[COLONIAL LOGO]
COLONIAL
HIGH YIELD MUNICIPAL FUND
[PHOTOGRAPH]
SEMIANNUAL REPORT
MAY 31, 1996
--------------------------
NOT FDIC-MAY LOSE VALUE
INSURED NO BANK GUARANTEE
--------------------------
COLONIAL HIGH YIELD MUNICIPAL FUND HIGHLIGHTS
DECEMBER 1, 1995 - MAY 31, 1996
INVESTMENT OBJECTIVE: Colonial High Yield Municipal Fund seeks 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 DESIGNED TO OFFER:
- Potential for high tax-free income
- Expert credit analysis
- Experienced professional management
PORTFOLIO MANAGER COMMENTARY: "Despite recent adverse conditions in the bond
market, we continue to take a long-range outlook and to maintain our `big
picture' strategy which is based on the fundamental prospects of the bonds in
which the Fund invests. We remain confident that this approach will continue to
provide attractive returns for the Fund's shareholders."
COLONIAL HIGH YIELD MUNICIPAL FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
Inception dates 9/1/94 6/8/92
Distributions declared per share* $0.325 $ 0.287
SEC yields on May 31, 1996** 5.85% 5.37%
Taxable-equivalent SEC yields*** 9.69% 8.89%
Total returns, assuming reinvestment of
all distributions and no sales charge or
contingent deferred sales charge (CDSC) --
6 months 0.14% (0.23)%
Net asset value per share at 5/31/96 $9.92 $ 9.92
</TABLE>
* A portion of the Fund's income may be subject to the alternative minimum
tax.
** The 30-day SEC yields on May 31, 1996, reflect the portfolio's earning
power, net of expenses, expressed as an annualized percentage of the
maximum offering price per share at the end of the period.
*** Taxable-equivalent SEC yields are based on the maximum federal income tax
rate of 39.6%.
QUALITY BREAKDOWN
(as of 5/31/96)
<TABLE>
<S> <C>
AAA ........................... 6.0%
AA ............................ 4.6%
A ............................. 11.6%
BBB ........................... 27.8%
BB ............................ 1.7%
B ............................. 0.3%
Non-rated ..................... 44.8%
Cash and equivalents .......... 3.2%
</TABLE>
Because the Fund is actively managed, quality weightings will change.
2
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
I am pleased to present your Fund's semiannual report for the period ended May
31, 1996. First, however, I would like to extend my thanks to President John A.
McNeice, Jr., who has retired after a career with Colonial that spanned 40
years. We look forward to his continued involvement on the executive committee
of the board of directors at our parent company, Liberty Financial Companies,
Inc.
[PHOTO OF HAROLD W. COGGER, PRESIDENT]
In my new position, I am directing Colonial's focus on the delivery of superior
investment performance over the long term. To achieve this mission, we will
continue to seek the optimal combination of talented people and effective
investment disciplines.
The receipt of your semiannual report is a good time to reflect on market
conditions and the performance of your Fund during the past 6 months. Falling
interest rates and minimal inflation helped the economy grow at a comfortable
pace throughout 1995 and created a positive environment for fixed income
investments. After a difficult 1994, investors who stayed the course during 1995
were amply rewarded.
While there may be some current market volatility, we expect slow growth and low
inflation to continue. In the following pages you'll find detailed information
on your Fund's performance as well as an in-depth discussion with the portfolio
manager.
With over 12 years of service at Colonial and more than 25 years in the
industry, I am enthusiastic about -- and dedicated to achieving -- Colonial's
mission of providing you with competitive investment returns. In my new role, I
look forward to communicating with you regarding your Colonial investment. We
appreciate the opportunity to help you meet your investment goals.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
July 11, 1996
Because market conditions change frequently, there can be no assurance that the
trends described here will continue, come to pass, or affect Fund performance.
3
PORTFOLIO MANAGEMENT REPORT
BONNY BOATMAN AND PETER ANDERSEN are portfolio co-managers of the Colonial High
Yield Municipal Fund. Ms. Boatman is senior vice president of Colonial
Management Associates, Inc. and director of the Tax-Exempt Bond Group. Mr.
Andersen is vice president of Colonial Management Associates, Inc.
Q: WHAT WAS YOUR INVESTMENT STRATEGY DURING THE PAST SIX MONTHS?
B.B.: Our strategy was unchanged from year-end. We continued to upgrade the
Fund's credit quality and to invest in a larger percentage of industrial revenue
bonds backed by publicly held companies. At the same time, we shortened the
portfolio's duration to avoid some of the losses that many other funds
experienced when interest rates reversed direction late in the period. Duration
measures a portfolio's sensitivity to changes in interest rates; the lower the
duration, the smaller the losses when interest rates move higher.
Q: WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE DURING THIS PERIOD?
P.A.: The biggest impact came from the sudden, sharp upward move in interest
rates that began in mid-February. From February 12, 1996 to May 31, 1996,
long-term interest rates, as tracked by the 30-year Treasury bond, rose from
6.03% to 6.99% on reports of stronger than expected economic activity. The Fund
weathered this unfavorable reversal in interest rates primarily by having a
shorter duration than the market, and therefore was less sensitive to interest
rate changes.
The Fund also benefited from holding an increased percentage of industrial
revenue bonds - our investment in these bonds increased from 9% on May 31, 1995
to 33% on May 31, 1996. We believe these bonds are undervalued by the market and
are well positioned to take advantage of an improving economic environment. In
addition, industrial revenue bonds are typically easier to buy and sell because
they are household names, giving the Fund more trading flexibility and allowing
it to respond more quickly to market changes. Some of the Fund's holdings in
this sector include American Airlines, FedEx Corp., Texas Instruments and
Lockheed Martin. The Fund's investment of approximately 45% of its assets in
non-rated municipal bonds also had a positive impact on performance. That is
because these bonds are much less sensitive to changes in interest rates due to
their high coupons and credit-intensive nature.
Q: HOW DID THE FUND'S SIX MONTH PERFORMANCE COMPARE TO THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX?
P.A.: The Fund outperformed the Lehman Brothers Municipal Bond Index, a
broad-based, unmanaged index that tracks the performance of the municipal bond
market. The total return for the Fund's Class A shares, based on net asset
value, was up 0.14% while the return on the Index was down 0.58%. The Fund
outperformed the Index by virtue of its shorter average duration as well as by
its holdings in non-rated bonds. Non-rated bonds, which tend to
4
support total return in an environment of increasing interest rates, are not
tracked by the Index.
Q: WHAT IS YOUR OUTLOOK FOR THE TAX-EXEMPT BOND MARKET?
B.B.: A number of recent economic releases indicate stronger growth than we
previously expected, instilling fears of inflation, which is negative for bond
prices. We believe that the tax-exempt bond market may continue to experience
lower prices and higher yields in the months ahead, so the Fund is positioned
defensively. Tax reform may still present a source of some concern, although the
market has already felt most of the negative effect of proposed changes. As a
result, we believe municipal bonds are still slightly undervalued and may
present a buying opportunity.
COLONIAL HIGH YIELD MUNICIPAL FUND INVESTMENT PERFORMANCE
Change in Value of $10,000 from 6/92 - 5/96
Based on Net Asset Value and CDSC for Class B Shares
<TABLE>
<CAPTION>
Label A B C D
- --------------------------------------------------------------------------------
Label CHYMF W/CDSC NAV
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 6/92 10000 10000 10000
2 10251.34 10251.34 10366.7
3 10194.31 10194.34 10227.61
4 10227.46 10227.46 10272.9
5 10179.73 10179.73 10101.46
6 10263.83 10263.83 10385.82
7 10368.82 10368.82 10620.8
8 10433.26 10433.26 10619.9
9 10652.63 10652.63 11113.64
10 10624.52 10624.52 10979.84
11 10710.79 10710.79 11130.11
12 10745.3 10745.3 11222.15
13 10874.46 10874.46 11433.29
14 10909.07 10909.07 11445.05
15 11102.97 11102.97 11737.94
16 11202.26 11202.26 11891.15
17 11237.94 11237.94 11911.09
18 11186.7 11186.7 11760.7
19 11261.29 11261.29 12070.18
20 11369.42 11369.42 12215.21
21 11226.66 11226.66 11810.28
22 10850.82 10850.82 11104.82
23 10826.84 10826.84 11190.1
24 10901.7 10901.7 11320.67
25 10921.84 10921.84 11184.27
26 11076.86 11076.86 11472.16
27 11097.48 11097.48 11496.57
28 11016.23 11016.23 11230.14
29 10890.06 10890.06 10885.2
30 10727.45 10727.45 10597.9
31 10877.21 10877.21 10974.31
32 11131.03 11131.03 11456.87
33 11398.5 11398.5 11923.56
34 11526.62 11526.62 12067.07
35 11538 11538 12061.19
36 11844.03 11844.03 12574.63
37 11807.7 11807.7 12342.9
38 11878.35 11878.35 12406.12
39 11984.63 11984.63 12581.38
40 12103.58 12103.58 12679.89
41 12271.41 12271.41 12986.31
42 12488.43 12488.43 13615.91
43 12621.42 12621.42 13529.45
44 12668.84 12668.84 13587.09
45 12619.03 12619.03 13421.82
46 12466.91 12466.91 13175.69
47 12463.33 12463.33 13122.76
48 5/96 12163.8 12459.33 13128.64
</TABLE>
A $10,000 investment in Class A shares made on 9/1/94 at net asset value (NAV)
would have been valued at $11,375 on 5/31/96. The same investment based on
maximum offering price (MOP) would have grown to $10,834 on 5/31/96.
AVERAGE ANNUAL TOTAL RETURNS
As of June 30, 1996 (Most Recent Quarter End)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
INCEPTION 9/1/94 6/8/92
NAV MOP NAV w/CDSC
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 YEAR 7.35% 2.25% 6.55% 1.55%
- --------------------------------------------------------------------------
SINCE INCEPTION 7.89% 5.06% 6.11% 5.49%
- --------------------------------------------------------------------------
</TABLE>
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indexes are not investments, do not incur fees or expenses and are not
professionally managed. Return and value of an investment will vary, resulting
in a gain or loss on sale. All results shown assume reinvestment of
distributions. NAV returns do not include sales charges or CDSC. MOP returns
include the maximum sales charge of 4.75%. The CDSC returns reflect the maximum
charge of 5% for one year and 3% since inception. Past performance cannot
predict future results.
5
INVESTMENT PORTFOLIO
MAY 31, 1996 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 95.0% PAR VALUE
================================================================================
<S> <C> <C>
AGRICULTURE, FORESTRY & FISHING - 1.2%
Agriculture - Crops
LA Port New Orleans Industrial
Development, Continental Grain Co.,
Series 1993,
7.500% 07/01/13 $2,000 $ 2,055
-------
................................................................................
CERTIFICATES OF PARTICIPATION - 0.4%
MA State Health & Educational
Facilities Authority, Independent Living
Bonds, Series 1993-A,
8.100% 07/01/18 600 590
-------
................................................................................
CONSTRUCTION - 1.3%
Building Construction
IN Hammond Sewer & Solid Waste Disposal,
American Maize Products Co., Series A,
8.000% 12/01/24 2,000 2,183
-------
................................................................................
FINANCE, INSURANCE & REAL ESTATE - 0.4%
Real Estate
MD Baltimore, Economic Development,
Park Charles Project, Series 1986,
8.000% 01/01/10 685 705
-------
................................................................................
GENERAL OBLIGATION - 1.5%
AZ Apache County School District,
Number 010, Round Valley
Project of 1987, Series 1990-C,
9.875% 07/01/05 500 546
CA State of California,
5.750% 03/01/19 2,000 1,917
-------
2,463
-------
................................................................................
HEALTH - 17.8%
Hospitals - 8.5%
AL Alabama Special Care Facilities
Authority, Montgomery Healthcare,
Series 1989,
11.000% 10/01/19 295 301
DE State Economic Development Authority,
Riverside Hospital, Series 1992-A,
9.500% 01/01/22 610 794
</TABLE>
6
Investment Portfolio/May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FL Tarpon Springs Health Facilities
Authority, Tarpon Springs Hospital
Foundation, Series 1988,
8.750% 05/01/12 $1,000 $1,049
GA Clayton Hospital Authority,
The Woodlands Foundation, Inc.,
Series 1991-A,
9.750% 05/01/21 (a) 1,500 1,275
ID State Health Facilities Authority,
IHC Hospitals, Inc.,
8.190% 02/15/21 1,000 1,052
IL Health Facilities Authority,
Edgewater Medical Center, Series A,
9.250% 07/01/24 2,000 2,152
MI State Hospital Finance Authority,
Detroit Osteopathic Hospital,
Series 1987-A,
7.500% 11/01/10 500 534
MO Hannibal Industrial Development,
Medical Systems of Northeast Missouri,
Series 1992,
9.500% 03/01/22 1,000 1,141
NC Lincoln County Hospital Project,
9.000% 05/01/07 335 402
NJ State Health Care Facilities Financing
Authority, Raritan Bay Medical Center,
7.250% 07/01/27 2,000 2,005
PA Cambria County Hospital Authority,
Conemaugh Valley Memorial Hospital,
Series 1988-A,
8.875% 07/01/18 165 177
TN Chattanooga Health, Education &
Housing Facilities Board, North Park
Hospital Project, Series 1993,
8.500% 02/01/23 990 996
VA Dickenson County Industrial
Development Authority, Volunteer
Healthcare Systems, Inc., Series 1988-A,
10.750% 06/01/18 (a) 500 150
VT State Educational & Health Buildings
Financing Agency, Springfield Hospital,
Series A,
7.750% 01/01/13 810 866
WA State Health Care Facility,
Grays Harbor Community Hospital,
Series 1993:
7.200% 07/01/03 210 219
8.025% 07/01/20 960 1,010
-------
14,123
-------
</TABLE>
7
Investment Portfolio/May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
================================================================================
<S> <C> <C>
HEALTH - CONT.
HUMAN SERVICES PROVIDERS - 1.1%
IL Champaign First Mortgage,
Hoosier Care Inc., Series 1989-A,
9.750% 08/01/19 $ 495 $ 525
IN Wabash First Mortgage, Hoosier
Care, Inc., Series 1989-A,
9.750% 08/01/19 495 523
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19 335 379
Series 1992-C,
9.750% 08/01/19 330 374
-------
1,801
-------
NURSING HOMES - 8.2%
CO State Health Facilities Authority, Denver,
10.500% 05/01/19 (a) 450 310
DE State Economic Development Authority,
Churchman Village Project, Series A,
10.000% 03/01/21 750 870
DE Sussex County Healthcare Facility,
Delaware Health Corp., Series 1994-A,
7.600% 01/01/24 1,000 962
FL Broward County, Beverly
Enterprises, Inc.,
9.800% 11/01/10 615 680
FL Flagler County Industrial
Redevelopment Authority,
South Florida Properties, Series 1988,
10.500% 12/01/18 925 931
FL Gadsden County Industrial Development
Authority, Florida Housing Properties, Inc.,
Series 1988-A,
10.450% 10/01/18 340 351
FL Palm Beach County,
Hillcrest Manor Project,
10.250% 12/01/16 675 703
IA State Healthcare Facility Finance
Authority, Care Initiatives Project,
Series 1996,
9.250% 07/01/25 500 534
KS Halstead Industrial Health Care
Project,
10.250% 08/01/13 (a) 335 134
MA State Industrial Finance Agency:
GF/Massachusetts, Inc., Series 1994,
8.300% 07/01/23 1,000 971
</TABLE>
8
Investment Portfolio/May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Mary Ann Morse Nursing Home, Inc.:
Series 1990,
9.000% 10/01/20 $ 940 $ 1,108
Series 1991-I,
10.000% 01/01/21 500 615
MI Cheboygan County Economic
Development Corp., Metro Health
Foundation Project, Series 1993,
5.000% 11/01/22 (a) 600 420
MO Grove Industrial Development Authority,
First Mortgage Health Care Facility,
Heritage Manor GR, Series 1988,
10.250% 11/01/13 435 391
NJ Economic Development Authority,
Geriatric and Medical Service, Inc.,
Series A,
10.500% 05/01/04 105 114
OH Lucas County, Villa North Nursing
Home, Series 1988-B,
10.500% 06/01/18 300 298
PA Chartiers Valley Industrial and
Commercial Authority, Beverly
Enterprises, Inc., Series 1985,
10.000% 06/01/07 1,720 1,845
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19 445 459
PA Delaware County Authority, Main Line
and Haverford Nursing, Series 1992,
9.000% 08/01/22 50 53
PA Lackawanna County Industrial Authority,
Green Ridge Nursing Center, Inc.,
10.500% 12/01/10 200 218
PA Luzerne County Industrial Development
Authority, Millville Nursing Center,
10.500% 12/01/12 235 223
PA Montgomery County Higher Education
& Health Authority, AHF/Roslyn-Hatboro,
Inc. Project,
9.000% 11/15/22 300 308
PA Philadelphia Authority for Industrial
Development, First Mortgage, RHA/PA
Nursing Home, Series 1988,
10.250% 11/01/18 740 765
VA Beach Development Authority,
Beverly Enterprises, Series 1985,
10.000% 04/01/10 235 260
-------
13,523
-------
................................................................................
</TABLE>
9
Investment Portfolio/May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
================================================================================
<S> <C> <C>
HOUSING - 19.1%
ASSISTED LIVING/SENIOR - 3.3%
CT State Authority, First Mortgage
Gross Health Care, Church-Avery
Project, Series 1990,
9.000% 04/01/20 $ 500 $ 535
IL State Development Finance Authority,
Care Institute, Inc.,
8.250% 06/01/25 2,000 2,037
MN Roseville, Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 1,270 1,214
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993-A,
8.250% 05/01/23 620 628
TX Bell County Health Facilities
Development Corp., Care Institutions, Inc.,
9.000% 11/01/24 1,000 1,065
-------
5,479
-------
MULTI-FAMILY - 10.3%
AK State Housing Finance Corp.,
Series 1992-A2,
6.750% 12/01/24 1,735 1,776
FL Clearwater Housing Authority,
Hampton Apartments, Series 1994,
8.250% 05/01/24 2,000 2,075
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 2,000 2,062
FL State Housing Finance Agency,
Windsong Apartments, Series 1993-C,
9.250% 01/01/19 750 749
MN Lakeville, Southfork Apartment
Project, Series 1989-A,
9.875% 02/01/20 700 708
MN Washington County Housing &
Redevelopment Authority,
Cottages of Aspen, Series 1992,
9.250% 06/01/22 495 504
MN White Bear Lake, Birch Lake
Townhomes Project, Series 1989-A,
9.750% 07/15/19 750 749
NC Eastern Carolina Regional Housing
Authority, Jacksonville New River
Apartments, Series 1994,
8.250% 09/01/14 1,480 1,484
</TABLE>
10
Investment Portfolio/May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Resolution Trust Corp., Pass Through
Certificates, Series 1993-A,
8.500% 12/01/16 (b) $4,248 $ 4,328
SC State Housing Finance and Development,
Multi-family Housing Finance Revenue,
Westbridge Apartments, Series A,
9.500% 09/01/20 650 657
TX Galveston Pass Through Certificates,
Health Facilities Center,
8.000% 08/01/23 1,000 1,006
VA Alexandria Redevelopment
& Housing Authority, Courthouse
Commons Apartments, Series 1990-A,
10.000% 01/01/21 500 502
VA Roanoke Redevelopment & Housing
Authority, First Mortgage, Mountain Ridge,
9.250% 11/01/22 (a) 500 475
-------
17,075
-------
SINGLE-FAMILY - 5.5%
CA Orange County, Series 1983, Issue 1,
9.250% 09/01/16 35 33
CO State Housing Finance Authority,
Series D-1,
7.375% 06/01/26 2,000 2,185
MO State Housing Development Commission,
Series C,
7.250% 09/01/26 2,755 2,955
NJ State Housing & Mortgage,
7.700% 10/01/29 1,265 1,317
PA Housing Finance Agency,
6.850% 04/01/25 2,435 2,535
-------
9,025
-------
................................................................................
MANUFACTURING - 9.9%
FURNITURE & FIXTURES - 0.3%
TN McKenzie Individual Development Board,
American Lantern Co.,
10.500% 05/01/16 470 497
-------
MEASURING & ANALYZING INSTRUMENTS - 0.4%
MN Brooklyn Park, TL Systems Corp.,
Series 1991,
10.000% 09/01/16 535 659
-------
PAPER PRODUCTS - 7.5%
GA Rockdale County Development
Authority, Solid Waste Disposal, Visy
Paper, Inc., Series 1993,
7.500% 01/01/26 2,500 2,487
</TABLE>
11
Investment Portfolio/May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - CONT.
Paper Products - Cont.
LA DeSoto Parish, International Paper,
6.550% 04/01/19 $ 1,000 $ 1,001
MI State Strategic Fund:
Blue Water Fiber Project, Series 1994,
8.000% 01/01/12 2,000 1,770
Great Lakes Pulp & Fiber Project,
Series 1994,
10.250% 12/01/16 2,500 2,181
NY New York City Industrial Development
Agency, Visy Paper, Inc., Series 1995,
7.950% 01/01/28 1,500 1,517
SC Darlington County,
Industrial Development Authority:
Series 1996,
6.000% 04/01/26 1,500 1,432
Sonoco Products Co. Project,
6.125% 06/01/25 2,000 1,942
-------
12,330
-------
PRIMARY METAL - 1.2
LA Vidalia, Alcoa Co. of
America Project,
5.875% 09/01/13 2,000 1,960
-------
TRANSPORTATION EQUIPMENT - 0.5%
MN Buffalo, Von Ruden
Manufacturing, Inc., Series 1989,
10.500% 09/01/14 790 885
-------
.............................................................................
MINING - 1.3%
CRUDE PETROLEUM & NATURAL GAS - 1.1%
WA Pierce County, Economic Development
Corp., Occidental Petroleum Co.,
5.800% 09/01/29 2,000 1,755
-------
METAL MINING - 0.2%
OH Cuyahoga County, Joy Technologies,
Inc., Series 1992,
8.750% 09/15/07 360 383
-------
.............................................................................
POLLUTION CONTROL REVENUE - 6.2%
GA Wayne County, Development Authority,
Solid Waste Disposal, ITT Royonier, Inc.,
Series 1990,
8.000% 07/01/15 500 546
IL Bryant Pollution Control Revenue,
Central Illinois Light Co. Project,
5.900% 08/01/23 1,750 1,676
</TABLE>
12
Investment Portfolio/May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
OH State Water Development,
Collateralized Pollution Control,
Pennsylvania Power Co.,
8.100% 01/15/20 $ 500 $ 534
SC York County Industrial Revenue,
Hoechst Celanese Corp.,
5.700% 01/01/24 4,535 4,201
TX Matagorda County, Collateralized
Pollution Control, Houston Lighting
and Power Co., Series 1986-A,
7.875% 11/01/16 800 824
TX Trinity River Authority, Texas
Instruments Project,
6.200% 03/01/20 2,000 1,962
WV Weirton Pollution Control, Weirton
Steel Corp., Series 1989,
8.625% 11/01/14 500 524
-------
10,267
-------
.............................................................................
PUBLIC FACILITIES IMPROVEMENT - 6.7%
CO Denver City and County
Special Facilities Airport,
United Air Lines, Series 1992-A,
6.875% 10/01/32 5,000 4,994
MN Mille Lacs Capital Improvement
Infrastructure, Band of Chippewa,
Series 1992-A,
9.250% 11/01/12 655 725
TX Dallas-Fort Worth International Airport,
American Airlines, Inc., Series 1990,
7.500% 11/01/25 2,000 2,113
WA Pilchuck Special Facilities Airport,
Tramco Project,
6.000% 08/01/23 3,500 3,264
-------
11,096
-------
.............................................................................
PUBLIC INFRASTRUCTURE - 12.6%
AIRPORTS - 10.3%
AZ Tucson Airport Authority,
Lockheed Project,
8.700% 09/01/19 2,500 2,831
CO Denver City & County Airport:
Airport System, Series 1992-C,
6.750% 11/15/22 1,250 1,264
Denver International Airport,
Series 1991-D,
7.750% 11/15/21 2,000 2,200
Stapleton International Airport,
Series 1990-A,
8.500% 11/15/23 250 286
</TABLE>
13
Investment Portfolio/May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------
<S> <C> <C>
PUBLIC INFRASTRUCTURE - CONT.
AIRPORTS - CONT.
IL Chicago O'Hare International Airport
Special Facility, United Airlines, Inc.,
Series 1988-A,
8.400% 05/01/18 $ 950 $ 1,025
IN State Airport Authority,
Federal Express Project,
7.100% 01/15/17 4,000 4,145
TX Alliance Airport Authority,
American Airlines Project,
7.500% 12/01/29 5,000 5,263
-------
17,014
-------
TURNPIKES/TOLL ROADS/BRIDGES - 2.3%
CA Foothill Eastern Transportation
Corridor Agency, State Toll Road,
Senior Lien, Series A,
(c) 01/01/29 12,000 1,305
CA San Joaquin Hills Transportation
Corridor Agency, Senior Lien Toll Road,
Series 1993, Current Interest Bond Series:
(c) 01/01/23 5,250 873
5.000% 01/01/33 2,000 1,593
-------
3,771
-------
.............................................................................
RETAIL TRADE - 1.2%
MISCELLANEOUS RETAIL
OH Lake County, Econonic Development,
North Madison Properties,
Series 1993,
8.819% 09/01/11 545 562
VA Virginia Beach Development Authority,
SC Diamond Associates, Inc.,
8.000% 12/01/10 1,500 1,502
-------
2,064
-------
.............................................................................
SERVICES - 0.3%
HOTELS, CAMPS & LODGING
MN Burnsville Commercial Development,
Holiday Inn Project,
10.600% 06/01/06 500 513
-------
.............................................................................
SOLID WASTE - 4.9%
LAND FILL - 1.8%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc. Project,
Series 1995,
9.000% 09/01/05 950 990
</TABLE>
14
Investment Portfolio/May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
WA Walla Walla Public Corp.,
Ponderosa Fibres Project,
9.125% 01/01/26
$ 2,000 $ 1,933
-------
2,923
-------
MISCELLANEOUS DISPOSAL - 0.9%
CT State Disposal Facility,
Waterbury Project, Series 1995,
9.375% 06/01/16 1,500 1,472
-------
RECYCLING - 0.1%
GA Fulton County Development
Authority, Waste Recycling, Inc.,
10.500% 12/01/07 120 126
-------
RESOURCE RECOVERY - 2.1%
WY Sweetwater County,
FMC Corp. Project, Series 1994-A,
7.000% 06/01/24 3,325 3,421
-------
.............................................................................
TAX ALLOCATION - 2.5%
CA Carson Improvement, Series 1992,
7.375% 09/02/22 975 990
CA Pleasanton Joint Powers Financing
Reassessment Subordinated Revenue,
Series 1993-B,
6.750% 09/02/17 1,935 1,916
IL State Development Finance Authority,
City of Marion Project, Series 1991,
9.625% 09/15/21 1,195 1,204
-------
4,110
-------
.............................................................................
UTILITY - 4.9%
CO-GENERATION - 1.4%
FL Martin County Industrial Development
Authority, Indiantown Co-Generation
Project, Series 1994-A,
7.875% 12/15/25 1,000 1,110
MD State Energy Financing Administration,
AES Warrior Co-Generation Project,
7.400% 09/01/19 1,250 1,275
-------
2,385
-------
INDIVIDUAL POWER PRODUCER - 1.8%
PA State Economic Development Finance
Authority, Colver Project, Series D,
7.150% 12/01/18 2,900 2,962
-------
</TABLE>
15
Investment Portfolio/May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
UTILITY - CONT.
MUNICIPAL ELECTRIC - 1.7%
CA Colton Public Financing Authority,
Series 1995,
7.500% 10/01/20 $ 1,000 $ 1,011
MN Southern Minnesota Municipal
Power Agency, Series 1994-A,
(c) 01/01/25 2,660 469
NY State Energy Research & Development
Authority, Consolidated Edison Co.,
Series 1991-A,
7.500% 01/01/26 1,250 1,341
--------
2,821
--------
............................................................................
WATER & SEWER - 2.8%
LA Public Facility Belmont Water
Authority,
9.000% 03/15/24 630 645
MA State Industrial Finance Agency,
Environmental Service Project,
Series 1994-A,
8.750% 11/01/21 1,000 1,004
MS Five Lakes Utility District,
8.250% 07/15/24 400 404
NJ State Economic Development
Authority, Hills Development Co.,
10.500% 09/01/08 400 411
NY New York City Municipal Water
Finance Authority, Series B,
5.500% 06/15/19 2,000 1,868
OH State Water Development, Pollution
Collateralized Control, The Cleveland
Electric Illumination, Series 1987-A,
9.750% 11/01/22 250 261
--------
4,593
--------
TOTAL MUNICIPAL BONDS (cost of $155,606)(d) 157,029
--------
SHORT-TERM OBLIGATIONS - 3.1%
- ----------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (e)
IL State Health Facilities Authority,
Franciscan Sisters Health Center,
3.800% 01/01/18 100 100
IN Capital Access Health Facility:
3.750% 12/01/02 1,900 1,900
3.750% 08/01/06 900 900
3.750% 12/01/10 1,000 1,000
</TABLE>
16
Investment Portfolio/May 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
NY Niagara Mohawk,
3.450% 07/01/27 $ 1,200 $ 1,200
WY Green River,
Series 1992,
3.750% 06/01/99 100 100
--------
TOTAL SHORT-TERM OBLIGATIONS 5,200
--------
OTHER ASSETS & LIABILITIES, NET - 1.9% 3,068
- ----------------------------------------------------------------------------
NET ASSETS - 100% $165,297
========
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) This issuer is in default of certain debt covenants. Income is not being
accrued.
(b) This security is exempt from registration under Rule 144-A of the
Securities Act of 1933. This security may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
May 31, 1996, the value of this security amounted to $4,328 or 2.6% of
net assets.
(c) Zero coupon bond.
(d) Cost for federal income tax purposes is the same.
(e) Variable rate demand notes are considered short-term obligations.
Interest rates change periodically on specified dates. These securities
are payable on demand and are secured by either letters of credit or
other credit support agreements from banks. The rates listed are as of
May 31, 1996.
See notes to financial statements.
17
STATEMENT OF ASSETS & LIABILITIES
MAY 31, 1996 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $155,606) $ 157,029
Short-term obligations 5,200
---------
162,229
Receivable for:
Interest $ 3,904
Fund shares sold 317
Investments sold 70
Deferred organization expenses 21
Other 75 4,387
-------- ---------
Total Assets 166,616
LIABILITIES
Payable for:
Distributions 793
Fund shares repurchased 194
Accrued:
Deferred Trustees fees 2
Other 330
--------
Total Liabilities 1,319
---------
NET ASSETS $ 165,297
=========
Net asset value & redemption price per share -
Class A ($25,196/2,540) $ 9.92
---------
Maximum offering price per share - Class A
($9.92/0.9525) $ 10.41 (a)
---------
Net asset value & offering price per share -
Class B ($140,101/14,122) $ 9.92 (b)
---------
COMPOSITION OF NET ASSETS
Capital paid in $ 168,030
Undistributed net investment income 159
Accumulated net realized loss (4,315)
Net unrealized appreciation 1,423
---------
$ 165,297
=========
</TABLE>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
18
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
(in thousands)
INVESTMENT INCOME
Interest $ 5,904
EXPENSES
Management fee $ 445
Service fee 201
Distribution fee - Class B 526
Transfer agent 133
Bookkeeping fee 33
Trustees fee 9
Custodian fee 3
Audit fee 15
Legal fee 53
Registration fee 13
Reports to shareholders 4
Amortization of deferred
organization expenses 9
Other 9 1,453
------- -------
Net Investment Income 4,451
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain 99
Net unrealized depreciation during
the period (4,935)
-------
Net Loss (4,836)
-------
Net Decrease in Net Assets from Operations $ (385)
=======
</TABLE>
See notes to financial statements.
19
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months Year ended
ended May 31 November 30
------------ -----------
1996 1995
<S> <C> <C>
(in thousands)
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 4,451 $ 8,258
Net realized gain (loss) 99 (2,355)
Net unrealized appreciation (depreciation) (4,935) 14,952
--------- ---------
Net Increase (Decrease) from Operations (385) 20,855
Distributions:
From net investment income - Class A (678) (771)
From net investment income - Class B (3,962) (7,619)
--------- ---------
(5,025) 12,465
--------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 9,275 12,349
Value of distributions reinvested - Class A 192 218
Cost of shares repurchased - Class A (1,585) (1,592)
--------- ---------
7,882 10,975
--------- ---------
Receipts for shares sold - Class B 16,532 30,411
Value of distributions reinvested - Class B 1,786 3,686
Cost of shares repurchased - Class B (11,768) (21,223)
--------- ---------
6,550 12,874
--------- ---------
Net Increase from Fund Share
Transactions 14,432 23,849
--------- ---------
Total Increase 9,407 36,314
NET ASSETS
Beginning of period 155,890 119,576
--------- ---------
End of period (including undistributed
net investment income of $159 and $337,
respectively) $ 165,297 $ 155,890
========= =========
NUMBER OF FUND SHARES
Sold - Class A 917 1,253
Issued for distributions reinvested - Class A 19 22
Repurchased - Class A (155) (162)
--------- ---------
781 1,113
--------- ---------
Sold - Class B 1,632 3,085
Issued for distributions reinvested - Class B 177 377
Repurchased - Class B (1,166) (2,157)
--------- ---------
643 1,305
--------- ---------
</TABLE>
See notes to financial statements.
20
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
.............................................................................
In the opinion of management of Colonial High Yield Municipal Fund (the Fund), a
series of Colonial Trust IV, the accompanying financial statements contain all
normal and recurring adjustments necessary for the fair presentation of the
financial position of the Fund at May 31, 1996, and the results of its
operations, the changes in its net assets and the financial highlights for the
six months then ended.
NOTE 2. ACCOUNTING POLICIES
.............................................................................
Organization: The Fund is a diversified portfolio of a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund's objective is to seek a high
level of after-tax total return. 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Debt securities generally are valued by a
pricing service based upon market transactions for normal, institutional-size
trading units of similar securities. When management deems it appropriate, an
over-the-counter or exchange bid quotation is used.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions 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, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
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.
21
Notes to Financial Statements/May 31, 1996
- ------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
..............................................................................
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.
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 expenses of $95,525 in
connection with its organization, initial registration with the Securities and
Exchange Commission and 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.
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. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
...............................................................................
MANAGEMENT FEE: Colonial Management Associates, Inc. (the 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>
22
Notes to Financial Statements/May 31, 1996
- ------------------------------------------------------------------------------
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: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. For the six months ended May 31, 1996, the Fund has been
advised that the Distributor retained net underwriting discounts of $25,660 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $134,345 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. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
..............................................................................
INVESTMENT ACTIVITY: During the six months ended May 31, 1996,
purchases and sales of investments, other than short-term
obligations, were $20,935,868 and $7,970,284, respectively.
Unrealized appreciation (depreciation) at May 31, 1996, based on
cost of investments for both financial statement and federal income
tax purposes was approximately:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 4,343,000
Gross unrealized depreciation (2,920,000)
-----------
Net unrealized appreciation $ 1,423,000
-----------
</TABLE>
23
Notes to Financial Statements/May 31, 1996
- ------------------------------------------------------------------------------
NOTE 4. PORTFOLIO INFORMATION - CONT.
..............................................................................
CAPITAL LOSS CARRYFORWARDS: At November 30, 1995, 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
2003 2,398,000
----------------
$ 5,628,000
----------------
</TABLE>
The loss carryforwards 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: 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 5. LINE OF CREDIT
..............................................................................
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR off-shore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the six months ended May 31, 1996.
24
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six
months ended
May 31 Year ended November 30
----------------------------------- ----------------------
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 10.230 $ 10.230 $ 9.330 $ 9.330
------------ ------------ ------------ ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.313 0.275 0.656 0.583
Net realized and
unrealized gain (loss) (0.298) (0.298) 0.912 0.912
------------ ------------ ------------ ----------
Total from Investment
Operations 0.015 (0.023) 1.568 1.495
------------ ------------ ------------ ----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.325) (0.287) (0.668) (0.595)
------------ ------------ ------------ ----------
Net asset value -
End of period $ 9.920 $ 9.920 $ 10.230 $ 10.230
------------ ------------ ------------ ----------
Total return (a) 0.14% (b) (0.23%)(b) 17.28% 16.42%
------------ ------------ ------------ ----------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.15% (c)(d) 1.90% (c)(d) 1.17% (c) 1.92% (c)
Net investment income 6.19% (c)(d) 5.44% (c)(d) 6.67% (c) 5.92% (c)
Portfolio turnover 9% (d) 9% (d) 26% 26%
Net assets at end
of period (000) $ 25,196 $ 140,101 $ 17,997 $ 137,893
</TABLE>
(a) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(b) Not annualized.
(c) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(d) Annualized.
25
FINANCIAL HIGHLIGHTS -- CONT.
Selected data for a share of each class outstanding throughout each
period are as follows:
<TABLE>
<CAPTION>
Period ended
Year ended November 30 November 30
-------------------------------------------- ------------
1994 1993 1992
Class A (a) Class B Class B Class B (b)
----------- ------- ------- -----------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 9.800 $ 10.320 $ 10.070 $ 10.000
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.188 0.605 0.609 0.338(c)
Net realized and
unrealized gain (loss) (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) Class A shares were initially offered on September 1, 1994. Per share
amounts reflect activity from that date.
(b) The Fund commenced investment operations on June 8, 1992.
(c) Net of fees and expenses waived or borne by the Adviser which amounted to
$0.00.
(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.
26
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial High Yield Municipal Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial High Yield Municipal Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call our
Literature Department at 1-800-248-2828 and additional reports will be sent to
you.
This report has been prepared for shareholders of Colonial High Yield Municipal
Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives and operating policies of the Fund.
27
[COLONIAL LOGO]
Mutual Funds for
Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Trustee (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland (formerly Dean,
Simon Graduate School of Business, University of Rochester; Chairman and Chief
Executive Officer, C.S. First Boston Merchant Bank; and President and Chief
Executive Officer, The First Boston Corporation)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
COLONIAL INVESTMENT SERVICES, INC., DISTRIBUTOR (C)1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
HM-03/366C-0596 M (7/96)
[RECYCLED PAPER LOGO]
Printed on recycled paper
