5 open-end and 2
closed-end management investment company portfolios, each of
which is advised by Stein Roe & Farnham Incorporated, an
indirect wholly-owned subsidiary of Liberty Financial
Companies, Inc., which in turn is an indirect subsidiary of
Liberty Mutual Insurance Company.
Ownership of the Trust
At February 28, 1995, the officers and Trustees of the Trust as a
group beneficially owned 698,809 shares of the Fund, representing
2.56% of the then outstanding shares. The largest single holding
was 688,068 shares (2.55% of the outstanding shares) by Mr. McNeice.
At February 28, 1995, the following shareholders owned more than
5% of the Fund's outstanding Class A and Class B shares:
Class A
Sekura Limited Partnership 7.57%
c/o Michael A. Kane
1887 Newton St., N.W.
Washington, DC 20010
Class B
Randy P. Shirley & Nancy S. Shirley JT TEN 6.39%
Rt. 3 Box 226C
Sherman, TX 75090-9587
Frank E. Karasz 16.38%
85 Lessey St.
Amherst, MA 01002
Gilbert Farias 5.88%
411 Hobron #1512
Honolulu, HI 96815
At February 28, 1995, there were 960 Class A and 87 Class B
record holders of the Fund.
Sales Charges (for fiscal year ended November 30) (in thousands)
Class B Shares
May 5, 1992
(commencement of
1994 1993 investment operations)
through November 30,
1992
Aggregate contingent
deferred sales charges
(CDSCs) on Fund
redemptions retained by CISI $28 $10 $0
CISI
12b-1 Plans, CDSC and Conversion of Shares
The Fund offers two classes of shares - Class A and Class B. The
Fund may in the future offer other classes of shares. The
Trustees have approved 12b-1 Plans pursuant to Rule 12b-1 under
the Act. Under the Plans, the Fund pays CISI a service fee at an
annual rate of 0.25% of average net assets attributed to its
Class B shares and a distribution fee at an annual rate of 0.75%
of average net assets attributed to its Class B shares. CISI
may use the entire amount of such fees to defray the costs of
commissions and service fees paid to financial service firms
(FSFs) and for certain other purposes. Since the distribution
and service fees are payable regardless of the amount of CISI's
expenses, CISI may realize a profit from the fees. The Class A
Plan has no fee but like the Class B Plan authorizes any other
payments by the Fund to CISI and its affiliates (including
Colonial) to the extent that such payments might be construed to
be indirect financing of the distribution of Fund shares.
The Trustees believe the Plans could be a significant factor in
the growth and retention of Fund assets resulting in a more
advantageous expense ratio and increased investment flexibility
which could benefit Fund shareholders. The Plans will continue
in effect from year to year so long as continuance is
specifically approved at least annually by a vote of the
Trustees, including the Trustees who are not interested persons
of the Trust and have no direct or indirect financial interest in
the operation of the Plans or in any agreements related to the
Plans (independent Trustees), cast in person at a meeting called
for the purpose of voting on the Plans. The Plans may not be
amended to increase the fee materially without approval by vote
of a majority of the outstanding voting securities of the
relevant class of shares and all material amendments of the Plans
must be approved by the Trustees in the manner provided in the
foregoing sentence. The Plans may be terminated at any time by
vote of a majority of the independent Trustees or by vote of a
majority of the outstanding voting securities of the relevant
class of shares. The continuance of the Plans will only be
effective if the selection and nomination of the Trustees who are
non-interested Trustees is effected by such non-interested Trustees.
Class A shares are offered at net asset value. Class B shares
are offered at net asset value subject to a CDSC if redeemed
within six years after purchase. The CDSC is described in the
Prospectus.
No CDSC will be imposed on shares derived from reinvestment of
distributions or on amounts representing capital appreciation.
In determining the applicability and rate of any CDSC, it will be
assumed that a redemption is made first of shares representing
capital appreciation, next of shares representing reinvestment of
distributions and finally of other shares held by the shareholder
for the longest period of time.
Eight years after the end of the month in which a Class B share
is purchased, such share and a pro rata portion of any shares
issued on the reinvestment of distributions will be automatically
converted into Class A shares having an equal value, which are
not subject to the distribution or service fee.
Sales-related expenses (in thousands) of CISI for the fiscal year
ended November 30, 1994, were:
Class A Class B
Shares Shares
Fees to FSF $ 0 $15
Cost of sales material relating to the Fund $10 (a)
Allocated travel, entertainment and other
promotional $ 0 $ 0
(a) Rounds to less than one.
INVESTMENT PERFORMANCE
The Fund's yields for the seven days ended November 30, 1994, were:
Class A Shares Class B Shares
Yield 3.668% 2.630%
Effective Yield 3.734% 2.664%
Tax-equivalent yield 6.070% 4.350%
Tax-equivalent effective yield 6.180% 4.410%
The Fund's average annual total returns at November 30, 1994, were:
Class A Shares
Since Inception
1 Year 5 Years June 16, 1987
2.00% 3.20% 3.94%
Class B Shares
Since Inception
1 Year May 5, 1992
With CDSC of 5.00% (3.99)% (0.14)%
Without CDSC 1.01% 1.01%
See Part 2 of this SAI, "Performance Measures," for how calculations
are made.
CUSTODIAN
United Missouri Bank, n.a. is the Fund's custodian. The custodian
is responsible for safeguarding the Fund's cash and securities,
receiving and delivering securities and collecting the Fund's
interest and dividends.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP are the Fund's independent accountants
providing audit and tax return preparation services and
assistance and consultation in connection with the review of
various SEC filings. The financial statements incorporated by
reference in this SAI have been so incorporated, and the schedule
of financial highlights included in the Prospectus have been so
included in reliance upon the report of Price Waterhouse LLP
given on the authority of said firm as experts in accounting and
auditing.
The financial statements and Report of Independent Accountants
appearing on pages 2 through 9 of the November 30, 1994 Annual
Report are incorporated in this SAI by reference.
<PAGE>
INVESTMENT PORTFOLIO (in thousands)
NOVEMBER 30, 1994
<TABLE>
<CAPTION>
Short-term municipal
obligations Par Value
- ------------------------------------------------------------
<S> <C> <C>
Variable rate demand notes(a) - 99.8%
- -------------------------------------------------------------
Education - 12.9%
NC Education Facilities, Bowman Grey
School Medical Project,
3.650% 09/01/20 . . . . . . . $ 1,300 $ 1,300
NY Seneca County, NY Chiropratic
College,
3.350% 10/01/21 . . . . . . . . 400 400
PA State Higher Education,
Student Loans,
3.700% 12/01/20 . . . . . . . . 1,000 1,000
TX North Higher Education Authority,
3.700% 04/01/20 . . . . . . . . 500 500
UT Student Loan Revenue,
3.650%11/01/00 . . . . . . . . . . 1,000 1,000
--------
4,200
- -------------------------------------------------------------
Electric - 7.3%
MI Monroe County Economic Development
Authority, Detroit Edison Co.,
Series CC,
3.500% 10/01/24 . . . . . . . . 700 700
NY State Energy Research & Development
Authority, Niagara Mohawk Power,
3.750% 07/01/15 . . . . . . . . 1,200 1,200
VT Industrial Development Authority,
Rye Gate,
3.700% 12/01/15 . . . . . . . . 500 500
--------
2,400
- -------------------------------------------------------------
General obligations - 5.8%
IL Chicago, General Obligation,
Series B,
3.600% 10/31/95 . . . . . . . . 1,400 1,400
NY General Obligation,
3.650% 08/15/22 . . . . . . . . 500 500
--------
1,900
- -------------------------------------------------------------
Hospitals & health care - 16.5%
CA Catholic Healthcare:
3.600% 07/01/09 . . . . . . . . 400 400
3.600% 07/01/20 . . . . . . . . 200 200
CA Health Facilities, Sutter Health,
3.500% 03/01/20 . . . . . . . . 600 600
CO Health Facilities Medical Center,
3.650% 05/15/20 . . . . . . . 1,000 1,000
MO State Health & Educational Facility,
Christian Health Service,
3.600% 12/01/19 . . . . . . . 900 900
MO Kansas City Hospital,
3.650% 10/15/14 . . . . . . . 300 300
SC Greenville Hospital, Series A,
3.650% 05/01/23 . . . . . . . 1,300 1,300
WI State Health Facility Authority,
Franciscan Health Care,
3.350% 01/01/16 . . . . . . . 700 700
--------
5,400
- -------------------------------------------------------------
Housing - 3.1%
IL Lisle Multi-Family Revenue, Ashley of
Lisle Project,
3.450% 12/15/25 . . . . . . . $ 1,000 $ 1,000
- -------------------------------------------------------------
Industrial development revenue - 11.3%
GA Hapeville Development Authority,
Hapeville Hotel Limited,
3.500% 11/01/15 . . . . . . . 1,500 1,500
KS Kansas City Industrial Revenue,
PQ Corp. Project,
3.550% 08/01/15 . . . . . . . 300 300
MI Delta County,
3.550% 12/01/13 . . . . . . . 700 700
TX Angelina & Neches River Authority,
3.550% 05/01/14 . . . . . . . 300 300
VA Campbell County,
3.750% 04/01/15 . . . . . . . 500 500
VA Industrial Development Authority,
Southampton,
3.750% 04/01/15 . . . . . . . 400 400
--------
3,700
- -------------------------------------------------------------
Pollution control - 20.2%
CA Southern California Edison,
3.650% 02/28/08 . . . . . . . 800 800
IL Development Finance Authority,
Staley Manufacturing Project,
3.350% 12/01/05 . . . . . . . 300 300
LA East Baton Rouge Parish,
3.650% 06/01/98 . . . . . . . 400 400
NC Halifax County Industrial Facilities
& Pollution Control Authority,
Westmoreland Coal Co.,
3.700% 12/01/19 . . . . . . . 200 200
NY State Environmental Facility,
Equity Huntington Project,
3.550% 11/01/14 . . . . . . . 1,100 1,100
VA Alexandria Industrial Development
Authority,
3.650% 12/01/16 . . . . . . . 600 600
WY City of Green River,
3.650% 06/01/07 . . . . . . . 1,300 1,300
WY Gillette County, Pollution Control
Revenue,
3.200% 12/12/94 . . . . . . . 500 500
WY Platte County, Pollution Control
Revenue,
3.500% 07/01/14 . . . . . . . 400 400
WY Sweetwater County, Pollution
Control Revenue,
3.550% 12/01/14 . . . . . . . 1,000 1,000
--------
6,600
- -------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
2
<PAGE>
INVESTMENT PORTFOLIO - continued
<TABLE>
<CAPTION>
Variable rate demand
notes - cont. Par Value
- -------------------------------------------------------------------------
<S> <C> <C>
Public facility & improvement - 8.3%
GA De Kalb County Industrial
Development Authority,
3.850% 02/01/00 . . . . . . . . . . . $ 600 $ 600
IN Gary Environmental Improvement,
USX,
3.650% 07/15/02 . . . . . . . . . . . 500 500
OH Environment Improvement,
USX,
3.500% 12/01/01 . . . . . . . . . . . 400 400
TN Clarksville Public Building Authority,
3.400% 12/01/00 . . . . . . . . . . . 1,200 1,200
--------
2,700
- -------------------------------------------------------------------------
Transportation - 7.7%
IL Chicago Airport Special Facility Revenue,
Beckett Aviation,
3.600% 12/15/14 . . . . . . . . . . . 500 500
IL State Toll Highway Authority, Series B,
3.500% 01/01/10 . . . . . . . . . . . 500 500
NY Triborough Bridge & Tunnel Authority,
3.500% 01/01/24 . . . . . . . . . . . 1,000 1,000
VA Peninsula Ports Authority,
Dominion Terminal Project,
3.450% 07/01/16 . . . . . . . . . . . 500 500
--------
2,500
- -------------------------------------------------------------------------
Water & sewer - 6.7%
CA Irvine Ranch Water District,
3.400% 08/01/16 . . . . . . . . . . . 1,200 1,200
NY New York City Municipal Water Finance
Authority, Water and Sewer System,
Series C:
3.400% 06/15/22. . . . . . . . . . . . 800 800
3.400% 06/15/23 . . . . . . . . . . . 200 200
--------
2,200
- -------------------------------------------------------------------------
Total investments (cost $32,600) (b) 32,600
- -------------------------------------------------------------------------
Other assets & liabilities - 0.2% 75
- -------------------------------------------------------------------------
Net assets - 100.0% $ 32,675
- -------------------------------------------------------------------------
<FN>
Notes to investment portfolio:
(a) Variable rate demand notes are considered
short-term obligations. Interest rates
change 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 November 30, 1994.
(b) Cost for federal income tax purposes is
the same.
</TABLE>
See notes to financial statements.
3
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENT OF ASSETS & LIABILITIES
November 30, 1994
(in thousands except for per share amount)
- --------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments at amortized cost.......................... $ 32,600
Receivable for:
Interest................................. $ 97
Fund shares sold......................... 5
Other...................................... 71 173
---- ---------
Total assets....................................... 32,773
LIABILITIES
Payable for:
Distributions............................ 70
Fund shares repurchased.................. 26
Accrued deferred Trustees fees............. 2
----
Total liabilities.............................. 98
---------
NET ASSETS equivalent to $1 per share for 32,675
shares of beneficial interest outstanding............ $ 32,675
=========
Class A ($28,808/28,808)............................ $ 1.00
=========
Class B ($3,867/3,867).............................. $ 1.00
=========
COMPOSITION OF NET ASSETS
Capital paid in...................................... $ 32,675
Undistributed net investment income.................. 2
Accumulated net realized loss........................ (2)
---------
$ 32,675
=========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended November 30, 1994
(in thousands)
- -------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest............................................... $ 693
EXPENSES
Management fee........................... $ 131
Service fee - Class B.................... 4
Distribution fee - Class B............... 14
Transfer agent........................... 59
Bookkeeping fee.......................... 27
Trustees fees............................ 12
Custodian fee............................ (a)
Audit fee................................ 28
Legal fee................................ 13
Reports to shareholders.................. 4
Registration fees........................ 28
Amortization of deferred
organization expenses.................. 3
Other.................................... 5
----
328
Fees and expenses waived
or borne by the adviser................. (153) 175
---- ---------
Net investment income................ $ 518
=========
<FN>
(a) Rounds to less than one.
</TABLE>
See notes to financial statements.
4
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- ------------------------------------------------------------------------------------------------------------
Year ended November 30
-----------------------
1994 1993
-------- --------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income.................................................... $ 518 $ 435
Distributions from
Net investment income - Class A.......................................... (493) (433)
Net investment income - Class B.......................................... (23) (2)
-------- --------
2 0
-------- --------
Fund share transactions
Receipts for shares sold - Class A....................................... 69,633 97,829
Value of distributions reinvested - Class A.............................. 371 389
Cost of shares repurchased - Class A..................................... (59,816) (114,556)
-------- --------
10,188 (16,338)
-------- --------
Receipts for shares sold - Class B....................................... 9,572 3,760
Value of distributions reinvested - Class B.............................. 15 1
Cost of shares repurchased - Class B..................................... (6,628) (2,988)
-------- --------
2,959 773
-------- --------
Net increase (decrease) from Fund share transactions.................. 13,147 (15,565)
-------- --------
Total increase (decrease).................................... 13,149 (15,565)
NET ASSETS
Beginning of period...................................................... 19,526 35,091
-------- --------
End of period (including undistributed net investment
income of $2 and none, respectively).................................... $ 32,675 $ 19,526
======== ========
NUMBER OF FUND SHARES
Sold - Class A........................................................... 69,633 97,830
Issued for distributions reinvested - Class A............................ 371 389
Repurchased - Class A.................................................... (59,817) (114,556)
-------- --------
10,187 (16,337)
-------- --------
Sold - Class B........................................................... 9,572 3,760
Issued for distributions reinvested - Class B............................ 15 1
Repurchased - Class B.................................................... (6,628) (2,988)
-------- --------
2,959 773
-------- --------
Net increase (decrease) in shares outstanding......................... 13,146 (15,564)
Outstanding at
Beginning of period..................................................... 19,529 35,093
-------- --------
End of period........................................................... 32,675 19,529
======== ========
</TABLE>
See notes to financial statements.
5
<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.
- --------------------------------------------------------------------------------
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.
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 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. The
amount and character of income to be distributed is determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
- --------------------------------------------------------------------------------
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,
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS - continued
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.
- --------------------------------------------------------------------------------
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
The Adviser, through its Colonial Investment Services (the Distributor)
division, is the Fund's principal underwriter. During the year ended November
30, 1994, the Distributor received contingent deferred sales charges (CDSC) of
$27,794 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. For the year
ended November 30, 1994, the Adviser has absorbed a portion of the service and
distribution fees.
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
Through April 17, 1994, the Adviser agreed to waive fees and bear
certain Fund expenses to the extent that total expenses (exclusive of service
fees, distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceeded 0.75% annually of the Fund's average
net assets.
This expense limit was reduced to 0.40% of the Fund's average net assets
for the period April 18, 1994, through August 31, 1994.
Effective September 1, 1994, and until further notice, the expense limit
reverted to 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. The compensation deferred earns interest
quarterly based on the 90-day U.S. Treasury bill rate. Obligations of the plan
will be paid solely out of the Fund's assets.
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
During the year ended November 30, 1994, purchases and sales (including
maturities) of short-term investments aggregated $70,105,607 and
$55,500,000,respectively.
- --------------------------------------------------------------------------------
OTHER
The Fund has greater than 10% of its net assets at November 30, 1994
invested in New York and Illinois, respectively.
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. CONTINGENT LIABILITY
The Adviser insures itself and all funds that it advises under a policy
with ICI Mutual Insurance Company. The annual premium is allocated among the
funds and the Adviser. Additionally, the Adviser and the funds have committed
up to 300% of the annual premium, one-third of which was provided in cash, with
the Fund's pro rata portion recorded as an asset. The remainder is secured
with an irrevocable letter of credit.
- --------------------------------------------------------------------------------
7
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30
------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----------------- ----------------- --------------------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B (B) CLASS A CLASS A
------- ------- ------- -------- ------- ----------- ------- -------
Net asset value - Beginning of period... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------- ------- ------- -------- ------- ----------- ------- -------
Income from investment operations:
Net investment income (a)............. 0.020 0.010 0.017 0.009 0.024 0.007 0.042 0.055
------- ------- ------- -------- ------- ----------- ------- -------
Less distributions declared
to shareholders:
From net investment income........... (0.020) (0.010) (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 $1.000 $1.000
------- ------- ------- -------- ------- ----------- ------- -------
Total return (c)(d).................... 2.00% 1.01% 1.73% 0.93% 2.44% 0.68%(e) 4.26% 5.64%
------- ------- ------- -------- ------- ----------- ------- -------
Ratios to average net assets:
Expenses............................. 0.60% 1.60% 0.75% 1.75% 0.75% 1.75% (f) 0.75% 0.75%
Fees and expenses waived
or borne by the adviser.............. 0.59% 0.59% 0.50% 0.50% 0.61% 0.79% (f) 0.53% 0.38%
Net investment income................ 2.05% 1.05% 1.69% 0.69% 2.42% 1.42% (f) 4.23% 5.50%
Net assets at end of period ($000)..... $28,808 $3,867 $18,618 $908 $34,956 $135 $28,355 $37,158
<FN>
(a) Net of fees and expenses waived
or borne by the adviser
which amounted to............... $0.006 $0.006 $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>
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
All of the distributions will be treated as exempt income for federal income
tax purposes.
8
<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 November 30, 1994, 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 November 30, 1994 by correspondence with
the custodian, to provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 11, 1995
COLONIAL TRUST IV
Cross Reference Sheet
Colonial Utilities Fund
-----------------------
Location or Caption in Statement
Item Number of Form N-1A of Additional Information
- ------------------------- --------------------------------
Part B
10. Cover Page
11. Table of Contents
12. Not Applicable
13. Investment Objectives and
Policies; Fundamental Investment
Policies; Other Investment
Policies; Miscellaneous
Investment Practices; Portfolio
Turnover
14. Management of the Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses;
Management of the Funds
17. Fund Charges and Expenses;
Management of the Funds
18. Shareholder Liability
19. How to Buy Shares; Determination
of Net Asset Value; Suspension of
Redemptions; Investor Services
20. Taxes
21. Fund Charges and Expenses;
Management of the Funds
22. Fund Charges and Expenses;
Management of the Funds
23. Independent Accountants
COLONIAL UTILITIES FUND
Statement of Additional Information
March 30, 1995
This Statement of Additional Information (SAI) contains
information which may be useful to investors but which is not
included in the Prospectus of Colonial Utilities Fund (Fund).
This SAI is not a prospectus and is authorized for distribution
only when accompanied or preceded by the Prospectus of the Fund
dated March 30, 1995. This SAI should be read together with the
Prospectus. Investors may obtain a free copy of the Prospectus
from Colonial Investment Services, Inc., One Financial Center,
Boston, MA 02111-2621.
Part 1 of this SAI contains specific information about the Fund.
Part 2 of this SAI includes information about the Colonial funds
generally and additional information about certain securities and
investment techniques described in the Fund's Prospectus.
TABLE OF CONTENTS
Part 1 Page
Definitions b
Investment Objective and Policies b
Fundamental Investment Policies b
Other Investment Policies b
Special Tax Considerations c
Portfolio Turnover c
Fund Charges and Expenses c
Investment Performance e
Custodian e
Independent Accountant e
Part 2
Miscellaneous Investment Practices 1
Taxes 9
Management of the Fund 11
Determination of Net Asset Value 14
How to Buy Shares 14
Investor Services 17
Suspension of Redemptions 19
Shareholder Liability 20
Performance Measures 20
Appendix I 22
Appendix II 23
UF-xxxx-395
Part 1
COLONIAL UTILITIES FUND
Statement of Additional Information
March 30, 1995
DEFINITIONS
"Trust" Colonial Trust IV
"Fund" Colonial Utilities Fund
"Colonial" Colonial Management Associates, Inc., the
Fund's investment adviser
"CISI" Colonial Investment Services, Inc., the
Fund's distributor
"CISC" Colonial Investors Service Center, Inc., the
Fund's investor services and transfer agent
INVESTMENT OBJECTIVE AND POLICIES
The Fund's Prospectus describes its investment objective and investment
policies. Part 1 of this SAI includes additional information concerning,
among other things, the fundamental investment policies of the Fund. Part 2
of this SAI contains additional information about the following securities
and investment techniques:
Short-Term Trading
Options (on Indices and Securities)
Repurchase Agreements
Except as described below under "Fundamental Investment Policies," the
Fund's investment policies are not fundamental, and the Trustees may change
the policies without shareholder approval.
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (Act) provides that a "vote of a
majority of the outstanding voting securities" means the affirmative vote
of the lesser of (1) more than 50% of the outstanding shares of the Fund,
or (2) 67% or more of the shares present at a meeting if more than 50% of
the outstanding shares are represented at the meeting in person or by
proxy. The following fundamental investment policies can not be changed
without such a vote.
The Fund may:
1. Issue senior securities only through borrowing from banks for temporary
or emergency purposes up to 10% of its net assets; however, it will not
purchase additional portfolio securities while borrowings exceed 5% of
net assets;
2. Only own real estate acquired as the result of owning securities and not
. more than 5% of total assets;
3. Invest up to 10% of its net assets in illiquid assets;
4. Purchase and sell futures contracts and related options so long as the
total initial margin and premiums on the contracts do not exceed 5% of
its total assets;
5. Underwrite securities issued by others only when disposing of portfolio
securities;
6. Make loans through lending of securities not exceeding 30% of total
assets, through the purchase of debt instruments or similar evidences of
indebtedness typically sold privately to financial institutions and
through repurchase agreements;
7. And will concentrate more than 25% of its total assets in any single
industry; and
8. With respect to 75% of total assets, not purchase any security (other
than obligations of the U.S. Government and cash items including
receivables) if as a result more than 5% of its total assets would then
be invested in securities of a single issuer or purchase the voting
securities of an issuer if, as a result of such purchases, the Fund
would own more than 10% of the outstanding voting shares of such issuer.
OTHER INVESTMENT POLICIES
As non-fundamental investment policies which may be changed without a
shareholder vote, the Fund may not:
1. Purchase securities on margin, but it may receive short-term credit to
. clear securities transactions and may make initial or maintenance
margin deposits in connection with futures transactions;
2 . Have a short securities position, unless the Fund owns, or owns rights
(exercisable without payment) to acquire, an equal amount of such
securities;
3. Own voting securities of any company if the Trust knows that officers
and Trustees of the Trust or officers and directors of Colonial who
individually own more than 0.5% of such securities together own more
than 5% of such securities;
4. Invest in interests in oil, gas or other mineral exploration or
development programs, including leases;
5. Purchase any security if, as a result of such purchase, more than 5% of
its total assets would then be invested in securities of companies
(including predecessors) less than three years old;
6. Pledge more than 33% of its total assets;
7. Purchase any security if, as a result of such purchase, more than 10%
of its total assets would then be invested in securities which are
restricted as to disposition; and
8. Under normal circumstances invest less than 65% of its total assets in
utility company equity securities.
9. Purchase warrants if, as a result of such purchase, more than 5% of its
total assets would then be invested in warrants or more than 2% of its
total assets would then be invested in warrants which are not listed on
the New York Stock Exchange or American Stock Exchange. (Provided,
however, that warrants acquired by the Fund in units or attached to
securities will be deemed to be without value.)
10. Purchase or sell real estate (including limited partnership interests)
although it may purchase and sell (a) securities which are secured by
real estate and (b) securities of companies which invest or deal in
real estate; provided, however, that nothing in this restriction shall
limit the Fund's ability to acquire or take possession of or sell real
estate which it has obtained as a result of enforcement of its rights
and remedies in connection with securities otherwise permitted to
acquire.
Total assets and net assets are determined at current value for purposes of
compliance with investment restrictions and policies. All percentage
limitations will apply at the time of investment and are not violated
unless an excess or deficiency occurs as a result of such investment. For
the purpose of the Act diversification requirement, an issuer is the entity
whose revenues support the security.
SPECIAL TAX CONSIDERATIONS
The Fund may designate dividends as eligible for the dividends-received
deduction only to the extent that the Fund receives dividends for which the
Fund would be entitled to the dividends-received deduction if the Fund were
a regular corporation and not a regulated investment company. The
dividends-received deduction is available only to corporations and is not
available to certain special corporations, such as Subchapter S
corporations, to other entities or to individuals. There can be no
assurance that the dividends-received deduction will not be reduced or
eliminated in the future.
For dividends designated by the Fund as eligible for the dividends-received
deduction to qualify as such by a particular shareholder, the shareholder
must meet the 46-day holding period. The basis of a shareholder's shares
may be reduced by an amount equal to the non-taxed portion of
"extraordinary dividends" eligible for the dividends-received deduction.
One-hundred percent of the distributions of the Fund qualified for the
corporate dividends-received deduction for the fiscal year ended November
30, 1994.
PORTFOLIO TURNOVER
1994 1993
16% 6%
FUND CHARGES AND EXPENSES
Under the Fund's management agreement, the Fund pays Colonial a monthly fee
based on the average daily net assets at the annual rate of 0.65%.
Colonial has voluntarily agreed to waive its fee so that its actual fee
will not exceed 0.65% of average daily net assets of the first $1 billion
and 0.60% in excess of $1 billion.
Recent Fees paid to Colonial, CISI and CISC (for the fiscal years ended
November 30) (dollars in thousands)
1994 1993 1992
Management fee $8,204 $6,352 $1,265
Bookkeeping fee 450 325 78
Shareholder service and
transfer agent fee 3,134 2,197 199(a)
12b-1 fees:
Service fee 3,187 2,469 487
Distribution fee (Class B) 6,401 4,486 250
(a) Under a prior fee schedule.
Brokerage Commissions (for the fiscal years ended November 30) (dollars in
thousands)
1994 1993 1992
Total commissions $1,067 $1,573 $394
Directed transactions (b) 16,100 0 0
Commissions on directed
transactions 24 0 0
(b) See "Management of the Funds-Portfolio Transactions-Brokerage and
Research Services" in Part 2 of this SAI.
Trustees and Trustees Fees
For the calendar year ended December 31, 1994, the Trustees received the
following compensation for serving as Trustees:
Aggregate Pension or Estimated Total
Compensa- Retirement Annual Compensation
Trustee tion Benefits Benefits From Fund
From Fund Accrued As Upon and
Part of Retirement Fund
Fund Complex(d)
Expense
Tom Bleasdale $7,093(c) $ 0 $ 0 $101,000
Lora S.
Collins 6,683 0 0 95,000
William D.
Ireland, Jr. 7,738 0 0 110,000
William E.
Mayer 6,314 0 0 89,752
John A.
McNeice, Jr. 0 0 0 0
James L.
Moody, Jr. 7,660 0 0 109,000
John J.
Neuhauser 6,682 0 0 95,000
George L.
Shinn 7,853 0 0 112,000
Robert L.
Sullivan 7,366 0 0 104,561
Sinclair
Weeks, Jr. 8,140 0 0 116,000
(c) Includes $3,459 as deferred compensation.
(d) The Colonial Funds Complex consists of 31 open-end and 5 closed-end
management investment company portfolios.
The following table sets forth the amount of compensation paid to Messrs.
Birnbaum, Grinnell and Lowry in their capacities as Trustees of the Liberty
All-Star Equity Fund, The Charles Allmon Trust, Inc., Liberty Financial
Trust and LFC Utilities Trust (together, Liberty Funds) for service during
the calendar year ended December 31, 1994:
Aggregate Pension or Estimated
Compensa- Retirement Annual Total
Trustee tion Benefits Benefits Compensation
From Fund Accrued As Upon From Liberty
for the Part of Retirement Funds for the
fiscal year Fund calendar year
ended Expense ended 12/31/94(e)
11/30/94
Robert J. $0 $0 $0 $ 0
Birnbaum
James E.
Grinnell 0 0 0 31,032
Richard W.
Lowry 0 0 0 31,282
(e) The Liberty Funds consists of 5 open-end abd 2 closed-end
management investment company portfolios, each of which is
advised by Stein Roe & Farnham Incorporated, an indirect
wholly-owned subsidiary of Liberty Financial Companies,
Inc., which in turn is an indirect subsidiary of Liberty
Mutual Insurance Company.
Ownership of the Fund
At February 28, 1995, the officers and Trustees of the Trust owned less
than 1% of the then outstanding shares of the Fund.
At February 28, 1995, the following shareholders owned 5% or more of the
Fund's outstanding shares: Merrill Lynch, Pierce, Fenner & Smith, Inc.,
4800 Deer Lake Drive, Jacksonville, FL 32216 (6.93% of Class A shares);
Merrill Lynch, Pierce, Fenner & Smith, Inc., Attention: Book Entry, Mutual
Fund Operations, Jacksonville, FL 32216 (20.02% of Class B shares).
At February 28, 1995 there were 26,221 Class A and 53,442Class B
shareholders.
Sales Charges (for the fiscal years ended November 30) (dollars in
thousands)
Class A Shares
1994 1993 1992
Aggregate initial
sales charges on
Fund share sales $1,892 $12,820 $5,403
Initial sales charges
retained by CISI $ 210 $ 1,410 $ 366
Class B Shares
May 5, 1992
(Class B shares
initially offered)
through November 30,
1994 1993 1992
Aggregate contingent
deferred sales charges
on Fund redemptions
retained by CISI $4,073 $912 $26
12b-1 Plans, CDSCs and Conversion of Shares
The Fund offers two classes of shares - Class A and Class B. The Fund may
in the future offer other classes of shares. The Trustees have approved
12b-1 plans pursuant to Rule 12b-1 under the Act. Under the Plans, the
Fund pays CISI a service fee at an annual rate of 0.25% of average net
assets attributed to each class of shares and a distribution fee at the
annual rate of 0.75% of average net assets attributed to Class B shares.
CISI may use the entire amount of such fees to defray the costs of
commissions and service fees paid to financial service firms (FSFs) and for
certain other purposes. Since the distribution fee is payable regardless
of the amount of CISI's expenses, CISI may in some cases realize a profit
from the fees.
The Plans authorize any other payments by the Fund to CISI and its
affiliates (including Colonial) to the extent that such payments might be
construed to be indirect financing of the distribution of Fund shares.
The Trustees believe the Plans could be a significant factor in the growth
and retention of Fund assets resulting in a more advantageous expense ratio
and increased investment flexibility which could benefit each class of Fund
shareholders. The Plans will continue in effect from year to year so long
as continuance is specifically approved at least annually by a vote of the
Trustees, including the Trustees who are not interested persons of the
Trust and have no direct or indirect financial interest in the operation of
the Plans or in any agreements related to the Plans (Independent Trustees),
cast in person at a meeting called for the purpose of voting on the Plans.
The Plans may not be amended to increase the fee materially without
approval by vote of a majority of the outstanding voting securities of the
relevant class of shares and all material amendments of the Plans must be
approved by the Trustees in the manner provided in the foregoing sentence.
The Plans may be terminated at any time by vote of a majority of the
independent Trustees or by vote of a majority of the outstanding voting
securities of the relevant class of shares. The continuance of the Plans
will only be effective if the selection and nomination of the Trustees who
are non-interested Trustees is effected by such non-interested Trustees.
Class A shares are offered at net asset value plus varying sales charges
which may include a CDSC. Class B shares are offered at net asset value
subject to a CDSC if redeemed within six years after purchase. The CDSC's
are described in the Prospectus.
No CDSC will be imposed on shares derived from reinvestment of
distributions or amounts representing capital appreciation. In determining
the applicability and rate of any CDSC, it will be assumed that a
redemption is made first of shares representing capital appreciation, next
of shares representing reinvestment of distributions and finally of other
shares held by the shareholder for the longest period of time.
Eight years after the end of the month in which a Class B share is
purchased, such share and a pro rata portion of any shares issued on the
reinvestment of distributions will be automatically converted into Class A
shares having an equal value, which are not subject to the distribution
fee.
Sales-related expenses (dollars in thousands) of CISI for the fiscal year
ended November 30, 1994 were:
Class A shares Class B shares
Fees to FSFs $696 $6,204
Cost of sales material
relating to the Fund 116 245
Allocated travel,
entertainment and other
promotional 226 452
INVESTMENT PERFORMANCE
The Fund's Class A and Class B yields for the month ended November 30, 1994
were 5.35% and 4.86%, respectively.
The Fund's average annual total returns at November 30, 1994, achieved in
part under the investment objectives and policies of the Fund prior to its
conversion to a utilities fund on March 4, 1992, were:
Class A Shares
1 year 5 years 10 years
With sales charge of 4.75% (13.36)% 6.20% 8.07%
Without sales charge (9.04)% 7.24% 8.60%
Class B Shares
Since inception
1 year 5/5/92 to 11/30/94
With CDSC of 5.00% (14.04)% 1.49%
Without CDSC (9.73)% 2.57%
The Fund's Class A and Class B distribution rates at November 30, 1994,
which are based on the latest month's distributions, annualized, and the
maximum offering price (net asset value for Class B) at the end of the
month, were 5.63% and 4.88%, respectively.
See Part 2 of this SAI, "Performance Measures," for how calculations are
made.
CUSTODIAN
Boston Safe Deposit and Trust Company is the Fund's custodian. The
custodian is responsible for safeguarding the Fund's cash and securities,
receiving and delivering securities and collecting the Fund's interest and
dividends.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP are the Fund's independent accountants providing audit
and tax return preparation services and assistance and consultation in
connection with the review of various SEC filings. The financial
statements incorporated by reference in this SAI have been so incorporated,
and the schedule of financial highlights included in the Prospectus have
been so included, in reliance upon the report of Price Waterhouse LLP given
on the authority of said firm as experts in accounting and auditing.
The financial statements and Report of Independent Accountants appearing on
pages 3 through 11 of the Fund's November 30, 1994 Annual Report, are
incorporated in this SAI by reference.
STATEMENT OF ADDITIONAL INFORMATION
PART 2
The following information applies generally to your Fund and to the
other Colonial funds. In certain cases the discussion applies to
some but not all of the funds, and you should refer to your Fund's
Prospectus and to Part 1 of this SAI to determine whether the matter
is applicable to your Fund. You will also be referred to Part 1 for
certain data applicable to your Fund.
MISCELLANEOUS INVESTMENT PRACTICES
Part 1 of this Statement lists on page b which of the following
investment practices are available to your Fund.
Short-Term Trading
In seeking the Fund's objective, Colonial will buy or sell portfolio
securities whenever Colonial believes it appropriate. Colonial's
decision will not generally be influenced by how long the Fund may
have owned the security. From time to time the Fund will buy
securities intending to seek short-term trading profits. A change in
the securities held by the Fund is known as "portfolio turnover" and
generally involves some expense to the Fund. These expenses may
include brokerage commissions or dealer mark-ups and other
transaction costs on both the sale of securities and the reinvestment
of the proceeds in other securities. If sales of portfolio
securities cause the Fund to realize net short-term capital gains,
such gains will be taxable as ordinary income. As a result of the
Fund's investment policies, under certain market conditions the
Fund's portfolio turnover rate may be higher than that of other
mutual funds. Portfolio turnover rate for a fiscal year is the ratio
of the lesser of purchases or sales of portfolio securities to the
monthly average of the value of portfolio securities, excluding
securities whose maturities at acquisition were one year or less.
The Fund's portfolio turnover rate is not a limiting factor when
Colonial considers a change in the Fund's portfolio.
Lower Rated Bonds
Lower rated bonds are those rated lower than Baa by Moody's, BBB by
S&P, or comparable unrated securities. Relative to comparable
securities of higher quality:
1. the market price is likely to be more volatile because:
a. an economic downturn or increased interest rates may have a
more significant effect on the yield, price and potential for
default;
b. the secondary market may at times become less liquid or
respond to adverse publicity or investor perceptions,
increasing the difficulty in valuing or disposing of the
bonds;
c. recent or future legislation limits and may further limit (i)
investment by certain institutions or (ii) tax deductibility
of the interest by the issuer, which may adversely affect
value; and
d. certain lower rated bonds do not pay interest in cash on a
current basis. However, the Fund will accrue and distribute
this interest on a current basis, and may have to sell
securities to generate cash for distributions.
2. the Fund's achievement of its investment objective is more
dependent on Colonial's credit analysis.
3. lower rated bonds are less sensitive to interest rate changes, but
are more sensitive to adverse economic developments.
Small Companies
Smaller, less well established companies may offer greater
opportunities for capital appreciation than larger, better
established companies, but may also involve certain special risks
related to limited product lines, markets, or financial resources and
dependence on a small management group. Their securities may trade
less frequently, in smaller volumes, and fluctuate more sharply in
value than securities of larger companies.
Foreign Securities
The Fund may invest in securities traded in markets outside the
United States. Foreign investments can be affected favorably or
unfavorably by changes in currency rates and in exchange control
regulations. There may be less publicly available information about
a foreign company than about a U.S. company, and foreign companies
may not be subject to accounting, auditing and financial reporting
standards comparable to those applicable to U.S. companies.
Securities of some foreign companies are less liquid or more volatile
than securities of U.S. companies, and foreign brokerage commissions
and custodian fees may be higher than in the United States.
Investments in foreign securities can involve other risks different
from those affecting U.S. investments, including local political or
economic developments, expropriation or nationalization of assets and
imposition of withholding taxes on dividend or interest payments.
Foreign securities, like other assets of the Fund, will be held by
the Fund's custodian or by a subcustodian or depository. See also
"Foreign Currency Transactions" below.
The Fund may invest in certain Passive Foreign Investment Companies
(PFICs) which may be subject to U.S. federal income tax on a portion
of any "excess distribution" or gain (PFIC tax) related to the
investment. The PFIC tax is the highest ordinary income rate and it
could be increased by an interest charge on the deemed tax deferral.
The Fund may possibly elect to include in its income its pro rata
share of the ordinary earnings and net capital gain of PFICs. This
election requires certain annual information from the PFICs which in
many cases may be difficult to obtain. An alternative election would
permit the Fund to recognize as income any appreciation (but not
depreciation) on its holdings of PFICs as of the end of its fiscal
year.
Zero Coupon Securities (Zeros)
The Fund may invest in debt securities which do not pay interest, but
instead are issued at a deep discount from par. The value of the
security increases over time to reflect the interest accreted. The
value of these securities may fluctuate more than similar securities
which are issued at par and pay interest periodically. Although
these securities pay no interest to holders prior to maturity,
interest on these securities is reported as income to the Fund and
distributed to its shareholders. These distributions must be made
from the Fund's cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Fund will not be able to purchase
additional income producing securities with cash used to make such
distributions and its current income ultimately may be reduced as a
result.
Step Coupon Bonds (Steps)
The Fund may invest in debt securities which do not pay interest for
a stated period of time and then pay interest at a series of
different rates for a series of periods. In addition to the risks
associated with the credit rating of the issuers, these securities
are subject to the volatility risk of zero coupon bonds for the
period when no interest is paid.
Pay-in-kind (PIK) Securities
The Fund may invest in securities which pay interest either in cash
or additional securities at the issuer's option. These securities are
generally high yield securities and in addition to the other risks
associated with investing in high yield securities are subject to the
risks that the interest payments that are securities are also subject
to the risks of high yield securities.
Money Market Instruments
Government obligations are issued by the U.S. or foreign government,
its subdivisions, agencies and instrumentalities. Supranational
obligations are issued by supranational entities and are generally
designed to promote economic improvements. Certificates of deposits
are issued against funds deposited in a commercial bank with a
defined return and maturity. Banker's acceptances are used to
finance the import, export or storage of goods and are "accepted"
when guaranteed at maturity by a bank. Commercial paper are
promissory notes issued by businesses to finance short-term needs
(including those with floating or variable interest rates, or
including a frequent interval put feature). Short-term corporate
obligations are bonds and notes (with one year or less to maturity at
the time of purchase) issued by businesses to finance long-term
needs. Participation Interests include the underlying securities and
any related guaranty, letter of credit, or collateralization
arrangement which the Fund would be allowed to invest in directly.
Securities Loans
The Fund may make secured loans of its portfolio securities amounting
to not more than the percentage of its total assets specified in Part
1 of this SAI, thereby realizing additional income. The risks in
lending portfolio securities, as with other extensions of credit,
consist of possible delay in recovery of the securities or possible
loss of rights in the collateral should the borrower fail
financially. As a matter of policy, securities loans are made to
banks and broker-dealers pursuant to agreements requiring that loans
be continuously secured by collateral in cash or short-term debt
obligations at least equal at all times to the value of the
securities on loan. The borrower pays to the Fund an amount equal to
any dividends or interest received on securities lent. The Fund
retains all or a portion of the interest received on investment of
the cash collateral or receives a fee from the borrower. Although
voting rights, or rights to consent, with respect to the loaned
securities pass to the borrower, the Fund retains the right to call
the loans at any time on reasonable notice, and it will do so in
order that the securities may be voted by the Fund if the holders of
such securities are asked to vote upon or consent to matters
materially affecting the investment. The Fund may also call such
loans in order to sell the securities involved.
Forward Commitments
The Fund may enter into contracts to purchase securities for a fixed
price at a future date beyond customary settlement time ("forward
commitments" and "when issued securities") if the Fund holds until
the settlement date, in a segregated account, cash or high-grade debt
obligations in an amount sufficient to meet the purchase price, or if
the Fund enters into offsetting contracts for the forward sale of
other securities it owns. Forward commitments may be considered
securities in themselves, and involve a risk of loss if the value of
the security to be purchased declines prior to the settlement date.
Where such purchases are made through dealers, the Fund relies on the
dealer to consummate the sale. The dealer's failure to do so may
result in the loss to the Fund of an advantageous yield or price.
Although the Fund will generally enter into forward commitments with
the intention of acquiring securities for its portfolio or for
delivery pursuant to options contracts it has entered into, the Fund
may dispose of a commitment prior to settlement if Colonial deems it
appropriate to do so. The Fund may realize short-term profits or
losses upon the sale of forward commitments.
Repurchase Agreements
The Fund may enter into repurchase agreements. A repurchase
agreement is a contract under which the Fund acquires a security for
a relatively short period (usually not more than one week) subject to
the obligation of the seller to repurchase and the Fund to resell
such security at a fixed time and price (representing the Fund's cost
plus interest). It is the Fund's present intention to enter into
repurchase agreements only with commercial banks and registered
broker-dealers and only with respect to obligations of the U.S.
government or its agencies or instrumentalities. Repurchase
agreements may also be viewed as loans made by the Fund which are
collateralized by the securities subject to repurchase. Colonial
will monitor such transactions to determine that the value of the
underlying securities is at least equal at all times to the total
amount of the repurchase obligation, including the interest factor.
If the seller defaults, the Fund could realize a loss on the sale of
the underlying security to the extent that the proceeds of sale
including accrued interest are less than the resale price provided in
the agreement including interest. In addition, if the seller should
be involved in bankruptcy or insolvency proceedings, the Fund may
incur delay and costs in selling the underlying security or may
suffer a loss of principal and interest if the Fund is treated as an
unsecured creditor and required to return the underlying collateral
to the seller's estate.
Reverse Repurchase Agreements
In a reverse repurchase agreement, a Fund sells a security and agrees
to repurchase the same security at a mutually agreed upon date and
price. A reverse repurchase agreement may also be viewed as the
borrowing of money by the Fund and, therefore, as a form of leverage.
The Fund will invest the proceeds of borrowings under reverse
repurchase agreements. In addition, a Fund will enter into a reverse
repurchase agreement only when the interest income expected to be
earned from the investment of the proceeds is greater than the
interest expense of the transaction. A Fund will not invest the
proceeds of a reverse repurchase agreement for a period which exceeds
the duration of the reverse repurchase agreement. A Fund may not
enter into reverse repurchase agreements exceeding in the aggregate
one-third of the market value of its total assets, less liabilities
other than the obligations created by reverse repurchase agreements.
Each Fund will establish and maintain with its custodian a separate
account with a segregated portfolio of securities in an amount at
least equal to its purchase obligations under its reverse repurchase
agreements. If interest rates rise during the term of a reverse
repurchase agreement, entering into the reverse repurchase agreement
may have a negative impact on a money market fund's ability to
maintain a net asset value of $1.00 per share.
Options on Securities
Writing covered options. The Fund may write covered call options and
covered put options on securities held in its portfolio when, in the
opinion of Colonial, such transactions are consistent with the Fund's
investment objectives and policies. Call options written by the Fund
give the purchaser the right to buy the underlying securities from
the Fund at a stated exercise price; put options give the purchaser
the right to sell the underlying securities to the Fund at a stated
price.
The Fund may write only covered options, which means that, so long as
the Fund is obligated as the writer of a call option, it will own the
underlying securities subject to the option (or comparable securities
satisfying the cover requirements of securities exchanges). In the
case of put options, the Fund will hold cash and/or high-grade short-
term debt obligations equal to the price to be paid if the option is
exercised. In addition, the Fund will be considered to have covered
a put or call option if and to the extent that it holds an option
that offsets some or all of the risk of the option it has written.
The Fund may write combinations of covered puts and calls on the same
underlying security.
The Fund will receive a premium from writing a put or call option,
which increases the Fund's return on the underlying security if the
option expires unexercised or is closed out at a profit. The amount
of the premium reflects, among other things, the relationship between
the exercise price and the current market value of the underlying
security, the volatility of the underlying security, the amount of
time remaining until expiration, current interest rates, and the
effect of supply and demand in the options market and in the market
for the underlying security. By writing a call option, the Fund
limits its opportunity to profit from any increase in the market
value of the underlying security above the exercise price of the
option but continues to bear the risk of a decline in the value of
the underlying security. By writing a put option, the Fund assumes
the risk that it may be required to purchase the underlying security
for an exercise price higher than its then-current market value,
resulting in a potential capital loss unless the security
subsequently appreciates in value.
The Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which
it purchases an offsetting option. The Fund realizes a profit or
loss from a closing transaction if the cost of the transaction
(option premium plus transaction costs) is less or more than the
premium received from writing the option. Because increases in the
market price of a call option generally reflect increases in the
market price of the security underlying the option, any loss
resulting from a closing purchase transaction may be offset in whole
or in part by unrealized appreciation of the underlying security.
If the Fund writes a call option but does not own the underlying
security, and when it writes a put option, the Fund may be required
to deposit cash or securities with its broker as "margin" or
collateral for its obligation to buy or sell the underlying security.
As the value of the underlying security varies, the Fund may have to
deposit additional margin with the broker. Margin requirements are
complex and are fixed by individual brokers, subject to minimum
requirements currently imposed by the Federal Reserve Board and by
stock exchanges and other self-regulatory organizations.
Purchasing put options. The Fund may purchase put options to protect
its portfolio holdings in an underlying security against a decline in
market value. Such hedge protection is provided during the life of
the put option since the Fund, as holder of the put option, is able
to sell the underlying security at the put exercise price regardless
of any decline in the underlying security's market price. For a put
option to be profitable, the market price of the underlying security
must decline sufficiently below the exercise price to cover the
premium and transaction costs. By using put options in this manner,
the Fund will reduce any profit it might otherwise have realized from
appreciation of the underlying security by the premium paid for the
put option and by transaction costs.
Purchasing call options. The Fund may purchase call options to hedge
against an increase in the price of securities that the Fund wants
ultimately to buy. Such hedge protection is provided during the life
of the call option since the Fund, as holder of the call option, is
able to buy the underlying security at the exercise price regardless
of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price
to cover the premium and transaction costs. These costs will reduce
any profit the Fund might have realized had it bought the underlying
security at the time it purchased the call option.
Over-the-Counter (OTC) options. The Staff of the Division of
Investment Management of the Securities and Exchange Commission has
taken the position that OTC options purchased by the Fund and assets
held to cover OTC options written by the Fund are illiquid
securities. Although the Staff has indicated that it is continuing
to evaluate this issue, pending further developments, the Fund
intends to enter into OTC options transactions only with primary
dealers in U.S. Government Securities and, in the case of OTC options
written by the Fund, only pursuant to agreements that will assure
that the Fund will at all times have the right to repurchase the
option written by it from the dealer at a specified formula price.
The Fund will treat the amount by which such formula price exceeds
the amount, if any, by which the option may be "in-the-money" as an
illiquid investment. It is the present policy of the Fund not to
enter into any OTC option transaction if, as a result, more than 15%
(10% in some cases, refer to your Fund's Prospectus) of the Fund's
net assets would be invested in (i) illiquid investments (determined
under the foregoing formula) relating to OTC options written by the
Fund, (ii) OTC options purchased by the Fund, (iii) securities which
are not readily marketable, and (iv) repurchase agreements maturing
in more than seven days.
Risk factors in options transactions. The successful use of the
Fund's options strategies depends on the ability of Colonial to
forecast interest rate and market movements correctly.
When it purchases an option, the Fund runs the risk that it will lose
its entire investment in the option in a relatively short period of
time, unless the Fund exercises the option or enters into a closing
sale transaction with respect to the option during the life of the
option. If the price of the underlying security does not rise (in
the case of a call) or fall (in the case of a put) to an extent
sufficient to cover the option premium and transaction costs, the
Fund will lose part or all of its investment in the option. This
contrasts with an investment by the Fund in the underlying
securities, since the Fund may continue to hold its investment in
those securities notwithstanding the lack of a change in price of
those securities.
The effective use of options also depends on the Fund's ability to
terminate option positions at times when Colonial deems it desirable
to do so. Although the Fund will take an option position only if
Colonial believes there is a liquid secondary market for the option,
there is no assurance that the Fund will be able to effect closing
transactions at any particular time or at an acceptable price.
If a secondary trading market in options were to become unavailable,
the Fund could no longer engage in closing transactions. Lack of
investor interest might adversely affect the liquidity of the market
for particular options or series of options. A marketplace may
discontinue trading of a particular option or options generally. In
addition, a market could become temporarily unavailable if unusual
events -- such as volume in excess of trading or clearing capability
- -- were to interrupt normal market operations.
A marketplace may at times find it necessary to impose restrictions
on particular types of options transactions, which may limit the
Fund's ability to realize its profits or limit its losses.
Disruptions in the markets for the securities underlying options
purchased or sold by the Fund could result in losses on the options.
If trading is interrupted in an underlying security, the trading of
options on that security is normally halted as well. As a result,
the Fund as purchaser or writer of an option will be unable to close
out its positions until options trading resumes, and it may be faced
with losses if trading in the security reopens at a substantially
different price. In addition, the Options Clearing Corporation (OCC)
or other options markets may impose exercise restrictions. If a
prohibition on exercise is imposed at the time when trading in the
option has also been halted, the Fund as purchaser or writer of an
option will be locked into its position until one of the two
restrictions has been lifted. If a prohibition on exercise remains
in effect until an option owned by the Fund has expired, the Fund
could lose the entire value of its option.
Special risks are presented by internationally-traded options.
Because of time differences between the United States and the various
foreign countries, and because different holidays are observed in
different countries, foreign options markets may be open for trading
during hours or on days when U.S. markets are closed. As a result,
option premiums may not reflect the current prices of the underlying
interest in the United States.
Futures Contracts and Related Options
The Fund will enter into futures contracts only when, in compliance
with the SEC's requirements, cash or cash equivalents, (or, in the
case of a fund investing primarily in foreign equity securities, such
equity securities), equal in value to the commodity value (less any
applicable margin deposits) have been deposited in a segregated
account of the Fund's custodian.
A futures contract sale creates an obligation by the seller to
deliver the type of instrument called for in the contract in a
specified delivery month for a stated price. A futures contract
purchase creates an obligation by the purchaser to take delivery of
the type of instrument called for in the contract in a specified
delivery month at a stated price. The specific instruments delivered
or taken at settlement date are not determined until on or near that
date. The determination is made in accordance with the rules of the
exchanges on which the futures contract was made. Futures contracts
are traded in the United States only on commodity exchange or boards
of trade -- known as "contract markets" -- approved for such trading
by the Commodity Futures Trading Commission (CFTC), and must be
executed through a futures commission merchant or brokerage firm
which is a member of the relevant contract market.
Although futures contracts by their terms call for actual delivery or
acceptance of commodities or securities, the contracts usually are
closed out before the settlement date without the making or taking of
delivery. Closing out a futures contract sale is effected by
purchasing a futures contract for the same aggregate amount of the
specific type of financial instrument or commodity with the same
delivery date. If the price of the initial sale of the futures
contract exceeds the price of the offsetting purchase, the seller is
paid the difference and realizes a gain. Conversely, if the price of
the offsetting purchase exceeds the price of the initial sale, the
seller realizes a loss. Similarly, the closing out of a futures
contract purchase is effected by the purchaser's entering into a
futures contract sale. If the offsetting sale price exceeds the
purchase price, the purchaser realizes a gain, and if the purchase
price exceeds the offsetting sale price, the purchaser realizes a
loss.
Unlike when the Fund purchases or sells a security, no price is paid
or received by the Fund upon the purchase or sale of a futures
contract, although the Fund is required to deposit with its custodian
in a segregated account in the name of the futures broker an amount
of cash and/or U.S. Government Securities. This amount is known as
"initial margin". The nature of initial margin in futures
transactions is different from that of margin in security
transactions in that futures contract margin does not involve the
borrowing of funds by the Fund to finance the transactions. Rather,
initial margin is in the nature of a performance bond or good faith
deposit on the contract that is returned to the Fund upon termination
of the futures contract, assuming all contractual obligations have
been satisfied. Futures contracts also involve brokerage costs.
Subsequent payments, called "variation margin", to and from the
broker (or the custodian) are made on a daily basis as the price of
the underlying security or commodity fluctuates, making the long and
short positions in the futures contract more or less valuable, a
process known as "marking to market."
The Fund may elect to close some or all of its futures positions at
any time prior to their expiration. The purpose of making such a
move would be to reduce or eliminate the hedge position then
currently held by the Fund. The Fund may close its positions by
taking opposite positions which will operate to terminate the Fund's
position in the futures contracts. Final determinations of
variation margin are then made, additional cash is required to be
paid by or released to the Fund, and the Fund realizes a loss or a
gain. Such closing transactions involve additional commission costs.
Options on futures contracts. The Fund will enter into written
options on futures contracts only when, in compliance with the SEC's
requirements, cash or equivalents equal in value to the commodity
value (less any applicable margin deposits) have been deposited in a
segregated account of the Fund's custodian. The Fund may purchase
and write call and put options on futures contracts it may buy or
sell and enter into closing transactions with respect to such options
to terminate existing positions. The Fund may use such options on
futures contracts in lieu of writing options directly on the
underlying securities or purchasing and selling the underlying
futures contracts. Such options generally operate in the same
manner as options purchased or written directly on the underlying
investments.
As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an offsetting option.
There is no guarantee that such closing transactions can be effected.
The Fund will be required to deposit initial margin and maintenance
margin with respect to put and call options on futures contracts
written by it pursuant to brokers' requirements similar to those
described above.
Risks of transactions in futures contracts and related options.
Successful use of futures contracts by the Fund is subject to
Colonial's ability to predict correctly movements in the direction of
interest rates and other factors affecting securities markets.
Compared to the purchase or sale of futures contracts, the purchase
of call or put options on futures contracts involves less potential
risk to the Fund because the maximum amount at risk is the premium
paid for the options (plus transaction costs). However, there may be
circumstances when the purchase of a call or put option on a futures
contract would result in a loss to the Fund when the purchase or sale
of a futures contract would not, such as when there is no movement in
the prices of the hedged investments. The writing of an option on a
futures contract involves risks similar to those risks relating to
the sale of futures contracts.
There is no assurance that higher than anticipated trading activity
or other unforeseen events might not, at times, render certain market
clearing facilities inadequate, and thereby result in the
institution, by exchanges, of special procedures which may interfere
with the timely execution of customer orders.
To reduce or eliminate a hedge position held by the Fund, the Fund
may seek to close out a position. The ability to establish and close
out positions will be subject to the development and maintenance of a
liquid secondary market. It is not certain that this market will
develop or continue to exist for a particular futures contract.
Reasons for the absence of a liquid secondary market on an exchange
include the following: (i) there may be insufficient trading
interest in certain contracts or options; (ii) restrictions may be
imposed by an exchange on opening transactions or closing
transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or
series of contracts or options, or underlying securities; (iv)
unusual or unforeseen circumstances may interrupt normal operations
on an exchange; (v) the facilities of an exchange or a clearing
corporation may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or
other reasons, decide or be compelled at some future date to
discontinue the trading of contracts or options (or a particular
class or series of contracts or options), in which event the
secondary market on that exchange (or in the class or series of
contracts or options) would cease to exist, although outstanding
contracts or options on the exchange that had been issued by a
clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms.
Use by tax-exempt funds of U.S. Treasury security futures contracts
and options. A Fund investing in tax-exempt securities issued by a
governmental entity may purchase and sell futures contracts and
related options on U.S. Treasury securities when, in the opinion of
Colonial, price movements in Treasury security futures and related
options will correlate closely with price movements in the tax-exempt
securities which are the subject of the hedge. U.S. Treasury
securities futures contracts require the seller to deliver, or the
purchaser to take delivery of, the type of U.S. Treasury security
called for in the contract at a specified date and price. Options on
U.S. Treasury security futures contracts give the purchaser the right
in return for the premium paid to assume a position in a U.S.
Treasury futures contract at the specified option exercise price at
any time during the period of the option.
In addition to the risks generally involved in using futures
contracts, there is also a risk that price movements in U.S. Treasury
security futures contracts and related options will not correlate
closely with price movements in markets for tax-exempt securities.
Index futures contracts. An index futures contract is a contract to
buy or sell units of an index at a specified future date at a price
agreed upon when the contract is made. Entering into a contract to
buy units of an index is commonly referred to as buying or purchasing
a contract or holding a long position in the index. Entering into a
contract to sell units of an index is commonly referred to as selling
a contract or holding a short position. A unit is the current value
of the index. The Fund may enter into stock index futures contracts,
debt index futures contracts, or other index futures contracts
appropriate to its objective(s). The Fund may also purchase and sell
options on index futures contracts.
There are several risks in connection with the use by the Fund of
index futures as a hedging device. One risk arises because of the
imperfect correlation between movements in the prices of the index
futures and movements in the prices of securities which are the
subject of the hedge. Colonial will attempt to reduce this risk by
selling, to the extent possible, futures on indices the movements of
which will, in its judgment, have a significant correlation with
movements in the prices of the Fund's portfolio securities sought to
be hedged.
Successful use of the index futures by the Fund for hedging purposes
is also subject to Colonial's ability to predict correctly movements
in the direction of the market. It is possible that, where the Fund
has sold futures to hedge its portfolio against a decline in the
market, the index on which the futures are written may advance and
the value of securities held in the Fund's portfolio may decline. If
this occurs, the Fund would lose money on the futures and also
experience a decline in the value in its portfolio securities.
However, while this could occur to a certain degree, Colonial
believes that over time the value of the Fund's portfolio will tend
to move in the same direction as the market indices which are
intended to correlate to the price movements of the portfolio
securities sought to be hedged. It is also possible that, if the
Fund has hedged against the possibility of a decline in the market
adversely affecting securities held in its portfolio and securities
prices increase instead, the Fund will lose part or all of the
benefit of the increased valued of those securities that it has
hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Fund has
insufficient cash, it may have to sell securities to meet daily
variation margin requirements.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the index
futures and the securities of the portfolio being hedged, the prices
of index futures may not correlate perfectly with movements in the
underlying index due to certain market distortions. First, all
participants in the futures markets are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through
offsetting transactions which would distort the normal relationship
between the index and futures markets. Second, margin requirements
in the futures market are less onerous than margin requirements in
the securities market, and as a result the futures market may attract
more speculators than the securities market. Increased participation
by speculators in the futures market may also cause temporary price
distortions. Due to the possibility of price distortions in the
futures market and also because of the imperfect correlation between
movements in the index and movements in the prices of index futures,
even a correct forecast of general market trends by Colonial may
still not result in a successful hedging transaction.
Options on index futures. Options on index futures are similar to
options on securities except that options on index futures give the
purchaser the right, in return for the premium paid, to assume a
position in an index futures contract (a long position if the option
is a call and a short position if the option is a put), at a
specified exercise price at any time during the period of the option.
Upon exercise of the option, the delivery of the futures position by
the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's
futures margin account which represents the amount by which the
market price of the index futures contract, at exercise, exceeds (in
the case of a call) or is less than (in the case of a put) the
exercise price of the option on the index future. If an option is
exercised on the last trading day prior to the expiration date of the
option, the settlement will be made entirely in cash equal to the
difference between the exercise price of the option and the closing
level of the index on which the future is based on the expiration
date. Purchasers of options who fail to exercise their options prior
to the exercise date suffer a loss of the premium paid.
Options on indices. As an alternative to purchasing call and put
options on index futures, the Fund may purchase call and put options
on the underlying indices themselves. Such options could be used in
a manner identical to the use of options on index futures.
Foreign Currency Transactions. The Fund may engage in currency
exchange transactions to protect against uncertainty in the level of
future currency exchange rates.
The Fund may engage in both "transaction hedging" and "position
hedging". When it engages in transaction hedging, the Fund enters
into foreign currency transactions with respect to specific
receivables or payables of the Fund generally arising in connection
with the purchase or sale of its portfolio securities. The Fund will
engage in transaction hedging when it desires to "lock in" the U.S.
dollar price of a security it has agreed to purchase or sell, or the
U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging the Fund attempts to protect itself
against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the applicable foreign
currency during the period between the date on which the security is
purchased or sold, or on which the dividend or interest payment is
declared, and the date on which such payments are made or received.
The Fund may purchase or sell a foreign currency on a spot (or cash)
basis at the prevailing spot rate in connection with the settlement
of transactions in portfolio securities denominated in that foreign
currency. The Fund may also enter into contracts to purchase or sell
foreign currencies at a future date ("forward contracts") and
purchase and sell foreign currency futures contracts.
For transaction hedging purposes the Fund may also purchase exchange-
listed and over-the-counter call and put options on foreign currency
futures contracts and on foreign currencies. Over-the-counter
options are considered to be illiquid by the SEC staff. A put option
on a futures contract gives the Fund the right to assume a short
position in the futures contract until expiration of the option. A
put option on currency gives the Fund the right to sell a currency at
an exercise price until the expiration of the option. A call option
on a futures contract gives the Fund the right to assume a long
position in the futures contract until the expiration of the option.
A call option on currency gives the Fund the right to purchase a
currency at the exercise price until the expiration of the option.
When it engages in position hedging, the Fund enters into foreign
currency exchange transactions to protect against a decline in the
values of the foreign currencies in which its portfolio securities
are denominated (or an increase in the value of currency for
securities which the Fund expects to purchase, when the Fund holds
cash or short-term investments). In connection with position
hedging, the Fund may purchase put or call options on foreign
currency and foreign currency futures contracts and buy or sell
forward contracts and foreign currency futures contracts. The Fund
may also purchase or sell foreign currency on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will
not generally be possible since the future value of such securities
in foreign currencies will change as a consequence of market
movements in the value of those securities between the dates the
currency exchange transactions are entered into and the dates they
mature.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward or
futures contract. Accordingly, it may be necessary for the Fund to
purchase additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security or
securities being hedged is less than the amount of foreign currency
the Fund is obligated to deliver and if a decision is made to sell
the security or securities and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio security
or securities if the market value of such security or securities
exceeds the amount of foreign currency the Fund is obligated to
deliver.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Fund owns or intends to
purchase or sell. They simply establish a rate of exchange which one
can achieve at some future point in time. Additionally, although
these techniques tend to minimize the risk of loss due to a decline
in the value of the hedged currency, they tend to limit any potential
gain which might result from the increase in value of such currency.
Currency forward and futures contracts. The Fund will enter into
such contracts only when, in compliance with the SEC's requirements,
cash or equivalents equal in value to the commodity value (less any
applicable margin deposits) have been deposited in a segregated
account of the Fund's custodian. A forward currency contract
involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of
the contract as agreed by the parties, at a price set at the time of
the contract. In the case of a cancelable contract, the holder has
the unilateral right to cancel the contract at maturity by paying a
specified fee. The contracts are traded in the interbank market
conducted directly between currency traders (usually large
commercial banks) and their customers. A contract generally has no
deposit requirement, and no commissions are changed at any stage for
trades. A currency futures contract is a standardized contract for
the future delivery of a specified amount of a foreign currency at a
future date at a price set at the time of the contract. Currency
futures contracts traded in the United States are designed and traded
on exchanges regulated by the CFTC, such as the New York Mercantile
Exchange.
Forward currency contracts differ from currency futures contracts in
certain respects. For example, the maturity date of a forward
contract may be any fixed number of days from the date of the
contract agreed upon by the parties, rather than a predetermined date
in a given month. Forward contracts may be in any amounts agreed
upon by the parties rather than predetermined amounts. Also, forward
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires no
margin or other deposit.
At the maturity of a forward or futures contract, the Fund may either
accept or make delivery of the currency specified in the contract, or
at or prior to maturity enter into a closing transaction involving
the purchase or sale of an offsetting contract. Closing transactions
with respect to forward contracts are usually effected with the
currency trader who is a party to the original forward contract.
Closing transactions with respect to futures contracts are effected
on a commodities exchange; a clearing corporation associated with the
exchange assumes responsibility for closing out such contracts.
Positions in currency futures contracts may be closed out only on an
exchange or board of trade which provides a secondary market in such
contracts. Although the Fund intends to purchase or sell currency
futures contracts only on exchanges or boards of trade where there
appears to be an active secondary market, there is no assurance that
a secondary market on an exchange or board of trade will exist for
any particular contract or at any particular time. In such event, it
may not be possible to close a futures position and, in the event of
adverse price movements, the Fund would continue to be required to
make daily cash payments of variation margin.
Currency options. In general, options on currencies operate
similarly to options on securities and are subject to many similar
risks. Currency options are traded primarily in the over-the-counter
market, although options on currencies have recently been listed on
several exchanges. Options are traded not only on the currencies of
individual nations, but also on the European Currency Unit ("ECU").
The ECU is composed of amounts of a number of currencies, and is the
official medium of exchange of the European Economic Community's
European Monetary System.
The Fund will only purchase or write currency options when Colonial
believes that a liquid secondary market exists for such options.
There can be no assurance that a liquid secondary market will exist
for a particular option at any specified time. Currency options are
affected by all of those factors which influence exchange rates and
investments generally. To the extent that these options are traded
over the counter, they are considered to be illiquid by the SEC
staff.
The value of any currency, including the U.S. dollars, may be
affected by complex political and economic factors applicable to the
issuing country. In addition, the exchange rates of currencies (and
therefore the values of currency options) may be significantly
affected, fixed, or supported directly or indirectly by government
actions. Government intervention may increase risks involved in
purchasing or selling currency options, since exchange rates may not
be free to fluctuate in respect to other market forces.
The value of a currency option reflects the value of an exchange
rate, which in turn reflects relative values of two currencies, the
U.S. dollar and the foreign currency in question. Because currency
transactions occurring in the interbank market involve substantially
larger amounts than those that may be involved in the exercise of
currency options, investors may be disadvantaged by having to deal in
an odd lot market for the underlying currencies in connection with
options at prices that are less favorable than for round lots.
Foreign governmental restrictions or taxes could result in adverse
changes in the cost of acquiring or disposing of currencies.
There is no systematic reporting of last sale information for
currencies and there is no regulatory requirement that quotations
available through dealers or other market sources be firm or revised
on a timely basis. Available quotation information is generally
representative of very large round-lot transactions in the interbank
market and thus may not reflect exchange rates for smaller odd-lot
transactions (less than $1 million) where rates may be less
favorable. The interbank market in currencies is a global, around-
the-clock market. To the extent that options markets are closed
while the markets for the underlying currencies remain open,
significant price and rate movements may take place in the underlying
markets that cannot be reflected in the options markets.
Settlement procedures. Settlement procedures relating to the Fund's
investments in foreign securities and to the Fund's foreign currency
exchange transactions may be more complex than settlements with
respect to investments in debt or equity securities of U.S. issuers,
and may involve certain risks not present in the Fund's domestic
investments, including foreign currency risks and local custom and
usage. Foreign currency transactions may also involve the risk that
an entity involved in the settlement may not meet its obligations.
Foreign currency conversion. Although foreign exchange dealers do
not charge a fee for currency conversion, they do realize a profit
based on the difference (spread) between prices at which they are
buying and selling various currencies. Thus, a dealer may offer to
sell a foreign currency to the Fund at one rate, while offering a
lesser rate of exchange should the Fund desire to resell that
currency to the dealer. Foreign currency transactions may also
involve the risk that an entity involved in the settlement may not
meet its obligation.
Participation Interests. The Fund may invest in municipal
obligations either by purchasing them directly or by purchasing
certificates of accrual or similar instruments evidencing direct
ownership of interest payments or principal payments, or both, on
municipal obligations, provided that, in the opinion of counsel to
the initial seller of each such certificate or instrument, any
discount accruing on such certificate or instrument that is purchased
at a yield not greater than the coupon rate of interest on the
related municipal obligations will be exempt from federal income tax
to the same extent as interest on such municipal obligations. The
Fund may also invest in tax-exempt obligations by purchasing from
banks participation interests in all or part of specific holdings of
municipal obligations. Such participations may be backed in whole or
part by an irrevocable letter of credit or guarantee of the selling
bank. The selling bank may receive a fee from the Fund in connection
with the arrangement. The Fund will not purchase such participation
interests unless it receives an opinion of counsel or a ruling of the
Internal Revenue Service that interest earned by it on municipal
obligations in which it holds such participation interests is exempt
from federal income tax.
Stand-by Commitments. When the Fund purchases municipal obligations
it may also acquire stand-by commitments from banks and broker-
dealers with respect to such municipal obligations. A stand-by
commitment is the equivalent of a put option acquired by the Fund
with respect to a particular municipal obligation held in its
portfolio. A stand-by commitment is a security independent of the
municipal obligation to which it relates. The amount payable by a
bank or dealer during the time a stand-by commitment is exercisable,
absent unusual circumstances relating to a change in market value,
would be substantially the same as the value of the underlying
municipal obligation. A stand-by commitment might not be
transferable by the Fund, although it could sell the underlying
municipal obligation to a third party at any time.
The Fund expects that stand-by commitments generally will be
available without the payment of direct or indirect consideration.
However, if necessary and advisable, the Fund may pay for stand-by
commitments either separately in cash or by paying a higher price for
portfolio securities which are acquired subject to such a commitment
(thus reducing the yield to maturity otherwise available for the same
securities.) The total amount paid in either manner for outstanding
stand-by commitments held in the Fund portfolio will not exceed 10%
of the value of the Fund's total assets calculated immediately after
each stand-by commitment is acquired. The Fund will enter into stand-
by commitments only with banks and broker-dealers that, in the
judgment of the Board of Trustees, present minimal credit risks.
Inverse Floaters. Inverse floaters are derivative securities whose
interest rates vary inversely to changes in short-term interest rates
and whose values fluctuate inversely to changes in long-term interest
rates. The value of certain inverse floaters will fluctuate
substantially more in response to a given change in long-term rates
than would a traditional debt security. These securities have
investment characteristics similar to leverage, in that interest rate
changes have a magnified effect on the value of inverse floaters.
TAXES
All discussions of taxation at the shareholder level relate to
federal taxes only. Consult your tax adviser for state and local tax
considerations and for information about special tax considerations
that may apply to shareholders that are not natural persons.
Dividends Received Deductions. Distributions will qualify for the
corporate dividends received deduction only to the extent that
dividends earned by the Fund qualify. Any such dividends are,
however, includable in adjusted current earnings for purposes of
computing corporate AMT.
Return of Capital Distributions. To the extent that a distribution
is a return of capital for federal tax purposes, it reduces the cost
basis of the shares on the record date and is similar to a partial
return of the original investment (on which a sales charge may have
been paid). There is no recognition of a gain or loss, however,
unless the return of capital reduces the cost basis in the shares to
below zero. If distributions are taken in additional shares, they
will have no impact since the capital returned is reinvested and the
cost basis of the investment is unchanged.
Funds that invest in U.S. Government Securities. Many states grant
tax-free status to dividends paid to shareholders of mutual funds
from interest income earned by the Fund from direct obligations of
the U.S. government. Investments in mortgage-backed securities
(including GNMA, FNMA and FHLMC Securities) and repurchase agreements
collateralized by U.S. government securities do not qualify as direct
federal obligations in most states. Shareholders should consult with
their own tax advisers about the applicability of state and local
intangible property, income or other taxes to their Fund shares and
distributions and redemption proceeds received from the Fund.
Distributions from Tax-Exempt Funds. Each tax-exempt Fund will have
at least 50% of its total assets invested in tax-exempt bonds at the
end of each quarter so that dividends from net interest income on tax-
exempt bonds will be exempt from Federal income tax when received by
a shareholder. The tax-exempt portion of dividends paid will be
designated within 60 days after year end based upon the ratio of net
tax-exempt income to total net investment income earned during the
year. That ratio may be substantially different than the ratio of
net tax-exempt income to total net investment income earned during
any particular portion of the year. Thus, a shareholder who holds
shares for only a part of the year may be allocated more or less tax-
exempt dividends than would be the case if the allocation were based
on the ratio of net tax-exempt income to total net investment income
actually earned while a shareholder.
The Tax Reform Act of 1986 makes income from certain "private
activity bonds" issued after August 7, 1986, a tax preference item
for the alternative minimum tax (AMT) at the maximum rate of 28% for
individuals and 20% for corporations. If the Fund invests in private
activity bonds, shareholders may be subject to the AMT on that part
of the distributions derived from interest income on such bonds.
Other provisions of the Tax Reform Act affect the tax treatment of
distributions for corporations, casualty insurance companies and
financial institutions; interest on all tax-exempt bonds is included
in corporate adjusted current earnings when computing the AMT
applicable to corporations. Seventy-five percent of the excess of
adjusted current earnings over the amount of income otherwise subject
to the AMT is a preference item and added to the AMT income,
potentially creating an AMT liability.
Dividends derived from net income on any investments other than tax-
exempt bonds and any distributions of short-term capital gains are
taxable to shareholders as ordinary income. Any distributions of net
long-term gains will in general be taxable to shareholders as long-
term capital gains regardless of the length of time Fund shares are
held.
Shareholders receiving social security and certain retirement
benefits may be taxed on a portion of those benefits as a result of
receiving tax-exempt income, including tax-exempt dividends from the
Fund. The tax is imposed only where the sum of the recipient's
adjusted gross income, tax-exempt interest and dividend income and
one-half the social security benefits exceeds a base amount ($25,000
for single individuals and $32,000 for individuals filing a joint
return). The tax is imposed on the lesser of one-half of the social
security benefits or on one-half of the excess over the base amount.
Special Tax Rules Applicable to Tax-Exempt Funds. Income
distributions to shareholders who are substantial users or related
persons of substantial users of facilities financed by industrial
revenue bonds may not be excludable from their gross income if such
income is derived from such bonds. Income derived from Fund
investments other than tax-exempt instruments may give rise to
taxable income. Fund shares must be held for more than six months in
order to avoid the disallowance of a capital loss on the sale of Fund
shares to the extent of tax-exempt dividends paid during that period.
A shareholder that borrows money to purchase Fund shares will not be
able to deduct the interest paid with respect to such borrowed money.
Backup Withholding. Certain distributions and redemptions may be
subject to a 31% backup withholding unless a taxpayer identification
number and certification that the shareholder is not subject to the
withholding is provided to the Fund. This number and form may be
provided by either a Form W-9 or the accompanying application. In
certain instances CISC may be notified by the Internal Revenue
Service that a shareholder is subject to backup withholding.
Excise Tax. To the extent that the Fund does not annually distribute
substantially all taxable income and realized gains, it is subject to
an excise tax. Colonial intends to avoid this tax except when the
cost of processing the distribution is greater than the tax.
Tax Accounting Principles. To qualify as a "regulated investment
company," the Fund must (a) derive at least 90% of its gross income
from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of securities or foreign
currencies or other income (including but not limited to gains from
options, futures or forward contracts) derived with respect to its
business of investing in such securities or currencies; (b) derive
less than 30% of its gross income from the sale or other disposition
of certain assets held less than three months; (c) diversify its
holdings so that, at the close of each quarter of its taxable year,
(i) at least 50% of the value of its total assets consists of cash,
cash items, U.S. Government securities, and other securities limited
generally with respect to any one issuer to not more than 5% of the
total assets of the Fund and not more than 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any issuer
(other than U.S. Government securities).
Futures Contracts. Accounting for futures contracts will be in
accordance with generally accepted accounting principles. The amount
of any realized gain or loss on the closing out of a futures contract
will result in a capital gain or loss for tax purposes. In addition,
certain futures contracts held by the Fund (so-called "Section 1256
contracts") will be required to be "marked-to-market" (deemed sold)
for federal income tax purposes at the end of each fiscal year.
Sixty percent of any net gain or loss recognized on such deemed sales
or on actual sales will be treated as long-term capital gain or loss,
and the remainder will be treated as short-term capital gain or loss.
However, if a futures contract is part of a "mixed straddle" (i.e., a
straddle comprised in part of Section 1256 contracts), a Fund may be
able to make an election which will affect the character arising from
such contracts as long-term or short-term and the timing of the
recognition of such gains or losses. In any event, the straddle
provisions described below will be applicable to such mixed
straddles.
Special Tax Rules Applicable to "Straddles". The straddle provisions
of the Code may affect the taxation of the Fund's options and futures
transactions and transactions in securities to which they relate. A
"straddle" is made up of two or more offsetting positions in
"personal property," including debt securities, related options and
futures, equity securities, related index futures and, in certain
circumstances, options relating to equity securities, and foreign
currencies and related options and futures.
The straddle rules may operate to defer losses realized or deemed
realized on the disposition of a position in a straddle, may suspend
or terminate the Fund's holding period in such positions, and may
convert short-term losses to long-term losses in certain
circumstances.
Foreign Currency-Denominated Securities and Related Hedging
Transactions. The Fund's transactions in foreign currency-
denominated debt securities, certain foreign currency options,
futures contracts and forward contracts may give rise to ordinary
income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned.
If more than 50% of a Fund's total assets at the end of its fiscal
year are invested in securities of foreign corporate issuers, the
Fund may make an election permitting its shareholders to take a
deduction or credit for federal tax purposes for their portion of
certain foreign taxes paid by the Fund. Colonial will consider the
value of the benefit to a typical shareholder, the cost to the Fund
of compliance with the election, and incidental costs to the
shareholder in deciding whether to make the election. A
shareholder's ability to claim such a foreign tax credit will be
subject to certain limitations imposed by the Code, as a result of
which a shareholder may not get a full credit for the amount of
foreign taxes so paid by the Fund. Shareholders who do not itemize
on their federal income tax returns may claim a credit (but no
deduction) for such foreign taxes.
Certain Securities are considered to be Passive Foreign Investment
Companies (PFICS) under the Code, and the Fund is liable for any PFIC-
related taxes.
MANAGEMENT OF THE FUNDS
Colonial is a subsidiary of The Colonial Group, Inc. (TCG), One
Financial Center, Boston, MA 02111. TCG is a subsidiary of Liberty
Financial, subsidiary of Liberty Financial Companies, Inc. (Liberty
Financial), which in turn is an indirect subsidiary of Liberty Mutual
Insurance Company (Liberty Mutual). Liberty Mutual is an underwriter
of worker's compensation insurance and a property and casualty
insurer in the U.S. Liberty Financial's address is 600 Atlantic
Avenue, Boston, MA 02210. Liberty Mutual's address is 175 Berkeley
Street, Boston, MA 02117.
Trustees and Officers
Robert J. Birnbaum, Trustee, is a Trustee (formerly Special Counsel,
Dechert Price & Rhoads), 313 Bedford Road, Ridgewood, NJ 07405.
Tom Bleasdale, Trustee, is Retired (formerly Chairman of the Board
and Chief Executive Officer, Shore Bank & Trust Company), 1508
Ferncroft Tower, Danvers, MA 01923
Lora S. Collins, Trustee, is an Attorney with Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New York, NY
10022
James E. Grinnell, Trustee, is a Private Investor, 22 Harbor Avenue,
Marblehead, MA 01945.
William D. Ireland, Jr., Trustee, is Retired (formerly Chairman of
the Board, Bank of New England, Worcester), 103 Springline Drive,
Vero Beach, FL 32963
Richard W. Lowry, Trustee, is a Private Investor, 10701 Charleston
Drive, Vero Beach, FL 32963
William E. Mayer*, Trustee, is 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), College Park,
MD 20742.
John A. McNeice, Jr.*, Trustee and President, is Chairman of the
Board, The Colonial Group, Inc., Director, Liberty Financial
(formerly Chief Executive Officer and Director, TCG)
James L. Moody, Jr., Trustee, is Chairman of the Board, Hannaford
Bros., Co. (formerly Chief Executive Officer, Hannaford Bros. Co.),
P.O. Box 1000, Portland, ME 04104
John J. Neuhauser, Trustee, is Dean, Boston College School of
Management, 140 Commonwealth Avenue, Chestnut Hill, MA 02167
George L. Shinn, Trustee, is a Financial Consultant (formerly
Chairman, Chief Executive Officer and Consultant, The First Boston
Corporation), The First Boston Corporation, Tower Forty Nine, 12
East 49th Street, New York, NY 10017
Robert L. Sullivan, Trustee, is a Management Consultant, 7121 Natelli
Woods Lane, Bethesda, MD 20817
Sinclair Weeks, Jr., Trustee, is Chairman of the Board, Reed & Barton
Corporation, Bay Colony Corporate Center, Suite 4550, 1000 Winter
Street, Waltham, MA 02154
Harold W. Cogger, Vice President, is President and Chief Executive
Officer, Colonial; President and Chief, Executive Officer and
Director, TCG; Executive Vice President and Director, Liberty
Financial (formerly Director and Executive Vice President; Colonial).
Peter L. Lydecker, Controller (formerly Assistant Controller), is
Vice President, Colonial (formerly Assistant Vice President,
Colonial).
Davey S. Scoon, Vice President, is Executive Vice President and Chief
Operating Officer, Colonial; Executive Vice President and Chief
Operating Officer, TCG (formerly Director, Senior Vice President and
Treasurer, Colonial, Vice President - Finance and Administration,
Treasurer, TCG).
Richard A. Silver, Treasurer and Chief Financial Officer (formerly
Controller), is Senior Vice President, Director, Treasurer and Chief
Financial Officer, Colonial; Treasurer and Chief Financial Officer,
The Colonial Group, Inc.
Arthur O. Stern,Secretary, is Executive Vice President - Legal and
Compliance, Colonial; Executive Vice President, Legal and Compliance,
TCG (formerly General Counsel, Director, Clerk, Secretary, Senior
Vice President, Colonial; Vice President - Legal and Clerk, TCG).
* Trustees who are "interested persons" (as defined in the 1940 Act)
of the Fund or Colonial.
The Trustees serve as trustees of all Colonial funds, for which each
Trustee (except Mr. McNeice) will receive an annual retainer of
$45,000 and attendance fees of $7,500 for each regular joint meeting
and $1,000 for each special joint meeting. Committee chairs receive
an annual retainer of $5,000. Committee members receive an annual
retainer of $1,000 and $1,000 for each special meeting attended. Two-
thirds of the Trustee fees are allocated among the Colonial funds
based on the Funds' relative net assets and one-third of the fees are
divided equally among the Colonial funds.
The Agreement and Declaration of Trust (Declaration) of the Trust
provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with
litigation in which they may be involved because of their offices
with the Trust but that such indemnification will not relieve any
officer or Trustee of any liability to the Trust or its shareholders
by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his or her duties. The Trust, at its expense,
provides liability insurance for the benefit of its Trustees and
officers.
Colonial or its wholly-owned subsidiary, Colonial Advisory Services,
Inc. (CASI), has rendered investment advisory services to investment
company, institutional and other clients since 1931. Colonial
currently serves as investment adviser for 31 open-end and 5 closed-
end management investment company portfolios (collectively, Colonial
funds). Trustees and officers of the Trust who are also officers of
Colonial or its affiliates or who are stockholders of TCG will
benefit from the advisory fees, sales commissions and agency fees
paid or allowed by the Trust. More than 30,000 financial advisers
have recommended Colonial funds to over 800,000 clients worldwide,
representing more than $14 billion in assets.
The Management Contract
Under a Management Contract (Contract), Colonial has contracted to
furnish the Fund with investment research and recommendations or fund
management, respectively, and accounting, and administrative
personnel and services, and with office space, equipment and other
facilities, at Colonial's expense. For these services and
facilities, the Fund pays a monthly fee based on the average of the
daily closing value of the total net assets of the Fund for such
month.
Colonial's compensation under the Contract is subject to reduction in
any fiscal year to the extent that the total expenses of the Fund for
such year (subject to applicable exclusions) exceed the most
restrictive applicable expense limitation prescribed by any state
statute or regulatory authority in which the Trust's shares are
qualified for sale. The most restrictive expense limitation
applicable to the Fund is 2.5% of the first $30 million of the
Trust's average net assets for such year, 2% of the next $70 million
and 1.5% of any excess over $100 million.
Under the Contract, any liability of Colonial to the Fund and its
shareholders is limited to situations involving Colonial's own
willful misfeasance, bad faith, gross negligence or reckless
disregard of duties.
The Contract may be terminated with respect to the Fund at any time
on 60 days' written notice by Colonial or by the Trustees of the
Trust or by a vote of a majority of the outstanding voting securities
of the Fund. The Contract will automatically terminate upon any
assignment thereof and shall continue in effect from year to year
only so long as such continuance is approved at least annually (i) by
the Trustees of the Trust or by a vote of a majority of the
outstanding voting securities of the Fund and (ii) by vote of a
majority of the Trustees who are not interested persons (as such term
is defined in the 1940 Act) of Colonial or the Trust, cast in person
at a meeting called for the purpose of voting on such approval.
Colonial pays all salaries of officers of the Trust. The Trust pays
all expenses not assumed by Colonial including, but not limited to,
auditing, legal, custodial, investor servicing and shareholder
reporting expenses. The Trust pays the cost of typesetting for its
Prospectuses and the cost of printing and mailing any Prospectuses
sent to shareholders. CISI pays the cost of printing and
distributing all other Prospectuses.
The Contract provides that Colonial shall not be subject to any
liability to the Trust or to any shareholder of the Trust for any act
or omission in the course of or connected with rendering services to
the Trust in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties on the part of
Colonial.
The Pricing and Bookkeeping Agreement
Colonial provides pricing and bookkeeping services to the Fund
pursuant to a Pricing and Bookkeeping Agreement. The Pricing and
Bookkeeping Agreement has a one-year term. Colonial is paid monthly
a fee of $2,250 by each Fund, plus a monthly percentage fee based on
net assets of the Fund equal to the following:
1/12 of 0.000% of the first $50 million;
1/12 of 0.035% of the next $950 million;
1/12 of 0.025% of the next $1 billion;
1/12 of 0.015% of the next $1 billion; and
1/12 of 0.001% on the excess over $3 billion
Portfolio Transactions
Investment decisions. Colonial also acts as investment adviser to
the other Colonial funds (as defined under Management of the Fund
herein) and its wholly-owned subsidiary, CASI, advises other
institutional, corporate, fiduciary and individual clients for which
CASI performs various services. Various officers and Trustees of the
Trust also serve as officers or Trustees of other Colonial funds and
the other corporate or fiduciary clients of Colonial. The other
Funds and clients advised by Colonial sometimes invest in securities
in which the Fund also invests and sometimes engage in covered option
writing programs and enter into transactions utilizing stock index
options and stock index and financial futures and related options
("other instruments"). If the Fund, such other Funds and such other
clients desire to buy or sell the same portfolio securities, options
or other instruments at about the same time, the purchases and sales
are normally made as nearly as practicable on a pro rata basis in
proportion to the amounts desired to be purchased or sold by each.
Although in some cases these practices could have a detrimental
effect on the price or volume of the securities, options or other
instruments as far as the Fund is concerned, in most cases it is
believed that these practices should produce better executions. It
is the opinion of the Trustees that the desirability of retaining
Colonial as investment adviser to the Fund outweighs the
disadvantages, if any, which might result from these practices.
Brokerage and research services. Consistent with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., and
subject to seeking "best execution" (as defined below) and such other
policies as the Trustees may determine, Colonial may consider sales
of shares of the Fund and of the other Colonial funds as a factor in
the selection of broker-dealers to execute securities transactions
for the Fund.
Colonial places the transactions of the Fund with broker-dealers
selected by Colonial and, if applicable, negotiates commissions.
Broker-dealers may receive brokerage commissions on portfolio
transactions, including the purchase and writing of options, the
effecting of closing purchase and sale transactions, and the purchase
and sale of underlying securities upon the exercise of options and
the purchase or sale of other instruments. The Fund from time to
time also executes portfolio transactions with such broker-dealers
acting as principals. The Fund does not intend to deal exclusively
with any particular broker-dealer or group of broker-dealers.
Except as described below in connection with commissions paid to a
clearing agent on sales of securities, it is the Fund's and
Colonial's policy always to seek best execution, which is to place
the Fund's transactions where the Fund can obtain the most favorable
combination of price and execution services in particular
transactions or provided on a continuing basis by a broker-dealer,
and to deal directly with a principal market maker in connection with
over-the-counter transactions, except when it is believed that best
execution is obtainable elsewhere. In evaluating the execution
services of, including the overall reasonableness of brokerage
commissions paid to, a broker-dealer, consideration is given to,
among other things, the firm's general execution and operational
capabilities, and to its reliability, integrity and financial
condition.
Subject to such practice of always seeking best execution, securities
transactions of the Fund may be executed by broker-dealers who also
provide research services (as defined below) to Colonial, the Fund
and the other Colonial funds. Colonial may use all, some or none of
such research services in providing investment advisory services to
each of its investment company and other clients, including the Fund.
To the extent that such services are used by Colonial, they tend to
reduce Colonial's expenses. In Colonial's opinion, it is impossible
to assign an exact dollar value for such services.
Subject to such policies as the Trustees may determine, Colonial may
cause the Fund to pay a broker-dealer which provides brokerage and
research services to Colonial an amount of commission for effecting a
securities transaction, including the sale of an option or a closing
purchase transaction, for the Fund in excess of the amount of
commission which another broker-dealer would have charged for
effecting that transaction. As provided in Section 28(e) of the
Securities Exchange Act of 1934, "brokerage and research services"
include advice as to the value of securities, the advisability of
investing in, purchasing or selling securities and the availability
of securities or purchasers or sellers of securities; furnishing
analyses and reports concerning issues, industries, securities,
economic factors and trends and portfolio strategy and performance of
accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement).
Colonial must determine in good faith that such greater commission is
reasonable in relation to the value of the brokerage and research
services provided by the executing broker-dealer viewed in terms of
that particular transaction or Colonial's overall responsibilities to
the Fund and all its other clients.
The Trustees have authorized Colonial to utilize the services of a
clearing agent with respect to all call options written by Funds that
write options and to pay such clearing agent commissions of a fixed
amount per share (currently 1.25 cents) on the sale of the underlying
security upon the exercise of an option written by a Fund. The
Trustees may further authorize Colonial to depart from the present
policy of always seeking best execution and to pay higher brokerage
commissions from time to time for other brokerage and research
services as described above in the future if developments in the
securities markets indicate that such would be in the interests of
the shareholders of the Fund.
Principal Underwriter
CISI is the principal underwriter of the Trust's shares. CISI has no
obligation to buy the Fund's shares, and purchases the Fund's
shares, only upon receipt of orders from authorized FSFs or
investors.
Investor Servicing and Transfer Agent
CISC is the Trust's investor servicing agent (transfer, plan and
dividend disbursing agent), for which it receives fees which are paid
monthly by the Trust. The fee paid to CISC is based on the average
daily net assets of each Colonial fund. See "Fund Charges and
Expenses" in Part 1 of this SAI for information on fees received by
CISC. The agreement continues indefinitely but may be terminated by
90 days' notice by the Fund to CISC or generally by 6 months' notice
by CISC to the Fund. The agreement limits the liability of CISC to
the Fund for loss or damage incurred by the Fund to situations
involving a failure of CISC to use reasonable care or to act in good
faith in performing its duties under the agreement. It also provides
that the Fund will indemnify CISC against, among other things, loss
or damage incurred by CISC on account of any claim, demand, action or
suit made on or against CISC not resulting from CISC's bad faith or
negligence and arising out of, or in connection with, its duties
under the agreement.
DETERMINATION OF NET ASSET VALUE
The Fund determines net asset value (NAV) per share for each Class as
of the close of the New York Stock Exchange each day the Exchange is
open. Currently, the Exchange is closed Saturdays, Sundays and the
following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, the Fourth of July, Labor Day, Thanksgiving and
Christmas. Debt securities generally are valued by a pricing service
which determines valuations based upon market transactions for
normal, institutional-size trading units of similar securities.
However, in circumstances where such prices are not available or
where Colonial deems it appropriate to do so, an over-the-counter or
exchange bid quotation is used. Securities listed on an exchange or
on NASDAQ are valued at the last sale price. Listed securities for
which there were no sales during the day and unlisted securities are
valued at the last quoted bid price. Options are valued at the last
sale price or in the absence of a sale, the mean between the last
quoted bid and offering prices. Short-term obligations with a
maturity of 60 days or less are valued at amortized cost pursuant to
procedures adopted by the Trustees. The values of foreign securities
quoted in foreign currencies are translated into U.S. dollars at the
exchange rate for that day. Portfolio positions for which there are
no such valuations and other assets are valued at fair value as
determined in good faith under the direction of the Trustees.
Generally, trading in certain securities (such as foreign securities)
is substantially completed each day at various times prior to the
close of the Exchange. The values of these securities used in
determining the NAV are computed as of such times. Also, because of
the amount of time required to collect and process trading
information as to large numbers of securities issues, the values of
certain securities (such as convertible bonds, U.S. government
securities, and tax-exempt securities) are determined based on market
quotations collected earlier in the day at the latest practicable
time prior to the close of the Exchange. Occasionally, events
affecting the value of such securities may occur between such times
and the close of the Exchange which will not be reflected in the
computation of the Fund's NAV. If events materially affecting the
value of such securities occur during such period, then these
securities will be valued at their fair value following procedures
approved by the Trustees.
Amortized Cost for Money Market Funds
Money market funds generally value their portfolio securities at
amortized cost according to Rule 2a-7 under the 1940 Act.
Portfolio instruments are valued under the amortized cost method,
whereby the instrument is recorded at cost and thereafter amortized
to maturity. This method assures a constant NAV but may result in a
yield different than that of the same portfolio under the market
value method. The Trustees have adopted procedures intended to
stabilize the Fund's NAV per share at $1.00. When the Fund's market
value deviates from the amortized cost of $1.00, and results in a
material dilution to existing shareholders, the Trustees will take
corrective action to: realize gains or losses; shorten the
portfolio's maturity; withhold distributions; redeem shares in kind;
or convert to the market value method (in which case the NAV per
share may differ from $1.00). All investments will be determined
pursuant to procedures approved by the Trustees to present minimal
credit risk.
See the Statement of Assets and Liabilities of the Fund for a
specimen price sheet showing the computation of maximum offering
price per share of Class A shares .
HOW TO BUY SHARES
The Prospectus contains a general description of how investors may
buy shares of the Fund and tables of charges. This SAI contains
additional information which may be of interest to investors.
The Fund will accept unconditional orders for shares to be executed
at the public offering price based on the NAV per share next
determined after the order is placed in good order. The public
offering price is the NAV plus the applicable sales charge, if any.
In the case of orders for purchase of shares placed through FSFs, the
public offering price will be determined on the day the order is
placed in good order, but only if the FSF receives the order before
4:00 p.m. Eastern time and transmits it to the Fund before the Fund
processes that day's transactions. If the FSF fails to transmit
before the Fund processes that day's transactions, the customer's
entitlement to that day's closing price must be settled between the
customer and the FSF. If the FSF receives the order after 4:00 p.m.
Eastern time, the price will be based on the NAV determined as of the
close of the Exchange on the next day it is open. If funds for the
purchase of shares are sent directly to CISC they will be invested at
the public offering price next determined after receipt in good
order. Payment for shares of the Fund must be in U.S. dollars; if
made by check, the check must be drawn on a U.S. bank.
As a convenience to investors, shares of most Colonial funds may be
purchased through the Colonial Fundamatic Check Program.
Preauthorized monthly bank drafts or electronic funds transfer for a
fixed amount (at least $50) are used to purchase Fund shares at the
public offering price next determined after CISI receives the
proceeds from the draft (normally the 5th or the 20th of each month,
or the next business day thereafter). Further information and
application forms are available from FSFs or from CISI.
Class A Shares
Most Funds continuously offer Class A shares. The Fund receives the
entire NAV of shares sold. CISI's commission is the sales charge
shown in the Prospectus less any applicable FSF discount. The FSF
discount is the same for all FSFs, except that CISI retains the
entire sales charge on any sales made to a shareholder who does not
specify an FSF on the investment account application and retains the
entire contingent deferred sales charge (CDSC).
CISI offers several plans by which an investor may obtain reduced
sales charges on purchases of Fund Class A shares. These plans may
be altered or discontinued at any time.
Right of Accumulation and Statement of Intent (Class A Shares only)
Reduced sales charge on Class A shares can be effected by combining a
current purchase with prior purchases of Class A, B and D shares of
the Colonial funds. The applicable sales charge is based on the
combined total of:
1. the current purchase; and
2. the value at the public offering price at the close of business
on the previous day of all Colonial fund Class A shares held by
the shareholder (except shares of any Colonial money market fund,
unless such shares were acquired by exchange from Class A shares
of another Colonial fund other than a money market fund and any
Class C shares) and Class B and D shares.
CISI must be promptly notified of each purchase which entitles a
shareholder to a reduced sales charge. Such reduced sales charge
will be applied upon confirmation of the shareholder's holdings by
CISC. The Fund may terminate or amend this Right of Accumulation.
Any person may qualify for reduced sales charges on purchases of
Class A shares (exclusive of reinvested distributions of all Colonial
funds) made within a thirteen-month period pursuant to a Statement of
Intent ("Statement"). A shareholder may include, as an accumulation
credit towards the completion of such Statement, the value of all
Class A, B and D shares held by the shareholder in Colonial funds
(except money market fund, unless acquired by exchange from another
non-money market Colonial fund). The value is determined at the
public offering price on the date of the Statement.
During the term of a Statement, CISC will hold shares in escrow to
secure payment of the higher sales charge applicable to Class A
shares actually purchased. Dividends and capital gains will be paid
on all escrowed shares and these shares will be released when the
amount indicated has been purchased. A Statement does not obligate
the investor to buy or a Fund to sell the amount of the Statement.
If a shareholder exceeds the amount of the Statement and reaches an
amount which would qualify for a further quantity discount, a
retroactive price adjustment will be made at the time of expiration
of the Statement. The resulting difference in offering price will
purchase additional shares for the shareholder's account at the
applicable offering price. As a part of this adjustment, the FSF
shall return to CISI the excess commission previously paid during the
thirteen-month period.
If the amount of the Statement is not purchased, the shareholder
shall remit to CISI an amount equal to the difference between the
sales charge paid and the sales charge that should have been paid.
If the shareholder fails within twenty days after a written request
to pay such difference in sales charge, CISC will redeem that number
of escrowed Class A shares to equal such difference. The additional
amount of FSF discount from the applicable offering price shall be
remitted to the shareholder's FSF of record.
Additional information about and the terms of Statements of Intent
are available from your FSF, or from CISC at 1-800-345-6611.
Class B Shares
For those Funds offering Class B shares, the Prospectus contains a
general description of how investors may buy Class B shares of the
Fund and a description of the Contingent Deferred Sales Charge
(CDSC). This SAI contains additional information which may be of
interest to investors.
Most Funds continuously offer Class B shares. The Fund receives the
entire NAV of shares sold. The FSF commission is the same for all
FSFs; CISI retains the entire CDSC.
Colonial money market fund Class B shares are subject to higher
charges than those normally associated with money market funds, and
checkwriting privileges are not offered.
Class C Shares
For those Funds offering Class C shares, the Prospectus contains a
general description of how investors may buy Class C shares of the
Fund. This SAI contains additional information which may be of
interest to investors.
Class C shares are offered continuously. The Fund receives the
entire NAV of shares sold.
Class D Shares
For those Funds offering Class D Shares, the Prospectus contains a
general description of how investors may buy Class D shares of the
Fund and a description of the CDSC. This SAI contains additional
information which may be of interest to investors.
The Fund receives the entire NAV of shares sold. The FSF commission
is the same for all FSFs; CISI retains the entire CDSC.
Waiver of Contingent Deferred Sales Charges (CDSCs) (Classes A, B and
D)
CDSCs may be waived on redemptions in the following situations with
the proper documentation.
1. Death. CDSCs may be waived on redemptions within one year
following the death of (i) the sole shareholder on an individual
account, (ii) a joint tenant where the surviving joint tenant is
the deceased's spouse, or (iii) the beneficiary of a Uniform
Gifts to Minors Act (UGMA), Uniform Transfers to Minors Act
(UTMA) or other custodial account. If, upon the occurrence of
one of the foregoing, the account is transferred to an account
registered in the name of the deceased's estate, the CDSC will
be waived on any redemption from the estate account occurring
within one year after the death. If the Class B shares are not
redeemed within one year of the death, they will remain subject
to the applicable CDSC, when redeemed from the transferee's
account.
2. Systematic Withdrawal Plan (SWP). CDSCs may be waived on
redemptions occurring pursuant to a monthly, quarterly or semi-
annual SWP established with Colonial, to the extent the
redemptions do not exceed, on an annual basis, 12% of the
account's value, so long as at the time of the first SWP
redemption the account had had distributions reinvested for a
period at least equal to the period of the SWP (e.g., if it is a
quarterly SWP, distributions must have been reinvested at least
for the three month period prior to the first SWP redemption;
otherwise CDSCs will be charged on SWP redemptions until this
requirement is met; this requirement does not apply if the SWP
is set-up at the time the account is established, and
distributions are being reinvested).
3. Disability. CDSCs may be waived on redemptions occurring within
one year after the sole shareholder on an individual account or
a joint tenant on a spousal joint tenant account becomes
disabled (as defined in Section 72(m)(7) of the Internal Revenue
Code). To be eligible for such waiver, (i) the disability must
arise after the purchase of shares and (ii) the disabled
shareholder must have been under age 65 at the time of the
initial determination of disability. If the account is
transferred to a new registration and then a redemption is
requested, the applicable CDSC will be charged.
4. Death of a trustee. CDSCs may be waived on redemptions
occurring upon dissolution of a revocable living or grantor
trust following the death of the sole trustee where (i) the
grantor of the trust is the sole trustee and the current
beneficiary, (ii) death occurs following the purchase and (iii)
the trust document provides for dissolution of the trust upon
the trustee's death. If the account is transferred to a new
registration (including that of a successor trustee), the
applicable CDSC will be charged upon any subsequent redemption.
5. Returns of excess contributions. CDSCs may be waived on
redemptions required to return excess contributions made to
retirement plans or individual retirement accounts, so long as
the FSF agrees to return the applicable portion of any
commission paid by Colonial.
6. Qualified Retirement Plans. CDSCs may be waived on redemptions
required to make distributions from qualified retirement plans
following (i) normal retirement (as stated in the Plan document)
or (ii) separation from service. CDSCs also will be waived on
SWP redemptions made to make required minimum distributions from
qualified retirement plans that have invested in Colonial funds
for at least two years.
Fundamatic Check Program
As a convenience to investors, shares of most Colonial funds may be
purchased through the Colonial Fundamatic Check Program.
Preauthorized monthly bank drafts or electronic funds transfer for a
fixed amount of at least $50 are used to purchase Fund shares at the
public offering price next determined after CISI receives the
proceeds from the draft (normally the 5th or the 20th of each month,
or the next business day thereafter). Further information and
application forms are available from FSFs or from CISI.
Automated Dollar Cost Averaging (Classes A, B and D)
Colonial's Automated Dollar Cost Averaging Program allows you to
exchange on a monthly basis from any Colonial fund in which you have
a current balance of at least $5,000 into the same class of shares of
up to four other Colonial funds. Complete the Automated Dollar
Cost Averaging section of the application agreeing to a monthly
exchange of $100 or more to the same class of shares of the Colonial
fund you designate on your written application. The designated
amount will be exchanged on the third Tuesday of each month. There
is no charge for the exchanges made pursuant to the Automated Dollar
Cost Averaging program. Exchanges will continue so long as your
Colonial fund balance is sufficient to complete the transfers. Your
normal rights and privileges as a shareholder remain in full force
and effect. Thus you can: buy any Funds, exchange between the same
Class shares of Funds by written instruction or by telephone exchange
if you have so elected and withdraw amounts from any Fund, subject to
the imposition of any applicable CDSC.
Any additional payments or exchanges into your Fund will extend the
time of the Automated Dollar Cost Averaging program.
An exchange is a taxable capital transaction for federal tax
purposes.
You may terminate your program, change the amount of the exchange
(subject to the $100 minimum), or change your selection of funds, by
telephone or in writing; if in writing by mailing it to Colonial
Investors Service Center, P.O. Box 1722, Boston, MA 02105-1722.
You should consult your FSF or investment adviser to determine
whether or not the Automated Dollar Cost Averaging program is
appropriate for you.
Colonial Asset Builder Investment Program (Class A only)
A reduced sales charge applies to a purchase of certain Colonial
fund's Class A shares under a statement of intent for the Colonial
Asset Builder Investment Program. The Program offer may be withdrawn
at any time without notice. A completed Program may serve as the
initial investment for a new Program, subject to the maximum of
$4,000 in initial investments per investor. CISC will escrow shares
to secure payment of the additional sales charge on amounts invested
if the Program is not completed. Escrowed shares are credited with
distributions and will be released when the Program has ended. Prior
to completion of the Program, only scheduled Program investments may
be made in a Colonial fund in which an investor has a Program
account. The following services are not available to Program
accounts until a Program has ended:
Systematic Telephone Statement of
Withdrawal Plan Redemption Intent
Sponsored Colonial Cash Share Certificates
Arrangements Connection
$50,000 Fast Cash Reduced Sales Automatic Dividend
Charges Diversification
Right of for any "person" Exchange
Accumulation Privilege*
*Exchanges may be made to other Colonial funds offering the Program.
Because of the unavailability of certain services, the Program may
not be suitable for all investors.
The FSF receives 3% of the investor's intended purchases under a
Program at the time of initial investment and 1% after the 24th
monthly payment. CISI may require the FSF to return all applicable
commissions paid with respect to a Program terminated within six
months of inception, and thereafter to return commissions in excess
of the FSF discount applicable to shares actually purchased.
Since the Asset Builder plan involves continuous investment
regardless of the fluctuating prices of Fund shares, investors should
consult their FSF to determine whether it is appropriate. The Plan
does not assure a profit nor protects against loss in declining
markets.
Tax-Sheltered Retirement Plans (Classes A, B and D)
Certain Colonial funds offer prototype tax-qualified plans, including
Individual Retirement Accounts, and Pension and Profit-Sharing Plans
for individuals, corporations, employees and the self-employed. The
minimum initial Retirement Plan investment in any of the Funds is
$25. The First National Bank of Boston is the Trustee and charges a
$10 annual fee. Detailed information concerning these retirement
plans and copies of the Retirement Plans are available from CISI.
Other Plans (Class A only)
Shares of certain funds may be sold at NAV to current and retired:
Trustees of funds advised by Colonial; directors, officers and
employees of Colonial, CISI and other companies affiliated with
Colonial; registered representatives and employees of FSFs (including
their affiliates) that are parties to Dealer Agreements or other
sales arrangements with CISI; and such persons' families and their
beneficial accounts.
Class A Shares of certain funds may be purchased at reduced or no
sales charge pursuant to sponsored arrangements, which include
programs under which an organization makes recommendations to, or
permits group solicitation of, its employees, members or participants
in connection with the purchase of shares of the Fund on an
individual basis. The amount of the sales charge reduction will
reflect the anticipated reduction in sales expense associated with
sponsored arrangements. The reduction in sales expense, and
therefore the reduction in sales charge will vary depending on
factors such as the size and stability of the organizations group,
the term of the organization's existence and certain characteristics
of the members of its group. The Funds reserve the right to revise
the terms of or to suspend or discontinue sales pursuant to sponsored
plans at any time.
Class A shares of certain funds may also be purchased at reduced or
no sales charge by clients of dealers, brokers or registered
investment advisers that have entered into agreements with CISI
pursuant to which the Colonial funds are included as investment
options in programs involving fee-based compensation arrangements.
Class A shares of certain funds may also be purchased at reduced or
no sales charge by investors moving from another mutual fund complex
and by participants in certain retirement plans. In lieu of the
commissions described in the Prospectus, Colonial will pay the FSF a
finder's fee of 0.25% of the applicable account value during the
first twelve months in connection with such purchases.
Consultation with a competent financial and tax advisor regarding
these Plans and consideration of the suitability of Fund shares as an
investment under the Employee Retirement Income Security Act of 1974
or otherwise is recommended.
INVESTOR SERVICES
Your Open Account
The following information provides more detail concerning the
operation of a Colonial Open Account (an account with book entry
shares only). For further information or assistance, investors
should consult CISC.
The Open Account permits a shareholder to reinvest all or a portion
of a recent cash distribution without a sales charge. A shareholder
request must be received within 30 calendar days of the distribution.
A shareholder may exercise this privilege only once. No charge is
currently made for reinvestment.
The $10 fee on small accounts is paid to CISC.
If a shareholder changes his or her address and does not notify the
Fund, the Fund will reinvest all future distributions regardless of
the option chosen.
The Open Account also provides a way to accumulate shares of the
Fund. Checks presented for the purchase of shares of the Fund which
are returned by the purchaser's bank, or checkwriting privilege
checks for which there are insufficient funds in a shareholder's
account to cover redemption, will subject such purchaser or
shareholder to a $15 service fee for each check returned. Checks
must be drawn on a U.S. bank and must be payable in U.S. dollars.
CISC acts as the shareholder's agent whenever it receives
instructions to carry out a transaction on the shareholder's account.
Upon receipt of instructions that shares are to be purchased for a
shareholder's account, the designated FSF will receive the applicable
sales commission. Shareholders may change FSFs at any time by
written notice to CISC, provided the new FSF has a sales agreement
with CISI.
Shares credited to an account are transferable upon written
instructions in good order to CISC and may be redeemed as described
under "How to sell shares" in the Prospectus. Certificates will not
be issued for Class A shares unless specifically requested and no
certificates will be issued for Class B, C or D shares. Money market
funds will not issue certificates. A shareholder may send any
certificates which have been previously acquired to CISC for deposit
to their account.
Shares of Funds that pay daily dividends will normally earn dividends
starting with the date the Fund receives payment for the shares and
will continue through the day before the shares are redeemed,
transferred or exchanged.
Undelivered distribution checks returned by the post office may be
invested in your account.
Reinvestment Privilege
An investor who has redeemed Class A, B, or D shares may reinvest
(within 90 days) a portion or all of the proceeds of such sale in
shares of the same Class of any Colonial fund at the NAV next
determined after CISC receives a written request and payment. Any
CDSC paid at the time of the redemption will be credited to the
shareholder upon reinvestment. The period between the redemption and
the reinvestment will not be counted in aging the reinvested shares
for purposes of calculating any CDSC or conversion date. Investors
who desire to exercise this Privilege should contact their FSF or
CISC. Shareholders may exercise this Privilege an unlimited number
of times.
Exercise of this Privilege does not alter the federal income tax
treatment. The sale of Fund shares constitutes a capital transaction
for federal tax purposes. Consult your tax adviser.
Exchange Privilege
Shares of the Fund may be exchanged for the same class of shares of
the other continuously offered Colonial funds (with certain
exceptions) on the basis of the NAVs per share at the time of
exchange. The prospectus of each Fund describes its investment
objective and policies, and shareholders should obtain a prospectus
and consider these objectives and policies carefully before
requesting an exchange. Shares of certain Colonial funds are not
available to residents of all states. Consult CISC before requesting
an exchange.
By calling CISC, shareholders or their FSF of record may exchange
among accounts with identical registrations, provided that the shares
are held on deposit. During periods of unusual market changes and
shareholder activity, shareholders may experience delays in
contacting CISC by telephone to exercise the Telephone Exchange
Privilege. Because an exchange involves a redemption and
reinvestment in another Colonial fund, completion of an exchange may
be delayed under unusual circumstances, such as if the Fund suspends
repurchases or postpones payment for the Fund shares being exchanged
in accordance with federal securities law. CISC will also make
exchanges upon receipt of a written exchange request and, share
certificates, if any. If the shareholder is a corporation,
partnership, agent, or surviving joint owner, CISC will require
customary additional documentation. Prospectuses of the other
Colonial funds are available from the Colonial Literature Department.
A loss to a shareholder may result from an unauthorized transaction
reasonably believed to have been authorized. No shareholder is
obligated to use the telephone to execute transactions.
You need to hold your Class A shares for five months before
exchanging to certain funds having a higher maximum sales charge.
Consult your FSF or CISC. In all cases, the shares to be exchanged
must be registered on the records of the Fund in the name of the
shareholder desiring to exchange.
Shareholders of the other Colonial open-end Funds generally may
exchange their shares at NAV for the same class of shares of the
Fund.
An exchange is a capital sale transaction for federal income tax
purposes. The Exchange Privilege may be revised, suspended or
terminated at any time.
Telephone Address Change Services
By calling CISC, shareholders or their FSF of record may change an
address on a recorded telephone line. Confirmations of address
change will be sent to both the old and the new addresses. The
$50,000 Fast Cash privilege is suspended for 60 days after an address
change is effected.
Plans Available To Shareholders
The Plans described below are offered by most Colonial funds, are
voluntary and may be terminated at any time without the imposition by
the Fund or CISC of any penalty.
Checkwriting (Available only on the Class A and C shares of certain
Funds)
Shares may be redeemed by check if a shareholder completed an
Investment Account Application and Signature Card. Colonial will
provide checks to be drawn on The First National Bank of Boston (the
"Bank"). These checks may be made payable to the order of any person
in the amount of not less than $500 nor more than $100,000. The
shareholder will continue to earn dividends on shares until a check
is presented to the Bank for payment. At such time a sufficient
number of full and fractional shares will be redeemed at the next
determined net asset value to cover the amount of the check.
Certificate shares may not be redeemed in this manner.
Shareholders utilizing checkwriting drafts will be subject to the
Bank's rules governing checking accounts. There is currently no
charge to the shareholder for the use of checks. The shareholder
should make sure that there are sufficient shares in his or her Open
Account to cover the amount of any check drawn since the net asset
value of shares will fluctuate. If insufficient shares are in the
shareholder's Open Account, the check will be returned marked
"insufficient funds" and no shares will be redeemed. It is not
possible to determine in advance the total value of an Open Account
because prior redemptions and possible changes in net asset value may
cause the value of an Open Account to change. Accordingly, a check
redemption should not be used to close an Open Account.
Systematic Withdrawal Plan
If a shareholder's Account Balance is at least $5,000, the
shareholder may establish a Systematic Withdrawal Plan (SWP). A
specified dollar amount or percentage of the then current net asset
value of the shareholder's investment in any Fund will be paid
monthly or quarterly to a designated payee. The amount or percentage
the shareholder specifies generally may not, on an annualized basis,
exceed 12% of the value, as of the time the shareholder makes the
election, of the shareholder's investment. Withdrawals from Class B
and Class D shares of a Fund under a SWP will be treated as
redemptions of shares purchased through the reinvestment of Fund
distributions, or, to the extent such shares in the shareholder's
account are insufficient to cover Plan payments, as redemptions from
the earliest purchased shares of such Fund in the shareholder's
account. Generally, no CDSCs apply to a redemption pursuant to a
SWP, even if, after giving effect to the redemption, the
shareholder's Account Balance is less than the shareholder's Base
Amount. Qualified Plan participants who are required by Internal
Revenue Code regulation to withdraw more than 12%, on an annual
basis, of the value of their Class B and Class D share account may do
so but will be subject to a CDSC ranging from 1.00% to 5% of the
amount withdrawn. If a shareholder wishes to participate in a SWP,
the shareholder must elect to have all of the shareholder's income
dividends and other Fund distributions payable in shares of the Fund
rather than in cash.
A shareholder or a shareholder's FSF of record may establish a SWP
account by telephone on a recorded line. However, SWP checks will be
payable only to the shareholder and sent to the address of record.
SWPs from retirement accounts cannot be established by telephone.
A shareholder may not establish a SWP if the shareholder holds shares
in certificate form. Purchasing additional shares (other than
through dividend and distribution reinvestment) while receiving SWP
payments is ordinarily disadvantageous because of duplicative sales
charges. For this reason, a shareholder may not maintain a plan for
the accumulation of shares of a Fund (other than through the
reinvestment of dividends) and a SWP at the same time.
SWP payments are made through share redemptions, which may result in
a gain or loss for tax purposes, may involve the use of principal and
may eventually use up all of the shares in a shareholder's Open
Account.
The Funds may terminate a shareholder's SWP if the shareholder's
Account Balance falls below $5,000 due to any transfer or liquidation
of shares other than pursuant to the SWP. SWP payments will be
terminated on receiving satisfactory evidence of the death or
incapacity of a shareholder. Until this evidence is received, CISC
will not be liable for any payment made in accordance with the
provisions of a SWP.
The cost of administering SWPs for the benefit of shareholders who
participate in them is borne by the Funds as an expense of all
shareholders.
Shareholders whose positions are held in "street name" by certain
FSFs may not be able to participate in a SWP. If a shareholder's
Fund shares are held in "street name", the shareholder should consult
his or her FSF to determine whether he or she may participate in a
SWP.
Colonial cash connection. Dividends and any other distributions,
including SWP payments, may be automatically deposited to a
shareholder's bank account via electronic funds transfer.
Shareholders wishing to avail themselves of this electronic transfer
procedure should complete the appropriate sections of the Investment
Account Application.
Automatic dividend diversification. The automatic dividend
diversification reinvestment program (ADD) generally allows
shareholders to have all distributions from a Fund automatically
invested in the same class of shares of the other Colonial funds. An
ADD account must be in the same name as the shareholder's existing
Open Account with the particular fund. Call CISC for more
information at 1-800-422-3737.
Telephone Redemptions. Shareholders may select telephonic
redemptions on their account application. A redemption of up to
$50,000 may be sent to a shareholder's address without
preauthorization, by calling 1-800-422-3737 between 9:00 a.m. and
4:00 p.m. (NY time) on business days. The Fund will employ
reasonable procedures to confirm that instructions communicated by
telephone are genuine. Telephone redemptions are not available on
accounts with an address change in the preceding 60 days and proceeds
and confirmations will be mailed or sent to the address of record.
Shareholders will be required to provide their name, address and
account number. All telephone transactions are recorded. A loss to
a shareholder may result from an unauthorized transaction reasonably
believed to have been authorized. No shareholder is obligated to
execute the telephone authorization form or to use the telephone to
execute transactions.
Non cash Redemptions. For redemptions of any single shareholder
within any 90-day period exceeding the lesser of $250,000 or 1% of
the Fund's net asset value, the Fund may make the payment or a
portion of the payment with portfolio securities held by the Fund
instead of cash, in which case the redeeming shareholder may incur
brokerage and other costs in selling the securities received.
SUSPENSION OF REDEMPTIONS
The Fund may not suspend shareholders' right of redemption or
postpone payment for more than seven days unless the New York Stock
Exchange is closed for other than customary weekends or holidays, or
if permitted by the rules of the SEC during periods when trading on
the Exchange is restricted or during any emergency which makes it
impracticable for the Fund to dispose of its securities or to
determine fairly the value of its net assets, or during any other
period permitted by order of the SEC for protection of investors.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the
Fund. However, the Declaration disclaims shareholder liability for
acts or obligations of the Fund and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument
entered into or executed by the Fund or the Trustees. The
Declaration provides for indemnification out of Fund property for all
loss and expense of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
circumstances in which the Fund would be unable to meet its
obligations. The likelihood of such circumstances is remote.
As described under the caption "Organization and history" in the
Prospectus, the Fund will not hold annual shareholders' meetings.
The Trustees may fill any vacancies in the Board of Trustees except
that the Trustees may not fill a vacancy if, immediately after
filling such vacancy, less than two-thirds of the Trustees then in
office would have been elected to such office by the shareholders.
In addition, at such times as less than a majority of the Trustees
then in office have been elected to such office by the shareholders,
the Trustees must call a meeting of shareholders. Trustees may be
removed from office by a written consent signed by a majority of the
outstanding shares of the Trust or by a vote of the holders of a
majority of the outstanding shares at a meeting duly called for the
purpose, which meeting shall be held upon written request of the
holders of not less than 10% of the outstanding shares of the Trust.
Upon written request by the holders of 1% of the outstanding shares
of the Trust stating that such shareholders of the Trust, for the
purpose of obtaining the signatures necessary to demand a
shareholder's meeting to consider removal of a Trustee, request
information regarding the Trust's shareholders the Trust will provide
appropriate materials (at the expense of the requesting
shareholders). Except as otherwise disclosed in the Prospectus and
this SAI, the Trustees shall continue to hold office and may appoint
their successors.
At any shareholders' meetings that may be held, shareholders of all
series would vote together, irrespective of series, on the election
of Trustees or the selection independent accountants, but each series
would vote separately from the others on other matters, such as
changes in the investment policies of that series or the approval of
the investment advisory agreement for that series.
PERFORMANCE MEASURES
Total Return
Standardized average annual total return. Average annual total
return is the actual return on a $1,000 investment in a particular
class of shares of a Fund, made at the beginning of a stated period,
adjusted for the maximum sales charge or applicable CDSC for the
class of shares of the Fund and assuming that all distributions were
reinvested at NAV, converted to an average annual return assuming
annual compounding.
Nonstandardized total return. Nonstandardized total returns differ
from standardized average annual total returns only in that they may
relate to nonstandardized periods, represent aggregate rather than
average annual total returns or in that the sales charge or CDSC is
not deducted.
Yield
Money market. A Money Market fund's yield and effective yield is
computed in accordance with the SEC's formula for money market fund
yields.
Non money market. The yield for each class of shares is determined
by (i) calculating the income (as defined by the SEC for purposes of
advertising yield) during the base period and subtracting actual
expenses for the period (net of any reimbursements), and (ii)
dividing the result by the product of the average daily number of
shares of the Fund entitled to dividends for the period and the
maximum offering price of the Fund on the last day of the period ,
(iii) then annualizing the result assuming semi-annual compounding.
Tax-equivalent yield is calculated by taking that portion of the
yield which is exempt from income tax and determining the equivalent
taxable yield which would produce the same after tax yield for any
given Federal and State tax rate, and adding to that the portion of
the yield which is fully taxable. Adjusted yield is calculated in
the same manner as yield except that expenses voluntarily borne or
waived by Colonial have been added back to actual expenses.
Distribution rate. The distribution rate for each class of shares is
calculated by annualizing the most current period's distributions and
dividing by the maximum offering price on the last day of the period.
Generally, a Fund's distribution rate reflects total amounts actually
paid to shareholders, while yield reflects the current earning power
of a Fund's portfolio securities (net of a Fund's expenses). A
Fund's yield for any period may be more or less than the amount
actually distributed in respect of such period.
A Fund may compare its performance to various unmanaged indices
published by such sources as listed in Appendix II.
A Fund may also refer to quotations, graphs and electronically
transmitted data from sources believed by Colonial to be reputable,
and publications in the press pertaining to a Fund's performance or
to Colonial or its affiliates, including comparisons with competitors
and matters of national and global economic and financial interest.
Examples include Forbes, Business Week, MONEY Magazine, The Wall
Street Journal, The New York Times, The Boston Globe, Barron's
National Business & Financial Weekly, Financial Planning, Changing
Times, Reuters Information Services, Wiesenberger Mutual Funds
Investment Report, Lipper Analytical Services Corporation,
Morningstar, Inc., Sylvia Porter's Personal Finance Magazine, Money
Market Directory, SEI Funds Evaluation Services, FTA World Index and
Disclosure Incorporated.
All data is based on past performance and does not predict future
results.
APPENDIX I
DESCRIPTION OF BOND RATINGS
S&P
AAA The highest rating assigned by S&P indicates an extremely strong
capacity to repay principal and interest.
AA bonds also qualify as high quality. Capacity to repay principal and pay
interest is very strong, and in the majority of instances, they differ from
AAA only in small degree.
A bonds have a strong capacity to repay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB bonds are regarded as having an adequate capacity to repay principal
and interest. Whereas they normally exhibit protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to repay principal and interest than for bonds in the A
category.
BB, B, CCC, and CC bonds are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and principal in
accordance with the terms of the obligation. BB indicates the lowest
degree of speculation and CC the highest degree. While likely to have some
quality and protection characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
C ratings are reserved for income bonds on which no interest is being paid.
D bonds are in default, and payment of interest and/or principal is in
arrears.
Plus(+) or minus (-) are modifiers relative to the standing within the
major rating categories.
MOODY'S
Aaa bonds are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt edge".
Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While various protective elements are
likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa bonds are judged to be of high quality by all standards. Together with
Aaa bonds they comprise what are generally known as high-grade bonds. They
are rated lower than the best bonds because margins of protective elements
may be of greater amplitude or there may be other elements present which
make the long-term risk appear somewhat larger than in Aaa securities.
Those bonds in the Aa through B groups which Moody's believes possess the
strongest investment attributes are designated by the symbol Aa1, A1 and
Baa1.
A bonds possess many of the favorable investment attributes and are to be
considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa bonds are considered as medium grade, neither highly protected nor
poorly secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact, have speculative
characteristics as well.
Ba bonds are judged to have speculative elements: their future cannot be
considered as well secured. Often, the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes these bonds.
B bonds generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.
Caa bonds are of poor standing. They may be in default or there may be
present elements of danger with respect to principal or interest.
Ca bonds are speculative in a high degree, often in default or having other
marked shortcomings.
C bonds are the lowest rated class of bonds and can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
APPENDIX II
1994
SOURCE CATEGORY RETURN
(%)
Donoghue Tax-Free Funds 2.25
Donoghue U.S. Treasury Funds 3.34
Dow Jones Industrials 5.03
Morgan Stanley Capital
International EAFE Index 8.06
Morgan Stanley Capital
International EAFE GDP Index 8.21
Libor Six-month Libor 6.9375
Lipper Adjustable Rate Mortgage -2.20
Lipper California Municipal Bond -7.52
Funds
Lipper Connecticut Municipal Bond -7.04
Funds
Lipper Closed End Bond Funds -6.86
Lipper Florida Municipal Bond Funds -7.76
Lipper General Bond Fund -5.98
Lipper General Municipal Bonds -6.53
Lipper General Short-Term Tax-Exempt -0.28
Bonds
Lipper Global Flexible Portfolio -3.03
Funds
Lipper Growth Funds -2.15
Lipper Growth & Income Funds -0.94
Lipper High Current Yield Bond Funds -3.83
Lipper High Yield Municipal BondDebt -4.99
Lipper Fixed Income Funds -3.62
Lipper Insured Municipal Bond -6.47
Average
Lipper Intermediate Muni Bonds -3.53
Lipper Intermediate (5-10) U.S.
Government Funds -3.72
Lipper Massachusetts Municipal Bond -6.35
Funds
Lipper Michigan Municipal Bond Funds -5.89
Lipper Mid Cap Funds -2.05
Lipper Minnesota Municipal Bond -5.87
Funds
Lipper U.S. Government Money Market 3.58
Funds
Lipper Natural Resources -4.20
Lipper New York Municipal Bond Funds -7.54
Lipper North Carolina Municipal Bond -7.48
Funds
Lipper Ohio Municipal Bond Funds -6.08
Lipper Small Company Growth Funds -0.73
Lipper Specialty/Miscellaneous Funds -2.29
Lipper U.S. Government Funds -4.63
Shearson Lehman Composite
Government Index -3.37
Shearson Lehman
Government/Corporate Index -3.51
Shearson Lehman Long-term
Government Index -7.73
S&P 500 S&P 1.32
S&P Utility Index S&P -7.94
Bond Buyer Bond Buyer Price Index -18.10
First Boston High Yield Index -0.97
Swiss Bank 10 Year U.S. Government
(Corporate Bond) -6.39
Swiss Bank 10 Year United Kingdom
(Corporate Bond) -5.29
Swiss Bank 10 Year France (Corporate -1.37
Bond)
Swiss Bank 10 Year Germany (Corporate 4.09
Bond)
Swiss Bank 10 Year Japan (Corporate 7.95
Bond)
Swiss Bank 10 Year Canada (Corporate -14.10
Bond)
Swiss Bank 10 Year Australia (Corporate 0.52
Bond)
Morgan Stanley Capital
International 10 Year Hong Kong (Equity) -28.90
Morgan Stanley Capital
International 10 Year Belgium (Equity) 9.43
Morgan Stanley Capital
International 10 Year Spain (Equity) -3.93
SOURCE CATEGORY RETURN
(%)
Morgan Stanley Capital
International 10 Year Austria (Equity) -6.05
Morgan Stanley Capital
International 10 Year France (Equity) -4.70
Morgan Stanley Capital
International 10 Year Netherlands (Equity) 12.66
Morgan Stanley Capital
International 10 Year Japan (Equity) 21.62
Morgan Stanley Capital
International 10 Year Switzerland (Equity) 4.18
Morgan Stanley Capital 10 Year United Kingdom -1.63
International (Equity)
Morgan Stanley Capital 10 Year Germany Equity 5.11
International
Morgan Stanley Capital
International 10 Year Italy (Equity) 12.13
Morgan Stanley Capital
International 10 Year Sweden (Equity) 18.80
Morgan Stanley Capital 10 Year United States
International (Equity) 2.00
Morgan Stanley Capital
International 10 Year Australia (Equity) 6.48
Morgan Stanley Capital
International 10 Year Norway (Equity) 24.07
Inflation Consumer Price Index 2.67
FHLB-San Francisco 11th District Cost-of-Funds 4.367
Index
Federal Reserve Six-Month Treasury Bill 6.49
Federal Reserve One-Year Constant-Maturity
Treasury Rate 7.14
Federal Reserve Five-Year Constant-Maturity
Treasury Rate 7.78
*in U.S. currency
<PAGE>
INVESTMENT PORTFOLIO (IN THOUSANDS) NOVEMBER 30, 1994
<TABLE>
<CAPTION>
COMMON STOCKS - 84.8% SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 84.8%
Communications - 17.7%
Ameritech Corp. 600 $ 23,700
Bell Atlantic Corp. 500 25,062
BellSouth Corp. 500 25,937
GTE Corp. 1,150 35,219
NYNEX Corp. 1,050 39,506
Southwestern Bell Corp. 550 22,756
Sprint Corp. 100 2,987
US West, Inc. 650 22,912
--------
198,079
--------
ELECTRIC SERVICES - 59.5%
American Electric Power Co., Inc. 500 16,500
Baltimore Gas & Electric Co. 200 4,525
Boston Edison Co. 800 18,300
Cinergy Corp. 1,140 25,365
Consolidated Edison Co. of New
York, Inc. 300 7,762
Detroit Edison Co. 1,300 34,775
Dominion Resources, Inc. 750 27,844
DPL, Inc. 1,500 30,562
Duke Power Co. 300 12,225
Entergy Corp. 650 14,625
Florida Progress Corp. 300 9,112
FPL Group, Inc. 1,200 42,450
General Public Utilities Corp. 1,200 30,900
Hawaiian Electric Industries, Inc. 550 17,463
Idaho Power Co. 350 8,269
IES Industries, Inc. 650 16,981
Kansas City Power & Light Co. 800 17,900
KU Energy Corp. 200 5,425
Long Island Lighting Co. 900 15,075
Montana Power Co. 400 9,450
New York State Electric & Gas
Corp. 600 11,175
Northeast Utilities Co. 500 10,687
Ohio Edison Co. 900 16,650
PacifiCorp 1,700 31,450
Pacific Gas & Electric Co. 450 10,744
Peco Energy Co. 250 6,031
Portland General Corp. 600 11,400
Public Service Co. of Colorado 750 21,375
Public Service Enterprise Group, Inc. 500 13,312
Puget Sound Power & Light Co. 200 4,100
Rochester Gas & Electric Corp. 300 6,262
Scana Corp. 375 16,266
SCEcorp 600 8,400
Sierra Pacific Resources Holding 250 4,625
Southern Co. 1,800 $ 37,350
Texas Utilities Co. 1,050 34,256
Union Electric Co. 400 14,350
Utilicorp United, Inc. 600 15,450
Western Resources, Inc. 903 25,395
--------
664,786
--------
GAS SERVICES - 7.6%
Energen Corp. 193 3,862
MCN Corp. 700 12,688
MDU Resources Group, Inc. 132 3,409
Pacific Enterprises 450 9,619
Panhandle Eastern Corp. 500 10,563
People's Energy Corp. 400 9,800
UGI Corp. 635 11,980
Williams Co., Inc. 800 22,600
--------
84,521
- ---------------------------------------------------------------
Total common stocks (cost $1,092,530) 947,386
- ---------------------------------------------------------------
PREFERRED STOCKS - 14.6%
- ---------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 0.1%
DEPOSITORY INSTITUTIONS - 0.1%
Bankamerica Corp., A.R.P., Series 1 30 1,425
- ---------------------------------------------------------------
MANUFACTURING - 0.2%
PETROLEUM REFINING - 0.2%
USX Corp., A.R.P. 40 1,970
- ---------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 14.3%
ELECTRIC SERVICES - 12.1%
Appalachian Power Co., 7.40% 13 1,093
Arizona Public Service Co.,
$1.8125, Series W 180 3,398
Arkansas Power & Light Co.:
7.80% 10 873
7.88% 9 783
Baltimore Gas & Electric Co.,
Sinking Fund, 6.75% 29 2,487
Boston Edison Co., 7.75% 100 2,100
Carolina Power & Light Co., 7.72% 30 2,741
Central Maine Power Co., 7.875% 16 1,347
Central Power & Light Co., 7.12% 16 1,283
Cinergy Corp., 7.44% 25 2,079
Cleveland Electric Illuminating
Co., A.R.P., Series L 65 4,355
Commonwealth Edison Co., 7.24% 52 3,992
Detroit Edison Co.:
7.36% 45 3,623
7.45% 31 2,676
7.68% 30 2,674
7.74% 100 2,175
7.75% 100 2,175
</TABLE>
See notes to investment portfolio.
3
<PAGE>
INVESTMENT PORTFOLIO -- (CONTINUED)
<TABLE>
<CAPTION>
PREFERRED STOCKS - CONT. SHARES VALUE
- ---------------------------------------------------------------
ELECTRIC SERVICES - CONT.
<S> <C> <C>
Duke Power Co., 7.04% 20 $ 1,680
Duquesne Light Co., $7.20 21 1,785
Florida Power & Light Co., 7.40%,
Series G 24 2,088
Florida Power & Light Co.:
7.40% 4 339
7.76% 17 1,558
Georgia Power Co.:
A.R.P. 110 2,558
7.80% 11 1,027
Gulf States Utilities Co.:
A.R.P., Series A 20 2,017
7.56% 18 1,494
8.52% 8 728
$8.80, Series A 18 1,761
Illinois Power Co.:
A.R.P., Series A 25 969
A.R.P., Series B 30 1,403
7.56% 30 1,275
7.75% 50 2,231
Jersey Central Power & Light Co.,
7.88% 15 1,395
Louisiana Power & Light Co.,
8.00%, Series 92 90 1,834
Montana Power Co., $6.88 30 2,385
Niagara Mohawk Power Corp.:
A.R.P., Series B 161 3,750
7.72%, Series I 26 2,057
Ohio Edison Co.:
7.24% 13 969
7.36% 21 1,659
7.75% 240 4,830
Ohio Power Co., 7.60% 30 2,580
PSI Energy, Inc.:
6.88% 36 2,844
7.44% 235 4,964
Peco Energy Co., 7.48% 30 2,580
Pennsylvania Power & Light Co., 6.75% 51 4,067
Pennsylvania Power Co., 7.75% 15 1,260
Portland General Electric Co., 7.95% 18 1,580
Public Service Electric & Gas Co.:
7.52% 32 2,888
7.70% 24 2,244
Southern California Edison Co.:
7.36% 125 $ 2,662
7.58% 45 3,821
Tampa Electric Co., 7.44%, Series F 11 973
Texas Utilities Co.:
7.22% 200 3,975
7.50% 480 9,720
7.98% 35 3,124
Toledo Edison Co., A.R.P., Series A 40 765
Union Electric Co., $7.44 18 1,629
Virginia Electric & Power Co., $7.45 19 1,654
----------
134,976
----------
GAS SERVICES - 1.8%
Enron Capital, LLC, 8.00% 400 8,650
Northern Indiana Public Service
Co., 7.44% 9 774
Pacific Enterprises, $4.50 4 194
Transco Energy Co.:
$3.50, Series E 37 1,499
$4.75, Series A 170 8,517
----------
19,634
----------
PIPELINES - 0.4%
Enserch Corp., A.R.P. 48 4,245
- ---------------------------------------------------------------
Total preferred stocks (cost $189,599) 162,250
- ---------------------------------------------------------------
Total investments - 99.4% (cost $1,282,129) (a) 1,109,636
- ---------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 0.6% 6,926
- ---------------------------------------------------------------
NET ASSETS - 100.0% $1,116,562
- ---------------------------------------------------------------
<FN>
Notes to investment portfolio:
(a) Cost for federal income tax purposes is
the same.
Acronym Name
------- ----
A.R.P. Adjustable Rate Preferred
</TABLE>
See notes to financial statements.
4
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
November 30, 1994
(in thousands except for per share amounts and footnote)
- ---------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments at value (cost $1,282,129)............................... $1,109,636
Receivable for:
Investments sold...................................... $9,116
Dividends............................................. 7,426
Fund shares sold...................................... 1,053
Other.................................................... 95 17,690
------ ----------
Total assets.......................................... 1,127,326
Liabilities
Payable for:
Distributions......................................... 4,830
Fund shares repurchased............................... 3,326
Investments purchased................................. 947
Accrued:
Management & bookkeeping fees......................... 634
Service fee........................................... 229
Distribution fee - Class B............................ 465
Transfer agent fee.................................... 186
Deferred Trustees fees................................ 24
Other................................................. 123
------
Total liabilities..................................... 10,764
----------
Net assets at value for 95,281
shares of beneficial interest outstanding......................... $1,116,562
==========
Net asset value & redemption price per share -
Class A ($373,058/31,835)......................................... $ 11.72
==========
Maximum offering price per share - Class A
($11.72/0.9525)................................................... $ 12.30*
==========
Net asset value & offering price per share - Class B
($743,504/63,446).................................................. $ 11.72
==========
Composition of net assets
Capital paid in................................................... $1,367,877
Undistributed net investment income............................... 1,754
Accumulated net realized loss..................................... (80,576)
Net unrealized depreciation....................................... (172,493)
----------
$1,116,562
==========
<FN>
* On sales of $50,000 or more the offering price is reduced.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
Year ended November 30, 1994
(in thousands)
- ------------------------------------------------------------------------------
<S> <C> <C>
Investment income
Dividends......................................................... $ 85,952
Interest.......................................................... 267
---------
86,219
Expenses
Management fee..................................... $ 8,204
Service fee........................................ 3,187
Distribution fee - Class B......................... 6,401
Transfer agent..................................... 3,134
Bookkeeping fee.................................... 450
Trustees fees...................................... 80
Custodian fee...................................... 83
Audit fee.......................................... 43
Legal fee.......................................... 13
Reports to shareholders............................ 28
Registration fees.................................. 437
Other.............................................. 100 22,160
-------- ---------
Net investment income.................................. 64,059
Net realized & unrealized loss
on portfolio positions
Net realized loss.................................. (38,551)
Net unrealized depreciation
during the period............................... (164,651)
---------
Net loss............................................... (203,202)
----------
Net decrease in net assets from operations..................... $(139,143)
=========
</TABLE>
See notes to financial statements.
5
<PAGE>
FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Year ended November 30
----------------------------
1994 1993
---------- ----------
<S> <C> <C>
Increase (decrease) in net assets
Operations
Net investment income.......................................... $ 64,059 $ 44,211
Net realized loss.............................................. (38,551) (6,391)
Net unrealized depreciation.................................... (164,651) (10,915)
---------- ----------
Net increase (decrease) from operations..................... (139,143) 26,905
Distributions
From net investment income - Class A........................... (23,148) (18,948)
From net investment income - Class B........................... (39,378) (24,381)
---------- ----------
(201,669) (16,424)
---------- ----------
Fund share transactions
Receipts for shares sold - Class A............................. 63,527 320,952
Value of distributions reinvested - Class A.................... 17,112 12,499
Cost of shares repurchased - Class A........................... (143,099) (64,616)
---------- ----------
(62,460) 268,835
---------- ----------
Receipts for shares sold - Class B............................. 143,384 875,842
Value of distributions reinvested - Class B.................... 31,354 16,962
Cost of shares repurchased - Class B........................... (267,909) (59,109)
---------- ----------
(93,171) 833,695
---------- ----------
Net increase (decrease) from Fund share transactions........ (155,631) 1,102,530
---------- ----------
Total increase (decrease) ......................... (357,300) 1,086,106
Net assets
Beginning of period............................................ 1,473,862 387,756
---------- ----------
End of period (including undistributed net investment
income of $1,754 and $216, respectively)...................... $1,116,562 $1,473,862
========== ==========
Number of Fund shares
Sold - Class A................................................. 5,014 22,859
Issued for distributions reinvested - Class A.................. 1,373 889
Repurchased - Class A.......................................... (11,531) (4,651)
---------- ----------
(5,144) 19,097
---------- ----------
Sold - Class B................................................. 11,245 62,345
Issued for distributions reinvested - Class B.................. 2,517 1,200
Repurchased - Class B.......................................... (21,694) (4,213)
---------- ----------
(7,932) 59,332
---------- ----------
Net increase (decrease) in shares outstanding............... (13,076) 78,429
Outstanding at
Beginning of period......................................... 108,357 29,928
---------- ----------
End of period............................................... 95,281 108,357
========== ==========
</TABLE>
See notes to financial statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES
Colonial Utilities 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 diversified, open-end, management investment company.
The Fund may issue an unlimited number of shares. The Fund offers Class A
shares sold with a front-end sales charge and Class B shares which 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. 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.
- --------------------------------------------------------------------------------
SECURITY VALUATION AND TRANSACTIONS
Equity securities are valued at the last sale price or, in the case of
unlisted or listed securities for which there were no sales during
the day, at current quoted bid prices.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are
valued at fair value under procedures approved by the Trustees.
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 distribution fee),
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 annualized distribution fee 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 income, no
federal income tax has been accrued.
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
The Fund declares and records distributions daily and pays monthly.
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.
- --------------------------------------------------------------------------------
OTHER
Corporate actions are recorded on the ex-date. Interest income is
recorded on the accrual basis.
The Fund's custodian takes possession through the federal book-entry
system of securities collateralizing repurchase agreements. Collateral is
marked-to-market daily to ensure that the market value of the underlying
assets remains sufficient to protect the Fund. The Fund may experience
costs and delays in liquidating the collateral if the issuer defaults or
enters bankruptcy.
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE
Colonial Management Associates,Inc. (the Adviser) is the investment
adviser of the Fund and furnishes accounting and other services and office
facilities for amonthly fee based on the Fund's average net assets as follows:
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Net Assets Annual Fee Rate
------------------ ---------------
<S> <C>
First $1 billion..................... 0.65%
Over $1 billion...................... 0.60%
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
BOOKKEEPING FEE
The Adviser provides bookkeeping and pricing services for $27,000 per
year plus a percentage of the Fund's average net assets as follows:
<CAPTION>
Average Net Assets Annual Fee Rate
------------------ ---------------
<S> <C>
First $50 million................... No charge
Next $950 million................... 0.035%
Next $1 billion..................... 0.025%
Next $1 billion..................... 0.015%
Over $3 billion..................... 0.001%
</TABLE>
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
The Adviser, through its Colonial Investment Services (the
Distributor) division, is the Fund's principal underwriter. During the year
ended November 30, 1994, the Distributor retained net underwriting discounts of
$210,380 on sales of the Fund's Class A shares and received contingent
deferred sales charges (CDSC) of $4,072,646 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the
Distributor a service fee equal to 0.25% annually of the Fund's net assets as
of the 20th of each month. The plan also requires the payment of a distribution
fee to the Distributor equal to 0.75% of the average net assets attributable to
Class B 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.
- --------------------------------------------------------------------------------
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. The compensation deferred earns interest
quarterly based on the 90-day U.S. Treasury bill rate. Obligations of the
plan will be paid solely out of the Fund's assets.
- --------------------------------------------------------------------------------
Note 3. Portfolio information
During the year ended November 30, 1994, purchases and sales of
investments, other than short-term obligations, were $206,491,200 and
$336,781,118, respectively.
<TABLE>
Unrealized appreciation (depreciation) at November 30, 1994, based on
cost of investments for both financial statement and federal income tax
purposes was:
<S> <C>
Gross unrealized appreciation............................. $ 13,100,442
Gross unrealized depreciation............................. (185,593,172)
-------------
Net unrealized depreciation............................ $(172,492,730)
=============
</TABLE>
- --------------------------------------------------------------------------------
CAPITAL LOSS CARRYFORWARDS
At November 30, 1994, capital loss carryforwards available (to the
extent provided in regulations) to offset future realized gains were
approximately as follows:
<TABLE>
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARDS
------------ -------------
<S> <C>
1996................ $ 3,427,000
1997................ 32,911,000
1998................ 9,759,000
1999................ 3,592,000
2000................ 6,425,000
2001................ 6,391,000
2002................ 38,551,000
------------
$101,056,000
============
</TABLE>
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
The loss carryforwards expiring in 1996, and $11,630,000 and $5,427,000
of the loss carryforwards expiring in 1997 and 1998, respectively, were acquired
in the merger with Colonial Corporate Cash Trust II.
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 concentrates its investments in utility securities and certain
other industries, subjecting it to greater risk than a fund that is more
diversified.
- --------------------------------------------------------------------------------
NOTE 4. CONTINGENT LIABILITY
The Adviser insures itself and all funds that it advises under a policy
with ICI Mutual Insurance Company. The annual premium is allocated among the
funds and the adviser. Additionally, the Adviser and the funds have committed up
to 300% of the annual premium, one-third of which was provided in cash, with the
Fund's pro-rata portion recorded as an asset. The remainder is secured with an
irrevocable letter of credit.
9
<PAGE>
<TABLE>
Financial Highlights
Selected data for a share of each class outstanding throughout each period are as follows:
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year ended November 30
----------------------------------------------------------------------------------
1994 1993 1992(a) 1991(a) 1990(a)
----------------- ----------------- --------------------- ------- -------
Class A Class B Class A Class B Class A Class B(b) Class A Class A
------- ------- ------- ------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning
of period......................... $13.600 $13.600 $12.960 $12.960 $11.440 $12.310 $10.090 $11.600
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from investment
operations:
Net investment income............. 0.681 0.587 0.713 0.612 0.741 0.296 0.917 0.930
Net realized and unrealized
gain (loss) on investments... (1.896) (1.896) 0.616 0.616 1.517 0.691 1.377 (1.472)
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations................... (1.215) (1.309) 1.329 1.228 2.258 0.987 2.294 (0.542)
------- ------- ------- ------- ------- ------- ------- -------
Less distributions declared
to shareholders:
From net investment income........ (0.665) (0.571) (0.689) (0.588) (0.727) (0.337) (0.941) (0.968)
From capital paid in.............. -- -- -- -- (0.011)(c) -- (0.003)(c) --
------- ------- ------- ------- ------- ------- ------- -------
Total distributions
declared to shareholders..... (0.665) (0.571) (0.689) (0.588) (0.738) (0.337) (0.944) (0.968)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value - End of period........ $11.720 $11.720 $13.600 $13.600 $12.960 $12.960 $11.440 $10.090
======= ======= ======= ======= ======= ======= ======= =======
Total return (d)....................... (9.04)% (9.73)% 10.20% 9.42% 20.21% 6.06%(e) 23.56% (4.74)%
======= ======= ======= ======= ======= ======= ======= =======
Ratios to average net assets:
Expenses.......................... 1.23% 1.98% 1.19% 1.94% 1.16% 1.91%(f) 1.11% 1.17%
Net investment income............. 5.49% 4.74% 4.92% 4.17% 5.52% 4.77%(f) 8.50% 8.69%
Portfolio turnover..................... 16% 16% 6% 6% 35% 35% 1% 2%
Net assets at end of period
(in millions)..................... $ 373 $ 744 $ 503 $ 971 $ 232 $ 156 $ 135 $ 162
<FN>
(a) All per share amounts have been restated to reflect the 4 for 1 stock split effective February 10, 1992.
(b) Class B shares were initially offered on May 5, 1992. Per share amounts reflect activity from that date.
(c) The return of capital is for book purposes only and is a result of book-tax differences arising from the merger of
Colonial Utilities Fund (formerly Colonial Corporate Cash Trust I ) and Colonial Corporate Cash Trust II in a prior year.
The 1992 amount represents a reclassification for book purposes only relating to that merger.
(d) Total return at net asset value assuming all distributions reinvested and no initial sales charge or CDSC.
(e) Not annualized.
(f) Annualized.
</TABLE>
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
The Fund paid distributions of $0.665 per Class A share and $0.571 per Class B
shares, of which 100% qualifies for the 70% corporate dividends - received
deduction.
10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE TRUSTEES OF COLONIAL TRUST IV AND THE SHAREHOLDERS OF COLONIAL
UTILITIES 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 Utilities Fund (a series
of Colonial Trust IV) at November 30, 1994, 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 November 30, 1994 by correspondence with
the custodian and brokers, and the application of alternative auditing
procedures where confirmations from brokers were not received, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 11, 1995
11
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A
Summary of expenses
The Fund's financial history
Included in Part B
Colonial Tax-Exempt Fund (CTEF)
-------------------------------
Investment portfolio, November 30, 1994
Statement of assets and liabilities,
November 30, 1994
Statement of operations, Year ended November 30, 1994
Statement of changes in net assets, Years ended
November 30, 1994 and 1993
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial Tax-Exempt Insured Fund (CTEIF)
-----------------------------------------
Investment portfolio, November 30, 1994
Statement of assets and liabilities, November 30, 1994
Statement of operations, Year ended November 30, 1994
Statement of changes in net assets, Years ended
November 30, 1994 and 1993
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial Tax-Exempt Money Market Fund (CTEMMF)
----------------------------------------------
Investment portfolio, November 30, 1994
Statement of assets and liabilities, November 30, 1994
Statement of operations, Year ended November 30, 1994
Statement of changes in net assets, Years ended
November 30, 1994 and 1993
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial Utilities Fund (CUF)
-----------------------------
Investment portfolio, November 30, 1994
Statement of assets and liabilities, November 30, 1994
Statement of operations, Year ended November 30, 1994
Statement of changes in net assets, Years ended
November 30, 1994 and 1993
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial High Yield Municipal Fund (CHYMF)
------------------------------------------
Investment portfolio, November 30, 1994
Statement of assets and liabilities, November 30, 1994
Statement of operations, Year ended November 30, 1994 and 1993
Statement of changes in net assets, Year ended
November 30, 1994 and 1993
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial Intermediate Tax-Exempt Fund (CITEF)
---------------------------------------------
Investment portfolio, November 30, 1994
Statement of assets and liabilities, November 30, 1994
Statement of operations, Year ended November 30, 1994
Statement of changes in net assets, Year ended
November 30, 1994 and Period ended November 30,1993
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial Short-Term Tax-Exempt Fund (CSTTEF)
--------------------------------------------
Investment portfolio, November 30, 1994
Statement of assets and liabilities, November 30, 1994
Statement of operations, Year ended November 30, 1994
Statement of changes in net assets, Year ended
November 30, 1994 and Period ended November 30,1993
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
(b) Exhibits:
1. Amendment No. 4 to the Agreement and
Declaration of Trust (f)
2. Amended By-Laws (10/9/92) (i)
3. Not Applicable
4. Form of Specimen of Share Certificate (f)
5.(a)(1) Management Agreement (CTEF, CTEIF) (h)
(a)(2) Form of Proposed Management Agreement
between CUF and Colonial Management
Associates, Inc. (f)
(a)(3) Form of Proposed Management Agreement
between CTEMMF and Colonial Management
Associates, Inc. (f)
(a)(4) Form of Management Agreement between CITEF
and Colonial Management Associates, Inc.(i)
(a)(5) Form of Management Agreement between CSTTEF
and Colonial Management Associates, Inc. (i)
(a)(6) Management Agreement filed as Exhibit
5(a)(1), in Part C, Item 24(b) of Post-
Effective Amendment No. 32 to the
Registration Statement of Colonial Trust IV
(File Nos. 2-62492 and 811-2865) and is
hereby incorporated by reference and made a
part of this Registration Statement (CHYMF)
(b) Form of Pricing and Bookkeeping Agreement (h)
6. (a) Distributor's Contract with Colonial
Investment Services - filed as Exhibit 6(a)
in Part C, Item 24(b) of Post-Effective
Amendment No. 5 to the Registration
Statement on Form N-1A of Colonial Trust VI
(File Nos. 33-45117 & 811-6529) and is
hereby incorporated by reference and made a
part of this Registration Statement
(b) Form of Selling Agreement - filed as
Exhibit 6(b) in Part C, Item 24(b) of Post-
Effective Amendment No. 87 to the
Registration Statement on Form N-1A of
Colonial Trust III (File Nos. 2-15184 & 811-
881) and is hereby incorporated by
reference and made a part of this
Registration Statement
(c) Form of Bank and Bank Affiliated Selling
Agreement - filed as Exhibit 6(c) in Part
C, Item 24(b) of Post-Effective Amendment
No. 5 to the Registration Statement on Form
N-1A of Colonial Trust VI (File Nos.
33-45117 & 811-6529) and is hereby
incorporated by reference and made a part
of this Registration Statement
(d) Mutual Fund Agreement between NCNB
Securities, Inc. and Colonial Investment
Services, Inc. - filed as Exhibit 6(f) in
Part C, Item 24(b) of Post-Effective
Amendment No. 3 to the Registration
Statement on Form N-1A of Colonial
Massachusetts Tax-Exempt Trust (File Nos.
33-12109 & 811-5030) and is hereby
incorporated by reference and made a part
of this Registration Statement (e)
(e) Form of Asset Retention Agreement - filed
as Exhibit 6(e) in Part C, Item 24(b) of
Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A of
Colonial Trust VI (File Nos. 33-45117 & 811-
6529) and is hereby incorporated by
reference and made a part of this
Registration Statement
7. Not Applicable
8. (a) Forms of Safekeeping Agreement, Procedural
Agreement and Customer Agreement - filed as
Exhibit 8(iii) in Part C, Item 24(b) of Post-
Effective Amendment No. 28 to the
Registration Statement on Form N-1A of
Colonial High Yield Securities Trust (File
Nos. 2-41251 & 811-2214) and is hereby
incorporated by reference and made a part of
this Registration Statement (c)
(b) Sub-Custodian Agreement between State Street
Bank and Trust Company and The First National
Bank of Boston - filed as Exhibit 8(b) in
Part C, Item 24(b) of Post-Effective
Amendment No. 1 to the Registration Statement
on Form N-1A of Colonial Massachusetts Tax-
Exempt Trust (File Nos. 33-12109 & 811-5030)
and is hereby incorporated by reference and
made a part of this Registration Statement
(CTEF, CTEIF, CITEF, CSTTEF and CTEMMF) (d)
(c) Sub-Custodian Agreement between State Street
Bank and Trust Company and Irving Trust
Company - filed as Exhibit 8(c) in Part C,
Item 24(b) of Post-Effective Amendment No. 2
to the Registration Statement of Colonial
California Tax-Exempt Trust (File Nos. 33-
2640 & 811-4557) and is hereby incorporated
by reference and made a part of this
Registration Statement (CTEF, CTEIF and
CTEMMF) (d)
(e) Proposed form of Custodian Agreement with
United Missouri Bank (CTEF, CTEMMF, CTEIF,
CHYMF, CSTTEF, CITEF) (j)
(k) Proposed form of Custodian Agreement with
Boston Safe Deposit and Trust Company filed
as Exhibit 8 in Part C, Item 24(b) of Post-
Effective Amendment No. 19 to the
Registration Statement on Form N-1A of
Colonial Trust II (File Nos. 2-66976 and 811-
3009) and is hereby incorporated by reference
and made a part of this Registration Statement (CUF)
9. (a) Amended and Restated Shareholders' Servicing
and Transfer Agent Agreement as amended -
filed as Exhibit 9(a) in Part C, Item 24(b)
of Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A of
Colonial Trust VI (File Nos. 33-45117 & 811-
6529) and is hereby incorpoarated by
reference and made a part of this
Registration Statement
(b) Form of Agreement and Plan of Reorganization
(CTEMMF and CUF) (g)
(c) Form of Administration Agreement (CTEMMF)
10. Opinion and Consent of Counsel (CTEF) (a)
(a) Opinion and Consent of Messrs. Ropes & Gray
filed as Exhibit 10 in Part C, Item 24(b) of
Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A of CUF
(File Nos. 2-71242 & 811-3148) and is hereby
incorporated by reference and made a part of
this Registration Statement (CUF)
(b) Opinion and Consent of Counsel filed as
Exhibit 10. in Part C, Item 24(b) of Pre-
Effective Amendment No. 1 to the Registration
Statement on Form N-1A of CTEMMF (File Nos.
33-13922 & 811-5138) and is hereby
incorporated by reference and made a part of
this Registration Statement (CTEMMF)
11.(a) Consent of Independent Accountants
(b) Commodity Futures Trading Commission No-Action Letter
dated 11/1/84 (b)
12. Not Applicable
13. Not Applicable
(a) Investment letter of Colonial Management
Associates, Inc. filed as Exhibit 13. in Part
C, Item 24(b) of Pre-Effective Amendment No.
1 to the Registration Statement on Form N-1A
of CTEMMF (File Nos. 33-13922 & 811-5138) and
is hereby incorporated by reference and made
a part of this Registration Statement
(CTEMMF)
14.(a) Form of Colonial Group of Mutual Funds Money
Purchase Pension and Profit Sharing Plan
Document and Trust Agreement - filed as
Exhibit 14(a) in Part C, Item 24(b) of Post-
Effective Amendment No. 5 to the Registration
Statement on Form N-1A of Colonial Trust VI
(File Nos. 33-45117 & 811-6529) and is hereby
incorporated by reference and made a part of
this Registration Statement
(b) Form of Colonial Group of Mutual Funds Money
Purchase Pension and Profit Sharing
Establishment Book - filed as Exhibit 14(b)
in Part C, Item 24(b) of Post-Effective
Amendment No. 5 to the Registration Statement
on Form N-1A of Colonial Trust VI (File Nos.
33-45117 & 811-6529) and is hereby
incorporated by reference and made a part of
this Registration Statement
(c) Form of Colonial Group Funds Individual
Retirement Account and Application - filed as
Exhibit 14(c) in Part C, Item 24(b) of Post-
Effective Amendment No. 5 to the Registration
Statement on Form N-1A of Colonial Trust VI
(File Nos. 33-45117 & 811-6529) and is hereby
incorporated by reference and made a part of
this Registration Statement
(d) Form of Colonial Mutual Funds Simplified
Employee Plan and Salary Reduction Simplified
Employee Plan - filed as Exhibit 14(d) in
Part C, Item 24(b) of Post-Effective
Amendment No. 5 to the Registration Statement
on Form N-1A of Colonial Trust VI (File Nos.
33-45117 & 811-6529) and is hereby
incorporated by reference and made a part of
this Registration Statement
(e) Form of Colonial of Mutual Funds 401(k) Plan
Document and Trust Agreement - filed as
Exhibit 14(e) in Part C, Item 24(b) of Post-
Effective Amendment No. 5 to the Registration
Statement on Form N-1A of Colonial Trust VI
(File Nos. 33-45117 & 811-6529) and is hereby
incorporated by reference and made a part of
this Registration Statement
(f) Form of Colonial Mutual Funds 401(k) Plan
Establishment Booklet - filed as Exhibit
14(f) in Part C, Item 24(b) of Post-Effective
Amendment No. 5 to the Registration Statement
on Form N-1A of Colonial Trust VI (File Nos.
33-45117 & 811-6529) and is hereby
incorporated by reference and made a part of
this Registration Statement
(g) Form of Colonial Mutual Funds 401(k) Employee
Reports Booklet - filed as Exhibit 14(g) in
Part C, Item 24(b) of Post-Effective
Amendment No. 5 to the Registration Statement
on Form N-1A of Colonial Trust VI (File Nos.
33-45117 & 811-6529) and is hereby
incorporated by reference and made a part of
this Registration Statement
15. Distribution Plan adopted pursuant to Section
12b-1 of the Investment Company Act of 1940,
incorporated by reference to the
Distributor's Contract
16.(a)(1) Calculation of Performance Information (CTEF)
(a)(2) Calculation of Yield (CTEF)
(b)(1) Calculation of Performance Information (CTEIF)
(b)(2) Calculation of Yield (CTEIF)
(c)(1) Calculation of Performance Information (CUF)
(c)(2) Calculation of Yield (CUF)
(d)(1) Calculation of Performance Information (CTEMMF)
(d)(2) Calculation of Yield (CTEMMF)
(e)(1) Calculation of Performance Information (CHYMF)
(e)(2) Calculation of Yield (CHYMF)
(f)(1) Calculation of Performance (CITEF)
(f)(2) Calculation of Yield (CITEF)
(g)(1) Calculation of Performance (CSTTEF)
(g)(2) Calculation of Yield (CSTTEF)
17.(a) Financial Data Schedule (Class A) (CTEF)
(b) Financial Data Schedule (Class B) (CTEF)
(c) Financial Data Schedule (Class A)(CTEIF)
(d) Financial Data Schedule (Class B)(CTEIF)
(e) Financial Data Schedule (Class A)(CUF)
(f) Financial Data Schedule (Class B)(CUF)
(g) Financial Data Schedule (Class A)(CTEMMF)
(h) Financial Data Schedule (Class B)(CTEMMF)
(i) Financial Data Schedule (Class A)(CHYMF)
(j) Financial Data Schedule (Class B)(CHYMF)
(k) Financial Data Schedule (Class A)(CITEF)
(l) Financial Data Schedule (Class B)(CITEF)
(m) Financial Data Schedule (Class A)(CSTTEF)
18. Power of Attorney for: Tom Bleasdale, Lora
S. Collins, William D. Ireland, Jr.,
William E. Mayer, John A. McNeice, Jr.,
James L. Moody, Jr., John J. Neuhauser,
George L. Shinn, Robert L. Sullivan and
Sinclair Weeks, Jr.(k)
_________________________________
(a) Incorporated by reference to Post-Effective
Amendment No. 2 filed on or about 10/20/78.
(b) Incorporated by reference to Post-Effective
Amendment No. 12 filed on or about 11/30/84.
(c) Incorporated by reference to Post-Effective
Amendment No. 17 filed on or about 1/29/87.
(d) Incorporated by reference to Post-Effective
Amendment No. 18 filed on or about 1/29/88.
(e) Incorporated by reference to Post-Effective
Amendment No. 20 filed on or about 11/13/89.
(f) Incorporated by reference to Post-Effective
Amendment No. 30 filed on or about 12/17/91.
(g) Incorporated by reference to Post-Effective
Amendment No. 31 filed on or about 2/13/92.
(h) Incorporated by reference to Post-Effective
Amendment No. 32 filed on or about 3/16/92.
(i) Incorporated by reference to Post-Effective
Amendment No. 33 filed on or about 10/20/92.
(j) Incorporated by reference to Post-Effective
Amendment No. 36 filed on or about 3/16/93.
(k) Incorporated by reference to Post-Effective
Amendment No. 38 filed on or about 3/11/94.
Item 25. Persons Controlled by or Under Common Control with Registrant
None
Item 26. Number of Holders of Securities
(1) (2)
Title of Class Number of Record Holders as of 2/28/95
Shares of beneficial interest 80,829 Class A record holders (CTEF)
14,185 Class B record holders
Shares of beneficial interest 5,336 Class A record holders (CTEIF)
1,246 Class B record holders
Shares of beneficial interest 26,221 Class A record holders (CUF)
53,442 Class B record holders
Shares of beneficial interest 883 Class A record holders (CTEMMF)
70 Class B record holders
Shares of beneficial interest 216 Class A record holders (CHYMF)
3,772 Class B record holders
Shares of beneficial interest 136 Class A record holders (CSTTEF)
Shares of beneficial interest 401 Class A record holders (CITEF)
415 Class B record holders
Item 27. Indemnification
See Article VIII of Amendment No. 4 to the Agreement and
Declaration of Trust filed as Exhibit 1 hereto.
Item 28. Business and Other Connections of Investment Adviser
The following sets forth business and other connections of each
director and officer of Colonial Management Associates, Inc.:
Registrant's investment adviser, Colonial Management Associates, Inc., is
registered as an investment adviser under the Investment Advisers Act of 1940.
Colonial Management Associates, Inc. and its affiliate, Colonial Advisory
Services, Inc., as of the end of its fiscal year December 31, 1994, had one
institutional, corporate or other accounts under management or supervision, the
market value of which was approximately $265.3 million, and Colonial Management
Associates, Inc. was the investment adviser to the 36 mutual funds in the
Colonial Group of Funds, the market value of which investment companies was
approximately $13,327.8 million. Colonial Investment Services, Inc. a
subsidiary of Colonial Management Associates, Inc., is the principal
underwriter and the national distributor of all of the funds in the Colonial
Group of Funds,including the Registrant.
The following sets forth the business and other connections of each
director and officer of Colonial Management Associates, Inc.:
(1) (2) (3) (4)
Name and principal
business Affiliation
addresses* with Period is through 3/1/95.
of officers and invest- Other business, profession,
directors of ment vocation or employment
investment adviser adviser connection Affiliation
- ------------------ -------- --------------------------- -----------
Archer, Joseph A. V.P.
Augustine, Jeffrey V.P.
B.
Berliant, Allan V.P.
Bertelson, Lisa V.P.
Bissonette, V.P.
Michael
Boatman, Bonny E. Dir.;
Sr.V.P.;
IPC Mbr.
Carnabucci, V.P.
Dominick
Carroll, Sheila A. Sr.V.P.;
Dir.
Citrone, Frank V.P.
Cogger, Harold W. Dir.;Pres.; The Colonial Group, Inc. Dir.; Pres.
Exe. Man. Colonial Trusts I through VI V.P.
Cmte. Colonial High Income Municipal V.P.
Mbr.; Trust
IPC Mbr Colonial InterMarket Income Trust V.P.
I
Exe. Colonial Intermediate High Income V.P.
Cmte. Fund
Colonial Investment Grade
Municipal
Trust V.P.
Colonial Municipal Income Trust V.P.
Collins, Anne V.P.
Conlin, Nancy V.P.; Colonial Investors Service Center, Asst. Clerk
Asst. Inc.
Sec.; The Colonial Group, Inc. Asst. Clerk
Asst.
Clerk and Colonial Advisory Services, Inc. Asst. Clerk
Counsel Colonial Investment Services, Inc. Asst. Clerk
Cordes, Susan V.P.
Daniszewski, V.P.; Colonial Investment Services, Inc. V.P.
Joseph J. Asst.
Treasurer
DiSilva, Linda V.P.
Emilson, C. Dir.; Colonial Investors Service Center, Dir.; Ex.
Herbert Vice Inc. V.P.
Chm.; The Colonial Group, Inc. Dir.; Vice
Exe.
Cmte. Chrmn.;
Mbr.;
Exe. Man. Colonial Advisory Services, Inc. Dir.
Cmte.
Mbr.;
Exe.
Cmte.
Ericson, Carl C. V.P. Colonial Intermediate High Income V.P.
Fund
Evans, C. Frazier Dir.; Colonial Investment Services, Inc. Sr. V.P.
Sr.V.P.
Feingold, Andrea V.P. Colonial Intermediate High Income V.P.
Fund
Finnemore, Leslie V.P.
W.
Gerokoulis, V.P. Colonial Investment Services, Inc. Sr. V.P.
Stephen A.
Hartford, Brian V.P.
Haynie, James P. V.P. Colonial Advisory Services, Inc. V.P.
Hernandez, Manuel Sr.V.P.; Colonial Investors Service Center, Dir.; Pres.
R. Inc.
Dir.
Koonce, Michael H. V.P.; Colonial Trusts I through VI Asst. Sec.
Asst.
Sec.; Colonial High Income Municipal Asst. Sec.
Asst. Trust
Clerk & Colonial InterMarket Income Trust Asst. Sec.
I
Counsel Colonial Intermediate High Income Asst. Sec.
Fund
Colonial Investment Grade
Municipal
Trust Asst. Sec.
Colonial Municipal Income Trust Asst. Sec.
Colonial Investment Services, Inc. Asst. Clerk
Colonial Investors Service Center, Asst. Clerk
Inc.
The Colonial Group, Inc. Asst. Clerk
Colonial Advisory Services, Inc. Asst. Clerk
Lennon, John E. V.P. Colonial Advisory Services, Inc. V.P.
Lenzi, Sharon V.P.
Lilienfeld, V.P.
Jonathan
Loring, William C. V.P.
Lydecker, Peter L. V.P.; Colonial Trusts I through VI Controller
Asst.
Treasurer Colonial High Income Municipal Controller
Trust
Colonial InterMarket Income Trust Controller
I
Colonial Intermediate High Income Controller
Fund
Colonial Investment Grade
Municipal
Trust Controller
Colonial Municipal Income Trust Controller
MacKinnon, Donald Dir.;
S.
Sr.V.P.
McCue, Gerard A. V.P. Colonial Advisory Services, Inc. V.P.
McGregor, Jeffrey Dir.; Colonial Investment Services, Inc. Pres.; CEO;
L.
Sr.V.P. Dir.
McNeice, Jr., John Chrmn. & Boston College Trustee
A.
CEO; Boston College High School Trustee
Dir.;
Exe. Carney Hospital Foundation Mbr. of the
Cmte.
Chm.; Carney Fund
Exe.
Man. Colonial Advisory Services, Inc. Dir.; Chm.;
Cmte. CEO
Mbr. & Pres.
Colonial High Income Municipal Trustee;
Trust Pres.
Colonial InterMarket Income Trust Trustee;
I Pres.
Colonial Intermediate High Income Trustee;
Fund Pres.
Colonial Investment Grade
Municipal Trust Trustee;
Pres.
Colonial Municipal Income Trust Trustee;
Pres.
The Colonial Group, Inc. Trustee;
Pres.
Colonial Trusts I through VI Trustee;
Pres.
Colonial Investors Service Center, Trustee;
Inc. Pres.
Nativity Preparatory School Chm., Bd.
of Trustees
Northeastern University Corp. Bd.
Mbr.
Wentworth Institute of Technology Corp. Bd.
Mbr.
Colonial Investment Services, Inc. Dir.; Chm.
of
the Bd.
Board of Visitors - Peter Drucker
Graduate Center Board Member
St. John's Seminary Board Member
Third Century Foundation Trustee;
Pres.
Peter F. Drucker Foundation Dir.
United Way of Mass Bay Board Member
American Ireland Fund Board Member
Catholic Charities -
Archdiocese of Boston Board Member
O'Neill, Charles Sr.V.P.; Colonial Investment Services, Inc. Exec. V.P.
A.
Dir.
Palmer, Elizabeth V.P.
Peters, Helen F. Dir.;
Sr.V.P.;
IPC Mbr.
Rie, Daniel Sr.V.P.; Colonial Advisory Services, Inc. Sr. V.P.
IPC Mbr.;
Dir.
Salloway, Jane M. Cntrllr. The Colonial Group, Inc. Cntrllr. &
and Chief Chief Acct.
Acct. Offr.; Asst.
Offr.; Treasurer
V.P.
Scoon, Davey S. Dir.; Colonial Advisory Services, Inc. Treasurer
Exe.V.P.; Colonial High Income Municipal V.P.
Trust
Exe. Man. Colonial InterMarket Income Trust V.P.
I
Cmte. Colonial Intermediate High Income V.P.
Mbr. Fund
Colonial Investment Grade
Municipal
Trust V.P.
Colonial Municipal Income Trust V.P.
Colonial Trusts I through VI V.P.
Colonial Investors Service Center, Treasurer
Inc.
The Colonial Group, Inc. V.P.-Fin. &
Admn.
Shore, Janet V.P. and Colonial High Income Municipal Asst. Sec.
Trust
Compliance Colonial InterMarket Income Trust Asst. Sec.
I
Offr.; Colonial Intermediate High Income Asst. Sec.
Fund
IPC Mbr. Colonial Investment Grade
Municipal
Trust Asst. Sec.
Colonial Municipal Income Trust Asst. Sec.
Colonial Trusts I through VI Asst. Sec.
Colonial Investment Services, Inc. Asst. Clerk
Silver, Richard A. Dir.; Colonial Advisory Services, Inc. Controller
Sr.V.P.; Colonial High Income Municipal Treasurer &
Trust CFO
Treasurer Colonial InterMarket Income Trust Treasurer &
& I CFO
CFO Colonial Intermediate High Income Treasurer &
Fund CFO
Colonial Investment Grade
Municipal
Trust Treasurer &
CFO
Colonial Municipal Income Trust Treasurer &
CFO
Colonial Trusts I through VI Treasurer &
CFO
Colonial Investors Service Center, Asst.
Inc. Treasurer
The Colonial Group, Inc. Treasurer &
CFO
Colonial Investment Services, Inc. Treasurer &
CFO
Stern, Arthur O. Exe.V.P.; Colonial Advisory Services, Inc. Clerk
Dir.; Colonial High Income Municipal Secretary
Trust
Sec.; Colonial InterMarket Income Trust Secretary
I
Clrk.& Colonial Intermediate High Income Secretary
Fund
Gnrl. Colonial Investment Grade
Municipal
Counsel; Trust Secretary
Exe. Man. Colonial Municipal Income Trust Secretary
Cmt. Colonial Trusts I through VI Secretary
Mbr.;
IPC Mbr. Colonial Investors Service Center, Clerk
Inc.
The Colonial Group, Inc. Clerk;
V.P.Lgl.
Colonial Investment Services, Inc. Clrk;
Counsel
Yacovoni, Priscilla V.P.
- --------------------
* The Principal address of all of the officers and
directors of the investment adviser is One Financial
Center, Boston, MA 02111.
Item 29. Principal Underwriter
(a) Colonial Investment Services, Inc. a subsidiary of Colonial
Management Associates, Inc., Registrant's principal underwriter
also acts in the same capacity to Colonial Trust I, Colonial
Trust II, Colonial Trust IV, Colonial Trust V and Colonial
Trust VI:
sponsor for Colony Growth Plans (public offering of which were
discontinued June 14, 1971).
(b) The table below lists each director or officer of the principal
underwriter named in the answer to Item 21.
(1) (2) (3)
Name and Principal Position and Offices Positions and
Business Address* with Principal Offices with
Underwriter Registrant
- ----------------- -------------------- --------------
Ballou, Rich Regional V.P. None
Balzano, Christine V.P. None
R.
Buckley, Anne P. Compliance Officer None
Chrzanowski, Regional V.P. None
Daniel
Clapp, Elizabeth V.P. None
A.
Clark, Cynthia V.P. None
Daniszewski, V.P. None
Joseph J.
Davey, Cynthia Sr. V.P. None
Delaney, Noreen Regional V.P. None
Eckelman, Bryan Sr. V.P. None
Eldridge, Kenneth Sr. V.P. None
Emerson, Kim P. Regional V.P. None
Erickson, Cynthia V.P. None
G.
Evans, C. Frazier V.P. V.P.
Feldman, David Regional V.P. None
Flaherty, Michael Regional V.P. None
Gerokoulis, Sr. V.P. None
Stephen A.
Hanselman, J. Regional V.P. None
Michael
Hayes, Mary V.P. None
Elizabeth
Hodgkins, Joseph Regional V.P. None
Howard, Craig Sr. V.P. None
Judge, Dana V.P. None
Karagiannis, Sr. V.P. None
Marilyn
Kelley, Terry M. Regional V.P. None
Kelson, David W. Sr. V.P. None
Kilkenny Ann R. Sr. V.P. None
Kirby, Christopher V.P., Fin. Op. None
Principal
Lloyd, Judith H. Sr. V.P. None
Mahoney, D. Scott Sr. V.P. None
McCabe, Joanne Regional V.P. None
Mc Gregor, Jeffrey Director, CEO, None
L. President
McNeice, John A. Director, Chairman Trustee,
Jr. President
Meyer, Wayne Regional V.P. None
Murphy, Robert F. Sr. V.P. None
Norwood, Steve Regional V.P. None
O'Neill, Charles Exec. V.P. None
A.
Penitsch, Marilyn Regional V.P. None
L.
Potter, Cheryl Regional V.P. None
Reed, Christopher Regional V.P. None
B.
Ross, Gary J. Regional V.P. None
Rubin, James Regional V.P. None
Scott, Michael W. Sr. V.P. None
Silver, Richard A. Director, Treasurer, Treasurer, CFO
CFO
Sorrells, Sr. V.P. None
Elizabeth
Scoon, Davey S. COO V.P.
Stern, Arthur O. Clerk and Counsel Secretary
VanEtten, Keith H. V.P. None
Villanova, Paul Regional V.P. None
* The address for each individual is One Financial Center,
Boston, MA 02111.
Item 30. Location of Accounts and Records
Registrant's accounts and records required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are in the physical possession of the following:
Registrant:
Rule 31a-1(b),(4)
Rule 31a-2(a),(1)
Colonial Management Associates, Inc.
One Financial Center, Boston, Massachusetts 02111
Rule 31a-1(b), (1), (2), (3), (5), (6), (7), (8),
(9), (10), (11), (12)
Rule 31a-1(d),(f)
Rule 31a-2(a),(1),(2),(c),(e)
Colonial Investment Services, Inc.
One Financial Center, Boston, Massachusetts 02111
Rule 31a-1(d)
Rule 31a-2(c)
United Missouri Bank, n.a.
928 Grand Avenue, Kansas City, Missouri 64106
(CTEF, CTEIF, CTEMMF, CITEF, CSTTEF)
Rule 31a-1(b),(2),(3)
Rule 31a-2(a),(2)
Boston Safe Deposit and Trust Company
One Boston Place, Boston, Massachusetts 02108 (CUF)
Rule 31a-1(b),(2),(3)
Rule 31a-2(a),(2)
Colonial Investors Service Center, Inc.
P.O. Box 1722, Boston, Massachusetts 02105-1722
Rule 31a-1(b),(2)
Rule 31a-2(a),(2)
Item 31. Management Services
See Item 5(c), Part A and Item 16(d), Part B.
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a post-
effective amendment using financial statements
which need not be certified, within four to six
months from the effective date of Registrant's
Registration Statement under the Securities Act
of 1933.
(b) The Registrant hereby undertakes to promptly
call a meeting of shareholders for the purpose
of voting upon the question of removal of any
trustee or trustees when requested in writing
to do so by the record holders of not less than
10 per cent of the Registrant's outstanding
shares and to assist its shareholders in the
communicating with other shareholders in
accordance with the requirements of Section
16(c) of the Investment Company Act of 1940.
(c) [deleted]
(d) [deleted]
(e) [deleted]
************
NOTICE
A copy of the Agreement and Declaration of Trust, as amended,
of Colonial Trust IV (Trust) is on file with the Secretary of
State of the Commonwealth of Massachusetts and notice is hereby
given that these Registration Statements has been executed on
behalf of the Trust by an officer of the Trust as an officer and
by its Trustees as trustees and not individually and the
obligations of or arising out of these Registration Statements
are not binding upon any of the Trustees, officers or
shareholders individually but are binding only upon the assets
and property of the Trust.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant, Colonial
Trust IV, certifies that it meets all of the requirements for
effectiveness of the Registration Statement pursuant to Rule
485(b) and has duly caused this Post-Effective Amendment No. 40
to its Registration Statement under the Securities Act of 1933
and Amendment No. 38 to its Registration Statement under the
Investment Company Act of 1940, to be signed in this City of
Boston and the Commonwealth of Massachusetts on this 20th of
March, 1995.
COLONIAL TRUST IV
JOHN A. MCNEICE, JR.
------------------------
By: /s/ John A. McNeice, Jr.
------------------------
President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment has been signed below by the
following persons in their capacities and on the date indicated.
SIGNATURES TITLE DATE
/s/ JOHN A. MCNEICE, JR. President
-------------------- and Trustee
John A. McNeice, Jr.
/s/ RICHARD A. SILVER Treasurer and Chief
----------------- Financial Officer
Richard A. Silver
/s/ PETER L. LYDECKER Controller
-----------------
Peter L. Lydecker
/s/ TOM BLEASDALE Trustee
-------------
Tom Bleasdale
/s/ LORA S. COLLINS Trustee
---------------
Lora S. Collins
/s/ WILLIAM D. IRELAND, Jr. Trustee MICHAEL H. KOONCE
----------------------- -----------------
William D. Ireland, Jr. Michael H. Koonce
Attorney-in-fact
/s/ WILLIAM E. MAYER Trustee
----------------
William E. Mayer
/s/ JAMES L. MOODY, JR. Trustee
-------------------
James L. Moody, Jr.
/s/ JOHN J. NEUHAUSER Trustee
-----------------
John J. Neuhauser
/s/ GEORGE L. SHINN Trustee
---------------
George L. Shinn
/s/ ROBERT L. SULLIVAN Trustee
------------------
Robert L. Sullivan
/s/ SINCLAIR WEEKS, JR. Trustee
-------------------
Sinclair Weeks, Jr.
EXHIBIT INDEX
11.(a) Consent of Independent Accountants (TCF,CFSF, CGEF,
CIFFG, CSBF and CGNRF)
16.(a)(1) Calculation of Performance Information (CTEF)
(a)(2) Calculation of Yield (CTEF)
(b)(1) Calculation of Performance Information (CTEIF)
(b)(2) Calculation of Yield (CTEIF)
(c)(1) Calculation of Performance Information (CUF)
(c)(2) Calculation of Yield (CUF)
(d)(1) Calculation of Performance Information (CTEMMF)
(d)(2) Calculation of Yield (CTEMMF)
(e)(1) Calculation of Performance Information (CHYMF)
(e)(2) Calculation of Yield (CHYMF)
(f)(1) Calculation of Performance (CITEF)
(f)(2) Calculation of Yield (CITEF)
(g)(1) Calculation of Performance (CSTTEF)
(g)(2) Calculation of Yield (CSTTEF)
17.(a) Financial Data Schedule (Class A) (CTEF)
(b) Financial Data Schedule (Class B) (CTEF)
(c) Financial Data Schedule (Class A)(CTEIF)
(d) Financial Data Schedule (Class B)(CTEIF)
(e) Financial Data Schedule (Class A)(CUF)
(f) Financial Data Schedule (Class B)(CUF)
(g) Financial Data Schedule (Class A)(CTEMMF)
(h) Financial Data Schedule (Class B)(CTEMMF)
(i) Financial Data Schedule (Class A)(CHYMF)
(j) Financial Data Schedule (Class B)(CHYMF)
(k) Financial Data Schedule (Class A)(CITEF)
(l) Financial Data Schedule (Class B)(CITEF)
(m) Financial Data Schedule (Class A)(CSTTEF)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses and
Statements of Additional Information constituting parts of this Post-Effective
Amendment No. 40 to the registration statement on Form N-1A (the "Registration
Statement") of our reports dated January 11, 1995, relating to the financial
statements and financial highlights appearing in the November 30, 1994 Annual
Reports to Shareholders of Colonial High Yield Municipal Fund, Colonial
Intermediate Tax-Exempt Fund, Colonial Short-Term Tax-Exempt Fund, Colonial
Tax-Exempt Fund, Colonial Tax-Exempt Insured Fund and Colonial Utilities Fund,
each a series of Colonial Trust IV, which are also incorporated by reference
into the Registration Statement. We also consent to the references to us under
the headings "The Fund's Financial History" in the Prospectuses and
"Independent Accountants" in the Statements of Additional Information.
Price Waterhouse LLP
Boston, Massachusetts
March 17, 1995
<TABLE>
PERFORMANCE CALCULATION
COLONIAL TAX-EXEMPT FUND - CLASS A
Fiscal Year End: 11/30/94
<CAPTION>
1 YEAR ENDING 11/30/94 5 YEARS ENDING 11/30/94 10 YEARS ENDING 11/30/94
Standard Non-Standard Standard Non-Standard Standard Non-Standard
--------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Initial Inv. $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Max. Load 4.75% 4.75% 4.75%
Amt. Invested $952.50 $1,000.00 $952.50 $1,000.00 $952.50 $1,000.00
Initial NAV $13.92 $13.92 $13.02 $13.02 $11.67 $11.67
Initial Shares 68.427 71.839 73.157 76.805 81.620 85.690
Shares From Dist. 4.238 4.447 29.533 31.008 92.235 96.834
End of Period NAV $12.18 $12.18 $12.18 $12.18 $12.18 $12.18
Total Return -11.49% -7.08% 25.08% 31.32% 111.75% 122.31%
Average Annual
Total Return -11.49% -7.08% 4.58% 5.60% 7.79% 8.32%
</TABLE>
<TABLE>
PERFORMANCE CALCULATION
COLONIAL TAX-EXEMPT FUND - CLASS B
Fiscal Year End: 11/30/94
Inception Date: 5/5/92
<CAPTION>
1 YEAR ENDING 11/30/94 5/5/92 TO 11/30/94
Standard Non-Standard Standard Non-Standard
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Initial Inv. $1,000.00 $1,000.00 $1,000.00 $1,000.00
Amt. Invested $1,000.00 $1,000.00 $1,000.00 $1,000.00
Initial NAV $13.92 $13.92 $13.23 $13.23
Initial Shares 71.839 71.839 75.586 75.586
Shares From Dist. 3.875 3.875 11.415 11.415
End of Period NAV $12.18 $12.18 $12.18 $12.18
CDSC 4.38% 2.76%
Total Return -12.16% -7.78% 3.21% 5.97%
Average Annual
Total Return -12.16% -7.78% 1.23% 2.28%
</TABLE>
COLONIAL TAX-EXEMPT FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 11/30/94
a - b 6
FUND YIELD = 2 ------- + 1 - 1
cd
a = dividends and interest earned during
the month ................................ $20,317,355
b = expenses (exclusive of distribution fee)
accrued during the month.................. 2,796,727
c = average dividend shares outstanding
during the month ......................... 272,928,363
d = class A maximum offering price per share
on the last day of the month ............. $12.79
CLASS A YIELD ........................... 6.10%
======
Class A yield/(1-Load)
ie: 6.10%/(1-.0475)=yield on NAV= 6.41%
Less: Distribution fee (.75)
-----
CLASS B YIELD ........................... 5.66%
======
TAX-EQUIVALENT YIELD: CLASS A........... 10.10%
======
CLASS B........... 9.37%
======
<TABLE>
PERFORMANCE CALCULATION
COLONIAL TAX EXEMPT INSURED FUND - CLASS A
Fiscal Year End: 11/30/94
Inception Date: 11/20/85
<CAPTION> SINCE INCEPTION
1 YEAR ENDING 11/30/94 5 YEARS ENDING 11/30/94 11/20/85 TO 11/30/94
Standard Non-Standard Standard Non-Standard Standard Non-Standard
--------- ------------ --------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Initial Inv. $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Max. Load 4.75% 4.75% 4.75%
Amt. Invested $952.50 $1,000.00 $952.50 $1,000.00 $952.50 $1,000.00
Initial NAV $8.42 $8.42 $7.68 $7.68 $7.14 $7.14
Initial Shares 113.124 118.765 124.023 130.208 133.403 140.056
Shares From Dist. 6.280 6.589 43.178 45.331 105.154 110.394
End of Period NAV $7.45 $7.45 $7.45 $7.45 $7.45 $7.45
Total Return -11.04% -6.61% 24.57% 30.78% 77.73% 86.59%
Average Annual
Total Return -11.04% -6.61% 4.49% 5.51% 6.57% 7.15%
</TABLE>
<TABLE>
PERFORMANCE CALCULATION
COLONIAL TAX-EXEMPT INSURED FUND - CLASS B
Fiscal Year End: 11/30/94
Inception Date: 5/5/92
<CAPTION>
SINCE INCEPTION
1 YEAR ENDING 11/30/94 5/5/92 TO 11/30/94
Standard Non-Standard Standard Non-Standard
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Initial Inv. $1,000.00 $1,000.00 $1,000.00 $1,000.00
Amt. Invested $1,000.00 $1,000.00 $1,000.00 $1,000.00
Initial NAV $8.42 $8.42 $7.91 $7.91
Initial Shares 118.765 118.765 126.422 126.422
Shares From Dist. 5.645 5.645 16.551 16.551
End of Period NAV $7.45 $7.45 $7.45 $7.45
CDSC 4.42% 2.83%
Total Return -11.74% -7.31% 3.69% 6.52%
Average Annual
Total Return -11.74% -7.31% 1.42% 2.48%
</TABLE>
COLONIAL TAX-EXEMPT INSURED FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 11/30/94
a - b 6
FUND YIELD = 2 ------- + 1 - 1
cd
YIELD
a = dividends and interest earned during ---------
the month ................................ $1,317,425
b = expenses (exclusive of distribution fee)
accrued during the month.................. 215,840
c = average dividend shares outstanding
during the month ......................... 33,005,165
d = class A maximum offering price per share
on the last day of the month ............. $7.82
CLASS A YIELD ........................... 5.18%
=====
Class A yield/(1-Load)
ie: 5.18%/(1-.0475)=yield on NAV= 5.44%
Less: Distribution fee (.75)
-----
CLASS B YIELD ........................... 4.69%
======
TAX-EQUIVALENT YIELD: CLASS A............ 8.58%
======
CLASS B............ 7.76%
======
<TABLE>
PERFORMANCE CALCULATION
COLONIAL UTILITIES FUND - CLASS A
Fiscal Year End: 11/30/94
<CAPTION>
1 YEAR ENDING 11/30/94 5 YEARS ENDING 11/30/94 10 YEARS ENDING 11/30/94
Standard Non-Standard Standard Non-Standard Standard Non-Standard
--------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Initial Inv. $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Max. Load 4.75% 4.75% 4.75%
Amt. Invested $952.50 $1,000.00 $952.50 $1,000.00 $952.50 $1,000.00
Initial NAV $13.60 $13.60 $11.60 $11.60 $11.68 $11.68
Initial Shares 70.037 73.529 82.147 86.244 81.585 85.653
Shares From Dist. 3.889 4.080 33.111 34.762 103.881 109.063
End of Period NAV $11.72 $11.72 $11.72 $11.72 $11.72 $11.72
Total Return -13.36% -9.04% 35.08% 41.82% 117.37% 128.21%
Average Annual
Total Return -13.36% -9.04% 6.20% 7.24% 8.07% 8.60%
</TABLE>
<TABLE>
PERFORMANCE CALCULATION
COLONIAL UTILITIES FUND - CLASS B
Fiscal Year End: 11/30/94
Inception Date: 5/5/92
<CAPTION>
SINCE INCEPTION
1 YEAR ENDING 11/30/94 5/5/92 TO 11/30/94
Standard Non-Standard Standard Non-Standard
--------- ------------ --------- ---------
<S> <C> <C> <C> <C>
Initial Inv. $1,000.00 $1,000.00 $1,000.00 $1,000.00
Amt. Invested $1,000.00 $1,000.00 $1,000.00 $1,000.00
Initial NAV $13.60 $13.60 $12.31 $12.31
Initial Shares 73.529 73.529 81.235 81.235
Shares From Dist. 3.496 3.496 9.845 9.845
End of Period NAV $11.72 $11.72 $11.72 $11.72
CDSC 4.31% 2.86%
Total Return -14.04% -9.73% 3.89% 6.74%
Average Annual
Total Return -14.04% -9.73% 1.49% 2.57%
</TABLE>
COLONIAL UTILITIES FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 11/30/94
a - b 6
FUND YIELD = 2 ------- + 1 - 1
cd
a = dividends and interest earned during
the month ................................ $6,357,195
b = expenses (exclusive of distribution fee)
accrued during the month.................. 1,139,845
c = average dividend shares outstanding
during the month ......................... 96,410,145
d = class A maximum offering price per share
on the last day of the month ............. $12.30
CLASS A YIELD ........................... 5.35%
======
Class A yield/(1-Load)
ie: 5.35%/(1-.0475)=yield on NAV= 5.61%
Less: Distribution fee (.75)
-----
CLASS B YIELD ........................... 4.86%
======
<TABLE>
PERFORMANCE CALCULATION
COLONIAL TAX-EXEMPT MONEY MARKET FUND - CLASS A
Fiscal Year End: 11/30/94
Inception Date: 6/16/87
<CAPTION>
SINCE INCEPTION
1 YEAR ENDED 11/30/94 5 YEARS ENDED 11/30/94 06/16/87 THRU 11/30/94
------------------------------ ---------------------------- ------------------------------
<S> <C> <C> <C>
Initial Investment $1,000.00 $1,000.00 $1,000.00
Maximum Load 0.00% 0.00% 0.00%
Amount Invested $1,000.00 $1,000.00 $1,000.00
Initial NAV $1.00 $1.00 $1.00
Initial Shares 1000.000 1000.000 1000.000
Shares from Distribution 20.037 170.693 334.444
End of Period NAV $1.00 $1.00 $1.00
Total Return 2.00% 17.07% 33.44%
Average Annual
Total Return 2.00% 3.20% 3.94%
</TABLE>
<TABLE>
PERFORMANCE CALCULATION
COLONIAL TAX-EXEMPT MONEY MARKET FUND - CLASS B
Fiscal Year End: 11/30/94
Inception Date: 5/5/92
<CAPTION>
SINCE INCEPTION
1 YEAR ENDED 11/30/94 5/5/92 THROUGH 11/30/94
Standard Non-Standard Standard Non-Standard
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Initial Inv. $1,000.00 $1,000.00 $1,000.00 $1,000.00
Amt. Invested $1,000.00 $1,000.00 $1,000.00 $1,000.00
Initial NAV $1.00 $1.00 $1.00 $1.00
Initial Shares 1000.000 1000.000 1000.000 1000.000
Shares From Dist. 10.059 10.059 26.346 26.346
End of Period NAV $1.00 $1.00 $1.00 $1.00
CDSC 5.00% 3.00%
Total Return -3.99% 1.01% -0.37% 2.63%
Average Annual
Total Return -3.99% 1.01% -0.14% 1.01%
</TABLE>
COLONIAL TAX-EXEMPT MONEY MARKET FUND - CLASS A
YIELD CALCULATION
7-DAY PERIOD ENDED 11/30/94
1) 7 day yield = (a/b)(365/7)
a = change in value of account during
period, exclusive of capital changes.......... 0.0007034
b = value of account at beginning of period....... 1.00
7 day yield......................... 3.668%
Tax-equivalent yield................ 6.07%
365/7
2) 7 day effective yield = [1 + (a/b)] -1
7 day effective yield............... 3.734%
Tax-equivalent effective yield...... 6.18%
COLONIAL TAX-EXEMPT MONEY MARKET FUND - CLASS B
YIELD CALCULATION
7-DAY PERIOD ENDED 11/30/94
1) 7 day yield = (a/b)(365/7)
a = change in value of account during
period, exclusive of capital changes.......... 0.0005044
b = value of account at beginning of period....... 1.00
7 day yield......................... 2.630%
Tax equivalent yield 4.35%
365/7
2) 7 day effective yield = [1 + (a/b)] -1
7 day effective yield............... 2.664%
Tax equivalent yield 4.41%
PERFORMANCE CALCULATION
COLONIAL HIGH YIELD MUNICIPAL FUND - CLASS A
Fiscal Year End: 11/30/94
Inception Date: 9/1/94
INCEPTION TO DATE
9/1/94 TO 11/30/94
Standard Non-Standard
--------- ------------
Initial Inv. $1,000.00 $1,000.00
Max. Load 4.75%
Amt. Invested $952.50 $952.50
Initial NAV $9.80 $9.80
Initial Shares 97.194 102.041
Shares From Dist. 1.682 1.765
End of Period NAV $9.33 $9.33
Total Return -7.75% -3.15%
<TABLE>
PERFORMANCE CALCULATION
COLONIAL HIGH YIELD MUNICIPAL FUND - CLASS B
Fiscal Year End: 11/30/94
Inception Date: 6/8/92
<CAPTION>
1 YEAR ENDING 11/30/94 6/8/92 TO 11/30/94
Standard Non-Standard Standard Non-Standard
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Initial Inv. $1,000.00 $1,000.00 $1,000.00 $1,000.00
Amt. Invested $1,000.00 $1,000.00 $1,000.00 $1,000.00
Initial NAV $10.32 $10.32 $10.00 $10.00
Initial Shares 96.899 96.899 100.000 100.000
Shares From Dist. 5.883 5.883 16.291 16.291
End of Period NAV $9.33 $9.33 $9.33 $9.33
CDSC 4.52% 2.80%
Total Return -8.62% -4.10% 5.70% 8.50%
Average Annual
Total Return -8.62% -4.10% 2.26% 3.34%
</TABLE>
COLONIAL HIGH YIELD MUNICIPAL BOND FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 11/30/94
a - b 6
FUND YIELD = 2 ------- + 1 - 1
cd
a = dividends and interest earned during
the month ................................ $825,167
b = expenses (exclusive of distribution fee)
accrued during the month.................. 104,899
c = average dividend shares outstanding
during the month ......................... 12,805,870
d = class A maximum offering price per share
on the last day of the month ............. $9.80
CLASS A YIELD ........................... 6.99%
======
Class A yield/(1-Load)
ie: 6.99%/(1-.0475)=yield on NAV= 7.34%
Less: Distribution fee (.75)
-----
CLASS B YIELD ........................... 6.59%
======
TAX-EQUIVALENT YIELD: CLASS A........... 11.57%
======
CLASS B........... 10.91%
======
<TABLE>
PERFORMANCE CALCULATION
COLONIAL INTERMEDIATE TAX-EXEMPT FUND - CLASS A
Fiscal Year End: 11/30/94
Inception Date: 2/1/93
<CAPTION>
SINCE INCEPTION
1 YEAR ENDED 11/30/94 2/1/93 TO 11/30/94
Standard Non-Standard Standard Non-Standard
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Initial Inv. $1,000.00 $1,000.00 $1,000.00 $1,000.00
Max. Load 3.25% 3.25%
Amt. Invested $967.50 $1,000.00 $967.50 $1,000.00
Initial NAV $7.81 $7.81 $7.50 $7.50
Initial Shares 123.880 128.041 129.000 133.333
Shares From Dis 6.211 6.419 11.728 12.120
End of Period NAV $7.21 $7.21 $7.21 $7.21
Total Return -6.20% -3.05% 1.46% 4.87%
Average Annual
Total Return -6.20% -3.05% 0.80% 2.63%
</TABLE>
<TABLE>
PERFORMANCE CALCULATION
COLONIAL INTERMEDIATE TAX-EXEMPT FUND - CLASS B
Fiscal Year End: 11/30/94
Inception Date: 2/1/93
<CAPTION>
SINCE INCEPTION
1 YEAR ENDED 11/30/94 2/1/93 TO 11/30/94
Standard Non-Standard Standard Non-Standard
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Initial Inv. $1,000.00 $1,000.00 $1,000.00 $1,000.00
Amt. Invested $1,000.00 $1,000.00 $1,000.00 $1,000.00
Initial NAV $7.81 $7.81 $7.50 $7.50
Initial Shares 128.041 128.041 133.333 133.333
Shares From Dist. 5.543 5.543 10.411 10.411
End of Period NAV $7.21 $7.21 $7.21 $7.21
CDSC 3.69% 2.88%
Total Return -7.38% -3.68% 0.76% 3.64%
Average Annual
Total Return -7.38% -3.68% 0.41% 1.97%
</TABLE>
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 11/30/94
a - b 6
FUND YIELD = 2 ------- + 1 - 1
cd
ADJUSTED
YIELD YIELD*
a = dividends and interest earned during -------- --------
the month ............................... $145,296 $145,296
b = expenses (exclusive of distribution fee)
accrued during the month................. 5,060 28,529
c = average dividend shares outstanding
during the month ........................ 4,257,684 4,257,684
d = class A maximum offering price per share
on the last day of the month ............ $7.45 $7.45
CLASS A YIELD ......................... 5.36% 4.46%
====== ======
Class A yield/(1-Load)
ie: 5.36%/(1-.0325)=yield on NAV= 5.54%
Less: Distribution fee (.65)
----
CLASS B YIELD .......................... 4.89% 3.96%
====== ======
TAX-EQUIVALENT YIELD: CLASS A............ 8.87%
======
CLASS B............ 8.10%
======
* Without voluntary expense limit.
<TABLE>
PERFORMANCE CALCULATION
COLONIAL SHORT TERM TAX-EXEMPT FUND - CLASS A
Fiscal Year End: 11/30/94
Inception Date: 2/1/93
<CAPTION>
SINCE INCEPTION
1 YEAR ENDED 11/30/94 2/1/93 TO 11/30/93
Standard Non-Standard Standard Non-Standard
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Initial Inv. $1,000.00 $1,000.00 $1,000.00 $1,000.00
Max. Load 1.00% 1.00%
Amt. Invested $990.00 $1,000.00 $990.00 $1,000.00
Initial NAV $7.53 $7.53 $7.50 $7.50
Initial Shares 131.474 132.802 132.000 133.333
Shares From Dist. 3.925 3.964 7.184 7.258
End of Period NAV $7.42 $7.42 $7.42 $7.42
Total Return 0.47% 1.48% 3.27% 4.32%
Average Annual
Total Return 0.47% 1.48% 1.78% 2.34%
</TABLE>
COLONIAL SHORT TERM TAX-EXEMPT FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 11/30/94
a - b 6
FUND YIELD = 2 ------- + 1 - 1
cd
ADJUSTED
YIELD YIELD*
----------- ----------
a = dividends and interest earned during
the month ............................... $45,811 $45,811
b = expenses accrued during the month ....... 5,686 19,363
c = average dividend shares outstanding
during the month ........................ 1,839,954 1,839,954
d = maximum offering price per share
on the last day of the month ............ $7.49 $7.49
FUND YIELD ........................ 3.35% 2.31%
===== =====
TAX-EQUIVALENT YIELD............... 5.55%
=====
* Without voluntary expense limit
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL TAX-EXEMPT FUND YEAR END 11-30-1994 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL TAX-EXEMPT
FUND YEAR END 11-30-1994.
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
<SERIES>
<NUMBER> 1
<NAME> COLONIAL TAX-EXEMPT FUND, CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 3434035
<INVESTMENTS-AT-VALUE> 3239551
<RECEIVABLES> 156407
<ASSETS-OTHER> 85
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3396043
<PAYABLE-FOR-SECURITIES> 56038
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 41817
<TOTAL-LIABILITIES> 97855
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3057703
<SHARES-COMMON-STOCK> 234576
<SHARES-COMMON-PRIOR> 241279
<ACCUMULATED-NII-CURRENT> 1059
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (62796)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (194864)
<NET-ASSETS> 3298188
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 256970
<OTHER-INCOME> 0
<EXPENSES-NET> 40573
<NET-INVESTMENT-INCOME> 216397
<REALIZED-GAINS-CURRENT> (59241)
<APPREC-INCREASE-CURRENT> (420951)
<NET-CHANGE-FROM-OPS> (263795)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 190943
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24361
<NUMBER-OF-SHARES-REDEEMED> (39148)
<SHARES-REINVESTED> 8084
<NET-CHANGE-IN-ASSETS> (488773)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (3523)
<OVERDISTRIB-NII-PRIOR> (36)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 20098
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 40573
<AVERAGE-NET-ASSETS> 3200159
<PER-SHARE-NAV-BEGIN> 13.92
<PER-SHARE-NII> 0.795
<PER-SHARE-GAIN-APPREC> (1.744)
<PER-SHARE-DIVIDEND> (0.791)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.18
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL TAX-EXEMPT FUND YEAR END 11-30-1994 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL TAX-EXEMPT
FUND YEAR END 11-30-1994.
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
<SERIES>
<NUMBER> 1
<NAME> COLONIAL TAX-EXEMPT FUND, CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 3434035
<INVESTMENTS-AT-VALUE> 3239551
<RECEIVABLES> 156407
<ASSETS-OTHER> 85
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3396043
<PAYABLE-FOR-SECURITIES> 56038
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 41817
<TOTAL-LIABILITIES> 97855
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 497086
<SHARES-COMMON-STOCK> 36100
<SHARES-COMMON-PRIOR> 30870
<ACCUMULATED-NII-CURRENT> 1059
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (62796)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (194864)
<NET-ASSETS> 3298188
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 256970
<OTHER-INCOME> 0
<EXPENSES-NET> 40573
<NET-INVESTMENT-INCOME> 216397
<REALIZED-GAINS-CURRENT> (59241)
<APPREC-INCREASE-CURRENT> (420951)
<NET-CHANGE-FROM-OPS> (263795)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 24339
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9017
<NUMBER-OF-SHARES-REDEEMED> (4820)
<SHARES-REINVESTED> 1033
<NET-CHANGE-IN-ASSETS> (488773)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (3523)
<OVERDISTRIB-NII-PRIOR> (36)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 20098
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 40573
<AVERAGE-NET-ASSETS> 467292
<PER-SHARE-NAV-BEGIN> 13.92
<PER-SHARE-NII> 0.695
<PER-SHARE-GAIN-APPREC> (1.744)
<PER-SHARE-DIVIDEND> (0.691)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.180
<EXPENSE-RATIO> 1.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STAEMENTS OF COLONIAL TAX-EXEMPT INSURED FUND YEAR END 11-30-1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF
COLONIAL TAX-EXEMPT INSURED FUND YEAR END 11-30-1994.
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
<SERIES>
<NUMBER> 2
<NAME> COLONIAL TAX-EXEMPT INSURED FUND, CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 247217
<INVESTMENTS-AT-VALUE> 240724
<RECEIVABLES> 6025
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<APPREC-INCREASE-CURRENT> (30613)
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12079)
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 2945
<NUMBER-OF-SHARES-REDEEMED> (5793)
<SHARES-REINVESTED> 858
<NET-CHANGE-IN-ASSETS> (42935)
<ACCUMULATED-NII-PRIOR> 183
<ACCUMULATED-GAINS-PRIOR> (4599)
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 1506
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3262
<AVERAGE-NET-ASSETS> 225242
<PER-SHARE-NAV-BEGIN> 8.420
<PER-SHARE-NII> 0.439
<PER-SHARE-GAIN-APPREC> (0.977)
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<PER-SHARE-DISTRIBUTIONS> (0.432)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.450
<EXPENSE-RATIO> 1.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL TAX-EXEMPT INSURED FUND YEAR END 11-30-1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
TAX-EXEMPT INSURED FUND YEAR END 11-30-1994.
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
<SERIES>
<NUMBER> 2
<NAME> COLONIAL TAX-EXEMPT INSURED FUND, CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 247217
<INVESTMENTS-AT-VALUE> 240724
<RECEIVABLES> 6025
<ASSETS-OTHER> 46
<OTHER-ITEMS-ASSETS> 5450
<TOTAL-ASSETS> 252245
<PAYABLE-FOR-SECURITIES> 5406
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2129
<TOTAL-LIABILITIES> 7535
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51038
<SHARES-COMMON-STOCK> 6149
<SHARES-COMMON-PRIOR> 5467
<ACCUMULATED-NII-CURRENT> 397
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7325)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (6614)
<NET-ASSETS> 244710
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<NET-INVESTMENT-INCOME> 14576
<REALIZED-GAINS-CURRENT> (2726)
<APPREC-INCREASE-CURRENT> (30613)
<NET-CHANGE-FROM-OPS> (18763)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2287)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1552
<NUMBER-OF-SHARES-REDEEMED> (1031)
<SHARES-REINVESTED> 161
<NET-CHANGE-IN-ASSETS> (42935)
<ACCUMULATED-NII-PRIOR> 183
<ACCUMULATED-GAINS-PRIOR> (4599)
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-EXPENSE> 3262
<AVERAGE-NET-ASSETS> 49630
<PER-SHARE-NAV-BEGIN> 8.420
<PER-SHARE-NII> 0.378
<PER-SHARE-GAIN-APPREC> (0.977)
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<PER-SHARE-DISTRIBUTIONS> (0.371)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.450
<EXPENSE-RATIO> 1.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL UTILITIES FUND YEAR END 11-30-1994 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL UTILITIES
FUND YEAR END 11-30-1994.
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
<SERIES>
<NUMBER> 5
<NAME> COLONIAL UTILITIES FUND, CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 1282129
<INVESTMENTS-AT-VALUE> 1109636
<RECEIVABLES> 17595
<ASSETS-OTHER> 95
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1127326
<PAYABLE-FOR-SECURITIES> 947
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9817
<TOTAL-LIABILITIES> 10764
<SENIOR-EQUITY> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (172493)
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<EXPENSES-NET> 22160
<NET-INVESTMENT-INCOME> 64059
<REALIZED-GAINS-CURRENT> (38551)
<APPREC-INCREASE-CURRENT> (164651)
<NET-CHANGE-FROM-OPS> (139143)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 23148
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 5014
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<SHARES-REINVESTED> (11531)
<NET-CHANGE-IN-ASSETS> (357300)
<ACCUMULATED-NII-PRIOR> 216
<ACCUMULATED-GAINS-PRIOR> (42025)
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-EXPENSE> 22160
<AVERAGE-NET-ASSETS> 430503
<PER-SHARE-NAV-BEGIN> 13.60
<PER-SHARE-NII> 0.681
<PER-SHARE-GAIN-APPREC> (1.896)
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<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 11.72
<EXPENSE-RATIO> 1.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL UTILITIES FUND YEAR END 11-30-1994 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL UTILITIES FUND
YEAR END 11-30-1994.
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
<SERIES>
<NUMBER> 5
<NAME> COLONIAL UTILITIES FUND, CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 1282129
<INVESTMENTS-AT-VALUE> 1109636
<RECEIVABLES> 17595
<ASSETS-OTHER> 95
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<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 10764
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<PAID-IN-CAPITAL-COMMON> 895744
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (80576)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (172493)
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<REALIZED-GAINS-CURRENT> (38551)
<APPREC-INCREASE-CURRENT> (164651)
<NET-CHANGE-FROM-OPS> (139143)
<EQUALIZATION> 0
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<NUMBER-OF-SHARES-REDEEMED> (21694)
<SHARES-REINVESTED> 2517
<NET-CHANGE-IN-ASSETS> (357300)
<ACCUMULATED-NII-PRIOR> 216
<ACCUMULATED-GAINS-PRIOR> (42025)
<OVERDISTRIB-NII-PRIOR> 0
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<PER-SHARE-NAV-BEGIN> 13.60
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<EXPENSE-RATIO> 1.98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL TAX-EXEMPT MONEY MARKET FUND YEAR END 11-30-1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
TAX-EXMEPT MONEY MARKET FUND YEAR END 11-30-1994.
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
<SERIES>
<NUMBER> 4
<NAME> COLONIAL TAX-EXEMPT MONEY MARKET FUND, CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 32600
<INVESTMENTS-AT-VALUE> 32600
<RECEIVABLES> 102
<ASSETS-OTHER> 71
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32773
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<SENIOR-LONG-TERM-DEBT> 0
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28808
<SHARES-COMMON-STOCK> 28808
<SHARES-COMMON-PRIOR> 18621
<ACCUMULATED-NII-CURRENT> 2
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<ACCUMULATED-NET-GAINS> (2)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 32675
<DIVIDEND-INCOME> 0
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<EXPENSES-NET> 175
<NET-INVESTMENT-INCOME> 518
<REALIZED-GAINS-CURRENT> 0
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 493
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 69633
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<SHARES-REINVESTED> 371
<NET-CHANGE-IN-ASSETS> 13149
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 328
<AVERAGE-NET-ASSETS> 24277
<PER-SHARE-NAV-BEGIN> 1.00
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<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL TAX-EXEMPT MONEY MARKET FUND YEAR END 11-30-1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
TAX-EXEMPT MONEY MARKET FUND YEAR END 11-30-1994.
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
<SERIES>
<NUMBER> 4
<NAME> COLONIAL TAX-EXEMPT MONEY MARKET FUND, CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 32600
<INVESTMENTS-AT-VALUE> 32600
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<PAID-IN-CAPITAL-COMMON> 3867
<SHARES-COMMON-STOCK> 3867
<SHARES-COMMON-PRIOR> 908
<ACCUMULATED-NII-CURRENT> 2
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<ACCUMULATED-NET-GAINS> (2)
<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 0
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<NUMBER-OF-SHARES-SOLD> 9572
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<SHARES-REINVESTED> 15
<NET-CHANGE-IN-ASSETS> 13149
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 328
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<PER-SHARE-NAV-BEGIN> 1.00
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<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL HIGH YIELD MUNICIPAL FUND YEAR END 11-30-1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIA
L HIGH YIELD MUNICIPAL FUND YEAR END 11-30-1994.
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
<SERIES>
<NUMBER> 3
<NAME> COLONIAL HIGH YIELD MUNICIPAL FUND, CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 125329
<INVESTMENTS-AT-VALUE> 116735
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<ASSETS-OTHER> 1
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<ACCUMULATED-NET-GAINS> (2042)
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<NET-ASSETS> 119576
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<NUMBER-OF-SHARES-SOLD> 735
<NUMBER-OF-SHARES-REDEEMED> (90)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> (947)
<ACCUMULATED-NII-PRIOR> 69
<ACCUMULATED-GAINS-PRIOR> (653)
<OVERDISTRIB-NII-PRIOR> 0
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.33
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL HIGH YIELD MUNICIPAL FUND YAR END 11-30-1994 ANS IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
HIGH YIELD MUNICIPAL FUND YEAR END 11-30-1994.
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
<SERIES>
<NUMBER> 3
<NAME> COLONIAL HIGH YIELD MUNICIPAL FUND, CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 125329
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<SHARES-COMMON-STOCK> 12174
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<ACCUMULATED-NET-GAINS> (2042)
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<NUMBER-OF-SHARES-SOLD> 1738
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
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QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL INTERMEDIATE TAX-EXEMPT FUND YEAR END 11-30-1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL SHORT TERM TAX-EXEMPT FUND YEAR END 11-30-1994 AND IS
QUALIFIED AND IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF
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