Registration Nos: 2-62492
811-2865
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF [ X ]
1933
Pre Effective Amendment No. [ ]
Post Effective Amendment No. 42 [ X ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY [ X ]
ACT OF 1940
Amendment No. 40 [ X ]
COLONIAL TRUST IV
(Exact Name of Registrant as Specified in Charter)
One Financial Center, Boston, Massachusetts 02111
(Address of Principal Executive Office)
(617) 426-3750
(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 29, 1996 pursuant to paragraph (b).
[ ] 60 days after filing pursuant to paragraph (a)(2).
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485.
[ ] 75 days after filing pursuant to paragraph (a)(2).
[ ] on (date) pursuant to paragraph (a)(2) 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 26, 1996, the Registrant filed a Rule 24f-2
Notice in respect of its fiscal year ended November 30, 1995.
COLONIAL TRUST IV
Cross Reference Sheet
Colonial Intermediate Tax-Exempt Fund
Colonial Short-Term Tax-Exempt Fund
--------------------------------------
Item Number of Form N1A 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. Cover Page; How the Funds are
Managed; Organization and
History; The Funds' Investment
Objectives; Back Cover
6. Organization and History;
Distributions and Taxes; How to
Buy Shares
7. Cover Page; Summary of Expenses;
How to Buy Shares; How the Funds
Value their Shares; 12b-1 Plans;
Back Cover
8. Summary of Expenses; How to Sell
Shares; How to Exchange Shares;
Telephone Transactions
9. Not Applicable
March 29, 1996
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 risks 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 Funds' Financial History
The Funds' Investment Objectives
How the Funds Pursue their Objectives
How the Funds Measure their Performance
How the Funds are Managed
How the Funds Value their Shares
Distributions and Taxes
How to Buy Shares
How to Sell Shares
How to Exchange Shares
Telephone Transactions
12b-1 Plans
Organization and History
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.
IS-01/926B-0396
The Intermediate Fund seeks as high a level of after-tax total return as is
consistent with moderate volatility, by pursuing current income exempt from
federal income tax and opportunities for appreciation from a portfolio primarily
invested in investment-grade, intermediate-term municipal bonds. The Short-Term
Fund seeks 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 29, 1996 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 and, in addition, are subject to 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."
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 your annual
expenses for an investment in each Class of the Funds' shares. See "How the
Funds are Managed" and "12b-1 Plans" for more complete descriptions of the
Funds' various costs and expenses.
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 a % of
offering price) (3) 3.25% 0.00%(5) 1.00%
Maximum Contingent Deferred
Sales Charges (as a % 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 average net assets)
Intermediate Short-Term
Fund Fund
Class A Class B Class A
Management fee
(after expense 0.00% 0.00% 0.00%
waiver)
12b-1 fees 0.20 0.85 0.10
Other expenses 0.40(6) 0.40(6) 0.40
----- ----- -----
Total operating
expenses 0.60%(7) 1.25%(7) 0.50%(8)
====== ====== ======
(6) After expense waiver.
(7) Prior to August 1, 1995, the Adviser had voluntarily agreed to reimburse
the Intermediate Fund for all expenses (exclusive of 12b-1 fees, brokerage
commissions, interest, taxes and extraordinary expenses, if any).
Effective August 1, 1995, the Adviser has voluntarily agreed to reimburse
the Fund's expenses to the extent total expenses (exclusive of 12b-1 fees,
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 0.55%, "Other expenses" would have been 0.57% for each Class,
and "Total operating expenses" would have been 1.32% for Class A and 1.97%
for Class B. Amounts in the table reflect the aggregate operating
expenses incurred by the Fund during the fiscal year ended November 30,
1995, adjusted to reflect the current expense limit of the Fund.
(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 0.88%, and "Total
operating expenses" would have been 1.48%.
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:
Short-Term
Intermediate Fund Fund
Class A Class B Class A
Period: (9) (10)
1 year $38 $53 $13 $15
3 years 51 60 40 26
5 years 65 69 69 38
10 years 105 133(11) 133(11) 72
(9) Assumes redemption at period end.
(10) Assumes no redemption.
(11) Class B shares automatically convert to Class A shares after
approximately 8 years; therefore, years 9 and 10 reflect Class A share
expenses.
Without voluntary fee reduction, the Intermediate Fund's amounts would be $45,
$73, $102 and $186 for Class A shares for 1, 3, 5 and 10 years, respectively;
$60, $82, $106 and $213 for Class B shares assuming redemptions for 1, 3, 5,
and 10 years, respectively; and $20, $62, $106 and $213 for Class B shares
assuming no redemptions for 1, 3, 5 and 10 years, respectively. The 10 year
amounts for Class B share convert to Class A shares after approximately 8 years;
therefore, years 9 and 10 reflect Class A expenses
Without voluntary fee reduction, the Short Term Fund's amounts would be $25,
$56, $90 and $185 for Class A shares for 1, 3, 5 and 10 years, respectively.
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' 1995 Annual
Report and is incorporated by reference into the Statement of Additional
Information. The Funds adopted their current objectives on May 31, 1995. The
data presented for periods prior to May 31, 1995, represent operations under
earlier objectives and policies.
<TABLE>
<CAPTION>
Intermediate Fund
--------------------------------------------------------------------------------
Period ended
Year ended November 30 November 30
1995 1994 1993(b)
------------------------- ------------------------- -------------------------
Class A Class B Class A Class B Class A Class B
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $7.210 $7.210 $7.810 $7.810 $7.500 $7.500
======= ======= ======= ======= ======= ======
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.387 0.338 0.366 0.317 0.305 0.263
Net realized and unrealized
gain (loss) 0.641 0.641 (0.596) (0.596) 0.302 0.302
------ ------ ------- ------- ------ -----
Total from Investment Operations 1.028 0.979 (0.230) (0.279) 0.607 0.565
------ ------ ------- ------- ------ -----
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.388) (0.339) (0.370) (0.321) (0.297) (0.255)
------- ------- ------- ------- ------- -------
Net asset value - End of period $7.850 $7.850 $7.210 $7.210 $7.810 $7.810
======= ======= ======= ======= ======= ======
Total return (c)(d) 14.56% 13.82% (3.05)% (3.68)% 8.18%(e) 7.61%(e)
====== ====== ======= ======= ===== =====
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.36%(f) 1.01%(f) 0.20% 0.85% 0.20%(g) 0.85%(g)
Fees and expenses waived
or borne by the Adviser 0.96%(f) 0.96%(f) 1.07% 1.07% 1.33%(g) 1.33%(g)
Net investment income 5.03%(f) 4.38%(f) 4.85% 4.20% 4.53%(g) 3.88%(g)
Portfolio turnover 69% 69% 26% 26% 5%(g) 5%(g)
Net assets at end of period ($000) $13,317 $14,820 $16,791 $14,138 $14,700 $9,396
- ---------------------------------
(a) Net of fees and expenses waived or
borne by the Adviser which amounted to $0.074 $0.074 $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 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) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(g) Annualized.
</TABLE>
THE FUNDS' FINANCIAL HISTORY cont'd
<TABLE>
<CAPTION>
Short-Term Fund
--------------------------------------------
Year ended Period ended
November 30 November 30
1995 1994 1993(b)
----------- ----------- ---------------
Class A Class A Class A
<S> <C> <C> <C>
Net asset value - Beginning of period $7.420 $7.530 $7.500
======= ======= ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.289 0.215 0.196
Net realized and unrealized
gain (loss) 0.111 (0.105) 0.012
------ ------- -----
Total from Investment Operations 0.400 0.110 0.208
------ ------ -----
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.290) (0.220) (0.178)
------- ------- -------
Net asset value - End of period $7.530 $7.420 $7.530
======= ======= ======
Total return (c)(d) 5.47% 1.48% 2.80%(e)
===== ===== =====
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.50%(f) 0.50% 0.50%(g)
Fees and expenses waived
or borne by the Adviser 0.98%(f) 0.85% 1.92%(g)
Net investment income 3.74%(f) 2.97% 2.85%(g)
Portfolio turnover 123% 16% 22%(g)
Net assets at end of period ($000) $11,756 $13,763 $4,961
- ---------------------------------
(a) Net of fees and expenses waived or
borne by the Adviser which amounted to $0.076 $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 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) The benefits derived from custody credits and directed brokerage
arrangements had no impact . Prior years' ratios are net of benefits
received, if any.
(g) 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 Intermediate Fund seeks as high a level of after-tax total return as is
consistent with moderate volatility, by pursuing current income exempt from
federal income tax and opportunities for appreciation from a portfolio primarily
invested in investment-grade, intermediate-term municipal bonds. The Short-Term
Fund seeks 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 AND CERTAIN RISK FACTORS
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.
Borrowing of Money. The Fund may borrow 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.
Short-Term Trading. The Funds may trade portfolio securities for short-term
profits to take advantage of price differentials. These trades are limited by
certain Internal Revenue Code requirements. High portfolio turnover may result
in higher transaction costs and higher levels of realized capital gains.
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 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 each Fund's other fundamental policies listed
in the Statement of Additional Information cannot be changed without the
approval of a majority of such 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
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. Colonial Investment
Services, Inc. (Distributor), is a subsidiary of the Adviser and serves as the
distributor for the Funds' shares. Colonial Investors Service Center, Inc.
(Transfer Agent), an affiliate of the Adviser, serves as the shareholder
services and transfer agent for the Funds. The Colonial Group, Inc. is a direct
subsidiary of Liberty Financial Companies, Inc. which in turn is an indirect
subsidiary of Liberty Mutual Insurance Company (Liberty Mutual). Liberty Mutual
is considered to be the controlling entity of the Adviser and its affiliates.
Liberty Mutual is an underwriter of workers' compensation insurance and a
property and casualty insurer in the U.S.
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 daily 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
certain 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 of the Funds are
valued as of the close of the New York Stock Exchange (Exchange) each day the
Exchange is open. 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 to
shareholders 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. Although each Fund's distributions of interest from tax-exempt
bonds will not be subject to regular federal income tax, a portion of such
interest may be included in computing a shareholder's federal alternative
minimum tax liability. In addition, shareholders will generally be subject to
state and local income taxes on distributions they receive from each Fund.
Furthermore, capital gains distributions by each Fund will generally be subject
to federal, state and local income taxes. If the Funds make 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. 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 of the Funds are offered continuously. Orders received in good form prior
to the time at which the Funds value their shares (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; 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. 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, subject to a 0.20% annual service fee, 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 $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 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 eight years (at which time they convert to Class A shares not
bearing a distribution fee), a 0.20% annual service fee and a declining
contingent deferred sales charge if redeemed within 4four 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 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, subject to a 0.10% annual service fee, 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 $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.
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 amount
redeemed, 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. See the
Statement of Additional Information for more information.
Special Purchase Programs. The Fund allows certain investors or groups of
investors to purchase shares at a reduced or without an initial or contingent
deferred sales charge. These programs are described in the Statement of
Additional Information under "Programs for Reducing or Eliminating Sales
Charges" and "How to Sell Shares."
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 of the Funds may be sold on any day the 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
Funds 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 prior to the time at which the Funds value their shares 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 income 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 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. 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 four 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 and/or their financial advisers are automatically eligible to
exchange Fund shares by telephone and may redeem up to $50,000 of each
Fund's shares by calling 1-800-422-3737 toll-free any business day between
9:00 a.m. and the time at which the Fund values its shares. Telephone
redemption privileges for larger amounts may be elected on the account
application. 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 30 days. The
Transfer Agent will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine and, if it does not, may be liable for
any losses due to unauthorized or fraudulent telephone transactions. All
telephone transactions are recorded. Shareholders and/or their financial
advisers are required to provide their name, address and account
number. Financial advisers are also required to provide their broker number.
Shareholders and/or their financial advisers wishing to redeem or exchange
shares by telephone may experience difficulty in reaching the Fund at its
toll-free telephone number during periods of drastic economic or market changes.
In that event, shareholders and/or their financial advisers should follow the
procedures for redemption or exchange by mail as described above under "How to
Sell Shares." The Adviser, the Transfer Agent and the Fund reserve the right to
change, modify, or terminate the telephone redemption or exchange services at
any time upon prior written notice to shareholders.
Shareholders and/or their financial advisers 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
the 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. Shareholders receive one vote for
each Fund share. 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.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the Trust's
Declaration of Trust (Declaration) disclaims shareholder liability for acts or
obligations of the Funds and the Trust and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered into or
executed by the Funds or the Trust's 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 Funds. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances (which are considered remote) in which the Fund would
be unable to meet its obligations and the disclaimer was inoperative. The risk
of a particular fund incurring financial loss on account of another fund of the
Trust is also believed to be remote, because it would be limited to
circumstances in which the disclaimer was inoperative and the other fund was
unable to meet its obligations.
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
UMB, 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 29, 1996
COLONIAL INTERMEDIATE
TAX-EXEMPT FUND
COLONIAL SHORT-TERM
TAX-EXEMPT FUND
PROSPECTUS
Colonial Intermediate Tax-Exempt Fund seeks 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. Colonial Short-Term Tax-Exempt Fund seeks 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 29, 1996 Statement of Additional Information.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, ENDORSED OR
INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
[COLONIAL FLAG LOGO]
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, & 7.
To apply for special services for a new or existing account, complete sections
4, 5, 6, or 8 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 or D 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 Fund Fund
1_______________ 2__________________ 3____________________
$_______________ $__________________ $____________________
Amount Amount Amount
Class
___ A Shares ___ B Shares (less than $250,000) ___ C Shares (Adjustable Rate
U.S. Government Fund only)
___ D Shares (less than $500,000, available on certain funds; see prospectus)
Method of Payment
Choose one
___Check payable to the Fund
___Bank wired on (Date) ____/____/____
Wire confirmation #
___Wire/Trade confirmation #___________________
Ways to Receive Your Distributions
Choose one
___Reinvest dividends and capital gains
___Dividends and capital gains in cash
___Dividends in cash; reinvest capital gains
___Automatic Dividend Diversification See section 5A, inside
___Direct Deposit via Colonial Cash Connection Complete Bank Information
in section 4B. I understand that my bank must be a member of the
Automated Clearing House (ACH).
Distributions of $10.00 or less will automatically be reinvested in additional
fund shares.
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.
You must cross out item 2a, b or c below only if you have been notified by the
Internal Revenue Service (IRS) that you are currently subject to back-up
withholding because of under-reporting interest or dividends on you tax return.
2. I am not subject to back-up withholding because: (a) I am exempt from back-
up withholding, or (b) I have not been notified by the IRS that I am
subject to back-up withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer
subject to back-up 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. If you receive your SWP payment via ACH, you
may request it to be processed any day of the month. Withdrawals in excess of
12% annually of your current account value will not be accepted. Redemptions
made in addition to SWP payments may be subject to a contingent deferred sales
charge for Class B or Class D shares. Please consult your financial or tax
adviser before electing this option.
Funds for Withdrawal:
1___________________
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 _____/_____ (day/month).
2___________________
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 _____/_____ (day/month).
Payment Instructions
Send the payment to (choose one):
__My address of record.
__My bank account via Colonial Cash Connection (through electronic funds
transfer). Please complete the Bank Information section below. All ACH
transactions will be made two business days after the processing date
My bank must be a member of the Automated Clearing House (ACH) system.
__The payee listed at right. If more than one payee, provide the name,
address, payment amount, and frequency for other payees (maximum of 5) on
a separate sheet. If you are adding this service to an existing account,
please sign below and have your signature(s) guaranteed.
______________________________________________
Name of payee
______________________________________________
Address of payee
______________________________________________
City
______________________________________________
State Zip
______________________________________________
Payee's bank account number, if applicable
B. Telephone Withdrawal Options
All telephone transaction calls are recorded. These options are not available
for retirement accounts. Please sign below and have your signature(s)
guaranteed.
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 of record. For your protection, this service is only available on
accounts that have not had an address change within 30 days of the redemption
request.
2. Telephone Redemption
__I would like the Telephone Redemption privilege either by federal fund wire
or ACH. Telephone redemptions over $1,000 will be sent via federal fund wire,
usually on hte next business day ($7.50 will be deducted). Redemptions of
$1,000 or less will be sent by check to your designated bank.
3. On-Demand ACH Redemption
__I would like the On-Demand ACH Redemption Privilege. Proceeds paid via ACH
will be credited to your bank account two business days after the process
date. You or your financial adviser may withdraw shares from you fund acount
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.
Bank Information (For Sections A and B 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)
X__________________________________
Signature of account owner(s)
X__________________________________
Signature of account owner(s) Place signature guarantee here.
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. Accounts must be identically registered. I have
carefully read the prospectus for the fund(s) listed below.
1____________________________
From fund
____________________________
Account number (if existing)
____________________________
To fund
____________________________
Account number (if existing)
2____________________________
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 exchanged into the same share
class of up to four other identically registered Colonial accounts, on a
monthly basis. The minimum amount for each exchange is $100. Please complete
the section below.
____________________________________
Fund from which shares will be sold
$_________________________
Amount to redeem monthly
1____________________________________
Fund to invest shares in
$_________________________
Amount to invest monthly
2____________________________________
Fund to invest shares in
$_________________________
Amount to invest monthly
C. Fundamatic/On-Demand ACH Purchase
Fundamatic automatically transfers the specified amount from your bank
checking account to your Colonial fund account. The On-Demand ACH Purchase
program moves money from you bank checking account to your Colonial Fund
account by electronic funds transfer on any specified day of the month.
You will receive the applicable price two business days after the receipt
of your request. 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.
1____________________________________
Fund name
_________________________________
Account number
$_____________________ _________________
Amount to transfer Month to start
2___________________________________
Fund name
$_____________________ _________________
Amount to transfer Month to start
Frequency
__Monthly or __Quarterly
Check one:
__ACH (Any day of the month)
__Paper Draft
(Choose either the 5th__ or 20th__ day of the month)
Authorization to honor checks drawn by Colonial Investors Service Center,
Inc. 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
6------------Ways to Reduce Your Sales Charges------------
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 any other 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.
1_____________________________________
Name on account
_____________________________________
Account number
2_____________________________________
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.
7-------------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, Inc. (CISI), the Fund's prospectus, and this
application. We will notify CISI, Inc., 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
8----------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. Please
indicate accounts to be linked.______________________
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, Inc. 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, Inc., Colonial Investment Services, 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-224B-1295
Checkwriting Signature Card
(Class A & Class C Shares Only)
Colonial Mutual Funds
Signature Card for the Bank of Boston ("Bank").
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Name of Fund
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Fund account number
Indicate the number of signatures required
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Account Name:
You must sign below exactly as your account is registered.
X
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Signature
X
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Signature
By signing this card, you are subject to the conditions printed on the reverse
side. If adding this privilege to an existing account, your signatures must be
guaranteed.
Checkwriting Privilege
By electing the checkwriting privilege and signing the signature card, I
acknowledge that I am subject to the rules and regulations of the Bank of
Boston ("Bank") as currently existing and as they may be amended from time
to time. I designate the Bank as my representative to present checks drawn
on my Fund account to the Fund or its Agent and deposit the proceeds in this
checking account. I understand that the shares for which share certificates
have been issued or requested cannot be redeemed in this manner.
If the account is registered in joint tenancy, all persons must sign this card,
and each person guarantees the genuineness of all other parties' signatures. I
understand that if only one person signs a check, that all other tenants have
authorized that signature.
Minimum and Maximum
I understand that checks may not be in amounts less than $500 nor more than
$100,000, and that the Fund reserves the right to change these limits in its
sole discretion. I agree that neither the Fund nor its Agent is responsible
for any loss, expense, or cost arising from these redemptions. Also, if I have
recently made additional investments, I understand that redemption proceeds
will not be available until the check used to purchase the investment
(including a certified or cashier's check) has been cleared by the bank on
which it is drawn, which could take up to 15 days or more.
D-138A-0795
COLONIAL TRUST IV
Cross Reference Sheet
Colonial 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 Fund's Financial History
4. The Fund's Investment Objective;
Organization and History; How the
Fund Pursues its Objective
5. Cover Page; How the Fund is
Managed; Organization and
History; The Fund's Investment
Objective; Back Cover
6. Organization and History;
Distributions and Taxes; How to
Buy Shares
7. Cover Page; Summary of Expenses;
How to Buy Shares; How the Fund
Values its Shares; 12b-1 Plans;
Back Cover
8. Summary of Expenses; How to Sell
Shares; How to Exchange Shares;
Telephone Transactions
9. Not Applicable
March 29, 1996
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 risks 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 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.
TE-01/927B-039
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 29, 1996 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 and, in addition, are subject to 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 Objective
How the Fund Pursues its Objective
and Certain Risk Factors
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 your annual
expenses for an investment in each Class of the Fund's shares. See "How the Fund
is Managed" and "12b-1 Plans" for more complete descriptions of the Fund's
various costs and expenses.
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 average net assets)
Class A Class B
Management fee (6) 0.52% 0.52%
12b-1 fees 0.25 1.00
Other expenses 0.21 0.21
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Total operating expenses 0.98% 1.73%
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(6) For fiscal year 1995, the management fee was 0.55% and did not reflect the
1996 management fee reductions. See "Fund Charges and Expenses" in the
Statement of Additional Information.
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
(7) (8)
1 year $57 $ 68 $ 18
3 years 77 85 55
5 years 99 114 94
10 years 162 184 (9) 184 (9)
(7) Assumes redemption at period end.
(8) Assumes no redemption.
(9) Class B shares automatically convert to Class A shares after approximately
8 years; therefore, years 9 and 10 reflect Class A share 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 1995 Annual
Report and is incorporated by reference into the Statement of Additional
Information. The Fund adopted its current objective on May 31, 1995. The data
presented for periods prior to May 31, 1995 represent operations under earlier
objectives and policies.
<TABLE>
<CAPTION>
CLASS A
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Year ended November 30
------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $12.180 $13.920 $13.480 $13.190 $12.890 $13.020
------- ------- ------- ------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.771 0.795 0.842 0.913 0.955 0.986
Net realized and unrealized
gain (loss) 1.535 (1.744) 0.451 0.277 0.305 (0.120)
----- ------- ----- ----- ------ -------
Total from Investment Operations 2.306 (0.949) 1.293 1.190 1.260 0.866
----- ------- ----- ----- ------ -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.766) (0.791) (0.853) (0.900) (0.955) (0.996)
From net realized gains --- --- --- --- --- ---
From capital paid in --- --- --- --- (0.005) (a) ---
--- --- --- --- ------- --- ---
Total From Distributions Declared to (0.766) (0.791) (0.853) (0.900) (0.960) (0.996)
Shareholders ------- ------- ------- ------- ------- -------
Net asset value - End of period $13.720 $12.180 $13.920 $13.480 $13.190 $12.890
======= ======= ======= ======= ======== =======
Total return (b) 19.35% (7.08)% 9.80% 9.29% 10.12% 6.95%
====== ======= ===== ===== ====== =====
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.01% (c) 1.01% 1.02% 1.05% 1.03% 1.05%
Net investment income 5.82% (c) 6.00% 6.06% 6.81% 7.29% 7.64%
Portfolio turnover 41% 56% 28% 14% 10% 10%
Net assets at end of period (in millions) $3,111 $2,858 $3,357 $2,899 $2,486 $1,886
- ----------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS A
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Year ended November 30
--------------------------------------------------------
1989 1988 1987 1986
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $12.970 $12.760 $13.880 $12.760
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 1.001 1.007 1.083 1.110
Net realized and unrealized
gain (loss) 0.045 0.235 (1.159) 1.150
----- ----- ------- -----
Total from Investment Operations 1.046 1.242 (0.076) 2.260
----- ----- ------- -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.996) (1.032) (1.015) (1.085)
From net realized gains --- --- (0.029) (0.055)
From capital paid in --- --- --- ---
--- --- --- ---
Total From Distributions Declared to (0.996) (1.032) (1.044) (1.140)
Shareholders ------- ------- ------- -------
Net asset value - End of period $13.020 $12.970 $12.760 $13.880
======= ======= ======= =======
Total return (b) 8.33% 10.03% (0.55)% 18.38%
===== ====== ======= ======
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.03% 1.06% 1.08% 1.05%
Net investment income 7.67% 7.77% 7.79% (d) 8.10% (d)
Portfolio turnover 9% 22% 20% 26%
Net assets at end of period (in millions) $1,547 $1,389 $1,278 $1,342
- ---------------------------------
</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) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(d) Ratio excludes reduction of provision for accumulated earnings tax.
THE FUND'S FINANCIAL HISTORY (CONT'D)
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------
Year ended November 30
-----------------------------------------------------------
1995 1994 1993 1992 (a)
---- ---- ---- --------
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $12.180 $13.920 $13.480 $13.230
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.673 0.695 0.740 0.462
Net realized and unrealized gain (loss) 1.535 (1.744) 0.451 0.248
------ ------- ----- -----
Total from Investment Operations 2.208 (1.049) 1.191 0.710
------ ------- ----- -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.668) (0.691) (0.751) (0.460)
------- ------- ------- -------
Net asset value - End of period $13.720 $12.180 $13.920 $13.480
======== ======= ======= =======
Total return(b) 18.47% (7.78)% 9.00% 9.29% (d)
====== ======= ===== =====
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.76% (c) 1.76% 1.77% 1.80% (e)
Net investment income 5.07% (c) 5.25% 5.31% 6.06% (e)
Portfolio turnover 41% 56% 28% 14%
Net assets at end of period (in millions) $469 $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 deferred sales charge.
(c) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits, if any.
(d) Not annualized.
(e) 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 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 OBJECTIVE AND CERTAIN RISK FACTORS
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 (a) bonds rated lower
than Baa by Moody's, lower than BBB by S&P or comparably rated bonds
(collectively "lower rated bonds") and (b) unrated bonds of all credit qualities
but excluding prerefunded bonds, in the aggregate, to not more than 35% of total
assets. The Fund currently intends to limit its investments in unrated bonds of
all credit qualities but excluding prerefunded bonds to 25% of total assets
(which 25% shall be included in the 35% aggregate limit for lower rated and
unrated bonds above). Relative to comparable securities of higher quality, lower
rated bonds and many unrated securities:
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 objective 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, 1995, was:
Rated Unrated
Investment grade 81.80% 15.70%
B-BB and equivalent 0.70 1.40
Below B 0.00 0.40
---- ----
Total 82.50% 17.50%
===== =====
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 Adviser's prediction on interest rates is inaccurate, the Fund may be
worse off than if it had not hedged.
Temporary/Defensive Investments. Temporarily available cash may be invested in
certificates of deposit, bankers' acceptances, Treasury bills and repurchase
agreements. Some or all of the Fund's assets may be invested in such investments
during periods of unusual market conditions. 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 will 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.
Borrowing of Money. The Fund may borrow 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.
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, shareholders should consider whether the Fund remains an
appropriate investment in light of their 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 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 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. Colonial Investment
Services, Inc. (Distributor) is a subsidiary of the Adviser which serves as the
distributor for the Fund's shares. Colonial Investors Service Center, Inc.
(Transfer Agent), an affiliate of the Adviser, serves as the shareholder
services and transfer agent for the Fund. The Colonial Group, Inc. is a direct
subsidiary of Liberty Financial Companies, Inc. which in turn is an indirect
subsidiary of Liberty Mutual Insurance Company (Liberty Mutual).Liberty Mutual
is considered to be the controlling entity of the Adviser and its affiliates.
Liberty Mutual is an underwriter of workers' compensation insurance and a
property and casualty insurer in the U.S.
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 daily net assets for fiscal year 1995.
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. Robert S. Waas, Vice President of
the Adviser, has co-managed the Fund since July 1995. Prior to joining the
Adviser in July 1995, Mr. Waas was a portfolio manager at Van Kampen/American
Capital and the Colonial Penn Group.
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 certain 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 of the Fund are
valued as of the close of the New York Stock Exchange (Exchange) each day the
Exchange is open. 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 to
shareholders 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 distributions in cash or in additional Fund shares,
you must report them as taxable income unless you are a tax-exempt institution.
Although the Fund's distributions of interest from tax-exempt bonds will not be
subject to regular federal income tax, a portion of such interest may be
included in computing a shareholder's federal alternative minimum tax liability.
In addition, shareholders will generally be subject to state and local income
taxes on distributions they receive from the Fund. Furthermore, capital gains
distributions by the Fund will generally be subject to federal, state and local
income taxes. 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 of the Fund are offered continuously. Orders received in good form prior
to the time at which the Fund values its shares (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 share 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, subject to a
0.25% annual service fee, 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 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 eight years (at which time they convert to Class A shares not
bearing a distribution fee), a 0.25% annual service fee and a declining
contingent deferred sales charge if redeemed within six 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 amount
redeemed, 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. See the
Statement of Additional Information for more information.
Special Purchase Programs. The Fund allows certain investors or groups of
investors to purchase shares at a reduced, or without an, initial or contingent
deferred sales charge. These programs are described in the Statement of
Additional Information under "Programs for Reducing or Eliminating Sales
Charges" and "How to Sell Shares."
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 of the Fund may be sold on any day the 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 prior to the time at which the Fund values its shares 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 income 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 the same class of shares of most
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.
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 and/or their financial advisers are automatically eligible to
exchange Fund shares by telephone and may redeem up to $50,000 of Fund
shares by calling
1-800-422-3737 toll-free any business day between 9:00 a.m. and the time at
which the Fund values its shares. Telephone redemption privileges for larger
amounts may be elected on the account application. 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 30 days. The Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine and, if it does
not, may be liable for any losses due to unauthorized or fraudulent telephone
transactions. All telephone transactions are recorded. Shareholders and/or their
financial advisers are required to provide their name, address and account
number. Financial advisers are also required to provide their broker number.
Shareholders and/or their financial advisers wishing to redeem or exchange
shares by telephone may experience difficulty in reaching the Fund at its
toll-free telephone number during periods of drastic economic or market changes.
In that event, shareholders and/or their financial advisers should follow the
procedures for redemption or exchange by mail as described above under "How to
Sell Shares." The Adviser, the Transfer Agent and the Fund reserve the right to
change, modify, or terminate the telephone redemption or exchange services at
any time upon prior written notice to shareholders. Shareholders and/or their
financial advisers 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 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. Shareholders receive one vote for
each Fund share. 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.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the Trust's
Declaration of Trust (Declaration) disclaims shareholder liability for acts or
obligations of the Fund and the Trust and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered into or
executed by the Fund or the Trust's 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 (which are considered remote) in which the Fund would
be unable to meet its obligations and the disclaimer was inoperative.
The risk of a particular fund incurring financial loss on account of another
fund of the Trust is also believed to be remote because it would be limited to
circumstances in which the disclaimer was inoperative and the other fund was
unable to meet its obligations.
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
UMB, 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 29, 1996
COLONIAL TAX-
EXEMPT FUND
PROSPECTUS
Colonial Tax-Exempt Fund seeks 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 29, 1996 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 Objective;
Organization and History; How the
Fund Pursues its Objective
5. Cover Page; How the Fund is
Managed; Organization and
History; The Fund's Investment
Objective; Back Cover
6. Organization and History;
Distributions and Taxes; How to
Buy Shares
7. Cover Page; Summary of Expenses;
How to Buy Shares; How the Fund
Values its Shares; 12b-1 Plans;
Back Cover
8. Summary of Expenses; How to Sell
Shares; How to Exchange Shares;
Telephone Transactions
9. Not Applicable
March 29, 1996
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 risks 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 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.
TI-01/924B-0396-0396
Read it carefully and retain it for future reference. More detailed information
about the Fund is in the March 29, 1996 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 and, in addition, are subject to 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
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 your annual
expenses for an investment in each Class of the Fund's shares. See "How the Fund
is Managed" and "12b-1 Plans" for more complete descriptions of the Fund's costs
and expenses.
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 average 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 operating 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) (7)
1 year $ 58 $ 68 $ 18
3 years 79 87 57
5 years 103 118 98
10 years 170 192 (8) 192 (8)
(6) Assumes redemption at period end.
(7) Assumes no redemption.
(8) Class B shares automatically convert to Class A shares after
approximately 8 years; therefore, years 9 and 10 reflect Class A share
expenses.
THE FUND'S FINANCIAL HISTORY
The following schedules 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 1995 Annual
Report and is incorporated by reference into the Statement of Additional
Information. The Fund adopted its current objective on May 31, 1995. The data
presented for periods prior to May 31, 1995 represent operations under earlier
objectives and policies.
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------
Year ended November 30
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $7.450 $8.420 $8.080 $7.880 $7.660 $7.680
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.418 0.439 0.456 0.480 0.496 0.506
Net realized and unrealized
gain (loss) 0.935 (0.977) 0.338 0.200 0.222 (0.016)
----- ------- ----- ----- ----- -------
Total from Investment Operations 1.353 (0.538) 0.794 0.680 0.718 0.490
----- ------- ----- ----- ----- -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.423) (0.432) (0.454) (0.480) (0.498) (0.510)
------ ------ ------ ------ ------ ------
From net realized gain ------ ------ ------ ------ ------ ------
Total Distributions Declared to Shareholders (0.423) (0.432) (0.454) (0.480) (0.498) (0.510)
------- ------- ------- ------- ------- -------
Net asset value - End of period $8.380 $7.450 $8.420 $8.080 $7.880 $7.660
====== ====== ====== ====== ====== ======
Total return (a) 18.55% (6.61)% 10.00% 8.85% 9.66% 6.65%
====== ======= ====== ===== ===== =====
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.05%(b) 1.05% 1.07% 1.10% 1.08% 1.10%
Net investment income 5.20%(b) 5.44% 5.44% 5.97% 6.35% 6.66%
Portfolio turnover 31% 36% 12% 7% 8% 15%
Net assets at end of period (000) $240,894 $198,909 $241,610 $217,782 $189,483 $142,525
- --------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class A
----------------------------------------------
Year ended November 30
1989 1988 1987 1986
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $7.460 $7.260 $8.120 $7.150
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.508 0.510 0.501 0.546 (c)
Net realized and unrealized
gain (loss) 0.222 0.201 (0.767) 0.966
Total from Investment Operations 0.730 0.711 (0.266) 1.512
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.510) (0.511) (0.498) (0.542)
From net realized gain ------ ------ (0.096) -----
Total Distributions Declared to Shareholders (0.510) (0.511) (0.594) (0.542)
Net asset value - End of period $7.680 $7.460 $7.260 $8.120
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% (c)
Net investment income 6.70% 6.85% 6.63% 6.95% (c)
Portfolio turnover 38% 78% 129% 130%
Net assets at end of period (000) $124,119 $104,074 $105,944 $97,208
- ---------------------------------------------
</TABLE>
(a) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(b) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(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
------------------------------------------------------------------
Year ended November 30
------------------------------------------------------------------
1995 1994 1993 1992 (a)
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $7.450 $8.420 $8.080 $7.910
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.359 0.378 0.395 0.240
Net realized and unrealized
gain (loss) on investments 0.935 (0.977) 0.338 0.170
----- ------- ----- -----
Total from Investment Operations 1.294 (0.599) 0.733 0.410
----- ------- ----- -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.364) (0.371) (0.393) (0.240)
------- ------- ------- -------
Net asset value - End of period $8.380 $7.450 $8.420 $8.080
====== ====== ====== ======
Total return (b) 17.68% (7.31)% 9.20% 5.23% (d)
====== ======= ===== =====
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.80% (c) 1.80% 1.82% 1.85% (e)
Net investment income 4.45% (c) 4.69% 4.69% 5.22% (e)
Portfolio turnover 31% 36% 12% 7%
Net assets at end of period (000) $50,016 $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) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(d) Not annualized.
(e) 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 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 OBJECTIVE
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.
"When-Issued" and "Delayed Delivery" Securities. 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 10% of the Fund's net 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.
Borrowing of Money. The Fund may borrow 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.
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 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. Colonial Investment
Services, Inc. (Distributor) is a subsidiary of the Adviser and serves as the
distributor for the Fund's shares. Colonial Investors Service Center, Inc.
(Transfer Agent), an affiliate of the Adviser, serves as the shareholder
services and transfer agent for the Fund. The Colonial Group, Inc. is a direct
subsidiary of Liberty Financial Companies, Inc. which in turn is an indirect
subsidiary of Liberty Mutual Insurance Company (Liberty Mutual). Liberty Mutual
is considered to be the controlling entity of the Adviser and its affiliates.
Liberty Mutual is an underwriter of workers' compensation insurance and a
property and casualty insurer in the U.S.
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 daily net assets for the fiscal year 1995.
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
certain 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 of the Fund are
valued as of the close of the New York Stock Exchange (Exchange) each day the
Exchange is open. 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 to
shareholders 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. Although
the Fund's distributions of interest from tax-exempt bonds will not be subject
to regular federal income tax, a portion of such interest may be included in
computing a shareholder's federal alternative minimum tax liability. In
addition, shareholders will generally be subject to state and local income taxes
on distributions they receive from the Fund. Furthermore, capital gains
distributions by the Fund will generally be subject to federal, state and local
income taxes. 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 of the Fund are offered continuously. Orders received in good form prior
to the time at which the Fund values its shares (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 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, subject
to a 0.25% annual service fee, plus an initial sales charge 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 3.63% 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 eight years (at which time they convert to Class A shares not
bearing a distribution fee), a 0.25% annual service fee and a declining
contingent deferred sales charge if redeemed within six 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 amount
redeemed, 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.
Special Purchase Programs. The Fund allows certain investors or groups of
investors to purchase shares at a reduced or without an initial or contingent
deferred sales charge. These programs are described in the Statement of
Additional Information under "Programs for Reducing or Eliminating Sales
Charges" and "How to Sell Shares."
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 of the Fund may be sold on any day the 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 prior to the time at which the Fund values its shares 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 income 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 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 and/or their financial advisers are automatically eligible to
exchange Fund shares by telephone and redeem up to $50,000 of Fund shares
by calling
1-800-422-3737 toll-free any business day between 9:00 a.m. and the time at
which the Fund values its shares. Telephone redemption privileges for larger
amounts may be elected on the account application. 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 30 days. The Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine and, if it does
not, may be liable for any losses due to unauthorized or fraudulent telephone
transactions. All telephone transactions are recorded. Shareholders and/or their
financial advisers are required to provide their name, address and account
number. Financial advisers are also required to provide their broker number.
Shareholders and/or their financial advisers wishing to redeem or exchange
shares by telephone may experience difficulty in reaching the Fund at its
toll-free telephone number during periods of drastic economic or market changes.
In that event, shareholders and/or their financial advisers should follow the
procedures for redemption or exchange by mail as described above under "How to
Sell Shares." The Adviser, the Transfer Agent and the Fund reserve the right to
change, modify, or terminate the telephone redemption or exchange services at
any time upon prior written notice to shareholders. Shareholders and/or their
financial advisers 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. Shareholders receive one vote for
each Fund share. 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.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the Trust's
Declaration of Trust (Declaration) disclaims shareholder liability for acts or
obligations of the Fund and the Trust and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered into or
executed by the Fund or the Trust's 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 (which are considered remote) in which the Fund would
be unable to meet its obligations and the disclaimer was inoperative.
The risk of a particular fund incurring financial loss on account of another
fund of the Trust is also believed to be remote, because it would be limited to
circumstances in which the disclaimer was inoperative and the other fund was
unable to meet its obligations.
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
UMB, 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 29, 1996
COLONIAL TAX-EXEMPT INSURED FUND
PROSPECTUS
Colonial Tax-Exempt Insured Fund seeks 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 29, 1996 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. Cover Page; How the Fund is
Managed; Organization and
History; The Fund's Investment
Objective; Back Cover
6. Organization and History;
Distributions and Taxes; How to
Buy Shares
7. Cover Page; Summary of Expenses;
How to Buy Shares; How the Fund
Values its Shares; 12b-1 Plans;
Back Cover
8. Summary of Expenses; How to Sell
Shares; How to Exchange Shares;
Telephone Transactions
9. Not Applicable
March 29, 1996
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 risks 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, seeksa 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.
HM-01/925B-0396
Read it carefully and retain it for future reference. More detailed information
about the Fund is in the March 29, 1996 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 and, in addition, are subject to 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 your annual
expenses for an investment in each Class of the Fund's shares. See "How the Fund
is Managed" and "12b-1" Plans" for more complete descriptions of the Fund's
various costs and expenses.
Shareholder Transaction Expenses (1)(2)
Class A Class B
Maximum Initial Sales Charge
Imposed on a Purchase
(as of % 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 average net assets)
Class A Class B
Management fee 0.55% 0.55%
12b-1 fees 0.25 1.00
Other expenses 0.37 0.37
---- ----
Total operating expenses 1.17% 1.92%
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) (7)
1 year $ 59 $ 69 $ 19
3 years 83 90 60
5 years 109 124 104
10 years 183 205(8) 205(8)
(6) Assumes redemption at period end.
(7) Assumes no redemption.
(8) Class B shares automatically convert to Class A shares after
approximately 8 years; therefore years 9 and 10 reflect Class A share
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 1995 Annual
Report and is incorporated by reference into the Statement of Additional
Information. The Fund adopted its current objective on May 31, 1995. The data
presented for periods prior to May 31, 1995 represent operations under earlier
objectives and policies.
<TABLE>
<CAPTION>
Period Ended
Year ended November 30 November 30
--------------------------------------------------------------------------------------
1995 1994 1993 1992(b)
---- ---- ----- -------
Class A Class B Class A(a) Class B Class B Class B
------- ------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $9.330 $9.330 $9.800 $10.320 $10.070 $10.000
------- ------- ------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.656 0.583 0.188 0.605 0.609 0.338(c)
Net realized and unrealized
gain (loss) 0.912 0.912 (0.496) (1.016) 0.277 0.041
Total from Investment Operations 1.568 1.495 (0.308) (0.411) 0.886 0.379
------ ------ ------- ------- ------ -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.668) (0.595) (0.162) (0.579) (0.636) (0.309)
------- ------- ------- ------- ------- -------
Net asset value - End of period $10.230 $10.230 $9.330 $9.330 $10.320 $10.070
======== ======== ======= ======= ======== =======
Total return (d) 17.28% 16.42% (3.15)%(e)% (4.10)% 9.00% 3.80%(e)(f)
====== ====== ======= ======= ======== =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.17%(g) 1.92%(g) 1.15%(h) 1.90% 1.94% 2.00%(h)
Fees waived by the Adviser --- --- --- --- --- 0.01%(h)
Net investment income 6.67%(g) 5.92%(g) 7.19%(h) 6.44% 5.95% 6.83%(h)
Portfolio turnover 26% 26% 25% 25% 31% 13%(h)
Net assets at end of period (000) $17,997 $137,893 $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) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(h) 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 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 legislation limits and future
legislation 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, 1995:
Rated Unrated
Investment grade 48.60% 43.70%
B-BB and equivalent 2.40% 4.00%
Below B --- 1.30%
Total 51.00% 49.00%
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.
Temporary/Defensive Investments. 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 net 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.
Borrowing of Money. The Fund may borrow money from banks for temporary or
emergency purposes up to 10% of its net assets.
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 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. Colonial Investment
Services, Inc. (Distributor) is a subsidiary of the Adviser and serves as the
distributor for the Fund's shares. Colonial Investors Service Center, Inc.
(Transfer Agent), an affiliate of the Adviser, serves as the shareholder
services and transfer agent for the Fund. The Colonial Group, Inc. is a direct
subsidiary of Liberty Financial Companies, Inc. which in turn is an indirect
subsidiary of Liberty Mutual Insurance Company (Liberty Mutual). Liberty Mutual
is considered to be the controlling entity of the Adviser and its affiliates
Liberty Mutual is an underwriter of workers' compensation insurance and a
property and casualty insurer in the U.S.
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 daily net assets for fiscal year 1995.
Bonny E. Boatman, Senior Vice President and Director of the Adviser and head of
the 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
certain 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 of the Fund are
valued as of the close of the New York Stock Exchange (Exchange) each day the
Exchange is open.. 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 to shareholders,
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. Although the Fund's
distribution of interest from tax-exempt bonds will not be subject to regular
federal income tax, a portion or all of such interest may be included in
computing a shareholder's federal alternative minimum tax liability. In
addition, shareholders will generally be subject to state and local income taxes
on distributions they receive from the Fund. Furthermore, capital gains
distributions by the Fund will generally be subject to federal, state and local
income taxes. Each January, information on the amount and nature of
distributions for the prior year is sent to shareholders.
HOW TO BUY SHARES
Shares of the Fund are offered continuously. Orders received in good form prior
to the time at which the Fund values its shares (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 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, subject to a
0.25% annual service fee, 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
Amounted 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
$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 PurchaseCommission
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 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 eight years (at which time they convert to Class A shares not
bearing a distribution fee), a 0.25% annual service fee and a declining
contingent deferred sales charge if redeemed within six 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 amount
redeemed, 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.
Special Purchase Programs. The Fund allows certain investors or groups of
investors to purchase shares at a reduced, or without an, initial or contingent
deferred sales charge. These programs are described in the Statement of
Additional Information under "Programs for Reducing or Eliminating Sales
Charges" and "How to Sell Shares." 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 of the Fund may be sold on any day the 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 prior to the time at which the Fund values its shares 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 income 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 and/or their financial advisers are automatically eligible to
exchange Fund shares by telephone and redeem up to $50,000 of Fund shares
by calling
1-800-422-3737 toll-free any business day between 9:00 a.m. and the time at
which the Fund values its shares. Telephone redemption privileges for larger
amounts may be elected on the account application. 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 30 days. The Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine and, if it does
not, may be liable for any losses due to unauthorized or fraudulent telephone
transactions. All telephone transactions are recorded. Shareholders and/or their
financial advisers are required to provide their name, address and account
number. Financial advisers are also required to provide their broker number.
Shareholders and/or their financial advisers wishing to redeem or exchange
shares by telephone may experience difficulty in reaching the Fund at its
toll-free telephone number during periods of drastic economic or market changes.
In that event, shareholders and/or their financial advisers should follow the
procedures for redemption or exchange by mail as described above under "How to
Sell Shares." The Adviser, the Transfer Agent and the Fund reserve the right to
change, modify, or terminate the telephone redemption or exchange services at
any time upon prior written notice to shareholders. Shareholders and/or their
financial advisers 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. Shareholders receive one vote for
each Fund share. 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.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the Trust's
Declaration of Trust (Declaration) disclaims shareholder liability for acts or
obligations of the Fund and the Trust and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered into or
executed by the Fund or the Trust's 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 (which are considered remote) in which the Fund would
be unable to meet its obligations and the disclaimer was inoperative. The risk
of a particular fund incurring financial loss on account of another fund of the
Trust is also believed to be remote, because it would be limited to
circumstances in which the disclaimer was inoperative and the other fund was
unable to meet its obligations.
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 UMB, 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 29, 1996
COLONIAL HIGH YIELD
MUNICIPAL FUND
PROSPECTUS
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.
For more detailed information about the Fund, call the Adviser at 1-800-248-2828
for the March 29, 1996 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 Objective;
Organization and History; How the
Fund Pursues its Objective and
Certain Risk Factors
5. Cover Page; How the Fund is
Managed; Organization and
History; The Fund's Investment
Objective, Back Cover
6. Organization and History;
Distributions and Taxes; How to
Buy Shares
7. Cover Page; Summary of Expenses;
How to Buy Shares; How the Fund
Values its Shares; 12b-1 Plans;
Back Cover
8. Summary of Expenses; How to Sell
Shares; How to Exchange Shares;
Telephone Transactions
9. Not Applicable
March 29, 1996
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 risks 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 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
UF--0396
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 29, 1996 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 and, in addition, are subject to 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."
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.
<PAGE>
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 your annual
expenses for an investment in each Class of the Fund's shares. See "How the Fund
is Managed" and "12b-1 Plans" for more complete descriptions of the Fund's
various costs and expenses.
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 average net assets)
Class A Class B
Management fee 0.64% 0.64%
12b-1 fees 0.25 1.00
Other expenses 0.32 0.32
---- ----
Total operating expenses 1.21% 1.96%
==== ====
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) (7)
1 year $ 59 $ 20 $ 70
3 years 84 61 91
5 years 111 106 126
10 years 187 209(8) 209(8)
(6) Assumes no redemption.
(7) Assumes redemption.
(8) Class B shares automatically convert to Class A shares after approximately
8 years; therefore, years 9 and 10 reflect Class A share expenses.
<PAGE>
THE FUND'S FINANCIAL HISTORY
The following schedules 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 1995 Annual
Report and is incorporated by reference into the Statement of Additional
Information. The schedules have 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
---------------------------------------------------------------------------------------
1995 1994 1993 1992(a) 1991(a) 1990(a) 1989(a) 1988(a)
---- ---- ---- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $11.720 $13.600 $12.960 $11.440 $10.090 $11.600 $10.710 $10.300
-------- -------- -------- -------- -------- -------- -------- --------
Income From Investment Operations:
Net investment income 0.640 0.681 0.713 0.741 0.917 0.930 0.939 0.851
Net realized and unrealized gain (loss) 2.659 (1.896) 0.616 1.517 1.377 (1.472) 0.927 0.529
----- ------- ----- ----- ----- ------- ------ ------
Total from Investment Operations 3.299 (1.215) 1.329 2.258 2.294 (0.542) 1.866 1.380
----- ------- ----- ----- ----- ------- ----- ------
Less Distributions Declared To Shareholders:
From net investment income (0.649) (0.665) (0.689) (0.727) (0.941) (0.968) (0.932) (0.850)
From net realized gains --- -- --- --- --- --- (0.044) (0.120)
From capital paid in --- --- --- (0.011) (b) (0.003) (b) --- --- ---
----- ----- ----- ------- ------- ----- ----- -----
Total Distributions Declared to Shareholders (0.649) (0.665) (0.689) (0.738) (0.944) (0.968) (0.976) (0.970)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value - End of period $14.370 $11.720 $13.600 $12.960 $11.440 $10.090 $11.600 $10.710
======== ======== ======== ======== ======== ======== ======== ========
Total return(c) 28.90% (9.04)% 10.20% 20.21% 23.56% (4.74)% 17.94% 13.75%
------ ------- ------ ------ ------ ------- ------ ------
Ratios To Average Net Assets
Expenses 1.21% (d) 1.23% 1.19% 1.16% 1.11% 1.17% 1.12% 1.15%
Net investment income 5.00% (d) 5.49% 4.92% 5.52% 8.50% 8.69% 8.10% 7.94%
Portfolio turnover 7% 16% 6% 35% 1% 2% 24% 11%
Net assets at end of period (in $400 $373 $503 $232 $135 $162 $141 $183
millions)
- ---------------------------------
</TABLE>
CLASS A
--------------------
Year Ended November 30
--------------------
1987(a) 1986(a)
------- -------
Net asset value - Beginning of period $12.560 $12.360
-------- -------
Income From Investment Operations:
Net investment income 0.988 1.044
Net realized and unrealized gain (loss) (2.110) 0.402
------- -----
Total from Investment Operations (1.122) 1.446
------- -----
Less Distributions Declared To Shareholders:
From net investment income (0.973) (1.096)
From net realized gains (0.165) (0.150)
------ -------
Total Distributions Declared to Shareholders (1.138) (1.246)
------- -------
Net asset value - End of period $10.300 $12.560
======== =======
Total return(c) (9.84)% 12.24%
------- ------
Ratios To Average Net Assets
Expenses 1.09% 1.04%
Net investment income 8.18% 8.44%
Portfolio turnover 206% 255%
Net assets at end of period (in millions) $288 $411
- ---------------------------------
(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 reclassification, 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.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
<PAGE>
THE FUND'S FINANCIAL HISTORY(CONT'D)
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------
Year ended November 30
------------------------------------------------
1995 1994 1993 1992(a)
---- ---- ---- -------
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $11.720 $13.600 $12.960 $12.310
-------- -------- -------- -------
Income From Investment Operations:
Net investment income 0.544 0.587 0.612 0.296
Net realized and unrealized gain (loss) 2.659 (1.896) 0.616 0.691
------ ------- ------ -----
Total from Investment Operations 3.203 (1.309) 1.228 0.987
------ ------- ------ -----
Less Distributions Declared To Shareholders:
From net investment income (0.553) (0.571) (0.588) (0.337)
------- ------- ------- -------
Net asset value - End of period $14.370 $11.720 $13.600 $12.960
======== ======== ======== =======
Total return(b) 27.96% (9.73)% 9.42% 6.06% (c)
------ ------- ----- -----
Ratios To Average Net Assets
Expenses 1.96% (e) 1.98% 1.94% 1.91% (d)
Net investment income 4.25% (e) 4.74% 4.17% 4.77% (d)
Portfolio turnover 7% 16% 6% 35%
Net assets at end of period (in millions) $821 $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.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
Further performance information is contained in the Fund's 1995 Annual Report to
shareholders, which is obtainable free of charge by calling 1-800-248-2828.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
The Fund seeks primarily current income and secondarily long-term growth.
HOW THE FUND PURSUES ITS OBJECTIVE AND CERTAIN RISK FACTORS
The Fund seeks to achieve its objective by investing primarily in common and
preferred equity securities of companies engaged in the manufacture, production,
generation, transmission, sale or distribution of electricity, natural gas or
other types of energy, or water or other sanitary services, companies engaged in
telecommunications, including telephone, telegraph, satellite, microwave,
cellular or other communications media and companies primarily engaged in public
broadcasting, print media and cable television (Utility Companies). Normally,
substantially all of the Fund's assets will be invested in equity securities
issued by Utility Companies.
Utility Companies. The values of securities issued by Utility Companies are
especially affected by changes in prevailing interest rate levels (as interest
rates increase, the values of securities issued by Utility Companies tend to
decrease, and vice versa). The values of and dividends paid on such securities
also are affected by general competitive and market forces in the utility
industries, changes in federal and state regulation, energy conservation efforts
and other environmental concerns and, particularly with respect to nuclear
facilities, shortened economic life and repair and decomissioning costs. Gas
utilities were in recent years affected by deregulation which adversely affected
the profitability of such utilities. Similarly, the profitability of certain
electric utilities and telecommunication companies may in the future be
adversely affected by increased competition resulting from partial deregulation.
When-Issued Securities. The Fund may invest in equity securities on a
"when-issued" or forward basis. This means that the Fund will enter into a
contract to purchase the underlying security for a fixed price on a date beyond
the customary settlement date. No interest accrues until settlement.
Options. 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 Fund the right to sell to the
seller of the put, 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
a call option which increases its return on the underlying security if the
option expires or is closed out at a profit. Written calls may obligate the Fund
to sell the underlying security at a below market price. The Fund will pay a
premium for a put option, which will represent a loss to the Fund if the option
expires unexercised. Both are exercisable at any time prior to expiration.
Temporary/Defensive Investments. Temporarily available cash may be invested in
certificates of deposit, bankers' acceptances, high quality commercial paper,
treasury bills, U.S. government securities and repurchase agreements. Some or
all of the Fund's assets also may be invested in such investments during periods
of unusual market conditions. 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 will 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.
Borrowing of Money. The Fund may borrow money from banks for temporary or
emergency purposes in amounts of up to 10% of its net assets; however, it will
not purchase additional portfolio securities while borrowings exceed 5% of net
assets.
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 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 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 charges.
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 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 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. Colonial Investment
Services, Inc. (Distributor), is a subsidiary of the Adviser and serves as the
distributor for the Fund's shares. Colonial Investors Service Center, Inc.
(Transfer Agent), an affiliate of the Adviser, serves as the shareholder
services and transfer agent for the Fund. The Colonial Group, Inc. is a direct
subsidiary of Liberty Financial Companies, Inc. which in turn is an indirect
subsidiary of Liberty Mutual Insurance Company (Liberty Mutual). Liberty Mutual
is considered to be the controlling entity of the Adviser and its affiliates.
Liberty Mutual is an underwriter of workers' compensation insurance and a
property and casualty insurer in the U.S.
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 daily net assets for fiscal year 1995.
John E. Lennon and James P. Haynie serve as co-managers of the Fund. Mr. Lennon,
Vice President of the Adviser, has managed the Fund since 1984 and various other
Colonial equity funds since 1982. Mr. Haynie, also a Vice President of the
Adviser, has co-managed the Fund since June, 1995, and has managed various other
Colonial equity funds since 1993. Prior to joining the Adviser in 1993, Mr.
Haynie was a Vice President at Massachusetts Financial Services Company and a
Portfolio Manager at Trinity Investment Management.
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 certain 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 of the Fund are
valued as of the close of the New York Stock Exchange (Exchange) each day the
Exchange is open. 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 to
shareholders 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. 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 of the Fund are offered continuously. Orders received in good form prior
to the time at which the Fund values its shares (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 minumum 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 share 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, subject to a
0.25% annual service fee, 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 3.63% 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 purchases 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 eight years (at which time they convert to Class A shares not
bearing a distribution fee), a 0.25% annual service fee and a declining
contingent deferred sales charge if redeemed within six 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 amount
redeemed, 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. See the
Statement of Additional Information.
Special Purchase Programs. The Fund allows certain investors or groups of
investors to purchase shares at a reduced, or without an, initial or contingent
deferred sales charge. These programs are described in the Statement of
Additional Information under "Programs for Reducing or Eliminating Sales
Charges" and "How to Sell Shares."
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 of the Fund may be sold on any day the 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 prior to the time at which the Fund values its shares 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 income 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 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 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 in which the original investment was made.
TELEPHONE TRANSACTIONS
All shareholders and/or their financial advisers are automatically eligible to
exchange Fund shares by telephone and may redeem up to $50,000 of Fund shares by
calling 1-800-422-3737 toll-free any business day between 9:00 a.m. and the time
at which the Fund values its shares. Telephone redemption privileges for larger
amounts may be elected on the account application. Proceeds and confirmations of
telephone transctions will be mailed or sent to the address of record. Telephone
redemptions are not available on accounts with an address change in the
preceding 30 days. The Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine and, if it does
not, may be liable for any losses due to unauthorized or fraudulent telephone
transactions. All telephone transactions are recorded. Shareholders and/or their
financial advisers will be required to provide their name, address and account
number. Financial advisers will also be required to provide their broker number.
Shareholders and/or their financial advisers wishing to redeem or exchange
shares by telephone may experience difficulty in reaching the Fund at its
toll-free telephone number during periods of drastic economic or market changes.
In that event, shareholders and/or their financial advisers should follow the
procedures for redemption or exchange by mail as described under "How to Sell
Shares." The Adviser, the Transfer Agent and the Fund reserve the right to
change, modify or terminate the telephone redemption or exchange services at any
time upon prior written notice to shareholders. Shareholders and/or their
financial advisers 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 Trust is a Massachusetts business trust organized in 1978. The Fund
represents an 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. Shareholders receive one vote for
each Fund share. 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.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the Trust's
Declaration of Trust (Declaration) disclaims shareholder liability for acts or
obligations of the Fund and the Trust and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered into or
executed by the Fund or the Trust's 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 (which are considered remote) in which the Fund would
be unable to meet its obligations and the disclaimer was inoperative.
The risk of a particular fund incurring financial loss on account of another
fund of the Trust is also believed to be remote, because it would be limited to
circumstances in which the disclaimer was inoperative and the other fund was
unable to meet its obligations.
<PAGE>
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 29, 1996
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 29, 1996 Statement of Additional Information.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, ENDORSED OR
INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
[Colonial Flag Logo]
Colonial Mutual Funds
One Financial Center
Boston, Massachusetts
02111-2621
617-426-3750
Part A of Post-Effective Amendment No. 41 filed with the Commission on
September 25, 1995 (Colonial Municipal Money Market Fund), is incorporated
herein in its entirety by reference.
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. Fund Charges and Expenses;
Management of the Colonial Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses;
Management of the Colonial Funds
17. Fund Charges and Expenses;
Management of the Colonial Funds
18. Shareholder Meetings
19. How to Buy Shares; Determination
of Net Asset Value; Suspension of
Redemptions; Special Purchase
Programs/Investor Services;
Programs for Reducing or
Eliminating Sales Charges; How to
Sell Shares; How to Exchange
Shares
20. Taxes
21. Fund Charges and Expenses;
Management of the Colonial Funds
22. Fund Charges and Expenses;
Investment Performance;
Performance Measures
23. Independent Accountants
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
COLONIAL SHORT-TERM TAX-EXEMPT FUND
Statement of Additional Information
March 29, 1996
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 Fund 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 29, 1996.
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
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
Investment Objective and Policies of the Funds
Fundamental Investment Policies of the Funds
Other Investment Policies of the Funds
Portfolio Turnover
Fund Charges and Expenses
Investment Performance
Custodian
Independent Accountants
Part 2
Miscellaneous Investment Practices
Taxes
Management of the Colonial Funds
Determination of Net Asset Value
How to Buy Shares
Special Purchase Programs/Investor Services
Programs for Reducing or Eliminating Sales Charges
How to Sell Shares
Distributions
How to Exchange Shares
Suspension of Redemptions
Shareholder Meetings
Performance Measures
Appendix I
Appendix II
Part 1
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
COLONIAL SHORT-TERM TAX-EXEMPT FUND
Statement of Additional Information
March 29, 1996
DEFINITIONS
"Trust" Colonial Trust IV
"Intermediate Fund" or "Fund" Colonial Intermediate Tax-Exempt Fund
"Short-Term Fund" or "Fund" Colonial Short-Term Tax-Exempt Fund
"Adviser" 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 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 contains
additional information about the following securities and investment techniques
that are described or referred to in the Prospectus:
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
Investment Company Act of 1940 (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 securities of any company if the Trust knows that officers and
Trustees of the Trust or officers and directors of Colonialthe Adviser
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 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
Year ended November 30 Year ended November 30
1995 1994 1995 1994
---- ---- ---- ----
69% 26% 123% 16%
FUND CHARGES AND EXPENSES
Under each Fund's management agreement, each Fund pays the Adviser 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 the Adviser may agree to periodically).
Recent Fees paid to the Adviser, CISI and CISC (dollars in thousands)
Intermediate Fund
February 1, 1993
(commencement of
Year ended operations)
November 30 through November 30
----------- -----------------
1995 1994 1993
---- ----- ----
Management Fee $157 $162 $68
Bookkeeping Fee 27 27 22
Shareholder services
and transfer
agent fee 50 46 18
12b-1 fees:
Service fee 56 59 25
Distribution fee
(Class B) 95 83 26
Fees and Expenses
waived or borne by
the Adviser (273) (317) (165)
Short-Term Fund
February 1, 1993
(commencement of
Year ended operations)
November 30 through November 30
----------- -----------------
1995 1994 1993
---- ----- ----
Management Fee $60 $63 $17
Bookkeeping Fee 27 27 23
Shareholder services
and transfer
agent fee 21 19 5
12b-1 fees:
Service fee 12 12 3
Distribution fee
(Class B) N/A N/A N/A
Fees and Expenses
waived or borne by
the Adviser (118) (108) (64)
Brokerage Commissions (dollars in thousands)
Intermediate Fund
February 1, 1993
(commencement of
Year ended operations)
November 30 through November 30
----------------- ---------------------
1995 1994 1993
---- ----- ----
Total commissions $689 $662 $0
Directed transactions (a) 0 0 0
Commissions on directed
transactions 0 0 0
Short-Term Fund
February 1, 1993
(commencement of
Year ended operations)
November 30 through November 30
----------------- --------------------
1995 1994 1993
---- ---- ----
Total commissions $0 $0 $0
Directed transactions (a) 0 0 0
Commissions on directed
transactions 0 0 0
(a) See "Management of the Colonial Funds-Portfolio Transactions-Brokerage and
Research Services" in Part 2 of this SAI.
Trustees and Trustees Fees
For the fiscal year ended November 30, 1995, and the calendar year ended
December 31, 1995, the Trustees received the following compensation for serving
as Trustees:
<TABLE>
<CAPTION>
Aggregate Aggregate
Compensation Compensation
From The From The Pension or Total Compensation From
Intermediate Fund Short-Term Fund Retirement Estimated Trust and Fund Complex
For The Fiscal Year For The Fiscal Benefits Annual Paid To The Trustees For
Ended November 30, Year Ended Accrued As Part Benefits Upon The Calendar Year Ended
Trustee 1995 November 30, 1995 of Fund Expense Retirement December 31, 1995(b)
------- ---------------- ----------------- --------------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
Robert J. Birnbaum (i) $ 668 $ 621 $0 $0 $ 71,250
Tom Bleasdale 1,041(c) 966(d) 0 0 98,000(e)
Lora S. Collins 972 902 0 0 91,000
James E. Grinnell (i) 670 624 0 0 71,250
William D. Ireland, Jr. 1,206 1,116 0 0 113,000
Richard w. Lowry (i) 670 622 0 0 71,250
William E. Mayer 971 901 0 0 91,000
James L. Moody, Jr. 1,083(f) 1,009(g) 0 0 94,500(h)
John J. Neuhauser 969 900 0 0 91,000
George L. Shinn 1,097 1,017 0 0 102,500
Robert L. Sullivan 1,074 997 0 0 101,000
Sinclair Weeks, Jr. 1,194 1,107 0 0 112,000
</TABLE>
(b) At December 31, 1995, the Colonial Funds complex consisted of 33 open-end
and 5 closed-end management investment portfolios.
(c) Includes $521 payable in later years as deferred compensation.
(d) Includes $481 payable in later years as deferred compensation.
(e) Includes $49,000 payable in later years as deferred compensation.
(f) Includes $855 payable in later years as deferred compensation.
(g) Includes $798 payable in later years as deferred compensation
(h) Total compensation of $94,500 for the calendar year ended December 31,
1995, will be payable in later years as deferred compensation.
(i) Elected as a Trustee of the Colonial Funds complex on April 21, 1995.
The following table sets forth the amount of compensation paid to Messrs.
Birnbaum, Grinnell and Lowry in their capacities as Trustees or Directors of the
Liberty All-Star Equity Fund and Liberty All-Star Growth Fund, Inc. (formerly
known as The Charles Allmon Trust, Inc.) (together, Liberty Funds I) for service
during the calendar year ended December 31, 1995, and of Liberty Financial Trust
(now known as Colonial Trust VII) and LFC Utilities Trust (together, Liberty
Funds II) for the period January 1, 1995 through March 26, 1995(j):
Total Compensation From Total Compensation
Liberty Funds II For The From Liberty Funds I For
Period January 1, 1995 The Calendar Year Ended
Trustee Through March 26, 1995 December 31, 1995 (k)
- ------- ---------------------- ---------------------
Robert J. Birnbaum $2,900 $16,675
James E. Grinnell 2,900 22,900
Richard W. Lowry 2,900 26,250 (l)
(j) On March 27, 1995, four of the portfolios in the Liberty Financial Trust
(now known as Colonial Trust VII) were merged into existing Colonial
funds and a fifth was reorganized as a new portfolio of Colonial Trust
III. Prior to their election as Trustees of the Colonial Funds, Messrs.
Birnbaum, Grinnell and Lowry served as Trustees of Liberty Funds II;
they continue to serve as Trustees or Directors of Liberty Funds I.
(k) At December 31, 1995, the Liberty Funds I were advised by Liberty Asset
Management Company (LAMCO). LAMCO is an indirect wholly-owned
subsidiary of Liberty Financial Companies, Inc. (an intermediate parent
of the Adviser).
(l) Includes $3,500 paid to Mr. Lowry for service as Trustee of Liberty
Newport World Portfolio (formerly known as Liberty All-Star World
Portfolio) (Liberty Newport) during the calendar year ended December 31,
1995. At December 31, 1995, Liberty Newport was managed by Newport
Pacific Management, Inc. and Stein Roe and Farnham Incorporated, each an
affiliate of the Adviser.
Ownership of the Fund
At February 29, 1996, the officers and Trustees of the Trust owned less than 1%
of the then outstanding shares of each Fund.
At March 18,1996, the following shareholders owned 5% or more of the Funds'
outstanding shares:
Intermediate Fund:
Class A shares: John A. McNeice, Jr., 47 Green Street, Canton, MA 02021-1023,
owned 5.21%; Merrill Lynch, Pierce Fenner & Smith, Inc., Attn. Book Entry,
Mutual Funds Operations, 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, FL
32216, owned 5.61%; Margaret D. Wilson, 12333 Courtyard Lake Drive, St. Louis,
MO 63127-1456, owned 5.44%.
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 9.43%.
Short-Term Fund:
Class A shares: Colonial Management Associates, Inc., Attn: John
Wallace/Controller, One Financial Center, Boston, MA 02111, owned 55.86%; Louis
Betrand, 406 N. Cunningham, Rayne, LA 70578-6514, owned 6.43%; Oveta Culp Hobby
Trust, U/A DTD 1/3/63, U/W WP Hobby Trust, 2131 San Felipe, Houston TX
77019-5626, owned 8.52%.
At February 29, 1996, there were 367 Class A and 402 Class B shareholders of the
Intermediate Fund and 121 Class A shareholders of the Short-Term Fund.
Sales Charges (dollars in thousands)
Intermediate Fund
Class A Shares
February 1, 1993
(commencement of
Year ended investment operations)
November 30 through November 30
----------- ---------------------
1995 1994 1993
---- ----- ----
Aggregate initial sales charges
charges on Fund share
sales $39 $74 $179
Initial sales charges retained
by CISI 6 4 12
Short-Term Fund
Class A Shares
February 1, 1993
(commencement of
Year ended investment operations)
November 30 through November 30
----------- ---------------------
1995 1994 1993
---- ---- ----
Aggregate initial sales charges
charges on Fund share
sales $5 $12 $22
Initial sales charges retained
by CISI 1 2 2
Intermediate Fund
Class B Shares
February 1, 1993
Year ended (commencement of operations)
November 30 through November 30
----------- -------------------
1995 1994 1993
---- ---- ----
Aggregate contingent
deferred sales charges
(CDSC)on Fund redemptions
retained CISI $46 $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 the Adviser) 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 and are
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.
Approximately 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, 1995, were:
Intermediate Fund Short-Term Fund
Class A Shares Class B Shares Class A Shares
Fees to FSFs $ 26 $58 $17
Cost of sales material
relating to the Funds
(including printing
and mailing expenses) 7 4 6
Allocated travel,
entertainment and
other promotional expenses
(including advertising) 9 7 7
INVESTMENT PERFORMANCE
The Fund's yields for the month ended November 30, 1995 were:
Intermediate Fund
Class A Shares
- ------------------------------------------------------------
Yield Tax-Equivalent Yield Adjusted Yield
4.18% 6.92% 3.53%
Intermediate Fund
Class B Shares
- ------------------------------------------------------------------
Yield Tax-Equivalent Yield Adjusted Yield
3.67% 6.08% 3.00%
Short-Term Fund
Class A Shares
- -------------------------------------------------------------------
Yield Tax-Equivalent Yield Adjusted Yield
3.51% 5.81% 2.64%
The Funds' average annual total returns at November 30, 1995, were:
Intermediate Fund
Class A Shares
February 1, 1993
(commencement of
investment operations)
1 Year through November 30, 1995
------ -------------------------
With sales charge
of 3.25% 10.83% 5.46%
Without sales charge 14.56% 6.70%
Short-Term Fund
Class A Shares
February 1, 1993
(commencement of
investment operations
1 Year through November 30, 1995
------ -------------------------
With sales charge
of 3.25% 4.41% 3.07%
Without sales charge 5.47% 3.43%
Intermediate Fund
Class B
February 1, 1993
(commencement of operations)
1 Year through November 30, 1995
------ --------------------------
With applicable CDSC 9.82% (4.00% CDSC) 5.37% (2.00% CDSC)
Without CDSC 13.82% 6.01%
The Funds' distribution rates at November 30, 1995, which are based on the most
recent month's distributions, annualized, and the maximum offering price at the
end of the month, were:
Class A Class B
Intermediate Fund 4.58% 4.10%
Short-Term Fund 4.10% N/A
See Part 2 of this SAI, "Performance Measures," for how calculations are made.
CUSTODIAN
UMB, 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 6 through 29 of the Funds' November 30, 1995 Annual Report, are
incorporated in this SAI by reference.
<PAGE>
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
INVESTMENT PORTFOLIO
NOVEMBER 30, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 100.2% PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
CERTIFICATES OF PARTICIPATION - 1.8%
SC Spartanburg County School District,
5.00% 07/01/04 $ 500 $ 513
------
...................................................................................
CONSTRUCTION - 0.3%
BUILDING CONSTRUCTION
IA State Finance Authority,
Mason County Shopping Center:
6.000% 12/01/95 40 40
8.000% 12/01/04 50 53
------
93
------
...................................................................................
EDUCATION - 6.8%
MN State Higher Education Facilities
Authority, MacAlester College, Series 4-C,
6.000% 03/01/01 500 532
NY State Dormitory Authority,
State University of New York, Series A:
5.500% 07/01/00(a) 500 523
5.625% 07/01/16(a) 500 493
TX Brazos, Higher Educational
Facilities Authority, Series 1992-A,
6.600% 03/01/00 345 362
------
1,910
------
...................................................................................
GENERAL OBLIGATION - 35.4%
AZ Maricopa Paradise Valley,
6.350% 07/01/10(a) 500 560
AZ Phoenix,
6.125% 07/01/03 500 559
HI Honolulu City & County,
6.000% 11/01/01 500 541
6.000% 11/01/10 500 540
IL Joliet,
Series 1993-A,
5.300% 01/01/02 65 68
LA New Orleans,
(b) 09/01/16(c) 2,000 1,165
LA State,
Series 1993-A,
5.300% 08/01/04 145 152
MA Haverhill, Series A,
5.900% 06/15/02 200 216
</TABLE>
6
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
MA New Bedford,
6.000% 10/15/02 $ 625 $ 680
MI Berkley, City School District,
7.000% 01/01/09 500 588
MN West St. Paul, Independent School,
District No. 197,
(b) 02/01/04 1,585 1,066
NJ State, Series D,
(b) 02/15/04 90 61
OH Big Walnut Local School District,
Delaware County, Series 1993,
5.200% 06/01/02(d) 585 605
OH Olmstead Falls Local School District,
6.850% 12/15/11 550 617
OH State, Higher Education Commission,
Series II-B,
5.750% 11/01/04 500 539
OH Trumbull County,
5.100% 12/01/03 500 521
TX State, Series A,
5.800% 10/01/04 1,000 1,094
WI Racine, District Number 8,
5.400% 12/01/03 375 393
------
9,965
------
...................................................................................
HEALTH - 7.5%
HOSPITALS - 6.8%
AL East Health Care Authority,
Health Care Facilities and Tax Anticipation,
Series 1993,
5.625% 09/01/04 50 53
HI State Department Budget and Finance
Special Purpose Mortgage, Kapiolani
Health Care System, Series 1993,
5.500% 07/01/01 110 113
MI Dickinson County Memorial Hospital,
7.625% 11/01/05 300 319
MN Brainerd, Health Care Facilities,
St. Joseph Medical Center, Series 1993-D,
5.300% 02/15/02 50 52
NJ Health Care Facilities Financing Authority,
Raritan Bay Medical Center,
5.800% 07/01/97 70 70
OH Cuyahoga County, Meridia Health Systems,
6.300% 08/15/06 890 969
OH Green Springs Health Care
Facilities, St. Francis Health Care Center,
Series A,
7.000% 05/15/04 100 107
</TABLE>
7
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTH - CONT.
HOSPITALS - CONT.
PA Philadelphia, Hospitals & Higher
Educational Facilities, Temple
University Hospital, Series 1993,
5.750% 11/15/99 $ 100 $ 102
TX Health Facilities Development
Corp., All Saints Episcopal Hospitals,
Series 1993-A,
5.800% 08/15/04 80 86
TX Tarrant County Health Facilities
Development Corp., Fort Worth
Osteopathic Hospital, Series 1993,
5.800% 05/15/04 50 54
------
1,925
------
NURSING HOMES - 0.7%
KY Jefferson County Health Facilities,
Beverly Enterprises, Inc., Series 1985-B,
9.750% 08/01/07 95 105
MA State, Industrial Finance Agency,
Belmont Home Care Project, Series A,
7.970% 01/01/99 100 103
------
208
------
...................................................................................
HOUSING - 2.8%
MULTI-FAMILY - 1.9%
MA State Housing Finance Agency,
Series 1992 C,
6.350% 05/15/03 200 213
RI Housing & Mortgage Finance
Corp., Homeownership Opportunity,
Series 6-B:
6.500% 04/01/03 100 107
6.500% 10/01/03 200 214
------
534
------
SINGLE-FAMILY - 0.9%
NH State Housing Finance Authority,
Single-family Mortgage, Series 1990-A,
6.850% 07/01/98 165 170
NJ State Housing & Mortgage Finance
Agency,
6.500% 05/01/03 85 92
------
262
------
</TABLE>
8
<PAGE>
Investment Portfolio/November 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
PUBLIC FACILITIES IMPROVEMENT - 9.4%
FL Homestead, Special Insurance
Assessment,
5.125% 09/01/02 $ 425 $ 439
KS State Development Authority,
Lease Juvenile Detention Facility
Project, Series 1992-H,
5.750% 06/01/02 60 64
LA State Correctional Facilities
Corp. Lease, Series 1993,
5.400% 12/15/01 65 68
LA Sulphur, Public Import Sales and Use
Tax, Series 1993-ST,
5.650% 04/01/04 50 53
NY State, Urban Development Corp:
5.700% 04/01/09 500 503
6.250% 04/01/02 500 531
SC Rock Hill, Tax Increment Revenue,
Manchester Redevelopment Project,
Series 1992-B,
5.500% 05/01/03 450 473
VA State Public Building Authority,
5.625% 08/01/02 500 533
------
2,664
------
...................................................................................
PUBLIC INFRASTRUCTURE - 10.9%
AIRPORTS - 1.0%
CO Denver City & County Airport,
Series 1992-C,
6.250% 11/15/00 50 52
NV Washoe County Airport Authority
System, Series 1993-B,
5.000% 07/01/01 225 231
------
283
------
TURNPIKES/TOLL ROADS/BRIDGES - 9.9%
CA Foothill, Eastern Transportation
Corridor Agency, State Toll Road,
Senior Lien, Series A,
(b) 01/01/04 500 306
KY State Turnpike Authority Economic
Development Revitalization Projects:
6.500% 07/01/08 1,000 1,135
Series 1992,
5.500% 01/01/01 50 52
NV Clark County Highway Improvement,
5.700% 07/01/03 500 530
</TABLE>
9
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
PUBLIC INFRASTRUCTURE - CONT.
TURNPIKES/TOLL ROADS/BRIDGES - CONT.
NY Triborough Bridge and Tunnel
Authority, Series A,
5.000% 01/01/07 $ 750 $ 748
------
2,771
------
...................................................................................
REFUNDED/ESCROW/SPECIAL OBLIGATION - 0.4%
NY New York Dormitory Authority,
State University of New York,
Series 1989-B,
7.100% 05/15/01 100 110
------
...................................................................................
RETAIL TRADE - 0.6%
MISCELLANEOUS RETAIL
OH Lake County, North Madison
Properties,
8.069% 09/01/01 90 92
VA Virginia Beach Development Authority,
SC Diamond Associates, Inc.,
8.000% 12/01/10 75 77
------
169
------
...................................................................................
SOLID WASTE - 5.8%
LAND FILL - 0.4%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc. Project,
9.000% 09/01/05 100 107
------
RESOURCE RECOVERY - 5.4%
MA State Industrial Finance Agency,
Resource Recovery, Refusetch,
Series 1993-A:
5.350% 07/01/00 100 104
5.450% 07/01/01 300 316
NJ Bergen County Utilities Authority,
Series A,
6.250% 06/15/07(c) 1,000 1,100
------
1,520
------
...................................................................................
STUDENT LOAN - 5.1%
NM State Educational Assistance
Foundation, Series 1-A,
6.200% 12/01/01 500 533
OH State Student Loan Funding Corp.,
Series A,
5.750% 08/01/03 800 840
</TABLE>
10
<PAGE>
Investment Portfolio/November 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
STUDENT LOAN - CONT.
SC State Education Assistance Authority,
Student Loan Revenue Bonds, Series 1991,
6.200% 09/01/99 $ 50 $ 52
-------
1,425
-------
...................................................................................
TAX ALLOCATION - 1.8%
FL Lake County Resources Industrial
Development, Recovery Group,
Series 1993-A,
5.400% 10/01/03 500 497
-------
...................................................................................
UTILITY - 3.5%
CO-GENERATION - 1.9%
CA Sacramento Co-generation Authority,
Procter & Gamble Project,
6.500% 07/01/14 500 524
-------
MUNICIPAL ELECTRIC - 1.6%
PR Commonwealth of Puerto Rico,
Electric Power Authority, Series X,
4.900% 07/01/03 300 305
WA Grant County Public Utilities,
District Number 002,
Electric System, Series 1993-E,
5.300% 01/01/03 50 52
WA Snohomish County Washington Public
Utilities, Generation System Revenue Bonds,
District Number 001, Series 1993,
5.250% 01/01/02 80 83
-------
440
-------
...................................................................................
WATER & SEWER - 8.1%
AZ Phoenix, Civic Improvement Corp.,
Waste Water Lease, Series 1993,
5.750% 07/01/04 50 54
PA Center Township Sewer Authority,
Series A,
6.000% 04/15/03 1,035 1,123
TX Houston Water & Sewer System,
Series C,
5.900% 12/01/05(d) 1,000 1,090
-------
2,267
-------
TOTAL MUNICIPAL BONDS (cost of $26,964) (e) $28,187
-------
</TABLE>
11
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS - 4.6% PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
VARIABLE RATE DEMAND NOTES (f)
NY New York City Water & Sewer,
4.000% 06/15/25 $1,200 1,200
WY City of Green River,
3.900% 06/01/07 100 100
-------
TOTAL SHORT-TERM OBLIGATIONS 1,300
-------
OTHER ASSETS & LIABILITIES, NET - (4.8)% (1,350)
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $28,137
-------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) These securities have been purchased on a delayed delivery basis for
settlement at a future date beyond the customary settlement time.
(b) Zero coupon bond.
(c) These securities, with a total market value of $2,265, are being used to
collateralize the delayed delivery purchases indicated in note (a) above.
(d) These securities, with a total market value of $1,695, are being used to
collateralize open futures contracts.
(e) Cost for federal income tax purposes is the same.
(f) 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,
1995.
Short futures contracts open at November 30, 1995 are as follows:
<TABLE>
<CAPTION>
Par value Unrealized
covered by Expiration depreciation
Type contracts month at 11/30/95
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Municipal bonds $ 1,000 December $ 61
</TABLE>
See notes to financial statements.
12
<PAGE>
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1995
(in thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $26,964) $28,187
Short-term obligations 1,300
-------
29,487
Receivable for:
Interest $ 424
Fund shares sold 9
Other 62 495
------ -------
Total Assets 29,982
LIABILITIES
Payable for:
Investments purchased 1,561
Fund shares repurchased 145
Distributions 104
Variation margin on futures 7
Payable to Adviser 7
Accrued:
Deferred Trustees fees 1
Other 20
------
Total Liabilities 1,845
-------
NET ASSETS $28,137
-------
Net asset value & redemption price per share -
Class A ($13,317/1,697) $ 7.85
-------
Maximum offering price per share - Class A
($7.85/0.9675) $ 8.11(a)
-------
Net asset value & offering price per share -
Class B ($14,820/1,888) $ 7.85(b)
-------
COMPOSITION OF NET ASSETS
Capital paid in $27,773
Undistributed net investment income 26
Accumulated net realized loss (824)
Net unrealized appreciation (depreciation) on:
Investments 1,223
Open futures contracts (61)
-------
$28,137
-------
</TABLE>
(a) On sales of $100,000 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.
13
<PAGE>
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
<TABLE>
(in thousands)
INVESTMENT INCOME
<S> <C> <C>
Interest $1,532
EXPENSES
Management fee $ 157
Service fee 56
Distribution fee - Class B 95
Transfer agent 50
Bookkeeping fee 27
Trustees fee 10
Custodian fee 9
Audit fee 12
Legal fee 7
Registration fee 19
Reports to shareholders 3
Amortization of deferred organization expenses 15
Other 10
470
------
Fees and expenses waived or borne by the Adviser (273) 197
------ ------
Net Investment Income 1,335
------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss on:
Investments (239)
Closed futures contracts (318)
------
Net Realized Loss (557)
Net unrealized appreciation (depreciation)
during the period on:
Investments 3,124
Open futures contracts (98)
------
Net Unrealized Appreciation 3,026
------
Net Gain 2,469
------
Net Increase in Net Assets from Operations $3,804
------
</TABLE>
See notes to financial statements.
14
<PAGE>
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended
(in thousands) November 30
---------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
-------- --------
<S> <C> <C>
Operations:
Net investment income $ 1,335 $ 1,353
Net realized loss (557) (266)
Net unrealized appreciation (depreciation) 3,026 (2,168)
-------- --------
Net Increase (Decrease) from Operations 3,804 (1,081)
Distributions:
From net investment income - Class A (707) (818)
From net investment income - Class B (656) (543)
-------- --------
2,441 (2,442)
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 3,913 6,586
Value of distributions reinvested - Class A 478 578
Cost of shares repurchased - Class A (9,071) (3,713)
-------- --------
(4,680) 3,451
-------- --------
Receipts for shares sold - Class B 2,057 7,656
Value of distributions reinvested - Class B 449 338
Cost of shares repurchased - Class B (3,059) (2,170)
-------- --------
(553) 5,824
-------- --------
Net Increase (Decrease) from Fund Share
Transactions (5,233) 9,275
-------- --------
Total Increase (Decrease) (2,792) 6,833
NET ASSETS
Beginning of period 30,929 24,096
-------- --------
End of period (including undistributed net
investment income of $26 and $33, respectively) $ 28,137 $ 30,929
-------- --------
NUMBER OF FUND SHARES
Sold - Class A 524 862
Issued for distributions reinvested - Class A 63 76
Repurchased - Class A (1,219) (492)
-------- --------
(632) 446
-------- --------
Sold - Class B 273 1,004
Issued for distributions reinvested - Class B 59 45
Repurchased - Class B (405) (291)
-------- --------
(73) 758
-------- --------
</TABLE>
See notes to financial statements
15
<PAGE>
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
FINANCIAL HIGHLIGHTS
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
--------------------------------------------------- ----------------------
1995 1994 1993 (b)
Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.210 $ 7.210 $ 7.810 $ 7.810 $ 7.500 $ 7.500
----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a) 0.387 0.338 0.366 0.317 0.305 0.263
Net realized and
unrealized gain (loss) 0.641 0.641 (0.596) (0.596) 0.302 0.302
----------------------------------------------------------------------------
Total from Investment
Operations 1.028 0.979 (0.230) (0.279) 0.607 0.565
----------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.388) (0.339) (0.370) (0.321) (0.297) (0.255)
----------------------------------------------------------------------------
Total Distributions
Declared to
Shareholders (0.388) (0.339) (0.370) (0.321) (0.297) (0.255)
----------------------------------------------------------------------------
Net asset value -
End of period $ 7.850 $ 7.850 $ 7.210 $ 7.210 $ 7.810 $ 7.810
============================================================================
Total return (c)(d) 14.56% 13.82% (3.05%) (3.68%) 8.18%(e) 7.61%(e)
============================================================================
RATIOS TO AVERAGE NET ASSETS
Expenses 0.36%(f) 1.01%(f) 0.20% 0.85% 0.20%(g) 0.85%(g)
Fees and expenses
waived or borne by
the Adviser 0.96%(f) 0.96%(f) 1.07% 1.07% 1.33%(g) 1.33%(g)
Net investment income 5.03%(f) 4.38%(f) 4.85% 4.20% 4.53%(g) 3.88%(g)
Portfolio turnover 69% 69% 26% 26% 5%(g) 5%(g)
Net assets at end
of period (000) $13,317 $14,820 $16,791 $14,138 $14,700 $ 9,396
(a)Net of fees and expenses waived or
borne by the Adviser which
amounted to $ 0.074 $ 0.074 $ 0.080 $ 0.080 $ 0.090 $ 0.090
</TABLE>
(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)The benefits derived from custody credits and directed brokerage arrangements
had no impact. Prior year ratios are net of benefits received, if any.
(g)Annualized.
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
All of the distributions will be treated as exempt income for federal income
tax purposes.
- --------------------------------------------------------------------------------
16
<PAGE>
COLONIAL SHORT-TERM TAX-EXEMPT FUND
INVESTMENT PORTFOLIO
NOVEMBER 30, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 100.1% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
CERTIFICATES OF PARTICIPATION - 5.1%
CA Los Angeles Unified School District,
Multiple Properties Project,
Series B,
5.000% 12/01/95(a) $ 400 $400
SC Spartanburg County School District,
No. 005:
3.900% 07/01/96 100 100
4.300% 07/01/98 100 100
----
600
----
................................................................................
CONSTRUCTION - 0.4%
BUILDING CONSTRUCTION
IA Economic Development Finance Authority,
Mason City Shopping Center,
6.250% 12/01/96 50 51
----
................................................................................
EDUCATION - 6.1%
NY State Dormitory Authority,
State University Educational Facilities,
Series A,
4.750% 05/15/98 300 302
OH State Public Facilities Commission,
Higher Education Facilities, Series II-A,
5.200% 05/01/97 415 422
----
724
----
................................................................................
GENERAL OBLIGATION - 53.2%
CO Adams County School District,
Series B,
4.200% 12/15/96 500 503
CT State, Series B,
4.100% 09/15/97 500 501
IL Cook County High School District 225,
Northfield Township,
5.200% 12/01/97 450 461
MN Bloomington Highway,
4.650% 12/01/97 500 507
NJ Keansburg School District,
5.800% 01/15/96 45 45
NM Alberquerque, Series A,
4.600% 07/01/97 500 505
</TABLE>
17
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
GENERAL OBLIGATION - CONT.
OH Olmstead Falls Local School District,
5.000% 12/15/97(a) $ 225 $ 230
OH Trumbull County,
4.600% 12/01/97(a) 500 508
TX State Public Finance Authority,
Series A,
5.000% 10/01/97 500 509
UT Washington County,
St. George School District,
6.250% 09/01/97 490 510
VA Richmond,
5.250% 01/15/97 500 507
WA Everett, Tax Levy,
Series 1993,
3.800% 12/01/95 65 65
WA State, Series R-93B,
4.200% 10/01/97 500 502
WI Milwaukee Area Technical College
District, Series A,
4.300% 06/01/98 500 502
WI State, Series 1994-B,
4.500% 05/01/97 400 403
------
6,258
------
................................................................................
HEALTH - 5.0%
HOSPITALS - 4.7%
OH Cuyahoga County, Meridia
Health System,
5.450% 08/15/97 540 549
------
NURSING HOMES - 0.3%
MA State Industrial Finance Agency,
Belmont Home Care Project, Series A,
7.570% 01/01/97 35 35
------
................................................................................
HOUSING - 2.0%
SINGLE-FAMILY
WY Community Development Authority,
4.400% 06/01/98(b) 230 231
------
................................................................................
POLLUTION CONTROL REVENUE - 5.5%
MO State Environmental Improvement and
Energy Resources Authority, Series A,
5.400% 07/01/97 530 542
OH Air Quality Development Authority,
4.250% 08/01/96 100 100
------
642
------
</TABLE>
18
<PAGE>
Investment Portfolio/November 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PUBLIC FACILITIES IMPROVEMENT - 0.5%
LA State Correctional Facilities
Corporation Lease, Series 1993,
4.100% 12/15/95 $ 60 $ 60
-------
................................................................................
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY
SERVICES - 22.3%
WATER TRANSPORTATION - 4.2%
AK Anchorage Port & Terminal Facility,
4.300% 02/01/98(b) 500 500
-------
TRANSPORTATION - 4.4%
NJ State Transportation Trust Fund
Authority, Series B,
5.000% 06/15/98 500 512
-------
WATER & SEWER - 13.7%
OH Clyde Waterworks,
5.600% 05/01/97 580 593
OH Hamilton County Sewer System,
Series A,
4.100% 12/01/97 500 504
TX Water Development Board,
Senior Lien,
4.900% 07/15/97 500 510
-------
1,607
-------
TOTAL MUNICIPAL BONDS (cost of $11,648)(c) 11,769
-------
SHORT-TERM OBLIGATIONS - 4.3%
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (d)
IL Health Facilities Authority,
Central Dupage Hospital,
4.100% 11/01/20 300 300
WY Green River,
3.900% 06/01/07 200 200
-------
TOTAL SHORT-TERM OBLIGATONS 500
-------
OTHER ASSETS & LIABILITIES, NET - (4.4)% (513)
- --------------------------------------------------------------------------------
NET ASSETS - 100% $11,756
-------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO :
- --------------------------------------------------------------------------------
(a) These securities, or a portion thereof, with a total market value of
$937, are being used to collateralize delayed delivery purchases indicated
in note (b) below.
19
<PAGE>
Investment Portfolio/November 30, 1995
- --------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO - CONT. :
- --------------------------------------------------------------------------------
(b) These securities have been purchased on a delayed delivery basis for
settlement at a future date beyond the customary settlement time.
(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, 1995.
See notes to financial statements.
20
<PAGE>
COLONIAL SHORT-TERM TAX-EXEMPT FUND
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
(in thousands except for per share amounts and footnote)
<S> <C> <C>
ASSETS
Investments at value (cost $11,648) $11,769
Short-term obligations 500
-------
12,269
Receivable for:
Interest $175
Expense reimbursement due
from Adviser 6
Other 94 275
---- -------
Total Assets 12,544
LIABILITIES
Payable for:
Investments purchased 732
Distributions 41
Fund shares repurchased 1
Accrued:
Deferred Trustees fees 3
Other 11
----
Total Liabilities 788
-------
NET ASSETS $11,756
Net asset value & redemption price per
share--Class A ($11,756/1,561) $ 7.53
-------
Maximum offering price per share--Class A
($7,530/0.9900) $ 7.61(a)
-------
COMPOSITION OF NET ASSETS
Capital paid in $11,756
Undistributed net investment income 19
Accumulated net realized loss (140)
Net unrealized appreciation 121
-------
$11,756
=======
</TABLE>
(a) On sales of $1,000,000 or more the offering price is reduced.
See notes to financial statements.
21
<PAGE>
COLONIAL SHORT-TERM TAX-EXEMPT FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $511
EXPENSES
Management fee $ 60
Service fee 12
Transfer agent 21
Bookkeeping fee 27
Trustees fee 9
Custodian fee 2
Audit fee 10
Legal fee 6
Registration fee 17
Reports to shareholders 3
Amortization of deferred
organization expenses 9
Other 2
-----
178
Fees and expenses waived or borne by the Adviser (118) 60
----- ----
Net Investment Income 451
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO
POSITIONS
Net realized loss (119)
Net unrealized appreciation during the period 304
-----
Net Gain 185
----
Net Increase in Net Assets from Operations $636
====
</TABLE>
See notes to financial statements.
22
<PAGE>
COLONIAL SHORT-TERM TAX-EXEMPT FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended
(in thousands) November 30
-------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
-------- --------
<S> <C> <C>
Operations:
Net investment income $ 451 $ 375
Net realized loss (119) (20)
Net unrealized appreciation (depreciation) 304 (190)
------- -------
Net Increase from Operations 636 165
Distributions:
From net investment income - Class A (465) (372)
------- -------
171 (207)
------- -------
Fund Share Transactions:
Receipts for shares sold - Class A 2,047 29,830
Value of distributions reinvested - Class A 390 295
Cost of shares repurchased - Class A (4,615) 21,116)
------- -------
Net Increase (Decrease) from Fund Share
Transactions (2,178) 9,009
------- -------
Total Increase (Decrease) (2,007) 8,802
NET ASSETS
Beginning of period 13,763 4,961
------- -------
End of period (including undistributed net
investment income of $19 and $24,
respectively) $11,756 $13,763
======= =======
NUMBER OF FUND SHARES
Sold - Class A 273 3,954
Issued for distributions reinvested - Class A 53 39
Repurchased - Class A (619) (2,798)
------- -------
(293) 1,195
------- -------
</TABLE>
See notes to financial statements.
23
<PAGE>
COLONIAL SHORT-TERM TAX-EXEMPT FUND
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
Period
Year ended ended
November 30 November 30
------------------------- -------------
1995 1994 1993 (b)
---------- ----------- -------------
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 7.420 $ 7.530 $7.500
------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.289 0.215 0.196
Net realized and
unrealized gain (loss) 0.111 (0.105) 0.012
------- ------- ------
Total from Investment
Operations 0.400 0.110 0.208
------- ------- ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.290) (0.220) (0.178)
------- ------- ------
Net asset value -
End of period $ 7.530 $ 7.420 $7.530
------- ------- ------
Total return (c)(d) 5.47% 1.48% 2.80%(e)
------- ------- ------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.50%(f) 0.50% 0.50%(g)
Fees and expenses waived or borne
by the Adviser 0.98%(f) 0.85% 1.92%(g)
Net investment income 3.74%(f) 2.97% 2.85%(g)
Portfolio turnover 123% 16% 22%(g)
Net assets at end
of period (000) $11,756 $13,763 $4,961
(a) Net of fees and expenses waived or borne by the Adviser
which amounted to $0.076 $0.063 $0.132
</TABLE>
(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) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits
received, if any.
(g) Annualized.
- -------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
All of the distributions will be treated as exempt income for federal income
tax purposes.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30,1995
NOTE 1. ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
ORGANIZATION: Colonial Intermediate Tax-Exempt Fund (CITEF) and Colonial
Short-Term Tax-Exempt Fund (CSTTEF) (the Funds), each a series of Colonial Trust
IV, are diversified portfolios of a Massachusetts business trust, registered
under the Investment Company Act of 1940, as amended, as 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 sold 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, 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.
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 Fund 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 income, no
federal income tax has been accrued.
25
<PAGE>
Notes to Financial Statements/November 30, 1995
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
DEFERRED ORGANIZATION EXPENSES: CITEF and CSTTEF incurred expenses of $75,021
and $45,089, 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 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 Funds' capital accounts to reflect
income and gains available for distribution (or available capital loss
carryovers) under income tax regulations.
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 Fee Rate
---- --------
<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 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 Funds' 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 each Fund's
principal underwriter. During the year ended November 30, 1995, each Fund has
been advised that the Distributor retained net underwriting discounts on CITEF
and CSTTEF of $5,753 and $805, respectively, on sales of the Funds' Class A
shares and received contingent deferred sales charges (CDSC) of $46,040 on
CITEF's Class B share redemptions.
26
<PAGE>
Notes to Financial Statements/November 30, 1995
- --------------------------------------------------------------------------------
CITEF and CSTTEF have adopted a 12b-1 plan which requires the payment of a
service fee to the Distributor equal to 0.20% and 0.10%, respectively, annually
of each Fund's net assets as of the 20th of each month. CITEF's plan also
requires the payment of a distribution fee to the Distributor equal to 0.65%
annually 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.
EXPENSE LIMITS: Through July 31, 1995, the Adviser agreed to reimburse CITEF for
all expenses. Effective August 1, 1995, and until further notice, the expense
limit changed to 0.40% of CITEF's average net assets. The Adviser 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. Each
Fund's 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.
The Funds' 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 each
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended November 30, 1995, 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 $19,189,120 $22,538,899
----------- -----------
Colonial Short-Term Tax-Exempt Fund $14,456,737 $15,477,525
----------- -----------
</TABLE>
Unrealized appreciation (depreciation) at November 30, 1995, based on cost of
investments for both financial statement and federal income tax purposes were as
follows:
<TABLE>
<CAPTION>
Colonial Colonial
Intermediate Short-Term
Tax-Exempt Fund Tax-Exempt Fund
--------------- ---------------
<S> <C> <C>
Gross unrealized appreciation $1,226,787 $121,050
Gross unrealized depreciation (3,524) (110)
---------- --------
Net unrealized appreciation $1,223,263 $120,940
========== ========
</TABLE>
27
<PAGE>
Notes to Financial Statements/November 30, 1995
- --------------------------------------------------------------------------------
NOTE 3. 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:
Colonial Intermediate Tax-Exempt Fund:
<TABLE>
<CAPTION>
Year of Capital loss
expiration carryforward
---------- ------------
<S> <C>
2002 $151,000
2003 591,000
--------
$742,000
========
</TABLE>
Colonial Short-Term Tax-Exempt Fund:
<TABLE>
<CAPTION>
Year of Capital loss
expiration carryforward
---------- ------------
<S> <C>
2001 $ 1,000
2002 1,000
2003 137,000
--------
$139,000
========
</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, 1995, CSTTEF had greater than 10% of its net assets
invested in Ohio.
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.
CITEF sells municipal and Treasury bond futures contracts to manage overall
portfolio interest rate exposure and not for trading purposes. The use of
futures contracts involves certain risks, which include (1) imperfect
correlation between the price movement of the contracts and the underlying
securities, (2) inability to close out positions due to different trading hours,
or the temporary absence of a liquid market, for either the contract or the
underlying securities, or (3) an inaccurate prediction by the Adviser of the
future direction of interest rates. Any of these risks may involve amounts
exceeding the variation margin recorded in CITEF's Statement of Assets and
Liabilities at any given time.
NOTE 4. OTHER RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
At November 30, 1995, CSTTEF had three shareholders who owned greater than 5% of
the Fund's shares outstanding.
28
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 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, 1995, 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, 1995
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
- --------------------
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 12, 1996
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 Objective and
Policies; Fundamental Investment
Policies; Other Investment
Policies; Miscellaneous
Investment Practices; Portfolio
Turnover
14. Fund Charges and Expenses;
Management of the Colonial Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses;
Management of the Colonial Funds
17. Fund Charges and Expenses;
Management of the Colonial Funds
18. Shareholder Meetings
19. How to Buy Shares; Determination
of Net Asset Value; Suspension of
Redemptions; Special Purchase
Programs/Investor Services;
Programs for Reducing or
Eliminating Sales Charge; How to
Sell Shares; How to Exchange
Shares
20. Taxes
21. Fund Charges and Expenses;
Management of the Colonial Funds
22. Fund Charges and Expenses;
Investment Performance;
Performance Measures
23. Independent Accountants
COLONIAL TAX-EXEMPT FUND
Statement of Additional Information
March 29, 1996
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 29, 1996. 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 Colonial Funds
Determination of Net Asset Value
How to Buy Shares
Special Purchase Programs/Investor Services
Programs for Reducing or Eliminating Sales Charges
How to Sell Shares
Distributions
How to Exchange Shares
Suspension of Redemptions
Shareholder Meetings
Performance Measures
Appendix I
Appendix II
TE-XX-0396
PART I
COLONIAL TAX-EXEMPT FUND
Statement of Additional Information
March 29, 1996
DEFINITIONS
"Trust" Colonial Trust IV
"Fund" Colonial Tax-Exempt Fund
"Adviser" 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
shareholder services and transfer agent
INVESTMENT OBJECTIVES AND POLICIES
The Fund's Prospectus describes its investment objective and policies. Part 1 of
this SAI includes additional information concerning, among other things, the
fundamental investment policies of the Fund. Part 2 contains additional
information about the following securities and investment techniques that are
described or referred to in the Prospectus:
Short-Term Trading
High Yield 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 securities of any company if the Trust knows that officers and
Trustees of the Trust or officers and directors of the Adviser 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)
1995 1994
---- ----
41% 56%
FUND CHARGES AND EXPENSES
Under the Fund's management agreement, the Trust pays the Adviser a monthly fee
based on the average daily net assets allocated among the Fund, Colonial
Tax-Exempt Insured Fund and Colonial High Yield Municipal Fund at the following
annual rates:
First $1 billion 0.60%
Next $2 billion 0.55%
Next $1 billion 0.50%
Excess over $4 billion 0.45%
Effective July 1, 1995, the management fee applicable to the Fund was reduced by
0.05% annually on the average daily net assets of the Fund between $2 billion
and $3 billion.
In addition, a further reduction to the management fee applicable to the Fund
will be based on the following schedule:
Effective Date Cumulative Annualized Reduction
January 1, 1996 0.01%
April 1, 1996 0.02%
July 1, 1996 0.03%
October 1, 1996 0.04%
Recent Fees paid to the Adviser, CISI and CISC (for the fiscal years ended
November 30) (in thousands)
1995 1994 1993
Management fee $19,170 $20,098 $19,169
Bookkeeping fee $765 $766 $764
Shareholder service and transfer agent fee $5,668 $5,864 $5,521
12b-1 fees:
Service fee $8,770 $9,151 $8,688
Distribution fee (Class B) $3,436 $3,540 $2,143
Brokerage Commissions (for the fiscal years ended November 30) (in thousands)
1995 1994 1993
---- ---- ----
Total Commissions (a) $73 $37 $0
Directed transactions 0 0 0
Commissions on directed transactions 0 0 0
(a) See "Management of the Colonial Funds - Portfolio Transactions -
Brokerage and research services" in Part 2 of this SAI.
Trustees Fees
For the fiscal year ended November 30, 1995, and the calendar year ended
December 31, 1995, the Trustees received the following compensation for serving
as Trustees:
<TABLE>
<CAPTION>
Total Compensation
Aggregate From Trust and
Compensation Pension Or Fund Complex Paid To
From Fund For The Retirement Benefits Estimated Annual The Trustees For The
Fiscal Year Ended Accrued As Part Of Benefits Upon Calendar Year Ended
Trustee November 30, 1995 Fund Expense Retirement December 31, 1995(b)
- ------- ----------------- ------------ ---------- --------------------
<S> <C> <C> <C> <C>
Robert J. Birnbaum (g) $10,909 ----- ----- $ 71,250
Tom Bleasdale $16,905 (c) ----- ----- $ 98,000 (d)
Lora S. Collins $15,710 ----- ----- $ 91,000
James E. Grinnell (g) $10,910 $ 71,250
William D. Ireland, Jr. $19,458 ----- ----- $ 113,000
Richard W. Lowry (g) $10,906 $ 71,250
William E. Mayer $15,710 ----- ----- $ 91,000
John A. McNeice, Jr. $ 0 ----- ----- $ 0
James L. Moody, Jr. $17,589 (e) ----- ----- $ 94,500 (f)
John J. Neuhauser $15,712 ----- ----- $ 91,000
George L. Shinn $17,775 ----- ----- $ 102,500
Robert L. Sullivan $17,419 ----- ----- $ 101,000
Sinclair Weeks, Jr. $19,286 ----- ----- $ 112,000
</TABLE>
(b) At December 31, 1995, the Colonial Funds complex consisted of 33 open-end
and 5 closed-end management investment company portfolios.
(c) Includes $8,417 payable in later years as deferred compensation.
(d) Includes $49,000 payable in later years as deferred compensation.
(e) Includes $13,921 payable in later years as deferred compensation.
(f) Total compensation of $94,500 for the calendar year ended December 31,
1995, will be payable in later years as deferred compensation.
(g) Elected as a Trustee of the Colonial Funds complex on April 21, 1995.
The following table sets forth the amount of compensation paid to Messrs.
Birnbaum, Grinnell and Lowry in their capacities as Trustees or Directors of the
Liberty All-Star Equity Fund and Liberty All-Star Growth Fund, Inc. (formerly
known as The Charles Allmon Trust, Inc.) (together, Liberty Funds I) for service
during the calendar year ended December 31, 1995, and of Liberty Financial Trust
(now known as Colonial Trust VII) and LFC Utilities Trust (together, Liberty
Funds II) for the period January 1, 1995 through March 26, 1995 (h):
Total Compensation From Total Compensation
Liberty Funds II For The From Liberty Funds I For
Period January 1, 1995 The Calendar Year Ended
Trustee Through March 26, 1995 December 31, 1995 (i)
- ------- ---------------------- ---------------------
Robert J. Birnbaum $2,900 $16,675
James E. Grinnell $2,900 $22,900
Richard W. Lowry $2,900 $26,250 (j)
(h) On March 27, 1995, four of the portfolios in the Liberty Financial Trust
(now known as Colonial Trust VII) were merged into existing Colonial
funds and a fifth was reorganized as a new portfolio of Colonial Trust
III. Prior to their election as Trustees of the Colonial Funds, Messrs.
Birnbaum, Grinnell and Lowry served as Trustees of Liberty Funds II; they
continue to serve as Trustees or Directors of Liberty Funds I.
(i) At December 31, 1995, the Liberty Funds I were advised by Liberty Asset
Management Company (LAMCO). LAMCO is an indirect wholly-owned subsidiary
of Liberty Financial Companies, Inc. (an intermediate parent of the
Adviser).
(j) Includes $3,500 paid to Mr. Lowry for service as Trustee of Liberty
Newport World Portfolio (formerly known as Liberty All-Star World
Portfolio) (Liberty Newport) during the calendar year ended December 31,
1995. At December 31, 1995, Liberty Newport was managed by Newport
Pacific Management, Inc. and Stein Roe & Farnham Incorporated, each an
affiliate of the Adviser.
Ownership of the Fund
At February 29, 1996, the officers and Trustees of the Trust as a group owned
less than 1% of the outstanding shares of the Fund.
At March 18, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc., Attn: Book
Entry, Mutual Funds Operations, 4800 Deer Lake Dr. E. 3rd FL, Jacksonville, FL
32216, owned 6.49% of the Fund's outstanding Class B shares.
At February 29, 1996, there were 80,197 Class A and 13,139 Class B
recordholders of the Fund.
Sales Charges (for the fiscal years ended November 30) (in thousands)
Class A Shares
1995 1994 1993
Aggregate initial sales charges on Fund share sales $2,093 $6,172 $16,294
Initial sales charges retained by CISI $243 $468 $2,021
Class B Shares
1995 1994 1993
Aggregate contingent deferred sales charges
(CDSC) on Fund redemptions retained by CISI $1,472 $1,272 $338
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 the Adviser) 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 and are
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 on
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.
Approximately 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, 1995) (in
thousands) of CISI relating to the Fund were:
Class A Shares Class B Shares
Fees to FSFs $7,565 $1,979
Cost of sales material relating to the Fund
(including printing and mailing expenses) $ 302 $ 69
Allocated travel, entertainment and other
promotional expenses(including advertising) $ 651 $ 145
INVESTMENT PERFORMANCE
The Fund's yields for the month ended November 30, 1995, were:
Tax-equivalent
Yield Yield
Class A Shares 4.97% 8.23%
Class B Shares 4.47% 7.40%
The Fund's average annual total returns at November 30, 1995, were:
Class A Shares
1 year 5 years 10 years
------ ------- --------
With sales charge of 4.75% 13.68% 6.90% 7.67%
Without sales charge 19.35% 7.94% 8.20%
Class B Shares
May 5, 1992
(commencement of
investment operations)
1 year November 30, 1995
------ ------------------
With applicable CDSC 13.47%(5.00% CDSC) 5.85% (3.00% CDSC)
Without CDSC 18.47% 6.57%
The Fund's Class A and Class B distribution rates at November 30, 1995, based on
the most recent month's distribution, annualized, and the maximum offering price
at the end of the month, were 5.32% and 4.85%, respectively.
See Part 2 of this SAI, "Performance Measures," for how calculations are made.
CUSTODIAN
UMB, 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 6 through 56 of the November 30, 1995 Annual Report are incorporated in
this SAI by reference.
<PAGE>
INVESTMENT PORTFOLIO
NOVEMBER 30, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 98.2% PAR VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C>
CERTIFICATES OF PARTICIPATION - 0.8%
AZ Apache County School District
Number 010 Round Valley
Project of 1987, Series 1990-C:
9.875% 07/01/05 $ 1,500 $ 1,676
10.800% 07/01/96 800 822
10.800% 07/01/97 800 858
10.800% 07/01/98 1,000 1,114
10.800% 07/01/99 1,000 1,084
AZ Maricopa County School District,
Number 028 Kyrene Elementary,
Series 1993 C:
(a) 07/01/07 4,000 2,235
(a) 07/01/08 4,000 2,100
(a) 01/01/09 2,000 1,015
(a) 01/01/10 2,000 952
(a) 01/01/11 6,000 2,670
MA Health and Educational Facilities,
Independent Living Bonds,
Series 1993-A,
8.100% 07/01/18 1,295 1,314
SC Charleston County:
6.000% 12/01/07(b) 3,110 3,335
6.000% 12/01/08(b) 3,295 3,509
6.000% 12/01/09(b) 3,495 3,692
6.000% 12/01/10(b) 3,710 3,886
-------
30,262
-------
........................................................................................
EDUCATION - 5.9%
FL State Board of Education,
Series 1993 D,
5.125% 06/01/22 14,500 13,721
IL Chicago Board Education:
Series 1992-A:
6.000% 01/01/20(c) 4,000 4,215
6.250% 01/01/15(c) 4,400 4,791
IL State Educational Facilities Authority,
Northwestern University,
5.375% 12/01/21 6,500 6,354
IN Purdue University,
Student Fee,
Series B,
6.700% 07/01/15 1,100 1,225
</TABLE>
6
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
IN Indiana University,
Student Fee,
7.000% 08/01/09 $ 2,680 $ 2,982
LA State Public Facilities Authority,
Tulane University,
6.625% 11/15/21 1,545 1,667
MA Health and Educational Facilities Authority:
Amherst College,
Series E,
6.750% 11/01/15 1,000 1,088
Berklee College of Music,
Series C,
6.875% 10/01/21 4,380 4,807
MA State College Building Authority Project,
Series A,
7.500% 05/01/11 1,500 1,849
NY State Dormitory Authority:
City University System:
Series 1990-C:
7.000% 07/01/14 2,050 2,276
7.500% 07/01/10 13,000 15,519
Series 1993-A,
5.750% 07/01/13 5,000 5,006
Series A,
5.625% 07/01/16(b) 5,500 5,417
Cornell University,
6.875% 07/01/14 1,355 1,398
Court Facilities Lease, City of New York:
Series C,
5.400% 05/15/23 16,000 15,020
Series F,
5.000% 07/01/14 4,700 4,265
State University Educational
Facilities, Series 1993-B:
5.250% 05/15/19 12,230 11,404
5.750% 05/15/24 7,000 6,912
State University of New York:
Series 1990-A,
7.500% 05/15/13 8,000 9,580
Series 1990-B,
7.000% 05/15/16 1,000 1,074
Series 1993-A:
5.500% 05/15/08 6,000 6,000
5.500% 05/15/13 33,805 33,044
5.875% 05/15/17 33,240 33,988
Upstate Community Colleges, Series
1994-A,
5.625% 07/01/14 11,500 11,256
</TABLE>
7
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
EDUCATION - CONT.
TX Texas Southern University,
Series A,
5.000% 08/01/13 $ 5,000 $ 4,775
--------
209,633
--------
.................................................................................
FINANCE/INSURANCE/REAL ESTATE - 0.1%
REAL ESTATE
MD Baltimore,
Economic Development,
Park Charles Project, Series 1986,
8.000% 01/01/10 1,695 1,820
--------
.................................................................................
GENERAL OBLIGATION - 5.3%
CA San Jose Redevelopment Agency,
5.000% 08/01/21 30,000 27,975
FL State Board of Education,
Series 1993 D,
5.200% 06/01/23 10,140 9,696
GA De Kalb County,
5.250% 01/01/20 5,000 4,900
IL Chicago Public Commerce Building,
Series 1990 A,
7.125% 01/01/15 4,010 4,461
MA State Bonds,
Consolidated Loan:
Series 1989 C,
7.000% 06/01/04 6,500 7,207
Series 1991 B,
(a) 06/01/07 5,500 3,135
Series 1991 C:
6.750% 08/01/09 3,865 4,228
7.000% 08/01/12 2,000 2,290
MA Holyoke,
School Project Loan,
7.650% 08/01/09 1,250 1,367
MA Lawrence,
4.750% 02/15/14 6,250 5,641
MA City of Lowell:
8.000% 01/15/00 1,385 1,555
8.400% 01/15/09 1,000 1,167
MI Brighton Area School District,
General Obligation Bonds,
Series 1992-II,
(a) 05/01/16 8,695 2,793
</TABLE>
8
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
MI City of Detroit:
Series 1990-A,
8.700% 04/01/10 $10,000 $11,875
Series 1990-B,
8.250% 04/01/10 5,000 5,444
NV State,
Colorado River Commission,
6.600% 10/01/16 5,000 5,387
NY New York City, General Obligation,
Series 1991-D:
8.000% 08/01/16 60 70
8.000% 08/01/18 75 87
NY State,
Series E,
5.500% 02/15/08 10,000 9,638
NY State Various Purpose,
3.000% 03/15/01 405 369
PA Westmoreland County Municipal
Authority, Municipal Services, Series
1993-C:
(a) 08/15/15 8,380 2,776
(a) 08/15/16 10,880 3,359
TN Metropolitan Government Nashville
& Davidson County,
6.150% 05/15/25 17,220 17,844
TN Shelby County School, General Obligation
School Series 1992-A:
(a) 05/01/10 7,065 3,135
(a) 05/01/13 2,500 900
TN Shelby County, Public Improvement,
Series 1992-A:
(a) 05/01/12 15,130 5,844
(a) 05/01/13 5,000 1,800
TX Hurst Euless Bedford
Independent School District,
6.500% 08/15/24 20,000 21,250
TX Ysleta Independent School District,
Series 1993,
(a) 08/15/12 6,240 2,519
VA Fairfax County Economic Development,
Ogden Martin Systems,
Series 1987 A,
7.750% 02/01/11 1,000 1,103
VT State Student Assistance Financing
Program, Series B,
6.700% 12/15/12 2,000 2,138
</TABLE>
9
<PAGE>
Investment Portfolio/November 30,1995
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C>
GENERAL OBLIGATION - CONT.
WA State:
Series A,
6.250% 02/01/11 $ 6,400 $ 6,960
Series B,
5.500% 05/01/18 12,130 12,160
--------
191,073
--------
...................................................................................
HEALTH - 14.2%
HOSPITALS - 7.9%
AL Alabama Special Care Facilities Authority,
Montgomery Healthcare,
Series 1989,
11.000% 00/01/19 15,760 15,524
CT State Health & Educational
Facilities Authority, New Britain
Hospital, Series 1991 A,
7.750% 07/01/22 905 974
DE State Economic Development,
Riverside Hospital Series 1992 A,
9.500% 01/01/22 1,165 1,341
FL Lee County Hospital Board,
6.350% 03/26/20 12,500 13,078
FL St. Petersburg Health Facilities
Authority, Allegany Health System,
St. Joseph's Hospital, Inc., Series 1985-A,
7.000% 12/01/15 2,000 2,252
GA Clayton Hospital Authority,
The Woodlands Foundation Inc.,
Series 1991 A,
9.750% 05/01/21 6,680 5,678
IL Health Facilities Authority:
Edgewater Medical Center,
Series A,
9.250% 07/01/24 8,435 8,899
Edward Hospital Association Project:
Series 1992,
7.000% 02/15/22 1,000 1,073
RIB (variable rate),
Series 1992 B,
9.467% 05/01/21 4,800 5,550
IL Naperville Economic Development,
Series 81,
13.000% 08/01/08 5,658 6,047
IL State Health Facilities Authority,
Mercy Center for Health Services,
6.650% 10/01/22 1,350 1,360
</TABLE>
10
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
LA Louisiana Public Facilities Authority,
RIB, (variable rate),
6.250% 11/28/14 $26,000 $26,910
MA Health and Educational Facilities,
Lowell General Hospital,
Series 1991-A,
8.400% 06/01/11 2,500 2,809
MI State Hospital Finance Authority,
Central Michigan Community Hospital,
Series 1993-A,
6.000% 10/01/08 1,500 1,539
MO Hannibal Industrial Development,
Medical Systems of Northeast Missouri,
Series 1992,
9.500% 03/01/22 4,250 4,967
MS Hospital Equipment & Facilities
Authority, Pooled Loan Program,
7.500% 08/01/16 18,900 19,987
MT State Health Facility Authority,
Hospital Facilities, Series 1994,
6.345% 02/15/25 6,000 5,445
NC Lincoln County, Lincoln County Hospital,
9.000% 05/01/07 530 664
NJ Health Care Facilities Financing
Authority, Raritan Bay Medical Center,
7.250% 07/01/14 4,000 4,050
NM Grant County Hospital Facility,
Gila Regional Medical Center,
Series 1986,
10.000% 02/01/12 2,185 2,304
NV Reno Hospital, St. Mary's Regional
Medical Center, Series 1991-A,
6.700% 07/01/21 1,700 1,840
NY State Medical Care Facilities
Finance Agency, Presbyterian
Hospital, Series 1994-A,
5.375% 02/15/25 10,000 9,587
OK Oklahoma City Industrial and Cultural
Facilities Trust, Hillcrest Health Center,
6.400% 08/01/14 4,320 4,498
PA Erie's County Hospital Authority,
Metro Health Center, Series 1992
7.375% 07/01/22 5,000 5,063
PA Philadelphia Hospital & Higher
Educational Facilities Authority,
Chestnut Hill Hospital,
6.500% 11/15/22 2,000 2,067
</TABLE>
11
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH - CONT.
HOSPITALS - CONT.
PA Westmoreland County Redevelopment
Authority, First Mortgage, Harmon
House, Series A,
(a) 08/15/28 $ 37,300 $ 3,124
TN Chattanooga Health Education
and Housing Facilities Board,
North Park Hospital Project, Series 1993,
8.500% 02/01/23 42,795 44,346
TN Metropolitan Government, Nashville
and Davidson Counties:
Meharry Medical College,
6.875% 12/01/24 29,750 32,985
Volunteer Healthcare Systems,
Series 1988-A,
10.750% 06/01/18(d) 18,880 4,154
TX Harris County Health Facilities
Development Corp.,
Hermann Hospital Project,
6.375% 10/01/24 18,000 19,035
TX Tarrant County, Health Facilities
Development Corporation,
10.125% 04/01/21 9,200 6,900
VA Dickenson County Industrial,
Development, Volunteer Healthcare
Systems Inc., Series 1988 A,
10.750% 06/01/18(d) 2,500 550
VA Norfolk Industrial Development
Authority,
Sentara Hospital, Series A,
6.500% 11/01/13 2,500 2,722
VA Southampton County Industrial
Authority, Medical Facility of
America XLIII Project, Series 1986,
8.375% 12/15/26 3,035 3,183
VT Educational and Health Buildings
Financing Agency, Springfield Hospital,
7.750% 01/01/13 2,020 2,106
WA Washington State Health Care
Facility, Grays Harbor Community
Hospital, Series 1993:
7.200% 07/01/03 1,185 1,274
8.025% 07/01/20 6,380 6,930
WI State Health and Educational
Facilities Authority, St. Luke's
Medical Center Project, Series 1991,
7.100% 08/15/19 2,550 2,818
--------
283,633
--------
</TABLE>
12
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
HUMAN SERVICES PROVIDERS - 1.4%
AZ Tucson Industrial Development
Authority, Villa Maria Care Center,
10.125% 11/01/21 $ 635 $ 595
CA San Diego Industrial Development,
Carmel Mountain Healthcare Center,
8.750% 12/01/16 5,500 5,940
CO Health Facility,
American Housing Foundation I,
Series 1990,
10.250% 12/01/20 2,500 2,803
CT State Development Authority,
Waterbury Health Care Center,
Series 1984,
13.500% 11/01/14 1,965 2,004
DE State Economic Development Healthcare
Facility,
10.000% 03/01/21 7,245 8,522
DE Sussex County, Healthcare Facility,
Delaware Health Corporation, Series
1994-A,
7.600% 01/01/24 14,230 13,910
IL Champaign First Mortgage,
Hoosier Care Inc., Series 1989-A,
9.750% 08/01/19 1,485 1,594
IN Wabash First Mortgage, Hoosier
Care, Inc., Series 1989-A,
9.750% 08/01/19 5,900 6,335
TN Shelby County, Health, Education,
and Housing Facilities Board, Open Arms
Development Center:
Series 1992-A
9.750% 08/01/19 4,295 5,025
Series 1992-C
9.750% 08/01/19 4,290 5,019
-------
51,747
-------
NURSING HOMES - 4.9%
FL Collier County Industrial
Development Authority, Beverly
Enterprises, Series 1991,
10.750% 03/01/03 1,120 1,317
FL Flagler County Industrial,
Redevelopment Authority,
South Florida Properties, Series 1988,
10.500% 12/01/18 8,925 8,981
</TABLE>
13
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH - CONT.
FL Gadsden County Industrial Development,
Florida Housing Properties, Inc.,
Series 1988-A,
10.450% 10/01/18 $ 6,135 $ 6,366
FL Palm Beach County:
Hillcrest Manor Project,
10.250% 12/01/16 3,190 3,339
Beverly Enterprises, Series 1984-1,
10.000% 06/01/11 2,735 3,087
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 7,752
IA Marion,
Kentucky Iowa Corporation Project,
Series 1990,
10.250% 01/01/20 1,000 1,050
IN Gary Industrial Economic Development,
West Side Health Care Center,
Series 1987 A,
11.500% 10/01/17 1,985 1,886
KS Washington County Industrial
Development Authority, Central
States, Series 1989,
10.250% 11/01/19 3,440 3,337
MA Boston,
St. Joseph Nursing Care Center, Inc.,
10.000% 01/01/20 (e) 315 349
MA State Industrial Finance Agency:
American Health Foundation Inc.,
Series 1989,
10.125% 03/01/19 3,250 3,437
Belmont Home Care Project,
Series A:
7.970% 01/01/99 290 297
9.270% 01/01/25 10,405 11,029
GF/Massachusetts Inc.,
Series 1994,
8.300% 07/01/23 13,000 12,821
Mary Ann Morse Nursing Home,
Series 1991 I,
10.000% 01/01/21 1,715 2,184
Seacoast Nursing Home,
Series 1991,
9.625% 12/01/21 4,945 5,477
</TABLE>
14
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
MO St. Charles County Industrial
Development Authority, Health Care
Properties of St. Charles County, Ltd.,
8.700% 06/01/11 (f) $ 2,680 $ 2,700
MO St. Louis County Industrial Development,
Authority, Cardinal Carberry
Health, Series 1991,
7.125% 03/20/23 2,000 2,190
NM Albuquerque Industrial Development
Authority, Manor Nursing Home,
12.000% 05/15/14 3,203 3,796
OH Alliance First Mortgage Medical
Facility, McCrea Nursing Center,
10.125% 02/01/13 2,410 2,517
OH Ashtabula County,
Village Square Nursing Center, Inc.,
12.000% 12/01/15 1,275 1,325
OH Franklin County,
Columbus West Health Care Co.,
Series 1986,
10.000% 09/01/16 3,015 2,864
OH Lucas County,
Villa North Nursing Home,
Series 1988-B,
10.500% 06/01/18 2,995 2,935
OH Montgomery County,
Grafton Oaks Project,
Series 1986,
9.750% 12/01/16 695 660
OH Perry County, New
Lexington Health,
9.875% 09/01/10 2,545 2,644
OH Trumbull County, Horizon Healthcare,
12.000% 12/01/15 2,215 2,302
OH Washington County Industrial
Development, Marie Antoinette Care
Center, Series 1983,
6.867% 12/01/13 5,370 4,900
PA Cambria County Industrial Development,
Beverly Enterprises,
10.000% 06/18/12 2,000 2,507
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19 10,730 11,159
PA Delaware County Authority,
Main Line and Haverford Nursing,
Series 1992,
9.000% 08/01/22 9,420 10,209
</TABLE>
15
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH - CONT.
NURSING HOMES - CONT.
PA Lackawanna County Industrial Authority,
Greenridge Nursing Center, Inc.,
10.500% 12/01/10 $ 1,950 $ 2,072
PA Luzerna County Industrial
Development Authority:
Beverly Enterprises,
Pennsylvania, Series 1983,
10.125% 11/01/08 870 978
First Mortgage, Millville Nursing Center,
10.500% 12/01/12 3,870 3,676
PA Montgomery County Higher Education
and Health Authority, AHF/Roslyn-
Hatboro, Incorporated Project,
9.000% 11/15/22 12,465 12,948
PA Philadelphia Authority For
Industrial Development:
The Care Pavilion, Series 1988,
10.250% 02/01/18 5,950 6,137
Nursing Home,
Series 1988,
10.250% 11/01/18 9,460 9,834
PA Warren County Housing Finance
Corporation, Allegheny Manor,
7.500% 02/01/21 1,423 1,482
PA Washington County Industrial
Development Authority, Central
States, Series 1989,
10.250% 11/01/19 3,440 3,337
PA Wilkins Area Industrial Development
Authority, Oakmont Nursing Center,
Series 1984,
10.000% 07/01/11 1,150 1,318
SC Charleston County,
Driftwood Health Care Center, Series 1984,
12.500% 12/01/14 1,410 1,445
TN Metropolitan Government, Nashville
and Davidson Counties Health and
Education Facilities, Central States, Series 1989
10.250% 11/01/19 770 747
TN Sullivan County, Health, Education,
and Housing Facilities Board,
10.250% 04/01/15 2,820 3,091
</TABLE>
16
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
TN Sumner County, Health, Education,
and Housing Facilities Board, Gallatin
Health Care, Series 1986:
9.750% 12/01/03 $ 160 $ 136
9.750% 12/01/04 175 149
9.750% 12/01/05 225 191
9.750% 12/01/06 220 187
10.250% 12/01/16 2,400 2,040
TX Whitehouse Health Facilities
Development Corporation, Oak Brook
Health Care Center, Series 1989,
10.000% 12/01/19 1,815 1,858
VA Beach Development Authority,
Beverly Enterprises, Series 1985,
10.000% 04/01/10 960 1,080
--------
175,749
--------
.........................................................................................
HOUSING - 13.3%
ASSISTED LIVING/SENIOR - 1.0%
AZ Mohave County Industrial Development
Authority, Multifamily, Kingman
Station Apartments,
8.125% 10/01/26 2,875 3,080
CO Health Facility,
Birchwood Manor,
Series 1991 A,
7.625% 04/01/26 1,835 1,920
DE Quaker Hill Housing Corporation,
Multi-family Housing, Quaker Hill
Apartments, Series A,
7.550% 08/01/21 6,225 6,738
IL State Development Finance Authority,
Care Institute, Inc.,
8.250% 06/01/25 10,000 10,300
MN Roseville,
Care Institute, Inc., Series 1993
7.750% 11/01/23 2,975 2,767
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993-A,
8.250% 05/01/23 1,470 1,486
TX Bell County Health Facilities
Development Corp., Care Institutes, Inc.
9.000% 11/01/24 7,585 8,125
--------
34,416
--------
</TABLE>
17
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
MULTI - FAMILY - 5.3%
AK State Housing Finance Corp.:
First Series 1991,
7.800% 12/01/30 $ 2,430 $ 2,570
Series A,
5.400% 12/01/13 7,400 7,058
Series 1992-A,
6.600% 12/01/23 11,750 13,042
AL State Housing Finance Authority,
Series 1990-C,
7.550% 04/01/16 730 776
AZ Phoenix Industrial Development
Authority, Chris Ridge Village
Project, Series 1992:
6.750% 11/01/12 650 678
6.800% 11/01/25 2,750 2,857
CA Housing Finance Agency,
Home Mortgage, Series 1984 B,
(a) 08/01/16 325 33
CO El Paso County Home Mortgage:
Series 1987 C,
8.300% 09/20/18 2,589 2,919
Series 1987 D,
8.150% 09/20/14 1,329 1,464
Series 1988 A,
8.375% 03/25/19 2,419 2,749
CT State Housing Finance Authority,
Housing Mortgage Finance Program,
Series B-1,
7.550% 11/15/08 75 81
FL Clearwater,
Hampton Apartments,
8.250% 05/01/24 3,475 3,692
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 10,600 11,130
FL State Housing Finance Agency,
Windsong Apartments, Series 1993-C,
9.250% 01/01/19 1,230 1,250
GA Augusta Housing Authority Mortgage,
Mountain Ridge Holdings II,
Series A,
8.960% 09/01/24 3,620 2,715
</TABLE>
18
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
GA Savannah Housing Authority,
Multi-family Housing, Plantation Oaks
Apartments Project, Series 1986,
9.625% 02/01/27 $ 2,905 $ 3,116
IL Carbondale Mortgage Revenue,
Mill Street Apartments, Series 1979,
7.375% 09/01/20 855 899
IL Charleston Non-Profit Corporation,
Cougills Manor Project,
6.875% 07/01/20 1,807 1,934
IL Chicago Multi-family Housing,
Jeffery Apartments,
Series 1987,
8.125% 08/01/30 2,395 2,491
IL Housing Development Authority,
Series 1990 A,
8.000% 06/01/26 680 704
IL Rockford:
8.700% 08/20/07 635 658
8.700% 08/20/26 4,455 4,619
KY Louisville Residential,
Series 1984,
(a) 07/01/16 1,135 116
LA Jefferson Housing Development,
Corporation Multi-family,
Concordia Project, Series A,
7.700% 08/01/22 2,570 2,792
LA New Orleans Housing Development
Corporation, Multi-family Housing
Mortgage, Southwood Patio, Series 1990-A,
7.700% 02/01/22 2,375 2,506
MN Washington County Housing and
Redevelopment Authority, Cottages of
Aspen Project,
9.250% 06/01/22 1,950 2,006
MN White Bear Lake,
Birch Lake Townhomes Project;
Series 1988 A,
9.750% 07/15/19 2,185 2,210
Series 1989 B,
(g) 07/15/19 310 489
MO St. Louis Area Housing Finance
Corporation, Wellington Arms III,
Series 1979,
7.500% 01/01/21 2,075 2,111
</TABLE>
19
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
MULTI - FAMILY - CONT.
MS Biloxi Urban Renewal
Biloxi Apartments Project,
Series 1985:
9.500% 12/01/05 $ 1,185 $ 1,225
9.500% 12/01/10 1,235 1,278
9.500% 12/01/15 1,970 2,039
NC Eastern Carolina Regional Housing
Authority, Jacksonville New River
Apartments,
8.250% 09/01/14 2,915 2,970
NE Omaha Housing Development
Corporation, Mortgage Notes, North
Omaha Homes,
7.375% 03/01/21 1,435 1,494
NY Nyack Housing Assistance
Corp., Plaza Apartments,
7.375% 06/01/21 (f) 3,070 3,072
NY Yorktown Housing Corp.,
Beaveridge Apartments,
7.375% 06/01/21 (f) 3,453 3,461
Pass Through Certificates, Series
1993-A,
8.500% 12/01/16 (f) 61,712 63,795
TN Knox County Industrial Board,
Multi-family Redevelopment,
Waterford Village Project, Series 1986:
8.750% 03/01/96 15 15
8.750% 03/01/05 525 542
8.750% 03/01/15 1,320 1,364
8.750% 03/01/26 3,590 3,712
TN Knoxville Community Development,
Corporation Multi-family Housing,
Maple Oak Apartment Project, Series 1992,
6.375% 10/15/08 2,510 2,610
TX Galveston Pass Health Facilities Center,
8.000% 08/01/23 1,850 1,929
TX Laredo Cherry Hills Apartment Project,
Housing Development Corp., Number 1,
7.375% 03/05/21 2,130 2,192
VA Alexandria Redevelopment
and Housing Authority, Courthouse
Commons Apartments:
Series 1990-A,
10.000% 01/01/21 760 772
Series 1990-B,
(a) 01/01/21 979 1,661
</TABLE>
20
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
VA Harrisonburg Redevelopment and
Multi-family Housing Authority,
Series 1991 A,
7.375% 11/20/28 $ 1,750 $ 1,862
VA Norfolk Redevelopment and Housing
Authority, Multi-family Housing,
Dockside, Series 1991-A:
7.300% 12/01/16 1,315 1,399
7.375% 12/01/28 1,940 2,068
VA Roanoke Redevelopment and Housing
Authority, Mountain Ridge,
9.250% 11/01/22 1,800 1,854
VA State Housing Authority Commonwealth
Mortgage,
Series B, Sub Series B-4,
6.850% 07/01/17 5,180 5,394
WA Washington State Housing Finance
Commission, Multi-family Housing,
Series 1988-A,
7.900% 07/01/30 1,460 1,522
WI Milwaukee Housing Authority
Mortgage, Windsor Court Project,
Series 1986,
8.700% 08/21/21 1,985 2,068
--------
189,963
--------
SINGLE - FAMILY - 7.0%
AZ Maricopa County Industrial Development,
Single-family, Series 1984,
(a) 02/01/16 10,055 3,054
CA Riverside County, Series 1988-A,
8.300% 11/01/12 10,000 13,225
CO Housing Finance Authority,
Single-family Housing:
Series 1991-A,
7.500% 05/01/29 4,745 5,024
Series 1991 C-1:
7.200% 02/01/18 870 923
7.650% 12/01/25 5,000 5,606
Series A,
7.150% 11/01/14 2,350 2,479
Series D-1,
7.375% 06/01/26 5,000 5,531
FL Brevard County,
Housing Finance Authority,
Single-family Mortgage, Series 1985,
(a) 04/01/17 8,055 906
</TABLE>
21
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
SINGLE - FAMILY - CONT.
GA Atlanta Urban Residential Finance
Authority, Single-family Housing
Mortgage, Series 1988,
8.250% 10/01/21 $ 1,220 $ 1,287
GA State Residential Finance Authority,
Home Ownership Mortgage:
Series C,
7.500% 01/01/18 755 804
Series 1989,
7.800% 06/01/21 5,950 6,359
IA Finance Authority Single-family,
Series 1992 B,
6.950% 07/01/24 10,000 10,475
IA State Finance Authority,
Single-family Mortgage Revenue,
Series A,
7.250% 07/01/16 1,075 1,137
IL East Moline Housing Finance Corp.,
Deerfield Woods Apartments,
7.500% 08/01/21 2,416 2,458
IL Rockford,
9.250% 02/01/00 1,075 1,111
IL State Housing Development Authority:
Series B,
7.250% 08/01/17 1,290 1,377
Series C,
7.500% 08/01/17 220 232
IN State Housing Finance Authority:
Single-family Housing,
Series 1987 C,
9.125% 07/01/18 4,075 4,294
GNMA Collateral Mortgage Program:
Series A-1,
7.850% 07/01/16 160 172
Series B-1,
7.600% 01/01/16 1,015 1,078
LA Housing Financing Agency,
Series 1988,
8.300% 11/01/20 2,780 2,908
LA Calcasieu Parish:
Series 1987-A,
8.125% 12/01/12 1,409 1,448
Series 1988-B,
8.250% 06/01/12 3,543 3,676
</TABLE>
22
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
LA Jefferson Parish Home Mortgage
Authority, Single-family,
Series 1988 A,
8.300% 04/01/20 $ 2,380 $ 2,526
MA State Housing Finance Agency:
Series 1987-A,
9.000% 12/01/18 1,595 1,675
Series 1988-A,
8.400% 08/01/21 740 768
Series 1988-B,
8.100% 08/01/23 840 883
MD State Community Development Administration,
Department of Housing and Community
Development, Single-family Program:
1st Series,
7.300% 04/01/17 450 478
3rd Series,
7.250% 04/01/27 960 1,013
ME State Health and Higher Educational
Facilities Authority,
Maine Medical Center, Series C,
5.000% 11/15/13 16,500 15,448
MN State Housing Finance Agency:
Series 1988 D,
8.250% 08/01/20 1,950 2,057
Single-family Mortgage,
Series C,
7.100% 07/01/11 675 721
MO State Housing Development Commission,
Series C,
6.900% 07/01/18 870 913
MS Canton Housing,
8.400% 08/15/21 1,551 1,590
MS Home Corporation Residual,
Series 1990-C,
(a) 09/01/13 20,000 7,125
MS Lamar County Wesley Manor II:
8.750% 08/01/20 1,000 1,054
8.750% 02/01/29 1,610 1,697
NE Investment Finance Authority,
Single-family Mortgage:
Series 1988-1,
8.125% 08/15/38 5,355 5,616
Series 1990-B,
10.892% 03/15/22 8,000 9,230
Series 1990-2,
11.134% 09/10/30 4,000 4,655
</TABLE>
23
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
SINGLE - FAMILY - CONT.
NH State Housing Finance Authority,
Single-family Resources Mortgage,
Series 1989-B,
7.700% 07/01/29 $ 2,705 $ 2,833
NJ State Housing and Mortgage Finance
Agency,
6.950% 11/01/13 5,090 5,383
NY State Mortgage Agency:
Series BB-2,
7.950% 10/01/15 1,395 1,461
Home Owner Mortgage:
Series H-2,
7.850% 04/01/22 1,500 1,599
Series 46,
6.650% 10/01/25 10,000 10,400
OH Housing Finance Agency,
Series 1988 C,
8.125% 03/01/20 1,025 1,088
OH Housing Finance Agency Single-
family Mortgage, RIB (variable rate),
Series A-2,
9.517% 03/24/31 6,550 7,189
PA Pittsburgh Urban Redevelopment
Authority, Sidney Square Project,
7.800% 08/01/28 5,290 5,473
PA State Housing Finance Authority,
Series 39B,
6.750% 04/01/16 5,700 6,013
SC State Housing Authority,
Homeownership Mortgage, Series 1988-A,
8.500% 07/01/08 2,000 2,088
TX Bexar County Housing Finance Corp.
GNMA Collateralized Mortgage,
Series 1989-A,
8.200% 04/01/22 4,055 4,405
TX Corpus Christi Housing Finance Corp.
Single-family Mortgage,
Lomas and Nettleton, Series C,
10.000% 10/01/07 1,145 1,178
TX Harris County Housing Finance,
Corporation Single-family,
Series 1987,
8.875% 12/01/17 2,595 2,705
</TABLE>
24
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
TX Lubbock Housing Finance Corporation,
Single-family Series:
Series 1988 C,
8.375% 12/01/20 $ 6,370 $ 6,545
Series 1988 D,
8.375% 12/01/20 1,165 1,206
TX State Department Housing and
Community Affairs, Collateralized
Home Mortgage, Series 1992-B2,
9.511% 06/18/23 9,000 10,102
TX State Housing Agency Mortgage,
Single-family,
Series A,
7.150% 09/01/12 900 960
UT State Housing Finance Agency,
Single-family Mortgage:
Series A,
7.200% 07/01/13 190 197
Series A-1,
6.900% 07/01/12 1,065 1,125
Series B-1,
7.500% 07/01/16 195 205
Series B-2:
7.000% 07/01/16 380 400
7.700% 07/01/15 40 42
Series D-2,
7.250% 07/01/11 530 566
Series E-1,
6.950% 07/01/11 1,740 1,842
Series F-1,
7.400% 07/01/09 510 530
Series 1990-C2,
7.950% 07/01/10 430 464
VA State Housing Authority, Commonwealth
Mortgage:
Series A,
7.100% 01/01/17 1,000 1,068
Series C2,
8.000% 01/01/38 1,000 1,056
Series 1988-C,
7.800% 01/01/38 11,500 12,061
VT Housing Finance Agency, Home
Mortgage Purchase, Series 1989-A,
7.850% 12/01/29 3,920 4,145
WA Washington Housing Development
Corporation, Parkview Apartments
Project,
7.500% 04/01/21 1,701 1,752
</TABLE>
25
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
SINGLE-FAMILY - CONT.
WI State Housing and Economic
Development Authority,
Series A,
7.000% 09/01/09 $ 985 $ 1,055
WV State Housing Development Fund,
Series 1992-B,
7.200% 11/01/20 10,000 10,600
WY Community Development Authority,
Single-family Mortgage:
Series 1987-A,
7.875% 06/01/18 2,255 2,371
Series 1988-G,
7.250% 06/01/21 4,500 4,792
WY Rock Springs Housing Finance
Corporation, Bicentennial Association II,
7.500% 05/01/20 1,159 1,227
--------
249,139
--------
.........................................................................................
MANUFACTURING - 2.0%
FOOD & KINDERED PRODUCTS - 0.0%
VA Halifax County Industrial Development
Authority, O'Sullivan Industries Project,
Series 1988,
8.250% 10/01/08 1,000 1,100
--------
MEASURING & ANALYZING INSTRUMENTS - 0.0%
MN Brooklyn Park,
TL Systems Corp., Series 1991,
10.000% 09/01/16 325 387
--------
PAPER PRODUCTS - 1.7%
GA Rockdale County Development
Authority, Solid Waste Disposal, Visy
Paper, Inc., Series 1993,
7.500% 01/01/26 14,000 14,350
IA Cedar Rapids Industrial Development,
Weyerhaeuser Company Project,
9.000% 08/01/14 1,000 1,411
LA De Soto Parish,
International Paper Company,
Series A,
7.700% 11/01/18 1,250 1,448
MI State Strategic Fund,
Blue Water Fiber Project, Series 1994,
8.000% 01/01/12 16,200 15,612
</TABLE>
26
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
MI Strategic Fund Limited,
Great Lakes Pulp & Fibre Project,
10.250% 12/01/16 $ 28,000 $ 29,505
-------
62,326
-------
PETROLEUM REFINING 0.1%
TX Lower Neches Valley Authority,
Mobil Oil Refining Corp.,
6.850% 05/01/12 3,570 3,766
-------
PRIMARY METAL - 0.2%
PA Bucks County,
Industrial Development:
Hechinger Company, Series 1984,
11.375% 11/15/04 2,420 2,506
Jorgensen Steel,
9.000% 06/01/05 4,000 4,105
-------
6,611
-------
TRANSPORTATION EQUIPMENT - 0.0%
MN Buffalo, Ruden Manufacturing Inc.,
10.500% 09/01/14 1,445 1,557
-------
.........................................................................................
MINING - 0.1%
METAL MINING
CO Mesa County Industrial Development
Joy Technologies Inc.,
Series 1992,
8.500% 09/15/06 1,000 1,075
OH Cuyahoga County,
Joy Technologies, Inc.,
8.750% 09/15/07 1,340 1,457
-------
2,532
-------
..........................................................................................
POLLUTION CONTROL REVENUE - 4.0%
FL Pinellas County,
Florida Power Corp.,
7.200% 12/01/14 1,000 1,111
FL State Municipal Power Agency,
Series 1993,
5.100% 10/01/25(c) 38,150 35,956
GA Bartow County Development Authority,
State Power Company Bowen Plant,
7.250% 07/01/21 1,000 1,028
GA Wayne County Development Authority,
Solid Waste Disposal, ITT Royonier
Incorporated, Series 1990,
8.000% 07/01/15 2,500 2,803
</TABLE>
27
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
POLLUTION CONTROL REVENUE - CONT.
IL State Development Finance Authority,
Central Illinois Public Service Co.:
Series A,
7.600% 03/01/14 $ 750 $ 842
Series B,
7.600% 09/01/13 750 845
IN Petersburg,
Indiana Power and Light Co.,
Series B,
5.400% 08/01/17 5,000 4,831
KY Louisville and Jefferson County,
Metropolitan Sewer District,
7.350% 05/01/19 500 569
MO State Environmental Improvement and
Energy Resources Pollution Control,
Authority:
Series 1984-G1,
8.250% 11/15/14 4,890 5,128
Series 1984-G4,
8.250% 11/15/14 5,460 5,726
MS Claiborne County Pollution Control,
Middle South Energy, Inc.,
Series 1984 C,
9.875% 12/01/14 1,250 1,448
ND Mercer County,
Basin Electric Power,
Series 2,
6.050% 01/01/19 10,000 10,350
NV Humboldt County Pollution Control
Revenue, Idaho Power Co. Project,
8.300% 12/20/14 1,875 2,257
NY State Environmental Facilities
Corporation, Pollution Control, New
York City Municipal Water Finance Authority:
Series 2,
5.750% 06/15/12 19,260 20,006
Series E,
6.875% 06/15/10 15,000 16,706
NY Suffolk County Water Authority,
7.375% 06/01/12 180 199
OK Muskogee,
Oklahoma Gas and Electric Project,
Series A,
7.000% 03/01/17 1,300 1,357
</TABLE>
28
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
TX Brazos River Authority,
Collateralized Pollution Control Bonds,
Texas Utilities Electric Co., Series 1989 C,
8.250% 01/01/19 $ 13,000 $ 14,284
TX San Antonio,
Series B,
6.000% 02/01/14 15,355 15,681
TX San Antonio Electric & Gas Revenue,
Series 1988,
8.000% 02/01/16 175 192
WV Mason County Pollution Control,
Appalachian Power Co.,
Series G,
7.400% 01/01/14 400 440
WY Sweetwater County, Pollution Control
Revenue, Idaho Power Company:
Series A,
7.625% 12/01/13 350 368
Series B,
7.625% 12/01/13 400 420
--------
142,547
--------
.........................................................................................
PUBLIC ADMINISTRATION - 0.2%
AK State Industrial Development
Authority, Series 1986:
8.625% 04/01/02 2,525 2,714
8.750% 04/01/07 2,965 3,191
--------
5,905
--------
.........................................................................................
PUBLIC FACILITIES IMPROVEMENT - 5.9%
CA Riverside County Transportation
Commission, Series A,
6.500% 06/01/09 6,500 7,028
FL Orange County, Series 1993-B,
5.375% 01/01/24 20,600 20,214
IL Chicago O'Hare International Airport
Special Facility, Senior Lien,
Series A,
5.000% 01/01/16(c) 15,000 14,156
IL Metropolitan Pier and Exposition
Authority, McCormick Place Expansion
Project:
Series 1992 A:
(a) 06/15/11 20,000 8,500
6.500% 06/15/27 2,500 2,619
</TABLE>
29
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
PUBLIC FACILITIES IMPROVEMENT - CONT.
MI Detroit Economic Development,
District Court Madison Center,
Series 1984,
10.625% 02/01/11 $ 5,000 $ 5,166
MN Mille Lacs Capital Improvement
Infrastructure, Band of Chippewa,
Series 1992-A,
9.250% 11/01/12 1,485 1,687
NY State Dormitory Authority:
Series 1991-A,
5.625% 05/15/13 8,000 7,860
6.000% 07/01/20 27,990 29,094
9.500% 04/15/14 9,000 10,582
NY State Urban Development:
5.700% 04/01/10 11,225 11,309
5.750% 04/01/11 2,000 2,020
Correctional Facility:
Series A:
6.500% 01/01/10 14,595 16,474
6.500% 01/01/11 8,500 9,552
Series 4,
5.375% 01/01/23 10,000 9,375
Series 1993 A,
5.500% 01/01/14 10,000 9,787
State Facilities, Series 1991,
7.500% 04/01/20 4,950 5,748
NY Urban Development Revenue
Corporation, Correctional Facilities,
Series 1993-A,
5.250% 01/01/21 15,000 13,837
PA Convention Center Authority, Series
1989-A,
6.000% 09/01/19 5,000 5,463
PR Commonwealth of Puerto Rico,
Infrastructure Finance Authority,
Series 1988-A,
7.900% 07/01/07 2,500 2,747
SC State Public Service Authority,
Series C,
5.000% 01/01/18 10,000 9,450
TN Shelby County, Public Improvement,
Series 1992-A,
(a) 05/01/10 15,750 6,989
</TABLE>
30
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
UT West Jordan Industrial Development,
7.875% 12/15/11 $ 2,000 $ 2,115
--------
211,772
--------
.........................................................................................
PUBLIC INFRASTRUCTURE - 5.0%
AIRPORTS - 2.0%
CA Los Angeles Regional Airport
Improvement Corp., Los Angeles
International Airport:
Series 1985,
11.250% 11/01/25 10,000 10,544
Series 1991,
6.800% 01/01/27 1,400 1,442
CA Los Angeles Transportation Authority,
Series B,
5.250% 07/01/23 10,000 9,662
CA Foothill Eastern Transportation
Corridor Agency, State Toll Road,
Senior Lien, Series A,
5.000% 01/01/35 4,865 4,081
CA San Joaquin Hills Transportation
Corridor Agency:
Series C,
(a) 01/01/20 4,600 995
Senior Lien Road, Series 1993,
6.750% 01/01/32 4,500 4,674
CO Denver City & County Airport Revenue:
6.500% 11/15/12 10,625 11,741
Series 1991 A,
8.750% 11/15/23 5,485 6,424
Series 1992 B,
7.250% 11/15/23 5,500 5,919
Stapleton International Airport,
Series 1990 A,
8.500% 11/15/23 5,000 5,694
FL Hillsborough County Aviation Authority,
Tampa International Airport,
Series A,
6.900% 10/01/11 1,500 1,629
IN Airport Authority,
7.100% 01/15/17 2,000 2,175
IN Indianapolis Airport Authority,
9.000% 07/01/15 250 262
IN Transportation Finance Authority,
Series A,
6.750% 11/01/11 2,000 2,153
TX Dallas-Fort Worth Regional Airport,
Series A,
7.375% 11/01/11 5,000 5,794
--------
73,189
--------
</TABLE>
31
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
PUBLIC INFRASTRUCTURE - CONT.
TURNPIKES/TOLL ROADS/BRIDGES - 3.0%
FL Orlando & Orange County Expressway,
Series A
5.125% 07/01/20 $ 10,455 $ 9,893
FL State Mid-Bay Bridge Authority,
Series A,
6.875% 10/01/22 2,000 2,350
MA State Turnpike Authority,
Series A,
5.000% 01/01/20 30,765 28,881
NV Clark County Passenger Facility,
Las Vegas McCarran International Airport,
Series B,
6.500% 07/01/12 3,000 3,139
NY State Thruway Authority Service
Contract, Local Highway
5.250% 04/01/13 10,000 9,388
NY Triborough Bridge and Tunnel
Authority, General Purpose:
Series A:
5.000% 01/01/24 12,000 11,250
5.200% 01/01/20 15,095 14,604
Series L,
8.000% 01/01/07 300 328
TX Harris County:
Series 1994,
5.375% 08/15/20 16,250 15,925
Toll Road Revenue,
5.000% 08/15/16 11,000 10,409
--------
106,167
--------
.........................................................................................
REFUNDED/ESCROW/SPECIAL OBLIGATION(h) - 5.7%
FL Dade County,
7.375% 07/01/19 500 562
FL Jacksonville Electric Authority,
Series 3-A,
6.875% 10/01/12 1,000 1,054
FL State Board of Education,
Public Education,
Series B,
7.750% 06/01/16 300 323
GA State Municipal Electric Authority,
7.875% 01/01/18 700 716
IA Ottumwa Hospital Facilities,
Ottumwa Regional Health Center,
Series 1985,
9.625% 11/01/10 3,025 3,250
</TABLE>
32
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
IL Du Pager Water Commission:
Series 1986,
7.875% 03/01/11 $ 375 $ 386
Series 1987,
6.875% 05/01/14 3,775 3,997
IL Health Facility Authority:
Lutheran Healthcare Systems,
Series 1989 B,
7.375% 04/01/08 5,055 5,630
United Medical Center-Formerly,
Series 1991:
8.125% 07/01/06 3,175 3,798
8.375% 07/01/12 1,500 1,851
IL State,
7.125% 04/01/08 1,000 1,031
IL State Sales Tax:
Series C,
6.875% 06/15/15 3,500 3,719
Series N,
6.900% 06/15/13 1,000 1,138
IN Hamilton County Public Building
Corp.,
7.000% 02/01/12 2,525 2,819
IN St. Joseph County Hospital Authority,
South Bend Memorial Hospital,
9.400% 06/01/10 3,190 4,283
KY State Turnpike Authority:
Series A:
7.250% 05/15/10 1,500 1,695
7.875% 01/01/04 200 209
KY Trimble County,
Louisville Gas & Electric Co.,
Series B,
6.550% 11/01/20 130 146
LA State Public Facilities Authority,
Tulane University,
6.625% 11/15/21 455 518
MA Bay Transportation Authority:
General Transportation System:
Series 1990-A,
7.000% 03/01/10 1,500 1,658
Series 1990-B,
7.800% 03/01/10 3,300 3,882
Series 1991-A,
7.000% 03/01/11 1,000 1,139
</TABLE>
33
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
REFUNDED/ESCROW/SPECIAL OBLIGATION - CONT.
MA Boston,
Boston City Hospital Facilities,
Series 1990-A,
7.625% 02/15/21(c) $ 12,000 $ 13,905
MA General Obligation Bonds:
Series 1989 C,
7.000% 06/01/09 500 554
Series 1990 C,
7.000% 12/01/10 2,700 3,031
Series 1991 A,
7.625% 06/01/08 5,000 5,869
MA State Water Resources Authority,
Series 1990 A,
7.625% 04/01/14 2,000 2,297
MI Huron Valley School District,
Series 1991,
(a) 05/01/20 95,750 20,945
MN University of Minnesota,
Series 1986-A,
7.750% 02/01/10 250 257
MO State Health and Educational
Facilities Authority, Series 1988-A,
7.750% 06/01/16 2,000 2,215
NC Municipal Power Agency,
5.500% 01/01/13 24,430 25,224
NV State,
Series A,
6.800% 07/01/12 2,500 2,831
NY New York City General Obligation,
Series 1991-D,
8.000% 08/01/18 5,085 6,070
NY State Dormitory Authority, State
University of New York:
Series 1989-B,
7.250% 05/15/15 4,150 4,725
Series 1990-B,
7.375% 05/15/14 2,790 3,191
NY Triborough Bridge and Tunnel Authority:
Series I,
7.625% 01/01/14 600 614
Series T,
7.000% 01/01/11 750 853
</TABLE>
34
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
PA Lehigh County,
Healtheast Inc.,
Series 1987 B,
9.000% 07/01/15 $ 4,000 $ 4,380
PA Philadelphia Hospital and Higher
Educational Facilities Authority:
Children's Hospital Project:
Series A,
6.500% 02/15/21 1,000 1,122
MR Project, Series 1986,
8.625% 08/01/11 1,000 1,051
PA State Industrial Development
Authority, Economic Development,
Series A,
7.000% 01/01/11 5,595 6,378
PA State University:
6.750% 07/01/09 750 824
6.750% 07/01/14 2,750 3,022
PA Westmoreland County Municipal
Authority, Special Obligation, Series
1985,
9.125% 07/01/10 5,000 6,294
PA York County Industrial Development
Authority, Fairview Village
Associates, Series 1986,
10.750% 06/01/16 700 743
SC State Public Service Authority,
Electric System Expansion Revenue,
Santee Cooper Project, Series 1986-A,
8.000% 07/01/19 500 527
TN Jackson Water and Sewer Revenue,
Series 1984,
10.375% 07/01/12 910 1,110
TN Shelby County, Public Improvement,
Series 1992-A,
(a) 05/01/11 10,000 4,125
TX Austin Utilities System Revenue:
Series A,
7.800% 11/15/12 200 223
Series 1985-A,
9.500% 05/15/15 6,000 7,245
Series 1986,
7.750% 11/15/12 200 208
TX Hidalgo County Health Services,
Mission Hospital Inc.,
Series A,
10.250% 02/01/25 4,785 6,053
</TABLE>
35
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
REFUNDED/ESCROW/SPECIAL OBLIGATION - CONT.
TX Houston Water & Sewer System Revenue,
Series A,
7.125% 12/01/16 $ 850 $ 894
TX San Antonio Water System Revenue,
Series 1990-A,
7.350% 05/01/07 525 572
UT Intermountain Power Agency,
State Power Supply,
Series A:
7.000% 07/01/21 1,000 1,109
7.750% 07/01/17 1,000 1,043
UT Salt Lake City Housing Authority,
Multi-family Mortgage, Hartland
Apartments Project, Series 1987-A-B,
8.875% 12/20/27 7,720 8,029
UT Uintah County Pollution Control,
Series 1984-F2,
10.500% 06/15/14 6,900 8,927
WV State's Parkways Economic
and Tourism Authority, Series 1989,
7.125% 07/01/19 1,990 2,216
--------
202,480
--------
.........................................................................................
RETAIL TRADE - 0.3%
HOME FURNISHINGS & EQUIPMENT - 0.1%
PA Philadelphia Authority for
Industrial Development, Hechinger
Company, Series 1983,
11.375% 12/01/04 3,875 4,000
--------
MISCELLANEOUS RETAIL - 0.2%
DE Sussex County, Economic Development,
Rehoboth Mall Project,
7.250% 10/15/12 4,885 5,447
--------
.........................................................................................
SALES & EXCISE TAX - 1.4%
CA Los Angeles County Transportation,
Authority Proposition A, Series 1993 A,
5.000% 06/01/21 42,555 39,683
NY State Dormitory Authority:
City University, Series B,
5.000% 05/15/18 12,920 11,612
--------
51,295
--------
</TABLE>
36
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
SERVICES - 0.2%
AMUSEMENT & RECREATION - 0.1%
NM Red River Sports Facility, Red
River Ski Area, Series 1985,
12.000% 06/01/07 $ 3,145 $ 3,204
-------
HOTELS, CAMPS & LODGING - 0.1%
MN Burnsville Commercial Development,
Holiday Inn Project,
10.600% 06/01/06 1,400 1,439
MN Minneapolis Commercial Development,
Hometel Associates, Limited,
Series 1988,
10.500% 06/01/03 1,500 1,518
-------
2,957
-------
.........................................................................................
SOLID WASTE - 0.8%
LAND FILL - 0.3%
WA Walla Walla Public Corp.,
Ponderosa Fibers Project,
9.125% 01/01/26 10,000 10,438
-------
MISCELLANEOUS DISPOSAL - 0.2%
CT State Development Authority,
Pfizer Inc. Project,
7.000% 07/01/25 3,000 3,398
MA Boston,
Industrial Development Financing,
Solid Waste Disposal,
10.500% 01/01/11 1,500 1,704
SC Richland County, Solid Waste
Disposal Facilities Revenue,
Union Camp Corp.,
6.750% 05/01/22 3,500 3,763
-------
8,865
-------
RESOURCE RECOVERY - 0.3%
CO Student Obligation Authority,
Series II-B,
6.200% 12/01/08 4,000 4,120
WA Spokane Regional Solid Waste
Management System, Series 1989-A:
7.750% 01/01/11 3,000 3,304
7.875% 01/01/07 2,500 2,734
-------
10,158
-------
</TABLE>
37
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
STUDENT LOAN - 0.2%
LA State Public Facility Authority,
Series A,
6.750% 09/01/06 $ 2,000 $ 2,143
NM State Educational Assistance
Foundation, Series II-A:
5.400% 12/01/06 1,000 1,019
5.500% 12/01/07 1,000 1,019
VA State Education Loan Guaranteed,
Senior Series D,
5.600% 03/01/03 3,200 3,296
-------
7,477
-------
.........................................................................................
TAX ALLOCATION - 4.1%
AK State Industrial Development
Authority, Series 1986:
8.625% 04/01/02 585 630
8.750% 04/01/07 915 987
AL Daphine Special Care Facilities
Financing Authority
Presbyterian Hospital,
(a) 07/01/18 (i) 200,000 28,250
AL Selma Special Care Facilities
Finance Authority, Vaughan Regional
Medical Center, Series 1987,
9.400% 06/01/07 4,000 4,425
AL State University Revenue,
Auburn University,
7.000% 06/01/12 1,000 1,114
AZ State University:
6.625% 06/01/09 1,000 1,093
7.300% 06/01/11 500 519
7.500% 07/01/16 200 208
CA Los Angeles County Transportation,
Series 1988 A,
8.000% 07/01/18 3,500 3,903
CO Mesa County,
(a) 12/01/11 5,905 2,347
DC District Columbia Hospital,
Washington Hospital Center Corp.,
Series 1990-A:
8.750% 01/01/15 10,000 11,975
9.000% 01/01/08 1,860 2,253
DE Wilmington, Riverside Hospital,
Series 1988A,
10.000% 10/01/03 300 351
</TABLE>
38
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
HI State Department Budget and Finance,
RIB (variable rate),
Series 1993 B,
6.584% 12/15/23 $ 10,000 $ 9,125
IL Development Finance Authority,
City of Marion Project,
Series 1991,
9.625% 09/15/21 5,755 5,978
IL Metropolitan Pier and Exposition
Authority, McCormick Place Expansion
Project, Series A,
(a) 06/15/16 15,250 4,708
IL State Sales Tax, Series N,
6.900% 06/15/09 1,000 1,090
NY State Energy Research and Development
Authority, Series 1993-B, RIB (variable rate),
8.295% 04/01/20 13,000 14,739
NY State Local Assistance Corp.,
Series D,
5.000% 04/01/23 36,425 33,557
NY State Local Government Assistance
Corp., Series 1993-C,
5.500% 04/01/17 18,475 18,452
--------
145,704
--------
.........................................................................................
TRANSPORTATION/COMMUNICATION/ELECTRIC/GAS & SANITATION - 3.7%
AIR TRANSPORTATION - 1.3%
CO Denver City and County Airport,
Series D,
7.750% 11/15/21 15,000 17,156
HI State Airport System,
Series 2,
7.000% 07/01/18 8,770 9,647
IL Chicago O'Hare International Airport
Special Facility,
International Terminal, Series A,
6.500% 01/01/18 17,500 17,981
TN Memphis-Shelby County, Airport
Authority Special Facilities, Express
Airlines I, Inc., Series 1986,
10.000% 12/01/16 750 764
--------
45,548
--------
</TABLE>
39
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION/COMMUNICATION/ELECTRIC/GAS & SANITATION - CONT.
TRANSPORTATION - 2.4%
IN Indianapolis Local Public
Improvement Bond Bank,
United Airlines Maintenance Facility,
6.700% 01/01/17 $ 4,000 $ 4,270
NJ State Transportation Trust Fund
Authority,
Series B,
7.000% 06/15/12 47,000 56,048
NY Metro Transportation Authority,
Series O,
6.000% 07/01/24 5,500 5,672
NY Port Authority, Series 1992,
4.750% 01/15/29 21,320 18,682
PA Erie-Western Port Authority,
Series 1990,
8.625% 06/15/10 1,850 2,007
-------
86,679
-------
.........................................................................................
UTILITY - 16.6%
CO-GENERATION - 0.2%
FL Martin County Industrial
Development Authority, Indiantown
Co-Generation Project,
7.875% 12/15/25 7,500 8,569
-------
INDIVIDUAL POWER PRODUCER - 0.9%
CA Southern Public Power Authority,
Power Project Revision,
5.210% 07/01/12 14,200 13,969
NY State Energy Consolidated Edison,
7.250% 11/01/24 7,000 7,516
PA Economic Development Finance
Authority, Colver Project, Series D,
7.150% 12/01/18 10,000 10,563
-------
32,048
-------
JOINT POWER AUTHORITY - 3.3%
AZ Salt River Project, Agricultural
Improvement & Power District
Electric System:
Series 1991-A,
6.625% 01/01/12 1,500 1,616
Series 1993-B,
5.250% 01/01/19 18,500 17,853
</TABLE>
40
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
CA Los Angeles Department of Water and Power,
5.250% 11/15/26 $ 7,000 $ 6,702
CA Southern California Public Power
Authority, Southern Transmission
Project, Series 1993,
5.250% 07/01/20 10,000 9,675
FL State Municipal Power Agency,
St. Lucie Project,
5.250% 10/01/21(c) 12,000 11,685
GA State Municipal Electric Authority,
Series O,
8.125% 01/01/17 10,000 10,900
MA Municipal Wholesale Electric
Power Supply System, Series 1994 A,
5.447% 07/01/16 22,900 20,639
SC Piedmont Municipal Power Agency,
Electric System:
Series 1986-A,
7.250% 01/01/22 2,000 2,044
Series 1988,
(a) 01/01/13 44,455 17,393
Series 1993,
5.375% 01/01/25 14,055 13,756
TX State Municipal Power Agency,
(a) 09/01/13 12,440 4,634
--------
116,897
--------
MUNICIPAL ELECTRIC - 12.2%
CA Fresno,
Series 1993 A,
5.250% 09/01/19 10,065 9,876
CA Los Angeles County Sanitation
District's Finance Authority,
Series A,
5.250% 10/01/19 10,000 9,688
CA Los Angeles Wastewater Systems,
Series 1993 D,
5.200% 11/01/21 10,000 9,600
FL Jacksonville Electric Authority,
St. John's River Power Park System,
Issue 2 SE,
5.250% 10/01/21 10,750 10,333
FL Orlando Utilities Commission:
Series 1993-A,
5.250% 10/01/23 11,525 11,107
Series 1993-B,
5.250% 10/01/23 14,835 14,297
RIB (variable rate), Series 1993-B,
6.838% 10/06/13 5,000 5,050
</TABLE>
41
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
UTILITY - CONT.
MUNICIPAL ELECTRIC - CONT.
GA Municipal Electric Authority Power:
Series 1993 C,
5.700% 01/01/19 $ 20,000 $ 20,625
Series O,
7.400% 01/01/01 1,675 1,801
Series Z,
5.500% 01/01/20(c) 39,000 39,439
IL State Development Finance Authority,
Commonwealth Edison Co. Project:
Series D,
6.750% 03/01/15 3,400 3,727
Series 1991,
7.250% 06/01/11 5,625 6,089
IN Sullivan Pollution Control, Merom
Station, Hoosier Energy Rural Electric
Power Loop, Inc., Series 1991,
7.100% 04/01/19 10,000 10,863
KY Jefferson County Pollution Control
Revenue, Louisville Gas and Electric Co.,
Series A,
7.450% 06/15/15 750 834
KY Trimble County,
Louisville Gas and Electric Co.,
Series B,
6.550% 11/01/20 870 936
NE Omaha Public Power System, Electric
System, Series 1993-C,
5.500% 02/01/14 20,000 20,300
NV Clark County Industrial Development,
Nevada Power Company, Series 1990,
7.800% 06/01/20 4,250 4,861
NY State Energy Research and
Development Authority,
Consolidated Edison Co.:
6.750% 01/15/27 4,265 4,489
7.500% 01/01/26 4,250 4,680
Edison Project,
5.250% 08/15/20 23,500 22,413
Rochester Gas and Electric Project, Series B,
6.500% 05/15/32 7,800 8,151
NY State Power Authority,
Series V,
8.000% 01/01/17 400 439
</TABLE>
42
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
OH State Air Quality Development Authority,
Ohio Power Co. Project,
Series B,
7.400% 08/01/09 $ 450 $ 485
SC State Public Service Authority:
Series C,
5.125% 01/01/21 23,300 22,193
Series 1986-C,
7.300% 07/01/21 1,950 2,028
Series 1993 C:
5.000% 01/01/25 10,000 9,313
5.125% 01/01/32 27,150 25,250
SD Heartland Consumer's Power District,
Series 1992,
6.000% 01/01/12 3,650 3,896
TX Austin Utilities System Revenue,
6.750% 05/15/12(c) 3,500 3,741
TX Brazos River Authority,
Houston Light and Power Co.,
Series A:
6.700% 03/01/17 12,140 13,354
7.625% 05/01/19 900 992
TX Brownsville, Series 1995,
5.250% 09/01/15 7,345 7,152
TX San Antonio Electric and Gas System,
Series 1989-A,
(a) 02/01/05 5,850 3,729
5.000% 02/01/12 25,000 24,313
TX State Municipal Power Agency,
5.000% 09/01/11 17,675 16,902
UT Intermountain Power Agency,
State Power Supply:
Series A,
(a) 07/01/17 19,000 5,629
Series B,
7.625% 07/01/08 100 109
VA Alexandria Industrial Development
Authority, Potomac Electric Project,
5.375% 02/15/24 24,250 23,250
WA Chelan County Public Utilities
District Number 001 Consolidate,
Series 1989-A Division I,
7.750% 07/01/21 4,500 4,967
WA State Public Power Linked Aces,
5.400% 07/01/12 14,000 13,230
</TABLE>
43
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C>
UTILITY - CONT.
MUNICIPAL ELECTRIC - CONT.
WA State Public Power Supply, Series B,
5.625% 07/01/12 $ 13,030 $ 12,835
WA Tacoma Electric System:
RIB (variable rate):
6.514% 01/02/15 12,000 12,720
8.790% 01/02/15 10,000 11,238
--------
436,924
--------
.........................................................................................
WATER & SEWER - 8.4%
FL Orlando Utilities Commission, Series A,
5.000% 10/01/20 15,000 13,969
FL Reedy Creek Improvement District,
Series 1,
5.000% 10/01/19 23,190 21,886
GA De Kalb County Water & Sewer
Redevelopment, Series 1993,
5.250% 10/01/23 30,905 29,939
ID State Water Resource Board,
Boise Water Corporation Series 1991,
7.250% 12/01/21 6,000 6,533
IL Southwestern Illinois Development
Authority, Sewer Facilities, Monsanto
Company, Series 1991,
7.300% 07/15/15 3,000 3,431
LA Public Facility Belmont Water,
Authority,
9.000% 03/15/24 1,460 1,538
MA State Water Resources Authority:
Series B:
5.000% 03/01/22 36,200 33,847
5.250% 03/01/13 12,500 12,188
Series C:
4.750% 12/01/23 15,680 14,014
5.250% 12/01/15 24,825 24,297
MS Five Lakes Utility District,
8.250% 07/15/24 760 789
NJ Union County Utilities Authority,
Solid Waste System, Series 1991-A,
7.200% 06/15/14 8,350 8,872
</TABLE>
44
<PAGE>
Investment Portfolio/November 30,1995
................................................................................
<TABLE>
<S> <C> <C>
NY New York City Municipal Water
Finance Authority, Water and Sewer System:
Series 1986-A,
6.000% 06/15/25 $ 16,000 $ 16,500
Series 1991 C,
5.500% 06/15/15 10 10
Series 1992-C,
6.500% 06/15/21 7,955 8,243
Series 1994-B,
5.375% 06/15/19 10,350 10,156
NY State Energy Research and
Development Authority,
6.100% 05/15/20 5,000 5,225
NY Suffolk County Water Authority,
7.375% 06/01/12 20 22
TN Jackson Water and Sewer Revenue,
Series 1984,
10.375% 07/01/12 1,090 1,315
TX Coastal Industrial Water Authority,
Bayport Water System, Series 1978,
7.000% 12/15/03 2,400 2,400
TX Houston Water and Sewer System Revenue:
1991-B,
6.750% 12/01/08 2,155 2,354
1992-B:
5.000% 12/01/18 24,755 22,929
6.375% 12/01/14 17,000 18,020
1992-C,
(a) 12/01/12 32,000 12,400
1995-A,
6.200% 12/01/20 8,700 9,135
UT Associated Municipal Power System,
Hunter Project, Series A,
5.500% 07/01/12 8,000 7,999
VA Roanoke County Water System,
5.000% 07/01/21 10,000 9,363
WA Seattle Water System,
5.250% 12/01/23 5,000 4,800
----------
302,174
----------
TOTAL MUNICIPAL BONDS (cost of $3,273,766) 3,516,158
----------
</TABLE>
45
<PAGE>
INVESTMENT PORTFOLIO/NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPTIONS - 0.0% CONTRACTS VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
December 1995 Municipal Bond Puts,
Strike price 116, expiration 12-19-95, (cost of $798) 100,000 $ 516
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 98.2% (cost of $3,274,564)(j) 3,516,674
----------
OTHER ASSETS & LIABILITIES, NET- 1.8% 63,343
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $3,580,017
==========
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) This security has been purchased on a delayed delivery basis for
settlement at a future date beyond the customary settlement time.
(c) These securities, or a portion thereof, with a total market value of
$129,903 are being used to collateralize open futures contracts.
(d) Non-income producing.
(e) 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, 1995.
(f) Security is exempt from registration under rule 144-A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At year end, the
value of these securities amounted to $73,028 or 2.0% of net assets.
(g) Accrued interest accumulates in the value of the security and is payable
at redemption.
(h) 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.
(i) This security is being used to collateralize the delayed delivery
purchases indicated in note (b) above.
(j) Cost for federal income tax purposes is $3,275,991.
Acronym Name
------- ----
RIB Residual Interest Bond
Short futures contracts open at November 30, 1995:
<TABLE>
<CAPTION>
Par value Unrealized
covered by Expiration depreciation
Type contracts month at 11/30/95
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Municipal bond $ 84,000 March $ 6,020
</TABLE>
See notes to financial statements.
46
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1995
(In thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $3,274,564) ...................................... $3,516,674
Receivable for:
Interest ................................................ $67,444
Investments sold ........................................ 38,470
Fund shares sold ........................................ 886
Other ................................................... 88 106,888
------- ----------
Total Assets ............................................................ 3,623,562
LIABILITIES
Payable for:
Investments purchased ................................... 19,874
Distributions ........................................... 16,425
Fund shares repurchased ................................. 3,575
Variation margin on futures ............................. 630
Payable to custodian bank ................................. 2,867
Accrued:
Management fee .......................................... 16
Deferred Trustees fees .................................. 17
Other ................................................... 141
-------
Total Liabilities ....................................................... 43,545
----------
NET ASSETS .................................................................. $3,580,017
----------
Net asset value & redemption price per share -
Class A ($3,110,773/226,745) ................................................ $13.72
==========
Maximum offering price per share - Class A
($13.72/0.9525) ............................................................. $14.40 (a)
----------
Net asset value & offering price per share -
Class B ($469,244/34,196) ................................................... $13.72 (b)
==========
COMPOSITION OF NET ASSETS
Capital paid in ............................................................. $3,423,001
Undistributed net investment income ......................................... 2,504
Accumulated net realized loss ............................................... (81,578)
Net unrealized appreciation (depreciation) on:
Investments ............................................................... 242,110
Open futures contracts .................................................... (6,020)
----------
$3,580,017
==========
</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.
47
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
(in thousands)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest ............................................................................ $239,927
EXPENSES
Management fee ................................................. $19,170
Service fee .................................................... 8,770
Distribution fee - Class B ..................................... 3,436
Transfer agent ................................................. 5,668
Bookkeeping fee ................................................ 765
Trustees fee ................................................... 142
Custodian fee .................................................. 167
Audit fee ...................................................... 89
Legal fee ...................................................... 306
Registration fee ............................................... 55
Reports to shareholders ........................................ 46
Other .......................................................... 208 38,822
------- --------
Net Investment Income ........................................................ 201,105
========
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments .................................................... 26,341
Closed futures contracts ....................................... (43,520)
--------
Net realized loss ............................................................. (17,179)
Net unrealized appreciation (depreciation)
during the period on:
Investments .................................................... 429,047
Open futures contracts ......................................... (5,640)
--------
Net Unrealized Gain ........................................................... 423,407
--------
Net Gain ................................................................ 406,228
--------
Net Increase in Net Assets from Operations .......................................... $607,333
========
</TABLE>
See notes to financial statements.
48
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended
(in thousands) November 30
-----------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
<S> <C> <C>
Operations:
Net investment income ............................... $ 201,105 $ 216,397
Net realized loss ................................... (17,179) (59,241)
Net unrealized appreciation (depreciation) .......... 423,407 (420,951)
---------- ---------
Net Increase (Decrease) from Operations ......... 607,333 (263,795)
Distributions:
From net investment income - Class A ................ (177,765) (190,943)
From net investment income - Class B ................ (23,492) (24,339)
---------- ---------
406,076 (479,077)
---------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A .................. 395,136 325,549
Receipts for shares issued in the acquisition
of Liberty Financial Tax-Free Bond Fund ............ 224,575 ----
Value of distributions reinvested - Class A ......... 98,351 107,226
Cost of shares repurchased - Class A ................ (817,386) (515,463)
---------- ---------
(99,324) (82,688)
---------- ---------
Receipts for shares sold - Class B .................. 34,958 122,043
Value of distributions reinvested - Class B ......... 13,028 13,678
Cost of shares repurchased - Class B ................ (72,909) (62,729)
---------- ---------
(24,923) 72,992
---------- ---------
Net Decrease from
Fund Share Transactions ...................... (124,247) (9,696)
---------- ---------
Total Increase (Decrease) ................... 281,829 (488,773)
NET ASSETS
Beginning of period ................................. 3,298,188 3,786,961
---------- ---------
End of period (including undistributed net
investment income of $2,504 and $1,059,
respectively) ..................................... $3,580,017 $3,298,188
========== ==========
NUMBER OF FUND SHARES
Sold - Class A ...................................... 30,093 24,361
Issued in the acquisition of Liberty
Financial Tax-Free Bond Fund ....................... 17,000 ----
Issued for distributions reinvested - Class A ....... 7,510 8,084
Repurchased - Class A ............................... (62,434) (39,148)
---------- ---------
(7,831) (6,703)
---------- ---------
Sold - Class B ...................................... 2,673 9,017
Issued for distributions reinvested - Class B ....... 996 1,033
Repurchased - Class B ............................... (5,573) (4,820)
---------- ---------
(1,904) 5,230
---------- ---------
</TABLE>
See notes to financial statements.
49
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION: Colonial Tax-Exempt Fund (the Fund), a series of Colonial Trust
IV, 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 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.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and asking price.
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, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B 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' 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.
50
<PAGE>
NOTES TO FINANCIAL STATEMENTS/NOVEMBER 30, 1995
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; market
discount is not accreted. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records distributions
daily and pays monthly.
The character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. Reclassifications are made to the Fund's capital accounts to
reflect income and gains available for distribution (or available capital loss
carryovers) under income tax regulations.
- --------------------------------------------------------------------------------
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:
<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>
Effective July, 1, 1995 the management fee applicable to the Fund was reduced by
0.05% annually of the average net assets of the Fund between $2 billion and $3
billion.
In addition, a further reduction will be made based on the following schedule:
<TABLE>
<CAPTION>
Cumulative Annualized
Effective Date Reduction
-------------- ---------------------
<S> <C>
January 1, 1996........................... 0.01%
April 1, 1996............................. 0.02%
July 1, 1996.............................. 0.03%
October 1, 1996........................... 0.04%
</TABLE>
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus a percentage of the Funds average net assets as follows:
<TABLE>
<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>
51
<PAGE>
NOTES TO FINANCIAL STATEMENTS/NOVEMBER 30, 1995
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
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 Funds 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 Funds
principal underwriter. During the year ended November 30, 1995, the Fund
has been advised that the Distributor retained net underwriting discounts of
$242,944 on sales of the Funds Class A shares and received contingent
deferredred sales charges (CDSC) of $1,471,600 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. Obligations of the plan will be paid solely out of the
Fund's assets.
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY: During the year ended November 30, 1995, purchases and
sales of investments, other than short-term obligations, were $1,398,255,135 and
$1,804,419,689, respectively.
Unrealized appreciation (depreciation) at November 30, 1995, based on cost of
investments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation... $ 270,462,739
Gross unrealized depreciation... (29,780,191)
-------------
Net unrealized appreciation... $ 240,682,548
=============
</TABLE>
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>
1999................... $ 3,641,000
2001................... 1,897,000
2002................... 61,394,000
2003................... 4,486,000
-----------
$71,418,000
===========
</TABLE>
52
<PAGE>
NOTES TO FINANCIAL STATEMENTS/NOVEMBER 30, 1995
Of the loss carryforwards expiring in 2001 and 2002, $1,897,000 and $3,200,000,
respectively, were acquired in the merger with Liberty Financial Tax-Free Bond
Fund. Their availability may be limited in a given year.
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, 1995
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.
The Fund may invest in municipal and Treasury bond futures contracts and
purchase and write options on futures. The Fund will invest in these
instruments to hedge against the effects of changes in value of portfolio
securities due to anticipated changes in interest rates and/or market
conditions, for duration management, or when the transactions are economically
appropriate to the reduction of risk inherent in the mangement of the Fund and
not for trading purposes. The use of futures contracts and options involves
certain risks, which include (1) imperfect correlation between the price
movement of the instruments and the underlying securities, (2) inability to
close out positions due to different trading hours or the temporary absence of a
liquid market for either the instrument or the underlying securities or (3) an
inaccurate prediction by the Adviser of the future direction of interest rates.
Any of these risks may involve amounts exceeding the amount recognized in the
Fund's Statement of Assets and Liabilities at any given time.
- --------------------------------------------------------------------------------
NOTE 4. MERGER INFORMATION
On March 24, 1995 Liberty Financial Tax-Free Bond Fund (LFTFBF) was merged into
the Fund by a non-taxable exchange of 17,000,007 Class A shares of the Fund
(value at $224,575,100) for 21,866,611 of LFTFBF shares then outstanding. The
assets of LFTFBF acquired included unrealized appreciation of $7,546,857. The
aggregate net assets of the Fund and LFTFBF immediately after the merger were
$3,663,697,413.
53
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30
----------------------------------------------------------
1995 1994
CLASS A CLASS B CLASS A CLASS B
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value --
Beginning of period .............. $ 12.180 $ 12.180 $ 13.920 $ 13.920
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............. 0.771 0.673 0.795 0.695
Net realized and unrealized
gain (loss) ...................... 1.535 1.535 (1.744) (1.744)
--------- --------- --------- ---------
Total from Investment
Operations .................. 2.306 2.208 (0.949) (1.049)
--------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income ......... (0.766) (0.668) (0.791) (0.691)
From capital paid in ............... ---- ---- ---- ----
--------- --------- --------- ---------
Total from distributions
declared to shareholders ......... (0.766) (0.668) (0.791) (0.691)
--------- --------- --------- ---------
Net asset value --
End of period .................... $ 13.720 $ 13.720 $ 12.180 $ 12.180
--------- --------- --------- ---------
Total return (b) ................... 19.35% 18.47% (7.08%) (7.78%)
--------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS
Expenses ........................... 1.01%(c) 1.76%(c) 1.01% 1.76%
Net investment income .............. 5.82%(c) 5.07%(c) 6.00% 5.25%
Portfolio turnover ................. 41% 41% 56% 56%
Net assets at end of period
(in millions) .................... $ 3,111 $ 469 $ 2,858 $ 440
</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) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits
received, if any.
(d) Not annualized.
(e) Annualized.
(f) Because of differences between book and tax basis accounting, there was no
return of capital for federal income tax purposes.
54
<PAGE>
FINANCIAL HIGHLIGHTS - continued
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30
- -------------------------------------------------------------------------------
1993 1992 1991
CLASS A CLASS B CLASS A CLASS B(a) CLASS A
- ------- ------- ------- ---------- --------
<S> <C> <C> <C> <C>
$13.480 $13.480 $13.190 $13.230 $12.890
- ------- ------- ------- ------- -------
0.842 0.740 0.913 0.462 0.955
0.451 0.451 0.277 0.248 0.305
- ------- ------- ------- ------- -------
1.293 1.191 1.190 0.710 1.260
- ------- ------- ------- ------- -------
(0.853) (0.751) (0.900) (0.460) (0.955)
---- ---- ---- ---- (0.005)(f)
- ------- ------- ------- ------ -------
(0.853) (0.751) (0.900) (0.460) (0.960)
- ------- ------- ------- ------- -------
$13.920 $13.920 $13.480 $13.480 $13.190
- ------- ------- ------- ------- -------
9.80% 9.00% 9.29% 9.29% (d) 10.12%
- ------- ------- ------- ------- --------
1.02% 1.77% 1.05% 1.80% (e) 1.03%
6.06% 5.31% 6.81% 6.06% (e) 7.29%
28% 28% 14% 14% 10%
$ 3,357 $ 430 $ 2,899 $ 137 $ 2,486
- -----------------------------------------------------------------------------
</TABLE>
Federal income tax information (unaudited)
All of the distributions will be treated as exempt
income for federal income tax purposes.
55
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST IV AND 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, 1995, 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, 1995 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
- --------------------
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 12, 1996
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 Objective and
Policies; Fundamental Investment
Policies; Other Investment
Policies; Miscellaneous
Investment Practices; Portfolio
Turnover
14. Fund Charges and Expenses;
Management of the Colonial Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses;
Management of the Colonial Funds
17. Fund Charges and Expenses;
Management of the Colonial Funds
18. Shareholder Meetings
19. How to Buy Shares; Determination
of Net Asset Value; Suspension of
Redemptions; Special Purchase
Programs/Investor Services;
Programs for Reducing or
Eliminating Sales Charge; How to
Sell Shares; How to Exchange
Shares
20. Taxes
21. Fund Charges and Expenses;
Management of the Colonial Funds
22. Fund Charges and Expenses;
Investment Performance;
Performance Measures
23. Independent Accountants
COLONIAL TAX-EXEMPT INSURED FUND
Statement of Additional Information
March 29, 1996
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 29, 1996. 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 Colonial Funds
Determination of Net Asset Value
How to Buy Shares
Special Purchase Programs/Investor Services
Programs for Reducing or Eliminating Sales Charges
How to Sell Shares
Distributions
How to Exchange Shares
Suspension of Redemptions
Shareholder Meetings
Performance Measures
Appendix I
Appendix II
TI--0396
Part 1
COLONIAL TAX-EXEMPT INSURED FUND
Statement of Additional Information
March 29, 1996
DEFINITIONS
"Fund" Colonial Tax-Exempt Insured Fund
"Trust" Colonial Trust IV
"Adviser" 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 shareholder
services and transfer agent
INVESTMENT OBJECTIVES AND POLICIES
The Fund's Prospectus describes the Fund's investment objectives and policies.
Part 1 of this SAI includes additional information concerning, among other
things, the fundamental investment policies of the Fund. Part 2 contains
additional information about the following securities and investment techniques
that are described or referred to in the Prospectus:
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 securities of any company if the Trust knows that officers and Trustees
of the Trust or officers and directors of the Adviser 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
Year ended November 30
1995 1994
---- ----
31% 36%
FUND CHARGES AND EXPENSES
Under the Fund's management agreement, the Trust pays the Adviser 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 the Adviser, CISI and CISC (dollars in thousands)
Year ended November 30
----------------------
1995 1994 1993
---- ---- ----
Management fee $1,544 $1,506 $1,469
Bookkeeping fee 108 106 103
Shareholder service and transfer agent fee 452 436 424
12b-1 fees:
Service fee 699 685 666
Distribution fee (Class B) 364 372 239
Brokerage Commissions(dollars in thousands)
Year ended November 30
1995 1994 1993
Total commissions $7 $2 $0
Directed transactions (a ) 0 0 0
Commissions on directed transactions 0 0 0
(a) See "Management of the Colonial Funds - Portfolio Transactions Brokerage
and Research Services" in Part 2 of this SAI.
Trustees Fees
For the fiscal year ended November 30, 1995 and the calendar year ended December
31, 1995 , the Trustees received the following compensation for serving as
Trustees:
<TABLE>
<CAPTION>
Total Compensation
Aggregate From Trust And
Compensation Pension Or Fund Complex Paid To
From Fund For The Retirement Benefits Estimated Annual The Trustees For The
Fiscal Year Ended Accrued As Part Of Benefits Upon Calendar Year Ended
Trustee November 30, 1995 Fund Expense Retirement December 31, 1995(b)
- ------- ----------------- ------------ ---------- --------------------
<S> <C> <C> <C> <C>
Robert J. Birnbaum (c) $1,403 ----- ----- $ 71,250
Tom Bleasdale 2,154(d ) ----- ----- 98,000 (e )
Lora S. Collins 1,998 ----- ----- 91,000
James E. Grinnell (c) 1,405 71,250
William D. Ireland, Jr. 2,478 ----- ----- 113,000
Richard W. Lowry (c) 1,402 71,250
William E. Mayer 1,999 ----- ----- 91,000
James L. Moody, Jr. 2,240 (f ) ----- ----- 94,500 (g )
John J. Neuhauser 1,999 ----- ----- 91,000
George L. Shinn 2,256 ----- ----- 102,500
Robert L. Sullivan 2,219 ----- ----- 101,000
Sinclair Weeks, Jr. 2,459 ----- ----- 112,000
</TABLE>
(b) At December 31, 1995, the Colonial Funds complex consisted of 33 open-end
and 5 closed-end management investment company portfolios.
(c) Elected as a Trustee of the Colonial Funds complex on April 21, 1995.
(d) Includes $1,075 payable in later years as deferred compensation.
(e) Includes $49,000 payable in later years as deferred compensation.
(f) Includes $1,580 payable in later years as deferred compensation.
(g) Total compensation of $94,500 for the calendar year ended December 31, 1995
will be payable in later years as deferred compensation.
The following table sets forth the amount of compensation paid to Messrs.
Birnbaum, Grinnell and Lowry in their capacities as Trustees or Directors of the
Liberty All-Star Equity Fund and Liberty All-Star Growth Fund, Inc. (formerly
known as The Charles Allmon Trust, Inc.) (together, Liberty Funds I) for service
during the calendar year ended December 31, 1995, and of Liberty Financial Trust
(now known as Colonial Trust VII) and LFC Utilities Trust (together, Liberty
Funds II) for the period January 1, 1995 through March 26, 1995 (h):
Total Compensation Total Compensation
From Liberty Funds II For From Liberty Funds I For
The Period January 1, 1995 The Calendar Year Ended
Trustee through March 26, 1995 December 31, 1995 (i )
- ------- ---------------------- ----------------------
Robert J. Birnbaum $2,900 $16,675
James E. Grinnell 2,900 22,900
Richard W. Lowry 2,900 26,250 (j)
(h) On March 27, 1995, four of the portfolios in the Liberty Financial Trust
(now known as Colonial Trust VII) were merged into existing Colonial funds
and a fifth was reorganized into a new portfolio of Colonial Trust III.
Prior to their election as Trustees of the Colonial Funds, Messrs.
Birnbaum, Grinnell and Lowry served as Trustees of Liberty Funds II; they
continue to serve as Trustees or Directors of Liberty Funds I.
(i) At December 31, 1995, the Liberty Funds I were advised by Liberty Asset
Management Company (LAMCO). LAMCO is an indirect wholly-owned subsidiary of
Liberty Financial Companies, Inc. (an intermediate parent of the Adviser).
(j) Includes $3,500 paid to Mr. Lowry for service as Trustee of Liberty Newport
World Portfolio (formerly known as Liberty All-Star World Portfolio)
(Liberty Newport) during the calendar year ended December 31, 1995. At
December 31, 1995, Liberty Newport was managed by Newport Pacific
Management, Inc. and Stein Roe & Farnham Incorporated, each an affiliate of
the Adviser.
Ownership of the Fund
At February 29, 1996, the officers and Trustees of the Fund as a group owned
less than 1% of the outstanding shares of the Fund.
At March 18, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc., Attn: Book
Entry, Mutual Fund Operations, 4800 Deer Lake Drive, E. 3rd Floor, Jacksonville,
FL 32216 owned 5.35% of the Fund's outstanding Class A shares.
At February 29, 1996, there were 6,088 Class A and 1,182 Class B shareholders.
Sales Charges (dollars in thousands)
Class A Shares
Year ended November 30
1995 1994 1993
Aggregate initial sales charges on Fund share sales $214 $384 $1,132
Initial sales charges retained by CISI
Class B Shares
Year ended November 30
1995 1994 1993
---- ---- ----
Aggregate contingent deferred sales charges
(CDSC) on Fund redemptions retained by CISI $161 $187 $66
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 the Adviser) 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.
Approximately 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 Fund for
the fiscal year ended November 30, 1995, were:
Class A Shares Class B Shares
Fees to FSFs $558 $232
Cost of sales material relating to the Fund
(including printing and mailing expenses) 41 15
Allocated travel, entertainment and other
promotional expenses (including advertising) 40 20
INVESTMENT PERFORMANCE
The Fund's Class A and Class B yields for the month ended November 30, 1995,
were:
Class A Shares Class B Shares
Tax-equivalent Tax-equivalent
Yield Yield Yield Yield
4.28% 7.09% 3.74% 6.19%
The Fund's average annual total returns at November 30, 1995, were:
Class A Shares
1 year 5 years 10 years
------ ------- --------
With sales charge of 4.75% 12.91% 6.72% 7.72%
Without sales charge 18.55% 7.77% 8.25%
Class B Shares
Since inception
1 year 5/5/92 to 11/30/95
With applicable CDSC 12.68%(5.00% CDSC) 5.80%(3.00% CDSC)
Without CDSC 17.68% 6.52%
The Fund's Class A and Class B distribution rates at November 30, 1995, which
are based on the most recent month's distribution, annualized, and maximum
offering price at the end of the month, were 4.68% and 4.18%, respectively.
See Part 2 of this SAI, "Performance Measures," for how calculations are made.
CUSTODIAN
UMB, 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 6 through 27 of the November 30, 1995 Annual Report are incorporated in
this SAI by reference.
<PAGE>
INVESTMENT PORTFOLIO/NOVEMBER 30, 1995
(in thousands)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 97.9% CURRENCY PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
EDUCATION - 8.9%
AL State Higher Education Loan Corp.,
Series 1994-C,
5.850% 09/01/04 (a) $ $ 1,000 $ 1,049
IL Chicago Board of Education,
General Obligation Lease Certificates,
Series 1992-A,
6.250% 01/01/15 $ 6,000 6,533
IL State University,
Auxiliary Facilities System Series 1993,
5.750% 04/01/14 $ 1,350 1,358
MA Health and Education Facilities:
Harvard University,
6.250% 04/01/20 $ 6,760 7,605
Northeastern University:
Series 1988-B,
7.600% 10/01/10 $ 1,000 1,104
Series E,
6.550% 10/01/22 $ 1,500 1,626
NH Higher Education and Health Facilities,
University Systems of New Hampshire,
Series 1992,
6.250% 07/01/20 $ 2,000 2,093
NY State Dormitory Authority,
Series 1993-A,
6.000% 07/01/20 $ 3,000 3,232
PA State Higher Education Facilities
Authority, Temple University, Series 1,
6.500% 04/01/21 $ 250 264
UT State Municipal Finance Co-Operative
Local Government, Pooled Capital
Improvement,
6.800% 05/01/12 $ 1,000 1,092
-------
25,956
-------
- --------------------------------------------------------------------------------
GENERAL OBLIGATION - 10.3%
AZ Maricopa County School District,
Number 8 Osborn,
7.500% 07/01/08 (a) $ 1,235 1,519
AZ Mohave County Unified High School
District, Series B,
8.500% 07/01/06 (a) $ 250 327
DC District of Columbia,
Series 1993-B1,
5.500% 06/01/09 $ 1,000 1,006
</TABLE>
6
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
GA Columbia County School District,
Series A,
6.750% 04/01/08 (a) $ 1,695 $ 1,973
IL Chicago Series A-2,
6.250% 01/01/14 (b) $ 4,000 4,260
IL Chicago Board of Education,
Lease Certificates, Series 1992-A,
6.000% 01/01/20 $ 2,000 2,107
IL Decatur,
6.900% 10/01/14 $ 250 268
IL State Dedicated Tax,
Civic Center, Series A,
7.000% 12/15/13 $ 200 216
IN Whitko Middle School,
Corporation First Mortgage, Series 1991,
6.750% 07/15/12 $ 1,000 1,081
LA State, Series 1991,
(c) 09/01/16 $ 2,000 607
MD Baltimore:
7.000% 10/15/08 $ 300 358
7.000% 10/15/09 (d) $ 1,055 1,258
MI Big Rapids Public School District,
5.625% 05/01/25 $ 2,725 2,725
MI Brighton Area School District,
Series II,
(c) 05/01/17 $ 10,340 3,115
MI Mona Shores School District,
5.500% 05/01/14 $ 2,000 2,010
NV Las Vegas-Clark
County Library District,
7.500% 02/01/02 (d) $ 1,000 1,147
PA Philadelphia School District, Series B,
5.500% 09/01/25 $ 5,000 4,925
WA Bellevue Convention Center Authority,
(c) 02/01/24 $ 5,000 1,000
-------
29,902
-------
- --------------------------------------------------------------------------------
HEALTH - 11.4%
HOSPITALS - 10.6%
AZ Scottsdale Industrial Development
Authority, Scottsdale Memorial Hospital,
Series 1987-A,
8.500% 09/01/17 $ 500 544
FL Dunedin Hospital, Mease Health Care,
6.750% 11/15/11 $ 100 114
IL Health Facilities Authority:
Methodist Health Services Corp.:
Series 1985-G,
8.000% 08/01/15 $ 965 1,069
</TABLE>
7
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. CURRENCY PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTH - CONT.
HOSPITALS - CONT.
Series 1992-B, RIB (variable rate),
9.467% 05/01/21 $ $ 500 $ 578
Rockford Memorial Hospital, Series B,
6.750% 08/15/18 $ 50 54
MA Health and Education Facilities:
McLean Hospital, Series C,
6.625% 07/01/15 $ 500 543
New England Deaconess Hospital,
Series D,
6.875% 04/01/22 $ 2,500 2,741
North Shore Medical Center, Series A,
5.625% 07/01/14 $ 10,000 10,175
Valley Regional Health System,
Series C,
7.000% 07/01/08 (d) $ 1,585 1,837
MS State Hospital Equipment and
Facilities Authority,
Rush Medical Foundation Project,
6.700% 01/01/18 $ 250 266
NV Reno Hospital, St. Mary's Regional
Medical Center, Series 1991-A,
6.700% 07/01/21 $ 1,000 1,082
OK State Industrial Authority:
Baptist Medical Center:
Series A,
7.000% 08/15/14 $ 150 161
Series C,
7.000% 08/15/04 (a) $ 1,500 1,723
TN Knox City Health, Education and
Housing Facilities,
5.250% 01/01/15 $ 5,000 4,881
TX Harris County Health Facilities
Development Corp.,
Texas Children's Hospital, Series A,
7.000% 10/01/19 $ 50 56
WI State Health & Education
Facilities Authority:
Bellin Memorial Hospital,
6.625% 02/15/08 (a) $ 1,000 1,147
Milwaukee Regional Medical Center:
Series 1990,
7.500% 08/01/11 $ 1,000 1,101
Series 1992,
6.500% 08/01/13 $ 1,500 1,584
</TABLE>
8
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Waukesha Memorial Hospital, Series 1990-B,
7.250% 08/15/19 $ 1,000 $ 1,101
-------
$ 30,757
-------
NURSING HOME - 0.8%
WA State Housing Finance Commission,
Franciscan Elder Care, Series 1991,
6.875% 01/01/21 $ 2,250 2,416
-------
- --------------------------------------------------------------------------------
HOUSING - 3.8%
MULTI - FAMILY - 1.0%
KY Housing Corp.,
Multi-Family Mortgage, Series 1985-A,
8.875% 07/01/19 235 240
MA State Housing Finance Agency,
Series A,
6.400% 01/01/09 2,000 2,115
MD Howard County Medical Mortgage
Heartlands Elderly Apartments,
Series 1985,
8.875% 12/01/10 495 527
-------
2,882
-------
SINGLE - FAMILY - 2.8%
AK State Housing Finance Corp.,
Series 1990-A2,
7.000% 12/01/11 235 251
FL Brevard County Housing Finance Authority,
Series C,
7.000% 09/01/23 40 42
FL Duval County Housing Finance Authority
Single Family Mortgage Series 1991,
7.350% 07/01/24 860 916
IL Onterie Center Housing Finance
Mortgage Revenue Bonds, Onterie Center,
Series 1992-A,
7.050% 07/01/27 2,000 2,123
MA State Housing Finance Agency,
Series 21,
7.125% 06/01/25 1,310 1,387
MS Housing Finance Corp.,
8.250% 10/15/18 3,170 3,356
NM Mortgage Finance Authority,
Series 1985-A,
9.250% 07/01/12 5 5
-------
8,080
-------
</TABLE>
9
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
POLLUTION CONTROL REVENUE - 2.4%
FL Hollywood Water & Sewer Revenue,
6.750% 10/01/11 $ 50 $ 57
FL State Municipal Power Agency,
Series 1993,
5.100% 10/01/25 $ 5,000 4,713
NY New York Energy Research & Development
Adjusted Gas Facilities,
Brooklyn Union Gas Company, Series 1989-B,
6.750% 02/01/24 $ 2,000 2,145
-------
6,915
-------
- --------------------------------------------------------------------------------
PUBLIC FACILITIES IMPROVEMENT - 3.4%
AL Birmingham Jefferson Civil Center
Authority Special Tax, Series 1992,
5.500% 09/01/14 2,500 2,503
CA Fairs Financing Authority,
Series 1991,
6.500% 07/01/11 1,300 1,388
FL Gulf Breeze,
Local Government Loan Program,
Series 1985-B,
8.000% 12/01/15 1,000 1,122
MI Municipal Bond Authority, Local
Government Loan Program:
Series 1991-C,
(c) 06/15/15 3,380 1,141
Series G,
(c) 05/01/18 2,000 565
SC State Port Authority,
Series 1991,
6.750% 07/01/21 3,000 3,221
WV School Building Authority, Capital
Import Revenue Bonds, Series 1990-B,
6.750% 07/01/17 75 80
-------
10,020
-------
- --------------------------------------------------------------------------------
PUBLIC INFRASTRUCTURE - 7.2%
Airports - 6.9%
GA Atlanta Airport Facilities Revenue,
Series A,
6.500% 01/01/07 (d) 1,000 1,134
HI State Airport System Revenue,
Series 2,
6.750% 07/01/21 250 268
</TABLE>
10
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
IL Chicago O'Hare International Airport
Special Facility, International Terminal,
6.750% 01/01/12 (a) $ 300 $ 323
IL Regional Transportation Authority,
Series C,
7.750% 06/01/20 5,000 6,500
NV Clark County Airport Improvements,
McCarren International Airport Las Vegas:
Series A,
7.500% 06/01/07 (d) 350 428
Series 1988,
8.250% 07/01/15 3,500 3,867
OR Portland International Airport,
Series Seven-B,
7.100% 07/01/21 1,000 1,108
PA Allegheny County Airport,
Greater Pittsburgh International:
Series 1988-C,
8.250% 01/01/16 3,250 3,530
Series 1992-B,
6.625% 01/01/22 1,000 1,059
TX Dallas-Fort Worth Regional Airport,
Series A,
7.375% 11/01/11 1,380 1,599
TX Houston Airport System Revenue,
Series A,
6.750% 07/01/21 200 214
-------
20,030
-------
TURNPIKES/TOLL ROADS/BRIDGES - 0.3%
KY State Turnpike Authority, Economic
Development Road Revitalization Projects,
Series 1993,
5.500% 07/01/09 500 515
NY Triborough Bridge & Tunnel
Authority, Series A,
6.625% 01/01/17 250 268
TX Harris County,
Toll Road Revenue,
6.500% 08/15/11 120 130
-------
913
-------
- --------------------------------------------------------------------------------
REFUNDED/ESCROW/SPECIAL OBLIGATIONS (e) - 10.4%
CA Alameda County, Certificates of Participation,
Series 1985-1,
7.250% 12/01/08 (a) 1,300 1,498
CA East Bay Municipal Utilities District,
Water System Subordinated,
Series 1990,
7.500% 06/01/18 2,500 2,875
</TABLE>
11
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
REFUNDED/ESCROW/SPECIAL OBLIGATIONS - CONT.
CA Los Angeles County Transport Commission
Sales Tax, Metropolitan Train,
Series 1991-A,
6.750% 07/01/18 $ 1,000 $ 1,136
CA University Revenues, 1989 Multiple
Purpose Projects, Series 1991-B,
6.750% 09/01/23 1,000 1,107
IL Chicago, General Obligation,
Central Public Library Project,
Series 1988-C,
6.850% 01/01/17 1,000 1,144
IN Marion County Convention
and Recreational Facilities Authority,
Excise Taxes Lease Rental Series 1991-B,
7.000% 06/01/21 1,000 1,141
LA New Orleans International Airport
General Purpose, Series 1987-A,
8.875% 08/01/17 5,000 5,469
MA Bay Transportation Authority:
Certificates of Participation,
Series 1990-A,
7.650% 08/01/15 1,000 1,161
General Transportation System,
Series 1990-A,
7.625% 03/01/15 2,000 2,292
NY New York City Municipal Finance
Authority Water and Sewer Systems,
Series 1991-C,
7.000% 06/15/16 1,500 1,716
NY State Dormitory Authority,
City University System, Series
1990-F,
7.500% 07/01/20 2,000 2,305
NY State Medical Care Facilities
Finance Agency, St. Luke's-Roosevelt
Hospital Center, Series 1989-B,
7.450% 02/15/29 500 570
PA Pittsburgh Water & Sewer Authority,
Series A,
6.500% 09/01/14 270 303
SC Charleston County, Certificate
of Participation, Series 1991,
7.100% 06/01/11 2,000 2,298
TN Chattanooga-Hamilton County
Series 1991-B, RIB (variable rate),
10.923% 05/25/21 1,000 1,264
</TABLE>
12
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
TX Coastal Water Authority,
Water Conveyance System, Series 1991,
6.250% 12/15/17 $ 1,750 $ 1,818
TX Colorado River Municipal Water
District, Water Transmission Facilities,
Series 1991-A,
6.625% 01/01/21 250 275
UT State Municipal Cooperative Local
Government, Series 1991,
7.000% 06/01/16 1,750 1,984
-------
30,356
-------
- --------------------------------------------------------------------------------
SOLID WASTE - 1.0%
RESOURCE RECOVERY
FL Palm Beach County Solid Waste Authority,
Series 1984,
8.375% 07/01/10 1,000 1,092
NJ Bergen County Utilities Authority,
Series A,
6.250% 06/15/07 (d) 230 253
SC Charleston County Solid Waste User Fee,
6.500% 01/01/09 (a) 1,405 1,546
-------
2,891
-------
- --------------------------------------------------------------------------------
STATE & COMMUNITY LEASE - 3.0%
IN State Office Building Commission,
Women's Prison, Series B,
6.250% 07/01/16 8,000 8,710
-------
- --------------------------------------------------------------------------------
STUDENT LOAN - 1.2%
MA Education Loan Authority,
Issue D, Series 1991-A,
7.250% 01/01/09 845 896
NM State Education Assistance
Foundation, Series A,
6.700% 04/01/02 (d) 235 248
PA State Higher Education Assistance
Student Loan RIB (variable rate), Series 1990-B,
10.515% 03/01/20 2,000 2,250
-------
3,394
-------
- --------------------------------------------------------------------------------
TAX ALLOCATION - 1.6%
CA Los Angeles Community Redevelopment
Agency, Bunker Hill Project,
6.500% 12/01/14 1,500 1,614
</TABLE>
13
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
TAX ALLOCATION - CONT.
NY State Local Government Assistance
Corp., Series 1993-E,
5.000% 04/01/21 $ 3,175 $ 2,969
-------
4,583
-------
- --------------------------------------------------------------------------------
TRANSPORTATION - 2.5%
DC Metropolitan Area Transit Authority,
6.000% 07/01/10 1,000 1,076
MA Massachusetts Bay Transportation
Authority, Series B,
5.375% 03/01/25 5,000 4,850
MA State Port Authority,
7.500% 07/01/20 1,000 1,120
SC State Port Authority, Series 1991,
6.500% 07/01/06 (a) 250 271
-------
7,317
-------
- --------------------------------------------------------------------------------
UTILITY - 20.0%
INVESTOR OWNED - 0.8%
DE State Economic Development Authority,
New Castle County Gas System,
Series 1991-C,
7.150% 07/01/21 1,000 1,111
MI St. Clair County Economic
Development Corp., Detroit Edison Co.,
Series 1993-AA,
6.400% 08/01/24 1,000 1,089
-------
2,200
-------
JOINT POWER AUTHORITY - 5.2%
MN Southern Minnesota Municipal
Power Agency, Series A,
(c) 01/01/24 21,000 4,462
TX State Municipal Power Agency:
(c) 09/01/10 5,000 2,256
(c) 09/01/12 3,000 1,193
(c) 09/01/15 8,975 2,962
UT State Municipal Power Agency
Electric Systems, Series 1993-A,
5.250% 07/01/18 3,000 2,880
WA Snohomish County Public Utilities, 1993,
5.500% 01/01/20 1,500 1,476
-------
15,229
-------
MUNICIPAL ELECTRIC - 14.0%
AK Anchorage Electric Utilities Revenue,
8.000% 12/01/09 1,000 1,262
</TABLE>
14
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CA Northern California Power Agency,
Hydroelectric Project No. 1,
Series 1992-A,
5.500% 07/01/23 $ 3,000 $ 2,962
GA Municipal Electrical Authority,
Special Obligation, Project One,
Fifth Cross,
6.400% 01/01/13 1,000 1,115
IN State Development Finance Authority,
PSI-Energy Inc., Series B,
5.750% 02/15/28 5,000 5,063
NC Municipal Power Agency Number 1
Catawba Electric Revenue Bonds,
Series 1992,
5.750% 01/01/15 3,000 3,030
NV Clark County Pollution Control
Nevada Power Company, Series 1992-B,
6.600% 06/01/19 3,500 3,749
NY New York State Power Authority
General Purpose Bonds, Series V,
7.875% 01/01/13 3,950 4,330
SC Piedmont Municipal Power Agency,
Series A,
6.125% 01/01/07 (a) 500 552
SC State Public Service Authority:
Series A,
6.250% 01/01/22 3,500 3,675
Series C,
5.125% 01/01/32 5,000 4,650
SD Heartland Consumers Power District,
6.000% 01/01/09 300 317
TX Austin Utilities System:
Series A:
5.750% 11/15/14 5,000 5,075
7.000% 05/15/16 1,200 1,323
TX State Municipal Power Agency,
(c) 09/01/11 7,900 3,348
WA Clark County Public Utilities
District Number 001 Electric System,
6.500% 01/01/11 200 212
WA State Public Power Supply System,
Nuclear Project No. 2, Series A,
6.500% 07/01/05 (a) 200 219
-------
40,882
-------
- --------------------------------------------------------------------------------
WATER & SEWER - 10.8%
FL Reedy Creek Improvement District,
Series 1,
5.000% 10/01/19 5,000 4,719
</TABLE>
15
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
WATER & SEWER - CONT.
FL Saint John's County Water and Sewer,
Saint Augustine Shores System,
Series 1991-A:
(c) 06/01/13 $ 2,600 $ 994
(c) 06/01/14 1,500 540
GA Fulton County Water and Sewer,
6.375% 01/01/14 6,000 6,765
IL Kankakee Sewer, Series 1991,
7.000% 05/01/16 1,000 1,104
MA Boston Water & Sewer Commission,
Series A,
5.250% 11/01/19 3,465 3,378
PA Philadelphia Water and Waste Water,
Series 1993,
5.250% 06/15/23 1,150 1,098
PA Pottstown Borough Authority Sewer,
Guaranteed Sewer Revenue, Series 1991,
(c) 11/01/16 1,000 311
VA Prince William County Services
Authority,
5.000% 07/01/21 4,900 4,520
VA Roanoke County Water System,
5.000% 07/01/21 3,500 3,277
VA Virginia Beach Water and Sewer,
5.125% 02/01/19 4,880 4,648
--------
31,354
--------
TOTAL MUNICIPAL BONDS (cost of $260,124) 284,787
--------
<CAPTION>
OPTIONS - 0.0% CONTRACTS
- --------------------------------------------------------------------------------
<S> <C> <C>
December 1995 Municipal Bond Puts:
Strike price 113, expiration 12-19-95 3,300 1
Strike price 115, expiration 12-19-95 6,000 3
--------
TOTAL OPTIONS (cost of $64) 4
--------
TOTAL INVESTMENTS - 97.9% (cost of $260,188)(f) 284,791
--------
<CAPTION>
SHORT-TERM OBLIGATIONS - 2.4% PAR
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (g)
- --------------------------------------------------------------------------------
<S> <C> <C>
CA State Health Facilities Financing Authority,
St. Francis Memorial Hospital, Series B,
3.500% 11/01/19 3,300 3,300
MS Jackson County,
Chevron USA, Inc. Project,
3.650% 06/01/23 2,800 2,800
NY Triborough Bridge & Tunnel Authority,
4.050% 01/01/24 1,000 1,000
--------
TOTAL SHORT-TERM OBLIGATIONS 7,100
--------
</TABLE>
<PAGE>
INVESTMENT PORTFOLIO/NOVEMBER 30, 1995
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - (0.3)% $ (981)
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $290,910
--------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) These securities, or a portion thereof, with a total market value of
$10,884, are being used to collateralize open futures contracts.
(b) This security has been purchased on a delayed delivery basis for settlement
at a future date beyond the customary settlement time.
(c) Zero coupon bond.
(d) These securities, or a portion thereof, with a total market value of
$4,727, are being used to collateralize the delayed delivery purchase
indicated in note (b) above.
(e) 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.
(f) Cost for federal income tax purposes is $260,242.
(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,
1995.
Short futures contracts open at November 30, 1995:
<TABLE>
<CAPTION>
Par value Unrealized
covered Expiration depreciation
Type by contracts month at 11/30/95
- --------------------------------------------------------------
<S> <C> <C> <C>
Municipal bond $7,500 December $286
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ACRONYM NAME
- ------- ----------------------
<S> <C>
RIB Residual Interest Bond
</TABLE>
SUMMARY OF SECURITIES BY INSURER
<TABLE>
<CAPTION>
% of
Insurer Net Assets
------- ----------
<S> <C>
Municipal Bond Insurance Agency 38.1
AMBAC Indemnity Corporation 27.3
Financial Guarantee Insurance Company 21.7
Uninsured Securities 5.8
Financial Security Assurance 3.4
Capital Guarantee Insurance Company 1.6
Bond Investment Guarantee Insurance 1.4
Connie Lee Insurance Company 0.7
-----
100.0
-----
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1995
(in thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $260,188) $ 284,791
Short-term obligations 7,100
---------
291,891
Receivable for:
Interest $5,154
Fund shares sold 134
Investments sold 31
Other 62 5,381
------ ---------
Total Assets 297,272
LIABILITIES
Payable for:
Investments purchased 4,246
Distributions 1,167
Fund shares repurchased 842
Variation margin on futures 56
Accrued:
Deferred Trustees fees 2
Other 49
------
Total Liabilities 6,362
---------
NET ASSETS $ 290,910
---------
Net asset value & redemption price per share -
Class A ($240,894/28,750) $ 8.38
---------
Maximum offering price per share - Class A
($8.38/0.9525) $ 8.80 (a)
---------
Net asset value & offering price per share -
Class B ($50,016/5,969) $ 8.38 (b)
---------
COMPOSITION OF NET ASSETS
Capital paid in $ 271,956
Undistributed net investment income 230
Accumulated net realized loss (5,593)
Net unrealized appreciation (depreciation) on:
Investments 24,603
Open futures contracts (286)
---------
$ 290,910
---------
</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.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
(in thousands)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest $17,529
EXPENSES
Management fee $ 1,544
Service fee 699
Distribution fee - Class B 364
Transfer agent 452
Bookkeeping fee 108
Trustees fee 16
Custodian fee 22
Audit fee 38
Legal fee 8
Registration fee 36
Reports to shareholders 6
Other 18 3,311
------- -------
Net Investment Income 14,218
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 5,745
Closed futures contracts (4,926)
-------
Net Realized Gain 819
Net unrealized appreciation (depreciation)
during the period on:
Investments 30,813
Open futures contracts (165)
-------
Net Unrealized Gain 30,648
-------
Net Gain 31,467
-------
Net Increase in Net Assets from Operations $45,685
-------
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended
(in thousands) November 30
----------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
-------- --------
<S> <C> <C>
Operations:
Net investment income $ 14,218 $ 14,576
Net realized gain (loss) 819 (2,726)
Net unrealized appreciation (depreciation) 30,648 (30,613)
-------- --------
Net Increase (Decrease) from Operations 45,685 (18,763)
Distributions:
From net investment income - Class A (12,225) (12,079)
From net investment income - Class B (2,207) (2,287)
-------- --------
31,253 (33,129)
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 20,382 23,583
Receipts for shares issued in the acquisition
of Liberty Financial Insured Municipal Fund 42,751 --
Value of distributions reinvested - Class A 6,971 6,917
Cost of shares repurchased - Class A (53,716) (46,210)
-------- --------
16,388 (15,710)
-------- --------
Receipts for shares sold - Class B 5,062 12,774
Value of distributions reinvested - Class B 1,259 1,291
Cost of shares repurchased - Class B (7,762) (8,161)
-------- --------
(1,441) 5,904
-------- --------
Net Increase (Decrease) from
Fund Share Transactions 14,947 (9,806)
-------- --------
Total Increase (Decrease) 46,200 (42,935)
NET ASSETS
Beginning of period 244,710 287,645
-------- --------
End of period (including undistributed net
investment income of $185 and $397,
respectively) $290,910 $244,710
-------- --------
NUMBER OF FUND SHARES
Sold - Class A 2,596 2,945
Issued in the acquisition of Liberty
Financial Insured Municipal Fund 5,319 --
Issued for distributions reinvested - Class A 873 858
Repurchased - Class A (6,739) (5,793)
-------- --------
2,049 (1,990)
-------- --------
Sold - Class B 639 1,552
Issued for distributions reinvested - Class B 158 161
Repurchased - Class B (977) (1,031)
-------- --------
(180) 682
-------- --------
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION: Colonial Tax-Exempt Insured Fund (the Fund), a series of Colonial
Trust IV 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 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.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and asking price.
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, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B 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 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
<PAGE>
NOTES TO FINANCIAL STATEMENTS/NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
is not accreted. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records distributions daily
and pays monthly.
The character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. Reclassifications are made to the Fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryovers) under income tax regulations.
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
High Yield Municipal 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 FEE: Colonial Investors Service Center, Inc., (the Transfer
Agent), an affiliate of the Adviser, provides shareholder services and receives
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. During the year ended November 30, 1995, the Fund has
been advised that the Distributor retained net underwriting discounts of $26,560
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $161,047 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. Obligations of the plan will be paid solely out of the
the Fund's assets.
<PAGE>
NOTES TO FINANCIAL STATEMENTS/NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY: During the year ended November 30, 1995, purchases and
sales of investments, other than short-term obligations were $86,678,150 and
$122,752,195, respectively.
Unrealized appreciation (depreciation) at November 30, 1995, based on cost of
investments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $24,610,192
Gross unrealized depreciation (61,145)
-----------
Net unrealized appreciation $24,549,047
-----------
</TABLE>
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 $ 414,000
1998 180,000
2000 171,000
2001 982,000
2002 3,313,000
----------
$5,060,000
----------
</TABLE>
Of the loss carryforwards expiring in 2001 and 2002, $982,000 and $620,000,
respectively, were acquired in the merger with Liberty Financial Insured
Municipal Fund. Their availability may be limited in a given year.
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, 1995
invested in Massachusetts.
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.
The Fund may invest in municipal and Treasury bond futures contracts and
purchase and write options on futures. The Fund will invest in these instruments
to hedge against the effects of changes in value of portfolio securities due to
anticipated changes in interest rates and/or market conditions, for duration
management, or when the transactions are economically appropriate to the
reduction of risk inherent in the management of the Fund and not for trading
purposes. The use of futures contracts and options involves certain risks, which
include (1) imperfect correlation between the price movement of the instruments
and the underlying securities, (2) inability to close out positions due to
different trading hours or the temporary absence of a liquid market for either
the
<PAGE>
Notes to Financial Statements/November 30, 1995
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION - CONT.
instruments or the underlying securities or (3) an innaccurate prediction by the
Adviser of the future direction of interest rates. Any of these risks may
involve amounts exceeding the amount recognized in the Fund's Statement of
Assets and Liabilities at any given time.
NOTE 4. MERGER INFORMATION
On March 24, 1995, Liberty Financial Insured Municipal Fund (LFIMF) was merged
into the Fund by a non-taxable exchange of 5,318,858 Class A shares of the Fund
(valued at $42,750,988) for the 4,080,498 of LFIMF shares then outstanding. The
assets of LFIMF acquired included unrealized appreciation of $282,748. The
aggregate net assets of the Fund and LFIMF immediately after the merger were
$300,749,659.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended November 30
---------------------------------------------------
1995 1994
Class A Class B Class A Class B
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.450 $ 7.450 $ 8.420 $ 8.420
-------- ------- -------- -------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.418 0.359 0.439 0.378
Net realized and
unrealized gain (loss) 0.935 0.935 (0.977) (0.977)
-------- ------- -------- -------
Total from Investment
Operations 1.353 1.294 (0.538) (0.599)
-------- ------- -------- -------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net
investment income (0.423) (0.364) (0.432) (0.371)
-------- ------- -------- -------
Net asset value -
End of period $ 8.380 $ 8.380 $ 7.450 $ 7.450
-------- ------- -------- -------
Total return (a) 18.55% 17.68% (6.61)% (7.31)%
-------- ------- -------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.05% (b) 1.80% (b) 1.05% 1.80%
Net investment income 5.20% (b) 4.45% (b) 5.44% 4.69%
Portfolio turnover 31% 31% 36% 36%
Net assets at end
of period (000) $240,894 $50,016 $198,909 $45,801
</TABLE>
(a) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(b) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits received,
if any.
- --------------------------------------------------------------------------------
Federal income tax information (unaudited)
All of the distributions will be treated as exempt income for federal income tax
purposes.
<PAGE>
FINANCIAL HIGHLIGHTS - continued
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended November 30
------------------------------------------------------------------
1993 1992 1991
Class A Class B Class A Class B(a) Class A
-------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 8.080 $ 8.080 $ 7.880 $ 7.910 $ 7.660
-------- ------- -------- ------- --------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.456 0.395 0.480 0.240 0.496
Net realized and
unrealized gain 0.338 0.338 0.200 0.170 0.222
-------- ------- -------- ------- --------
Total from Investment
Operations 0.794 0.733 0.680 0.410 0.718
-------- ------- -------- ------- --------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net
investment income (0.454) (0.393) (0.480) (0.240) (0.498)
-------- ------- -------- ------- --------
Net asset value -
End of period $ 8.420 $ 8.420 $ 8.080 $ 8.080 $ 7.880
-------- ------- -------- ------- --------
Total return (b) 10.00% 9.20% 8.85% 5.23% (c) 9.66%
-------- ------- -------- ------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.07% 1.82% 1.10% 1.85% (d) 1.08%
Net investment income 5.44% 4.69% 5.97% 5.22% (d) 6.35%
Portfolio turnover 12% 12% 7% 7% 8%
Net assets at end
of period (000) $241,610 $46,035 $217,782 $16,519 $189,483
</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.
<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, 1995, 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, 1995 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
- --------------------
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 12, 1996
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. Fund Charges and Expenses;
Management of the Colonial Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses;
Management of the Colonial Funds
17. Fund Charges and Expenses;
Management of the Colonial Funds
18. Shareholder Meetings
19. How to Buy Shares; Determination
of Net Asset Value; Suspension of
Redemptions; Special Purchase
Programs/Investor Services;
Programs for Reducing or
Eliminating Sales Charge; How to
Sell Shares; How to Exchange
Shares
20. Taxes
21. Fund Charges and Expenses;
Management of the Colonial Funds
22. Fund Charges and Expenses;
Investment Performance;
Performance Measures
23. Independent Accountants
COLONIAL HIGH YIELD MUNICIPAL FUND
Statement of Additional Information
March 29, 1996
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 29, 1996. 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
Definitions
Investment Objective 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 Colonial Funds
Determination of New Asset Value
How to Buy Shares
Special Purchase Program/Investor Services
Suspension of Redemptions
Programs for Reducing or Eliminating Sales Charges
How to Sell Shares
Distributions
How to Exchange Shares
Shareholder Meetings
Performance Measures
Appendix I
Appendix II
Part 1
COLONIAL HIGH YIELD MUNICIPAL FUND
Statement of Additional Information
March 29, 1996
DEFINITIONS
"Trust" Colonial Trust IV
"Fund" Colonial High Yield Municipal Fund
"Adviser" 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
shareholder services and transfer agent
INVESTMENT OBJECTIVES AND POLICIES
The Fund's Prospectus describes the Fund's investment objectives and policies.
Part 1 of this SAI includes additional information concerning, among other
things, the fundamental investment policies of the Fund. Part 2 contains
additional information about the following securities and investment techniques
that are described or referred to in the Prospectus:
Short-Term Trading
High Yield 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 securities of any company if the Trust knows that officers and
Trustees of the Trust or officers and directors of the Adviser 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
1995 1994
---- ----
26% 25%
FUND CHARGES AND EXPENSES
Under the Fund's management agreement, the Trust pays the Adviser a monthly fee
based on the average daily net assets allocated 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 the Adviser, CISI and CISC (dollars in thousands)
Year ended
November 30
1995 1994 1993
---- ---- ----
Management fee $759 $651 $502
Bookkeeping fee 58 51 41
Shareholder service and transfer
agent fee 227 193 147
12b-1 fees:
Service fee (a ) 345 297 228
Distribution fee (Class B) 948 882 683
(a) 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) The Fund did not pay brokerage commissions for the fiscal years
ended November 30, 1995, 1994 and 1993.
Trustees Fees
For the fiscal year ended November 30, 1995 and the calendar year ended
December 31, 1995, the Trustees received the following compensation for
serving as Trustees.
<TABLE>
<CAPTION>
Total Compensation
Aggregate From Trust And
Compensation Pension Or Fund Complex Paid To
From Fund For The Retirement Benefits Estimated Annual The Trustees For The
Fiscal Year Ended Accrued As Part Of Benefits Upon Calendar Year Ended
Trustee November 30, 1995 Fund Expense Retirement December 31, 1995(b)
- ------- ----------------- ------------ ---------- --------------------
<S> <C> <C> <C> <C>
Robert J. Birnbaum(c) $ 981 $ 71,250
Tom Bleasdale 1,511(d) ----- ----- 98,000 (e)
Lora S. Collins 1,399 ----- ----- 91,000
James E. Grinnell(c) 983 71,250
William D. Ireland, Jr. 1,,742 ----- ----- 113,000
Richard W. Lowry(c) 982 71,250
William E. Mayer 1,407 ----- ----- 91,000
James L. Moody, Jr. 1,509(f) ----- ----- 94,500 (g)
John J. Neuhauser 1,402 ----- ----- 91,000
George L. Shinn 1,581 ----- ----- 102,500
Robert L. Sullivan 1,552 ----- ----- 101,000
Sinclair Weeks, Jr. 1,727 ----- ----- 112,000
</TABLE>
(b) At December 31, 1995, the Colonial Funds complex consisted of 33 open-end
and 5 closed-end management investment company portfolios.
(c) Elected as a Trustee of the Colonial Funds comples on April 21, 1995.
(d) Includes $755 payable in later years as deferred compensation.
(e) Includes $49,000 payable in later years as deferred compensation.
(f) Includes $1.237 payable in later years as deferred compensation.
(g) Total compensation of $94,500 for the calendar year ended December 31,
1995 will be payable in later years as deferred compensation.
The following table sets forth the amount of compensation paid to Messrs.
Birnbaum, Grinnell and Lowry in their capacities as Trustees or Directors of the
Liberty All-Star Equity Fund and Liberty All-Star Growth Fund, Inc. (formerly
known as The Charles Allmon Trust, Inc.) (together, Liberty Funds I) for service
during the calendar year ended December 31, 1995, and of Liberty Financial Trust
(now known as Colonial Trust VII) and LFC Utilities Trust (together, Liberty
Funds II) for the period January 1, 1995 through March 26, 1995 (h):
Total Compensation Total Compensation
From Liberty Funds II For From Liberty Funds I For
The Period January 1, 1995 The Calendar Year Ended
Trustee through March 26, 1995 December 31, 1995 (i)
- ------- ---------------------- ---------------------
Robert J. Birnbaum $2,900 $16,675
James E. Grinnell 2,900 22,900
Richard W. Lowry 2,900 26,250 (j)
(h) On March 27, 1995, four of the portfolios in the Liberty Financial Trust
(now known as Colonial Trust VII) were merged into existing Colonial
funds and a fifth was reorganized into a new portfolio of Colonial Trust
III. Prior to their election as Trustees of the Colonial Funds, Messrs.
Birnbaum, Grinnell and Lowry served as Trustees of Liberty Funds II;
they continue to serve as Trustees or Directors of Liberty Funds I.
(i) At December 31, 1995, the Liberty Funds I were advised by Liberty Asset
Management Company (LAMCO). LAMCO is an indirect wholly-owned
subsidiary of Liberty Financial Companies, Inc. (an intermediate parent
of the Adviser).
(j) Includes $3,500 paid to Mr. Lowry for service as Trustee of Liberty
Newport World Portfolio (formerly known as Liberty All-Star World
Portfolio) (Liberty Newport) during the calendar year ended December 31,
1995. At December 31, 1995, Liberty Newport was managed by Newport
Pacific Management, Inc. and Stein Roe & Farnham Incorporated, each an
affiliate of the Adviser.
Ownership of the Fund
At February 29, 1996, the officers and Trustees of the Fund as a group owned
less than 1% of the outstanding shares of the Fund.
At March 18, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc., Attn: Book
Entry, Mutual Fund Operations, 4800 Deer Lake Drive, E. 3rd Floor, Jacksonville,
FL 32216 owned 9.83% of the Fund's outstanding Class B shares.
At February 29, 1996, there were 447 Class A and 3,885 Class B shareholders.
Sales Charges (dollars in thousands)
Class A Shares
Year Ended September 1, 1994
November 30 (commencement of investment operations)
1995 through November 30, 1994
--------- -------------------------
Aggregate initial sales
charges on Fund share sales $228 $110
Initial sales charges retained
by CISI 27 12
Class B Shares
Year Ended November 30
1995 1994 1993
---- ---- ----
Aggregate contingent deferred
sales charges (CDSC) on Fund
redemptions retained by CISI $265 278 $119
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 the Adviser) 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 and are
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.
Approximately 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 Fund for
the fiscal year ended November 30, 1995, were:
Class A Shares Class B Shares
Fees to FSFs $ 40 $ 1,123
Cost of sales material relating
to the Fund (including printing 21 61
and mailing expenses)
Allocated travel, entertainment
and other promotional expenses
(including advertising) 47 135
INVESTMENT PERFORMANCE
The Fund's Class A and Class B yields for the month ended November 30, 1995,
were:
Class A Class B
Tax-Equivalent Tax-Equivalent
Yield Yield Yield Yield
4.95% 8.20% 4.45% 7.37%
The Fund's average annual total returns at November 30, 1995 were:
Class A Shares
Since inception
1 year 9/1/94 to 11/30/95
-------------------
With sales charge of 4.75% 11.71% 6.50%
Without sales charge 17.28% 10.74%
Class B Shares
Since inception
1 year 6/8/92 to 11/30/95
------------------
With applicable CDSC 11.42% (5.00% CDSC) 6.20%(3.00%CDSC)
Without CDSC 16.42% 6.94%
The Fund's Class A and Class B distribution rates at November 30, 1995, based on
the most recent month's distribution, annualized, and the maximum offering price
at the end of the month, were 6.17% and 5.74%, respectively.
See Part 2 of this SAI, "Performance Measures," for how calculations are made.
CUSTODIAN
UMB, 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 6 through 25 of the November 30, 1995 Annual Report, are incorporated in
this SAI by reference.
<PAGE>
INVESTMENT PORTFOLIO
NOVEMBER 30, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 95.5% PAR VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
AGRICULTURE, FORESTRY & FISHING - 1.3%
AGRICULTURE - CROPS
LA Port New Orleans Industrial Development,
Continental Grain Co., Series 1993,
7.500% 07/01/13 $ 2,000 $ 2,070
-----------
- ---------------------------------------------------------------------------------------
CERTIFICATES OF PARTICIPATION - 0.4%
MA Health and Educational Facilities,
Independent Living Bonds, Series 1993-A,
8.100% 07/01/18 600 609
-----------
- ---------------------------------------------------------------------------------------
CONSTRUCTION - 1.4%
BUILDING CONSTRUCTION
IN Hammond Sewer & Solid Waste Disposal,
American Maize Products Co., Series A,
8.000% 12/01/24 2,000 2,230
-----------
- ---------------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 0.5%
REAL ESTATE
MD Baltimore, Economic Development,
Park Charles Project, Series 1986,
8.000% 01/01/10 700 752
-----------
- ---------------------------------------------------------------------------------------
GENERAL OBLIGATION - 1.7%
AZ Apache County School District
Number 010, Round Valley
Project of 1987, Series 1990-C,
9.875% 07/01/05 500 559
CA State of California,
5.750% 03/01/19 2,000 2,007
-----------
2,566
-----------
- ---------------------------------------------------------------------------------------
HEALTH - 18.9%
HOSPITALS - 9.3%
AL Alabama Special Care Facilities Authority,
Montgomery Healthcare, Series 1989,
11.000% 10/01/19 295 291
DE State Economic Development,
Riverside Hospital, Series 1992-A,
9.500% 01/01/22 610 702
FL Tarpon Springs Health Facilities
Authority, Tarpon Springs Hospital
Foundation, Series 1988,
8.750% 05/01/12 1,000 1,069
</TABLE>
6
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C>
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 1,152
IL Health Facilities Authority,
Edgewater Medical Center, Series A,
9.250% 07/01/24 2,000 2,110
MI State Hospital Finance Authority:
Detroit Osteopathic Hospital C,
Series 1987-A,
7.500% 11/01/10 500 511
Saratoga Community Hospital,
Series 1992,
8.750% 06/01/10 295 318
MO Hannibal Industrial Development,
Medical Systems of Northeast Missouri,
Series 1992,
9.500% 03/01/22 1,000 1,169
NC Lincoln County Hospital Project,
9.000% 05/01/07 350 439
NJ State Health Care Facilities Financing
Authority, Raritan Bay Medical Center,
7.250% 07/01/27 2,000 2,012
PA Cambria County Hospital Authority,
Conemaugh Valley Memorial Hospital,
Series 1988-A,
8.875% 07/01/18 165 181
TN Chattanooga Health Education
and Housing Facilities Board,
North Park Hospital Project, Series 1993,
8.500% 02/01/23 1,000 1,036
VA Dickenson County Industrial
Development, Volunteer Healthcare
Systems Inc., Series 1988-A,
10.750% 06/01/18(a) 500 110
VT State Educational & Health Buildings
Financing Agency, Springfield Hospital,
Series A,
7.750% 01/01/13 835 870
WA State Health Care Facility,
Grays Harbor Community
Hospital, Series 1993:
7.200% 07/01/03 210 226
8.025% 07/01/20 960 1,043
-----------
14,514
-----------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/November 30, 1995
- ---------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH - CONT.
HUMAN SERVICES PROVIDERS - 1.2%
IL Champaign First Mortgage,
Hoosier Care, Inc., Series 1989-A,
9.750% 08/01/19 $ 495 $ 532
IN Wabash First Mortgage, Hoosier
Care, Inc., Series 1989-A,
9.750% 08/01/19 495 531
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19 335 392
Series 1992-C,
9.750% 08/01/19 330 386
-----------
1,841
-----------
NURSING HOMES - 8.4%
AZ Tucson Industrial Development
Authority, Villa Maria Care Center,
10.125% 11/01/21 350 328
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% 03/01/21 750 882
DE Sussex County Healthcare Facility,
Delaware Health Corp., Series 1994-A,
7.600% 01/01/24 1,000 977
FL Broward County, Beverly Enterprises,
9.800% 11/01/10 615 689
FL Flagler County Industrial
Redevelopment Authority,
South Florida Properties, Series 1988,
10.500% 12/01/18 925 931
FL Gadsden County Industrial Development,
Florida Housing Properties, Inc.,
Series 1988-A,
10.450% 10/01/18 340 353
FL Palm Beach County,
Hillcrest Manor Project,
10.250% 12/01/16 675 707
IA State Healthcare Facility Finance
Authority, Mercy Health Initiatives,
9.950% 07/01/19 500 510
KS Halstead Industrial Health Care
Project,
10.250% 08/01/13 335 234
</TABLE>
8
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C>
MA State Industrial Finance Agency:
GF/Massachusetts Inc., Series 1994,
8.300% 07/01/23 $ 1,000 $ 986
Mary Ann Morse Nursing Home,
Series 1991-I,
10.000% 01/01/21 500 637
MI Cheboygan County Economic
Development Corp.,
Metro Health Foundation Project,
10.000% 11/01/22 (a) 600 420
MO Grove Industrial Development Authority,
First Mortgage Health Care Facility,
Heritage Manor GR, Series 1988,
10.250% 11/01/13 440 396
NJ Economic Development Authority,
Geriatric and Medical Service, Inc.,
Series A,
10.500% 05/01/04 115 125
OH Lucas County, Villa North
Nursing Home, Series 1988-B,
10.500% 06/01/18 300 294
PA Chartiers Valley Industrial
and Commercial Authority,
Beverly Enterprises, Series 1985,
10.000% 06/01/07 1,790 1,953
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc., Series 1989,
10.125% 05/01/19 450 468
PA Delaware County Authority,
Main Line and Haverford Nursing,
Series 1992,
9.000% 08/01/22 50 54
PA Lackawanna County Industrial Authority,
Green Ridge Nursing Center, Inc.,
10.500% 12/01/10 200 213
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% 11/15/22 300 312
PA Philadelphia Authority for Industrial
Development, First Mortgage, RHA/PA
Nursing Home, Series 1988,
10.250% 11/01/18 740 769
VA Beach Development Authority,
Beverly Enterprises, Series 1985,
10.000% 04/01/10 240 270
-----------
13,041
-----------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/November 30, 1995
- ---------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - 18.5%
ASSISTED LIVING/SENIOR - 3.5%
CT State Authority, First
Mortgage Gross Health Care,
Church-Avery Project, Series 1990,
9.000% 04/01/20 $ 500 $ 540
IL State Development Finance Authority,
Care Institute, Inc.,
8.250% 06/01/25 2,000 2,060
MN Roseville, Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 1,270 1,181
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993-A,
8.250% 05/01/23 620 627
TX Bell County Health Facilities
Development Corp., Care Institutions, Inc.
9.000% 11/01/24 1,000 1,071
-----------
5,479
-----------
MULTI-FAMILY - 11.1%
AK State Housing Finance Corp.,
Series 1992-A2,
6.750% 12/01/24 1,735 1,804
FL Clearwater,
Hampton Apartments,
8.250% 05/01/24 2,000 2,125
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 2,000 2,100
FL State Housing Finance Agency,
Windsong Apartments, Series 1993-C,
9.250% 01/01/19 750 762
MN Lakeville, Southfork
Apartment Project, Series 1989-A,
9.875% 02/01/20 700 714
MN White Bear Lake,
Birch Lake Townhomes Project,
Series 1988-A,
9.750% 07/15/19 750 759
NC Eastern Carolina Regional Housing
Authority, Jacksonville New River
Apartments,
8.250% 09/01/14 1,500 1,528
Resolution Trust Corp.,
Pass Through Certificates,
Series 1993-A,
8.500% 12/01/16 (b) 4,248 4,391
</TABLE>
10
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C>
SC State Housing Finance and Development,
Multi-family Housing Finance Revenue,
Westbridge Apartments, Series A,
9.500% 09/01/20 $ 650 $ 666
TN Memphis Center City Finance Corp.,
Multi-family Housing Board, Riverset
Apartments-Phase II Project, Series 1989-A,
9.500% 10/01/19 500 454
TX Galveston Pass Through Certificates,
Health Facilities Center,
8.000% 08/01/23 1,000 1,043
VA Alexandria Redevelopment
& Housing Authority, Courthouse
Commons Apartments, Series 1990-A,
10.000% 01/01/21 500 508
VA Roanoke Redevelopment & Housing
Authority, First Mortgage, Mountain Ridge,
9.250% 11/01/22 500 515
-----------
17,369
-----------
SINGLE-FAMILY - 3.9%
CA Orange County, Series 1983, Issue 1,
9.250% 09/01/16 55 52
CO State Housing Finance Authority,
Series D-1,
7.375% 06/01/26 2,000 2,213
MN Washington County Housing &
Redevelopment Authority, Cottages of
Aspen Project,
9.250% 06/01/22 495 509
MO State Housing Development Commission,
Series C,
7.250% 09/01/26 3,000 3,304
-----------
6,078
-----------
- ---------------------------------------------------------------------------------------
MANUFACTURING - 9.1%
FURNITURE & FIXTURES - 0.3%
TN McKenzie Industrial Development Board,
American Lantern Co.,
10.500% 05/01/16 473 509
-----------
MEASURING & ANALYZING INSTRUMENTS - 0.4%
MN Brooklyn Park, TL Systems Corp.,
Series 1991,
10.000% 09/01/16 535 637
-----------
PAPER PRODUCTS - 6.6%
GA Rockdale County Development
Authority, Solid Waste Disposal, Visy
Paper, Inc., Series 1993,
7.500% 01/01/26 2,500 2,563
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/November 30, 1995
- ---------------------------------------------------------------------------------------
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 $ 1,044
MI State Strategic Fund,
Blue Water Fiber Project, Series 1994,
8.000% 01/01/12 2,000 1,927
MI State Strategic Fund Limited,
Great Lakes Pulp & Fibre Project,
10.250% 12/01/16 2,500 2,634
SC Darlington County,
Industrial Development Authority,
Sonoco Products Co. Project,
6.125% 06/01/25 2,000 2,070
-----------
10,238
-----------
PRIMARY METAL - 1.3%
LA Vidalia, Alcoa Co. of
America Project,
5.875% 09/01/13 2,000 2,048
-----------
TRANSPORTATION EQUIPMENT - 0.5%
MN Buffalo, Von Ruden Manufacturing Inc.,
10.500% 09/01/14 790 851
-----------
- ---------------------------------------------------------------------------------------
MINING - 1.5%
CRUDE PETROLEUM & NATURAL GAS - 1.2%
WA Pierce County, Economic
Development Corp.,
Occidental Petroleum Co.,
5.800% 09/01/29 2,000 1,888
-----------
METAL MINING - 0.3%
OH Cuyahoga County,
Joy Technologies, Inc.,
8.750% 09/15/07 360 391
-----------
- ---------------------------------------------------------------------------------------
POLLUTION CONTROL REVENUE - 5.6%
GA Wayne County Development Authority,
Solid Waste Disposal, ITT Royonier,
Inc., Series 1990,
8.000% 07/01/15 500 561
IL Bryant Pollution Control Revenue,
Central Illinois Light Co. Project,
5.900% 08/01/23 1,750 1,792
OH State Water Development, Pollution
Control, Pennsylvania Power Co.,
8.100% 01/15/20 500 546
SC York County Industrial Revenue,
Hoechst Celanese Corp.,
5.700% 01/01/24 4,535 4,512
</TABLE>
12
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C>
TX Matagorda County, Collateralized
Pollution Control, Houston Lighting
and Power Co., Series 1986-A,
7.875% 11/01/16 $ 800 $ 836
WV Weirton Pollution Control, Weirton
Steel Corp., Series 1989,
8.625% 11/01/14 500 532
-----------
8,779
-----------
- ---------------------------------------------------------------------------------------
PUBLIC FACILITIES IMPROVEMENT - 5.1%
CO Denver City and County
Special Facilities Airport,
United Air Lines, Series 1992-A,
6.875% 10/01/32 5,000 5,125
MN Mille Lacs Capital Improvement
Infrastructure, Band of Chippewa,
Series 1992-A,
9.250% 11/01/12 655 744
TX Dallas-Fort Worth International Airport,
American Airlines, Inc., Series 1990,
7.500% 11/01/25 2,000 2,140
-----------
8,009
-----------
- ---------------------------------------------------------------------------------------
PUBLIC INFRASTRUCTURE - 12.2%
AIRPORTS - 8.0%
CO Denver City & County Airport:
Airport System, Series 1992-C,
6.750% 11/15/22 1,250 1,300
Denver International Airport, Series 1991-D,
7.750% 11/15/21 2,000 2,233
Stapleton International Airport, Series 1990-A,
8.500% 11/15/23 250 285
IL Chicago O'Hare International Airport
Special Facility, United Airlines, Inc.,
Series 1988-A,
8.400% 05/01/18 965 1,055
IN State Airport Authority,
7.100% 01/15/17 4,000 4,350
TX Alliance Airport Authority,
American Airlines Project,
7.500% 12/01/29 3,000 3,217
-----------
12,440
-----------
TURNPIKES/TOLL ROADS/BRIDGES - 4.2%
CA Foothill Eastern Transportation
Corridor Agency, State Toll Road,
Senior Lien, Series A:
(c) 01/01/29 12,000 1,410
6.000% 01/01/34 1,500 1,466
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/November 30, 1995
- ---------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
PUBLIC INFRASTRUCTURE - CONT.
TURNPIKES/TOLL ROADS/BRIDGES - CONT.
CA San Joaquin Hills Transportation Corridor
Agency, Senior Lien Toll Road,
Series 1993, Current Interest Bond Series:
(c) 01/01/23 $ 5,250 $ 932
5.000% 01/01/33 2,000 1,685
MA State Industrial Finance Agency,
Series 1990,
9.000% 10/01/20 940 1,081
-----------
6,574
-----------
- ---------------------------------------------------------------------------------------
RETAIL TRADE - 1.4%
MISCELLANEOUS RETAIL
OH Lake County Economic Development,
North Madison Properties, Series 1993,
8.819% 09/01/11 545 579
VA Virginia Beach Development Authority,
SC Diamond Associates, Inc.,
8.000% 12/01/10 1,500 1,547
-----------
2,126
-----------
- ---------------------------------------------------------------------------------------
SERVICES - 0.3%
HOTELS, CAMPS & LODGING
MN Burnsville Commercial Development,
Holiday Inn Project,
10.600% 06/01/06 500 514
-----------
- ---------------------------------------------------------------------------------------
SOLID WASTE - 5.3%
LAND FILL - 2.0%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc. Project,
9.000% 09/01/05 950 1,018
WA Walla Walla Public Corp.,
Ponderosa Fibres Project,
9.125% 01/01/26 2,000 2,087
-----------
3,105
-----------
MISCELLANEOUS DISPOSAL - 1.0%
CT State Disposal Facility,
Waterbury Project, Series 1995,
9.375% 06/01/16 1,500 1,519
-----------
RECYCLING - 0.1%
GA Fulton County Industrial Development
Authority, Waste Recycling, Inc.,
10.500% 12/01/07 120 127
-----------
</TABLE>
14
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C>
RESOURCE RECOVERY - 2.2%
WY Sweetwater County,
FMC Corp. Project, Series A,
7.000% 06/01/24 $ 3,325 $ 3,491
-----------
- ---------------------------------------------------------------------------------------
TAX ALLOCATION - 2.7%
CA Carson Improvement, Series 1992,
7.375% 09/02/22 975 1,030
CA Pleasanton Joint Powers Financing
Reassesment Subordinated Revenue,
Series 1993-B,
6.750% 09/02/17 1,950 1,960
IL State Development Finance Authority,
City of Marion Project, Series 1991,
9.625% 09/15/21 1,195 1,241
-----------
4,231
-----------
- ---------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 1.4%
AIR TRANSPORTATION
NY New York City Industrial Development
Agency, American Airlines,
6.900% 08/01/24 2,000 2,128
-----------
- ---------------------------------------------------------------------------------------
UTILITY - 5.1%
CO-GENERATION - 1.6%
FL Martin County Industrial
Development Authority, Indiantown
Co-Generation Project,
7.875% 12/15/25 1,000 1,142
MD State Energy Financing Administration,
Co-Generation Warrior Run Project,
7.400% 09/01/19 1,250 1,308
-----------
2,450
-----------
INDIVIDUAL POWER PRODUCER - 2.0%
PA State Economic Development Finance
Authority, Colver Project, Series D,
7.150% 12/01/18 2,900 3,063
-----------
MUNICIPAL ELECTRIC - 1.5%
CA Colton Public Finance Authority,
7.500% 10/01/20 1,000 1,013
MN Southern Minnesota Municipal
Power Agency, Series 1994-A,
(c) 01/01/25 6,660 1,340
-----------
2,353
-----------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/November 30, 1995
- ---------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
WATER & SEWER - 3.1%
LA Public Facility Belmont Water
Authority,
9.000% 03/15/24 $ 630 $ 664
MA State Industrial Finance Agency,
Environmental Service Project,
Series 1994-A,
8.750% 11/01/21 1,000 1,036
MS Five Lakes Utility District,
8.250% 07/15/24 400 415
NJ Economic Development Authority,
Hills Development Co., Series 1988,
10.500% 09/01/08 400 418
NY New York City Municipal Water
Finance Authority, Series B,
5.500% 06/15/19 2 ,000 1,995
OH State Water Development Pollution
Collateralized Control, The Cleveland
Electric Illumination, Series 1987 A-2,
9.750% 11/01/22 250 266
-----------
4,794
-----------
TOTAL MUNICIPAL BONDS (cost of $142,456) (d) 148,814
-----------
SHORT-TERM OBLIGATIONS - 2.6%
- ---------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (e)
IL State Development Finance Authority,
Ulhich Children's Home Project,
3.900% 04/01/07 1,500 1,500
IL State Health Facilities Authority,
Franciscan Sisters Health Center,
4.100% 01/01/18 700 700
MA State Health and Educational Facilities,
Capital Assets,
3.800% 01/01/35 1,000 1,000
MI Farmington, Botsford Hospital,
3.900% 02/15/16 300 300
SC State Jobs Economic Development
Authority,
4.100% 12/01/12 600 600
-----------
TOTAL SHORT-TERM OBLIGATIONS 4,100
-----------
OTHER ASSETS & LIABILITIES, NET - 1.9% 2,976
- ---------------------------------------------------------------------------------------
NET ASSETS - 100% $ 155,890
-----------
</TABLE>
16
<PAGE>
Investment Portfolio/November 30, 1995
- --------------------------------------------------------------------------------
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 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At year end, the
value of this security amounted to $4,391 or 2.8% 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 November 30, 1995.
See notes to financial statements.
17
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1995
<TABLE>
(In thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $142,456) ............................... $ 148,814
Short-term obligations ............................................. 4,100
---------
152,914
Receivable for:
Interest ...................................... $ 3,504
Fund shares sold .............................. 678
Investments sold .............................. 211
Deferred organization expenses ................ 30
Other ......................................... 15 4,438
--------- ---------
Total Assets .................................................... 157,352
LIABILITIES
Payable for:
Distributions ................................. 751
Fund shares repurchased ....................... 386
Accrued:
Deferred Trustees fees ........................ 3
Other ........................................... 322
---------
Total Liabilities .............................................. 1,462
---------
NET ASSETS ......................................................... $ 155,890
---------
Net asset value & redemption price per share -
Class A ($17,997/1,759) ............................................ $ 10.23
---------
Maximum offering price per share - Class A
($10.23/0.9525) .................................................... $ 10.74(a)
---------
Net asset value & offering price per share -
Class B ($137,893/13,479) .......................................... $ 10.23(b)
---------
COMPOSITION OF NET ASSETS
Capital paid in ................................................... $ 153,609
Undistributed net investment income ................................ 337
Accumulated net realized loss ...................................... (4,414)
Net unrealized appreciation during the period ...................... 6,358
---------
$ 155,890
---------
</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
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
(in thousands)
INVESTMENT INCOME
Interest................................................................. $ 10,820
EXPENSES
Management fee............................................. $ 759
Service fee................................................ 345
Distribution fee - Class B................................. 948
Transfer agent............................................. 227
Bookkeeping fee............................................ 58
Trustees fee............................................... 15
Custodian fee.............................................. 7
Audit fee.................................................. 32
Legal fee.................................................. 96
Registration fee........................................... 32
Reports to shareholders.................................... 6
Amortization of deferred...................................
organization expenses.................................... 18
Other...................................................... 19 2,562
-------- --------
Net Investment Income............................................. 8,258
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss.......................................... (2,355)
Net unrealized appreciation during
the period............................................... 14,952
--------
Net Gain.......................................................... 12,597
--------
Net Increase in Net Assets From Operations............................... $ 20,855
--------
</TABLE>
See notes to financial statements.
19
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended
(in thousands) November 30
------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994(a)
---- -------
<S> <C> <C>
Operations:
Net investment income ............................. $ 8,258 $ 7,305
Net realized loss ................................. (2,355) (1,389)
Net unrealized appreciation (depreciation) ........ 14,952 (11,175)
--------- ---------
Net Increase from Operations .................. 20,855 (5,259)
Distributions:
From net investment income - Class A .............. (771) (79)
From net investment income - Class B .............. (7,619) (6,882)
--------- ---------
12,465 (12,220)
--------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A ................ 12,349 7,128
Value of distributions reinvested - Class A ....... 218 11
Cost of shares repurchased - Class A .............. (1,592) (862)
--------- ---------
10,975 6,277
--------- ---------
Receipts for shares sold - Class B ................ 30,411 17,113
Value of distributions reinvested - Class B ....... 3,686 3,138
Cost of shares repurchased - Class B .............. (21,223) (15,255)
--------- ---------
12,874 4,996
--------- ---------
Net Increase from Fund Share Transactions ..... 23,849 11,273
--------- ---------
Total Increase (Decrease) ................. 36,314 (947)
NET ASSETS
Beginning of period ............................... 119,576 120,523
--------- ---------
End of period (including undistributed net
investment income of $337 and $432,
respectively) .................................. $ 155,890 $ 119,576
--------- ---------
NUMBER OF FUND SHARES
Sold - Class A .................................... 1,253 735
Issued for distributions reinvested - Class A ..... 22 1
Repurchased - Class A ............................. (162) (90)
--------- ---------
1,113 646
--------- ---------
Sold - Class B .................................... 3,085 1,738
Issued for distributions reinvested - Class B ..... 377 317
Repurchased - Class B ............................. (2,157) (1,558)
--------- ---------
1,305 497
--------- ---------
</TABLE>
(a) Class A shares were initially offered on September 1, 1994.
See notes to financial statements.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30,1995
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial High Yield Municipal Fund (the Fund), a series of
Colonial Trust IV, 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 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.
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.
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 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.
21
<PAGE>
Notes to Financial Statements/November 30, 1995
- ---------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses of $95,525 in con-
nection 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 carryovers) under income tax regulations.
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 and receives 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 year ended November 30, 1995, the Fund has been
advised that the Distributor retained net underwriting discounts of $27,077 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $264,994 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.
22
<PAGE>
Notes to Financial Statements/November 30, 1995
- --------------------------------------------------------------------------------
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
the Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended November 30, 1995, purchases and
sales of investments, other than short-term obligations, were $54,203,267 and
$34,991,513, respectively.
Unrealized appreciation (depreciation) at November 30, 1995, based on cost of
investments for both financial statement and federal income tax purposes was
approximately:
<TABLE>
<S> <C>
Gross unrealized appreciation ......... $ 7,794,000
Gross unrealized depreciation ......... (1,436,000)
-------------
Net unrealized appreciation ....... $ 6,358,000
-------------
</TABLE>
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
share- holders 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.
23
<PAGE>
FINANCIAL HIGHLIGHTS
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
------------------------------------------------------------------------------
1995 1994 1993 1992
CLASS A CLASS B CLASS A(a) CLASS B CLASS B CLASS B(b)
------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period ............ $ 9.330 $ 9.330 $ 9.800 $ 10.320 $ 10.070 $10.000
------- -------- ------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............. 0.656 0.583 0.188 0.605 0.609 0.338(c)
Net realized and
unrealized gain (loss) ............ 0.912 0.912 (0.496) (1.016) 0.277 0.041
------- -------- ------- -------- -------- -------
Total from Investment
Operations .................. 1.568 1.495 (0.308) (0.411) 0.886 0.379
------- -------- ------- -------- -------- -------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net
investment income ................. (0.668) (0.595) (0.162) (0.579) (0.636) (0.309)
------- -------- ------- -------- -------- -------
Net asset value -
End of period .................. $10.230 $ 10.230 $ 9.330 $ 9.330 $ 10.320 $10.070
------- -------- ------- -------- -------- -------
Total return (d) .................. 17.28% 16.42% (3.15%)(e) (4.10%) 9.00% 3.80%(e)(f)
------- -------- ------- -------- -------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses ......................... 1.17%(g) 1.92%(g) 1.15%(h) 1.90% 1.94% 2.00%(h)
Fees waived by
the Adviser ................... -- -- -- -- -- 0.01%(h)
Net investment income ............ 6.67%(g) 5.92%(g) 7.19%(h) 6.44% 5.95% 6.83%(h)
Portfolio turnover ............... 26% 26% 25% 25% 31% 13%(h)
Net assets at end
of period (000) ............... $17,997 $137,893 $ 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) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits received,
if any.
(h) Annualized.
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
All of the distributions will be treated as exempt income for federal income
tax purposes.
- --------------------------------------------------------------------------------
24
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 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, 1995, 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, 1995 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
- --------------------
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 12, 1996
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 Objective and
Policies; Fundamental Investment
Policies; Other Investment
Policies; Miscellaneous
Investment Practices; Portfolio
Turnover
14. Fund Charges and Expenses;
Management of the Colonial Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses;
Management of the Colonial Funds
17. Fund Charges and Expenses;
Management of the Colonial Funds
18. Shareholder Meetings
19. How to Buy Shares; Determination
of Net Asset Value; Suspension of
Redemptions; Special Purchase
Programs/Investor Services;
Programs for Reducing or
Eliminating Sales Charge; How to
Sell Shares; How to Exchange
Shares
20. Taxes
21. Fund Charges and Expenses;
Management of the Colonial Funds
22. Fund Charges and Expenses;
Investment Performance;
Performance Measures
23. Independent Accountants
COLONIAL UTILITIES FUND
Statement of Additional Information
March 29, 1996
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 29, 1996. 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
Special Tax Considerations
Portfolio Turnover
Fund Charges and Expenses
Investment Performance
Custodian
Independent Accountant
Part 2
Miscellaneous Investment Practices
Taxes
Management of the Colonial Funds
Determination of Net Asset Value
How to Buy Shares
Special Purchase Programs/Investor Services
Programs for Reducing or Eliminating Sales Charge
How to Sell Shares
Distributions
How to Exchange Shares
Suspension of Redemptions
Shareholder Meetings
Performance Measures
Appendix I
Appendix II
UF--296
<PAGE>
Part 1
COLONIAL UTILITIES FUND
Statement of Additional Information
March 29, 1996
DEFINITIONS
"Trust" Colonial Trust IV
"Fund" Colonial Utilities Fund
"Adviser" 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 contains
additional information about the following securities and investment techniques
that are described or referred to in the Prospectus:
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 securities of any company if the Trust knows that officers and
Trustees of the Trust or officers and directors of the Adviser 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. 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.)
9. 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 paid by the Fund from investment income
earned in the year ended November 30, 1995, qualified for the corporate
dividends-received deduction.
PORTFOLIO TURNOVER
1995 1994
---- ----
7% 16%
FUND CHARGES AND EXPENSES
Under the Fund's management agreement, the Fund pays the Adviser a monthly fee
based on the average daily net assets at the annual rate of 0.65%. The Adviser
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 the Adviser, CISI and CISC (for the fiscal years ended
November 30) (dollars in thousands)
1995 1994 1993
---- ---- ----
Management fee $7,486 $8,204 $6,352
Bookkeeping fee 401 450 325
Shareholder service and
transfer agent fee 2,955 3,134 2,197
12b-1 fees:
Service fee 2,905 3,187 2,469
Distribution fee (Class B) 5,843 6,401 4,486
Brokerage Commissions (for the fiscal years ended November 30) (dollars in
thousands)
1995 1994 1993
---- ---- ----
Total commissions $ 468 $ 1,067 $1,573
Directed transactions (a) 7,301 16,100 0
Commissions on directed transactions 7 24 180
(a) See "Management of the Colonial Funds-Portfolio Transactions-Brokerage and
Research Services" in Part 2 of this SAI.
Trustees and Trustees Fees
For the fiscal year ended November 30, 1995, and the calendar year ended
December 31, 1995, the Trustees received the following compensation for serving
as Trustees:
<TABLE>
<CAPTION>
Total Compensation
Aggregate From Fund and
Compensation Pension or Fund Complex Paid To
From Fund for Retirement Benefits Estimated Annual The Trustees For
Fiscal Year Ended Accrued As Part of Benefits Upon Calendar Year Ended
Trustee November 30, 1995 Fund Expense Retirement December 31, 1995(b)
- ------- ----------------- -------- ---------- --------------------
<S> <C> <C> <C> <C>
Robert J. Birnbaum $3,984 ----- ----- $ 71,250
Tom Bleasdale 6,198(c) ----- ----- 98,000 (d)
Lora S. Collins 5,757 ----- ----- 91,000
James E. Grinnell 3,981 ----- ----- 71,250
William D. Ireland, Jr. 7,137 ----- ----- 113,000
Richard W. Lowry 3,983 ----- ----- 71,250
William E. Mayer 5,755 ----- ----- 91,000
James L. Moody, Jr. 6,450(e) ----- ----- 94,500 (f)
John J. Neuhauser 5,756 ----- ----- 91,000
George L. Shinn 6,519 ----- ----- 102,500
Robert L. Sullivan 6,384 ----- ----- 101,000
Sinclair Weeks, Jr. 7,070 ----- ----- 112,000
</TABLE>
(b) At December 31, 1995, the Colonial Funds complex consisted of 33 open-end
and 5 closed-end management investment company portfolios.
(c) Includes $3,081 payable in later years as deferred compensation.
(d) Includes $49,000 payable in later years as deferred compensation.
(e) Includes $5,095 payable in later years as deferred compensation.
(f) Total compensation of $94,500 for the calendar year ended December 31,
1995 will be payable in later years as deferred compensation.
The following table sets forth the amount of compensation paid to Messrs.
Birnbaum, Grinnell and Lowry in their capacities as Trustees or Directors of the
Liberty All-Star Equity Fund and Liberty All-Star Growth Fund, Inc. (formerly
known as The Charles Allmon Trust, Inc.) (together, Liberty Funds I) for service
during the calendar year ended December 31, 1995, and of Liberty Financial Trust
(now known as Colonial Trust VII) and LFC Utilities Trust (together, Liberty
Funds II) for the period January 1, 1995 through March 26, 1995 (g):
Total Compensation Total Compensation
From Liberty Funds II For From Liberty Funds I For
The Period January 1, 1995 The Calendar Year Ended
Trustee through March 26, 1995 December 31, 1995 (h)
- ------- ---------------------- ---------------------
Robert J. Birnbaum(i) $2,900 $16,675
James E. Grinnell(i) 2,900 22,900
Richard W. Lowry(i) 2,900 26,250 (j)
(g) On March 27, 1995, four of the portfolios in the Liberty Financial Trust
(now known as Colonial Trust VII) were merged into existing Colonial
funds and a fifth was reorganized as a new portfolio of the Trust. Prior
to their election as Trustees of the Colonial Funds, Messrs. Birnbaum,
Grinnell and Lowry served as Trustees of Liberty Funds II and they
continue to serve as Trustees or Directors of Liberty Funds I.
(h) At December 31, 1995, the Liberty Funds I were advised by Liberty Asset
Management Company (LAMCO). LAMCO is an indirect wholly-owned subsidiary
of Liberty Financial Companies, Inc. (an intermediate parent of the
Adviser).
(i) Elected as a Trustee of the Colonial Funds complex on April 21, 1995.
(j) Includes $3,500 paid to Mr. Lowry for service as Trustee of Liberty
Newport World Portfolio (formerly known as Liberty All-Star World
Portfolio) (Liberty Newport) during the calendar year ended December 31,
1995. At December 31, 1995, Liberty Newport was managed by Newport
Pacific Management, Inc. and Stein Roe & Farnham Incorporated, each an
affiliate of the Adviser.
Ownership of the Fund
At February 29, 1996, the officers and trustees of the Trust as a group owned
less than 1% of the then outstanding shares of the Fund.
At March 18, 1996, 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 (6.63% of Class A shares); Merrill Lynch, Pierce,
Fenner & Smith, Inc., Attention: Book Entry, Mutual Fund Operations,
Jacksonville, FL 32216 (19.03% of Class B shares).
At February 29, 1996 there were 23,207 Class A and 49,527 Class B shareholders.
Sales Charges (for the fiscal years ended November 30)(dollars in thousands)
Class A Shares
1995 1994 1993
---- ---- ----
Aggregate initial sales charges
on Fund share sales $706 $1,892 $12,820
Initial sales charges retained by CISI $ 74 $ 210 $ 1,410
Class B Shares
1995 1994 1993
---- ---- ----
Aggregate contingent deferred sales
charges (CDSC) on Fund redemptions
retained by CISI $3,597 $4,073 $912
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 the Adviser) 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.
Approximately 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 Fund for
the fiscal year ended November 30, 1995 were:
Class A Shares Class B Shares
Fees to FSFs $933 $3,684
Cost of sales material relating
to the Fund (including printing and
mailing expenses) 95 214
Allocated travel, entertainment and other
promotional expenses (including advertising) 150 306
INVESTMENT PERFORMANCE
The Fund's Class A and Class B yields for the month ended November 30, 1995 were
3.82% and 3.26%, respectively.
The Fund's average annual total returns at November 30, 1995, 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% 22.78% 12.82% 8.99%
Without sales charge 28.90% 13.93% 9.52%
Class B Shares
Since inception
1 year 5/5/92 to 11/30/95
------ -------------------
With applicable CDSC 22.96%(5.00% CDSC) 8.44%(3.00% CDSC)
Without CDSC 27.96% 9.11%
The Fund's Class A and Class B distribution rates at November 30, 1995, which
are based on the latest month's distributions, annualized, and the maximum
offering price at the end of the month, were 4.18% and 3.64%, 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 6 through 18 of the Fund's November 30, 1995 Annual Report are
incorporated in this SAI by reference.
<PAGE>
INVESTMENT PORTFOLIO
NOVEMBER 30, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 86.2% SHARES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES
COMMUNICATIONS - 26.7%
AT&T Corp. 200 $ 13,200
Ameritech Corp. 700 38,500
Bell Atlantic Corp. 550 34,650
BellSouth Corp. 1,050 40,819
Frontier Corp. 275 7,116
GTE Corp. 1,150 49,019
MCI Communications Corp. 300 8,025
NYNEX Corp. 1,050 52,106
Pacific Telesis Group, Inc. 100 3,000
SBC Communications, Inc. 725 39,150
Sprint Corp. 125 5,000
US West, Inc. 750 23,437
US West Media Group 700 12,600
----------
326,622
----------
ELECTRIC SERVICES - 50.1%
American Electric Power Co., Inc. 450 16,931
Baltimore Gas & Electric Co. 100 2,663
Boston Edison Co. 725 20,209
Carolina Power & Light Co. 150 4,931
Cincinnati Gas & Electric Co. 1,100 32,450
Consolidated Edison Co. of New York 50 1,444
DPL, Inc. 1,500 36,000
Detroit Edison Co. 1,225 39,966
Eastern Utilities Association 125 2,873
Entergy Corp. 500 13,938
FPL Group, Inc. 1,100 47,713
Florida Progress Corp. 275 9,453
General Public Utilities Corp. 1,200 37,950
Hawaiian Electric Industries, Inc. 488 18,647
Houston Industries, Inc. 125 5,719
IES Industries, Inc. 650 18,038
KU Energy Corp. 200 5,875
Kansas City Power & Light Co. 700 17,500
Long Island Lighting Co. 550 9,419
New York State Electric & Gas Corp. 400 10,400
Northeast Utilities 600 14,325
Ohio Edison Co. 325 7,394
PacifiCorp 1,700 33,363
Peco Energy Co. 350 10,150
</TABLE>
6
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
- ----------------------------------------------------------------------------------
<S> <C> <C>
Pinnacle West Capital Corp. 200 $ 5,450
Portland General Corp. 600 16,950
Public Service Co. of Colorado 575 19,838
Public Service Enterprise Group, Inc. 400 11,850
Puget Sound Power & Light Co. 200 4,650
Rochester Gas & Electric Corp. 125 2,938
SCE Corp. 300 4,688
Scana Corp. 325 8,774
Sierra Pacific Resources 250 5,781
Southern Co. 1,800 41,174
Texas Utilities Co. 775 29,837
Union Electric Co. 100 4,012
Utilicorp United, Inc. 600 16,724
Western Resources, Inc. 650 21,531
----------
611,548
----------
GAS SERVICES - 9.4%
Energen Corp. 193 4,490
KN Energy, Inc. 100 2,913
MCN Corp. 875 19,031
MDU Resources Group, Inc. 225 4,528
Pacific Enterprises 450 12,038
Panhandle Eastern Corp. 600 17,025
People's Energy Corp. 217 6,612
UGI Corp. 700 14,524
Williams Companies, Inc. 800 33,600
----------
114,761
----------
TOTAL COMMON STOCKS (cost of $965,481) 1,052,931
----------
PREFERRED STOCKS - 12.7 %
- ----------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES
ELECTRIC SERVICES - 11.2%
Appalachian Power Co., 7.40% 13 1,274
Arizona Public Service Co., $1.8125, Series W 180 4,590
Arkansas Power & Light Co.:
7.80% 10 990
7.88% 9 890
Baltimore Gas & Electric Co.,
6.75% Sinking Fund 29 2,952
Boston Edison Co., 7.75% 100 2,500
Carolina Power & Light Co., 7.72% 30 3,030
Central Maine Power Co., 7.875% 16 1,564
Central Power & Light Co., 7.12% 16 1,546
Cleveland Electric Illuminating Co., A.R.P.,
Series L 65 4,778
Commonwealth Edison Co., 7.24% 52 5,130
</TABLE>
7
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
PREFERRED STOCKS - CONT. SHARES VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - CONT.
ELECTRIC SERVICES - CONT.
Detroit Edison Co.:
7.36% 45 $ 4,545
7.45% 31 3,130
7.68% 30 3,001
7.74% 100 2,500
7.75% 100 2,563
Duke Power Co., 7.04% 20 2,158
Florida Power & Light Co.:
7.40%, Series G 24 2,415
7.40% 4 400
7.76% 17 1,743
Georgia Power Co.:
A.R.P. 110 2,613
7.80% 11 1,161
Gulf States Utilities Co.:
8.80%, Series A 17 1,679
A.R.P., Series A 19 1,823
7.56% 18 1,604
8.52% 8 780
Illinois Power Co.:
A.R.P., Series A 25 1,125
A.R.P., Series B 30 1,459
7.75% 50 2,606
Jersey Central Power & Light Co., 7.88% 15 1,470
Louisiana Power & Light Co., 8.00%, Series 1992 90 2,295
Montana Power Company, $6.875 30 3,060
Niagara Mohawk Power Corp.:
A.R.P., Series B 161 3,186
7.72% 26 1,917
Northern Indiana Public Service Co., 7.44% 9 911
Ohio Edison Co., 7.75% 240 6,000
PSI Energy, Inc.:
6.88% 36 3,708
7.44% 235 5,992
Peco Energy Company, 7.48% 30 3,142
Pennsylvania Power & Light Co., 6.75% 51 5,227
Pennsylvania Power Co., 7.75% 15 1,425
Public Service Electric & Gas Co., 7.52% 32 3,095
Southern California Edison Co., 7.36% 125 3,147
Tampa Electric Company, 7.44%, Series F 11 1,089
Texas Utilities Co.:
7.22% 200 5,500
7.50% 480 13,320
7.98% 35 3,841
</TABLE>
8
<PAGE>
Investment Portfolio/November 30, 1995
<TABLE>
- ----------------------------------------------------------------------------------
<S> <C> <C>
Toledo Edison Co., A.R.P., Series A 40 $ 740
Union Electric Co., $7.44 18 1,809
----------
137,423
----------
GAS SERVICES - 1.1%
Enron Corp., 8.00% 400 10,100
Pacific Enterprises, $4.50 4 264
Williams Co., Inc., $3.50 37 2,683
----------
13,047
----------
PIPELINES - 0.4%
Enserch Corp. A.R.P., Series E 48 4,579
----------
TOTAL PREFERRED STOCKS (cost of $154,644) 155,049
----------
TOTAL INVESTMENTS - 98.9% (cost of $1,120,125) (a) 1,207,980
----------
SHORT-TERM OBLIGATIONS - 1.0% PAR
---------------------------------------------------------------------------------
Repurchase agreement with Bankers Trust Securities
Corp. dated 11/30/95, due 12/01/95 at 5.90% collateralized
by U.S. Treasury notes with various maturities to 1997,
market value $12,194 (repurchase proceeds $11,969) $11,967 11,967
----------
OTHER ASSETS & LIABILITIES, NET - 0.1% 1,355
- ----------------------------------------------------------------------------------
NET ASSETS - 100.0% $1,221,302
==========
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Cost for federal income tax purposes is the same.
Acronym Name
A.R.P. Adjustable Rate Preferred
See notes to financial statements.
9
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
(in thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $1,120,125) $1,207,980
Short-term obligations 11,967
----------
1,219,947
Receivable for:
Dividends $5,362
Fund shares sold 2,265
Investments sold 1,551
Interest 2
Other 32 9,212
------ ----------
Total Assets 1,229,159
LIABILITIES
Payable for:
Distributions 3,974
Fund shares repurchased 3,750
Accrued:
Deferred Trustees fees 22
Transfer Agent Out-of-Pocket fees 100
Other 11
------
Total Liabilities 7,857
----------
NET ASSETS $1,221,302
==========
Net asset value & redemption price per share -
Class A ($400,349/27,851) $14.37
==========
Maximum offering price per share - Class A
($14.37/0.9525) $15.09 (a)
==========
Net asset value & offering price per share -
Class B ($820,953/57,110) $14.37 (b)
==========
COMPOSITION OF NET ASSETS
Capital paid in $1,234,731
Undistributed net investment income 796
Accumulated net realized loss (102,080)
Net unrealized appreciation 87,855
----------
$1,221,302
==========
</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.
10
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 71,455
Interest 859
--------
72,314
EXPENSES
Management fee $ 7,486
Service fee 2,905
Distribution fee - Class B 5,843
Transfer agent 2,955
Bookkeeping fee 401
Trustees fee 47
Custodian fee 38
Audit fee 53
Legal fee 13
Registration fee 33
Reports to shareholders 19
Other 139 19,932
-------- --------
Net Investment Income 52,382
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss (21,504)
Net unrealized appreciation during
the period 260,221
--------
Net Gain 238,717
--------
Net Increase in Net Assets from Operations $291,099
========
</TABLE>
See notes to financial statements.
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended November 30
(in thousands) ------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
<S> <C> <C>
Operations:
Net investment income $ 52,382 $ 64,059
Net realized loss (21,504) (38,551)
Net unrealized appreciation (depreciation) 260,221 (164,651)
---------- ----------
Net Increase (Decrease) from Operations 291,099 (139,143)
Distributions:
From net investment income - Class A (19,543) (23,148)
From net investment income - Class B (33,675) (39,378)
---------- ----------
237,881 (201,669)
---------- ----------
Fund Share Transactions:
Receipts for shares sold - Class A 41,022 63,527
Value of distributions reinvested - Class A 14,696 17,112
Cost of shares repurchased - Class A (106,875) (143,099)
---------- ----------
(51,157) (62,460)
---------- ----------
Receipts for shares sold - Class B 62,927 143,384
Value of distributions reinvested - Class B 27,317 31,354
Cost of shares repurchased - Class B (172,228) (267,909)
---------- ----------
(81,984) (93,171)
---------- ----------
Net Decrease from Fund Share Transactions (133,141) (155,631)
---------- ----------
Total Increase (Decrease) 104,740 (357,300)
NET ASSETS
Beginning of period 1,116,562 1,473,862
---------- ----------
End of period (including undistributed net investment
income of $796 and $1,754, respectively) $1,221,302 $1,116,562
========== ==========
NUMBER OF FUND SHARES
Sold - Class A 3,230 5,014
Issued for distributions reinvested - Class A 1,156 1,373
Repurchased - Class A (8,370) (11,531)
---------- ----------
(3,984) (5,144)
---------- ----------
Sold - Class B 4,945 11,245
Issued for distributions reinvested - Class B 2,147 2,517
Repurchased - Class B (13,428) (21,694)
---------- ----------
(6,336) (7,932)
---------- ----------
</TABLE>
See notes to financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
November 30, 1995
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Utilities Fund (the Fund), a series of Colonial Trust IV,
is a diversified portfolio of a Massachussets business trust registered under
the Investment Company Act of 1940, as amended, as a 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, 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.
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 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
carryovers) under income tax regulations.
13
<PAGE>
Notes to Financial Statements/November 30, 1995
NOTE 1. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
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 a monthly fee based on the Fund's average net assets as
follows:
<TABLE>
<CAPTION>
Average Net Assets Annual Fee Rate
------------------ ---------------
<S> <C>
First $1 billion 0.65%
Over $1 billion 0.60%
</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:
<TABLE>
<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 and receives 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: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. For the year ended November 30, 1995, the Fund has been
advised that the Distributor retained net underwriting discounts of $74,182 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $3,596,980 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.
14
<PAGE>
Notes to Financial Statements/November 30, 1995
- --------------------------------------------------------------------------------
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended November 30, 1995, purchases and
sales of investments, other than short-term obligations, were $83,598,066 and
$223,972,181, respectively.
Unrealized appreciation (depreciation) at November 30, 1995, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $132,876,705
Gross unrealized depreciation (45,021,216)
------------
Net unrealized appreciation $ 87,855,489
------------
</TABLE>
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 $ 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
2003 21,504,000
------------
$122,560,000
------------
</TABLE>
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.
15
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended November 30
---------------------------------------------
1995 1994
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $11.720 $11.720 $13.600 $13.600
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.640 0.544 0.681 0.587
Net realized and
unrealized gain (loss) 2.659 2.659 (1.896) (1.896)
------- ------- ------- -------
Total from Investment
Operations 3.299 3.203 (1.215) (1.309)
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.649) (0.553) (0.665) (0.571)
From capital
paid in --- --- --- ---
------- ------- ------- -------
Total Distributions
Declared to
Shareholders (0.649) (0.553) (0.665) (0.571)
------- ------- ------- -------
Net asset value -
End of period $14.370 $14.370 $11.720 $11.720
======= ======= ======= =======
Total return (d) 28.90% 27.96% (9.04)% (9.73)%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.21% (e) 1.96% (e) 1.23% 1.98%
Net investment income 5.00% (e) 4.25% (e) 5.49% 4.74%
Portfolio turnover 7% 7% 16% 16%
Net assets at end
of period (in millions) $ 400 $ 821 $ 373 $ 744
</TABLE>
(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 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 contingent deferred sales charge.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits received,
if any.
(f) Not annualized.
(g) Annualized.
16
<PAGE>
FINANCIAL HIGHLIGHTS - continued
<TABLE>
<CAPTION>
Year ended November 30
================================================================================
1993 1992(a) 1991(a)
Class A Class B Class A Class B (b) Class A
- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
$12.960 $12.960 $11.440 $12.310 $10.090
- ------- ------- ------- ------- -------
0.713 0.612 0.741 0.296 0.917
0.616 0.616 1.517 0.691 1.377
- ------- ------- ------- ------- -------
1.329 1.228 2.258 0.987 2.294
- ------- ------- ------- ------- -------
(0.689) (0.588) (0.727) (0.337) (0.941)
--- --- (0.011)(c) --- (0.003)(c)
- ------- ------- ------- ------- -------
(0.689) (0.588) (0.738) (0.337) (0.944)
- ------- ------- ------- ------- -------
$13.600 $13.600 $12.960 $12.960 $11.440
======= ======= ======= ======= =======
10.20% 9.42% 20.21% 6.06%(f) 23.56%
======= ======= ======= ======= =======
1.19% 1.94% 1.16% 1.91%(g) 1.11%
4.92% 4.17% 5.52% 4.77%(g) 8.50%
6% 6% 35% 35% 1%
$ 503 $ 971 $ 232 $ 156 $ 135
</TABLE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
100% of the distributions paid by the Fund from investment income earned in the
year ended November 30, 1995, qualify for the corporate dividends received
deduction.
17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 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, 1995, 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, 1995
by correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
- --------------------
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 12, 1996
STATEMENT OF ADDITIONAL INFORMATION
PART 2
The following information applies generally to most Colonial funds. "Colonial
funds" or "funds" include each series of Colonial Trust I, Colonial Trust II,
Colonial Trust III, Colonial Trust IV, Colonial Trust V, Colonial Trust VI and
Colonial Trust VII. In certain cases, the discussion applies to some but not all
of the Colonial 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 investment objective, the Adviser will buy or sell
portfolio securities whenever it believes it is appropriate. The Adviser'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. The fund's 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 the Adviser 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. existing legislation limits and future legislation 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.
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.
<PAGE>
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 which consist of additional securities are also subject to the risks of
high yield securities.
Money Market Instruments
Government obligations are issued by the U.S. or foreign governments, their
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 deposits 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
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 the Adviser deems it appropriate to do
so. The fund may realize short-term profits or losses upon the sale of forward
commitments.
Mortgage Dollar Rolls
In a mortgage dollar roll, the fund sells a mortgage-backed security and
simultaneously enters into a commitment to purchase a similar security at a
later date. The fund either will be paid a fee by the counterparty upon entering
into the transaction or will be entitled to purchase the similar security at a
discount. As with any forward commitment, mortgage dollar rolls involve the risk
that the counterparty will fail to deliver the new security on the settlement
date, which may deprive the fund of obtaining a beneficial investment. In
addition, the security to be delivered in the future may turn out to be inferior
to the security sold upon entering into the transaction. Also, the transaction
costs may exceed the return earned by the fund from the transaction.
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 a 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. The Adviser 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, the 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, the 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. The fund will not invest the proceeds of a reverse
repurchase agreement for a period which exceeds the duration of the reverse
repurchase agreement. The 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 the Adviser,
such transactions are consistent with the fund's investment objective 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 the Adviser 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 the Adviser deems it desirable to do so. Although
the fund will take an option position only if Colonialthe Adviser 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 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
Upon entering into futures contracts, in compliance with the SEC's requirements,
cash, cash equivalents or high-grade debt securities, equal in value to the
amount of the fund's obligation under the contract (less any applicable margin
deposits and any assets that constitute "cover" for such obligation), will be
segregated with the fund's custodian. For example, if a fund investing primarily
in foreign equity securities enters into a contract denominated in a foreign
currency, the fund will segregate cash, cash equivalents or high-grade debt
securities equal in value to the difference between the fund's obligation under
the contract and the aggregate value of all readily marketable equity securities
denominated in the applicable foreign currency held by the fund.
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 the Adviser `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.
The 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 the Adviser, 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. The Adviser 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 the Adviser'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, the Adviser 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 the Adviser 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 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. Upon entering into such contracts, in
compliance with the SEC's requirements, cash, cash equivalents or high-grade
debt securities, equal in value to the amount of the fund's obligation under the
contract (less any applicable margin deposits and any assets that constitute
"cover" for such obligation), will be segregated with the fund's custodian. For
example, if a fund investing primarily in foreign equity securities enters into
a contract denominated in a foreign currency, the fund will segregate cash, cash
equivalents or high-grade debt securities equal in value to the difference
between the fund's obligation under the contract and the aggregate value of all
readily marketable equity securities denominated in the applicable foreign
currency held by the fund.
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 charged 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 the Adviser 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 Trust's 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.
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 included in a corporation's alternative minimum
taxable income.
Dividends derived from 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.
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 the fund's investments other than tax-exempt instruments may give rise to
taxable income. The fund's 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 the fund's shares will not be able to deduct the
interest paid with respect to such borrowed money.
Sales of Shares. In general, any gain or loss realized upon a taxable
disposition of shares by a shareholder will be treated as long-term capital gain
or loss if the shares have been held for more than twelve months, and otherwise
as short-term capital gain or loss assuming such shares are held as a capital
asset. However, any loss realized upon a taxable disposition of shares held for
six months or less will be treated as long-term, rather than short-term, capital
loss to the extent of any long-term capital gain distributions received by the
shareholder with respect to those shares. All or a portion of any loss realized
upon a taxable disposition of shares will be disallowed if other shares are
purchased within 30 days before or after the disposition. In such a case, the
basis of the newly purchased shares will be adjusted to reflect the disallowed
loss.
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 Ffund.
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. The Adviser, 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 the 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. The
Adviser 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
shareholders 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 COLONIAL FUNDS (in this section, and the following sections
entitled "Trustees and Officers," "The Management Agreement," "Administration
Agreement," "The Pricing and Bookkeeping Agreement," "Portfolio Transactions,"
"Investment decisions," and "Brokerage and research services," the "Adviser"
refers to Colonial Management Associates, Inc.) The Adviser is the investment
adviser to each of the Colonial funds (except for Colonial Municipal Money
Market Fund, Colonial Global Utilities Fund and Colonial Newport Tiger Fund -see
Part I of each Fund's respective SAI for a description of the investment
adviser). The Adviser is a subsidiary of The Colonial Group, Inc. (TCG), One
Financial Center, Boston, MA 02111. TCG is a direct subsidiary of Liberty
Financial Companies, Inc. (Liberty Financial), which in turn is a direct
subsidiary of LFC Holdings, Inc., which in turn is a direct subsidiary of
Liberty Mutual Equity Corporation, which in turn is a wholly-owned subsidiary of
Liberty Mutual Insurance Company (Liberty Mutual). Liberty Mutual is an
underwriter of workers' 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.
<PAGE>
Trustees and Officers (this section applies to all of the Colonial funds)
<TABLE>
<CAPTION>
Position with
Name and Address Age Fund Principal Occupation During Past Five Years
- ---------------- --- ---- -------------------------------------------
<S> <C> <C> <C>
Robert J. Birnbaum(1) (2) 68 Trustee Retired since 1994 (formerly Special Counsel, Dechert
313 Bedford Road Price & Rhoads from September, 1988 to December, 1993)
Ridgewood, NJ 07450
Tom Bleasdale 65 Trustee Retired since 1993 (formerly Chairman of the Board and
1508 Ferncroft Tower Chief Executive Officer, Shore Bank & Trust Company from
Danvers, MA 01923 1992-1993), is a Director of The Empire Company since
June, 1995 (3)
Lora S. Collins 60 Trustee Attorney with Kramer, Levin, Naftalis, Nessen, Kamin &
919 Third Avenue Frankel since September, 1986 (3)
New York, NY 10022
James E. Grinnell (1) (2) 66 Trustee Private Investor since November, 1988
22 Harbor Avenue
Marblehead, MA 01945
William D. Ireland, Jr. 72 Trustee Retired since 1990, is a Trustee of certain charitable
103 Springline Drive and non-charitable organizations since February, 1990 (3)
Vero Beach, FL 32963
Richard W. Lowry (1) (2) 59 Trustee Private Investor since August, 1987
10701 Charleston Drive
Vero Beach, FL 32963
William E. Mayer* 55 Trustee Dean, College of Business and Management, University of
College Park, MD 20742 Maryland since October, 1992 (formerly Dean, Simon
Graduate School of Business, University of Rochester from
October, 1991 to July, 1992 (3)
James L. Moody, Jr. 64 Trustee Chairman of the Board, Hannaford Bros., Co. since May,
1984 (formerly Chief Executive Officer, Hannaford Bros.
Co. from May, 1984 to May, 1992) (3)
John J. Neuhauser 52 Trustee Dean, Boston College School of Management since 1978 (3)
140 Commonwealth Avenue
Chestnut, Hill MA 02167
George L. Shinn 73 Trustee Financial Consultant since 1989 (formerly Chairman, Chief
The First Boston Corp. Executive Officer and Consultant, The First Boston
Tower Forty Nine Corporation from 1983 to July, 1991) (3)
12 East 49th Street
New York, NY 10017
Robert L. Sullivan 68 Trustee Self-employed Management Consultant since January, 1989
7121 Natelli Woods Lane (3)
Bethesda, MD 20817
<PAGE>
Sinclair Weeks, Jr. 72 Trustee Chairman of the Board, Reed & Barton Corporation since
Bay Colony Corporate Ctr. 1987 (3)
Suite 4550
1000 Winter Street
Waltham, MA 02154
Harold W. Cogger 59 President President of Colonial funds since March, 1996
(formerly Vice (formerly Vice President from July, 1993 to March,
President) 1996); is President since July, 1993, Chief Executive
Officer since March,
1995 and Director
since March, 1984 of
the Adviser
(formerly Executive
Vice President of
the Adviser from
October, 1989 to
July, 1993);
President since
October, 1994, Chief
Executive Officer
since March, 1995
and Director since
October, 1981 of
TCG; Executive Vice
President and
Director, Liberty
Financial (3)
Peter L. Lydecker 41 Controller Controller of Colonial funds since June, 1993 (formerly
(formerly Assistant Controller from March, 1985 to June, 1993);
Assistant Vice President of the Adviser since June, 1993
Controller) (formerly Assistant Vice President of the Adviser from
August, 1988 to June, 1993) (3)
Davey S. Scoon 48 Vice President Vice President of Colonial funds since June, 1993, is
Executive Vice President since July, 1993 and Director
since March, 1985 of the Adviser (formerly Senior Vice
President and Treasurer of the Adviser from March, 1985
to July, 1993); Executive Vice President and Chief
Operating Officer, TCG since March, 1995 (formerly Vice
President - Finance and Administration of TCG from
November, 1985 to March, 1995) (3)
Richard A. Silver 48 Treasurer and Treasurer and Chief Financial Officer of Colonial funds
Chief Financial since July, 1993 (formerly Controller from July, 1980
Officer to July, 1993), is Senior Vice President and Director
(formerly since April, 1988 and Treasurer and Chief Financial
Controller) Officer since July, 1993 of the Adviser (formerly
Assistant Treasurer
from January, 1978
to July, 1993);
Treasurer and Chief
Financial Officer of
TCG since July, 1993
(formerly Assistant
Treasurer of TCG
from January, 1985
to July, 1993) (3)
Arthur O. Stern 56 Secretary Secretary of Colonial funds since 1985, is Director
since 1985, Executive Vice President since July, 1993,
General Counsel, Clerk and Secretary since March, 1985
of the Adviser; Executive Vice President, Legal since
March, 1995 and Clerk since March, 1985 of TCG
(formerly Executive Vice President, Compliance from
March, 1995 to March, 1996 and Vice President - Legal
of TCG from March, 1985 to March, 1995) (3)
</TABLE>
(1) Elected to the Colonial Funds complex on April 21, 1995.
(2) On April 3, 1995, and in connection with the merger of TCG with a
subsidiary of into Liberty Financial which occurred on March 27, 1995,
Liberty Financial Trust (LFT) changed its name to Colonial Trust VII.
Prior to the merger, each of Messrs. Birnbaum, Grinnell, and Lowry was
a Trustee of LFT. Mr. Birnbaum has been a Trustee of LFT since
November, 1994. Each of Messrs. Grinnell and Lowry has been a Trustee
of LFT since August, 1991. Each of Messrs. Grinnell and Lowry continue
to serve as Trustees under the new name, Colonial Trust VII, along with
each of the other Colonial Trustees named above. The Colonial Trustees
were elected as Trustees of Colonial Trust VII effective April 3, 1995.
(3) Elected as a Trustee or officer of the LFC Utilities Trust, the master
fund in Colonial Global Utilities Fund, a series of Colonial Trust III
(LFC Portfolio) on March 27, 1995 in connection with the merger of TCG
with a subsidiary of Liberty Financial.
* Trustees who are "interested persons" (as defined in the Investment
Company Act of 1940) of the fund or the Adviser.
The address of the officers of each Colonial Fund is One Financial Center,
Boston, MA 02111.
The Trustees serve as trustees of all Colonial funds for which each Trustee 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 fund's
relative net assets and one-third of the fees are divided equally among the
Colonial funds.
The Adviser and/or its affiliate, Colonial Advisory Services, Inc. (CASI), has
rendered investment advisory services to investment company, institutional and
other clients since 1931. The Adviser currently serves as investment adviser and
administrator for 30 open-end and 5 closed-end management investment company
portfolios, and is the administrator for 3 open-end management investment
company portfolios (collectively, Colonial funds). Trustees and officers of the
Trust, who are also officers of the Adviser or its affiliates 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 $15.5 billion in assets.
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.
The Management Agreement (this section does not apply to the Colonial Municipal
Money Market Fund, Colonial Global Utilities Fund or Colonial Newport Tiger
Fund) Under a Management Agreement (Agreement), the Adviser has contracted to
furnish each 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. For these
services and facilities, each Colonial fund pays a monthly fee based on the
average of the daily closing value of the total net assets of each fund for such
month.
The Adviser's compensation under the Agreement is subject to reduction in any
fiscal year to the extent that the total expenses of each 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 a Colonial 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 Agreement, any liability of the Adviser to the fund and its
shareholders is limited to situations involving the Adviser's own willful
misfeasance, bad faith, gross negligence or reckless disregard of duties.
The Agreement may be terminated with respect to the fund at any time on 60 days'
written notice by the or by the Trustees of the Trust or by a vote of a majority
of the outstanding voting securities of the fund. The Agreement 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 the
Adviser or the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
The Adviser pays all salaries of officers of the Trust. The Trust pays all
expenses not assumed by the Adviser 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 Agreement provides that the Adviser 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 the Adviser.
Administration Agreement (this section applies only to the Colonial Municipal
Money Market Fund, Colonial Global Utilities Fund and Colonial Newport Tiger
Fund and their respective Trusts)
Under an Administration Agreement with each Fund, Adviser, in its capacity as
the Administrator to each Fund, has contracted to perform the following
administrative services:
(a) providing office space, equipment and clerical personnel;
(b) arranging, if desired by the respective Trust, for its
Directors, officers and employees to serve as Trustees,
officers or agents of each Fund;
(c) preparing and, if applicable, filing all documents required
for compliance by each Fund with applicable laws and
regulations;
(d) preparation of agendas and supporting documents for and
minutes of meetings of Trustees, committees of Trustees and
shareholders;
(e) coordinating and overseeing the activities of each Fund's
other third-party service providers; and
(f) maintaining certain books and records of each Fund.
With respect to the Colonial Municipal Money Market Fund, the Administration
Agreement for this Fund provides for the following services in addition to the
services referenced above:
(g) monitoring compliance by the Fund with Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act") and
reporting to the Trustees from time to time with respect
thereto; and
(h) monitoring the investments and operations of the SR&F
Municipal Money Market Portfolio (Municipal Money Market
Portfolio) in which Colonial Municipal Money Market Fund
is invested and the LFC Portfolio and reporting to the
Trustees from time to time with respect thereto.
The Administration Agreement has a one year term. The Adviser is paid a monthly
fee at the annual rate of average daily net assets set forth in Part 1 of this
Statement of Additional Information.
The Pricing and Bookkeeping Agreement
The Adviser provides pricing and bookkeeping services to each Colonial fund
pursuant to a Pricing and Bookkeeping Agreement. The Pricing and Bookkeeping
Agreement has a one-year term. The Adviser, in its capacity as the Administrator
to each of Colonial Municipal Money Market Fund and Colonial Global Utilities
Fund, is paid an annual fee of $18,000, plus 0.0233% of average daily net assets
in excess of $50 million. For each of the other Colonial funds (except for
Colonial Newport Tiger Fund), the Adviser 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
The Adviser provides pricing and bookkeeping services to Colonial Newport Tiger
Fund for an annual fee of $27,000, plus 0.035% of Colonial Newport Tiger Fund's
average net assets over $50 million.
Stein Roe & Farnham Incorporated, the investment adviser of each of the
Municipal Money Market Portfolio and LFC Portfolio, provides pricing and
bookkeeping services to each Portfolio for a fee of $25,000 plus 0.0025%
annually of average daily net assets of each Portfolio over $50 million.
Portfolio Transactions
The following sections entitled "Investment decisions" and "Brokerage and
research services" do not apply to Colonial Municipal Money Market Fund,
Colonial U.S. Fund for Growth ,and Colonial Global Utilities Fund,. For each of
these funds, see Part 1 of its respective SAI. The Adviser of Colonial Newport
Tiger Fund follows the same procedures as those set forth under "Brokerage and
research services."
Investment decisions. The Adviser acts as investment adviser to each of the
Colonial funds (except for the Colonial Municipal Money Market Fund, Colonial
Global Utilities Fund and Colonial Newport Tiger Fund, each of which is
administered by the Adviser, and Colonial U.S. Fund for Growth for which
investment decisions have been delegated by the Adviser to State Street Bank and
Trust Company, the fund's sub-adviser) (as defined under Management of the Fund
herein). The Adviser's affiliate, 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 the
Adviser. The Colonial funds and clients advised by the Adviser or the funds
administered by the Adviser 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
Colonial 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 the Adviser as investment adviser to the Colonial funds outweighs the
disadvantages, if any, which might result from these practices.
The portfolio managers of Colonial International Fund for Growth, a series of
Colonial Trust III, will use the trading facilities of Stein Roe & Farnham
Incorporated, an affiliate of the Adviser, to place all orders for the purchase
and sale of this fund's portfolio securities, futures contracts and foreign
currencies.
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, the Adviser may consider sales of shares of the Colonial funds as a
factor in the selection of broker-dealers to execute securities transactions for
a Colonial fund.
The Adviser places the transactions of the Colonial funds with broker-dealers
selected by the Adviser 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
Colonial funds from time to time also execute portfolio transactions with such
broker-dealers acting as principals. The Colonial funds do 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 Colonialthe Adviser's policy always to seek
best execution, which is to place the Colonial funds' transactions where the
Colonial funds 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 Colonial funds may be executed by broker-dealers who also
provide research services (as defined below) to the Adviser and the Colonial
funds. The Adviser 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
the Adviser, they tend to reduce the Adviser's expenses. In the Adviser's
opinion, it is impossible to assign an exact dollar value for such services.
Subject to such policies as the Trustees may determine, the Adviser may cause
the Colonial funds to pay a broker-dealer which provides brokerage and research
services to the Adviser an amount of commission for effecting a securities
transaction, including the sale of an option or a closing purchase transaction,
for the Colonial funds 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). The Adviser 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 the Adviser's overall responsibilities to the Colonial
funds and all its other clients.
The Trustees have authorized the Adviser to utilize the services of a clearing
agent with respect to all call options written by Colonial 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 the Adviser
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
Colonial funds.
Principal Underwriter
CISI is the principal underwriter of the Trust's shares. CISI has no obligation
to buy the Colonial funds' shares, and purchases the Colonial funds 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 plus reimbursement for certain out-of-pocket expenses. 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 or Colonial funds to CISC or generally by 6 months' notice by
CISC to the Fund or Colonial funds. The agreement limits the liability of CISC
to the Fund or Colonial funds for loss or damage incurred by the Fund or
Colonial funds 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 or Colonial funds 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
Each Colonial fund determines net asset value (NAV) per share for each Class as
of the close of the New York Stock Exchange (Exchange) (generally 4:00 p.m.
Eastern time, 3:00 p.m. Chicago time) 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. Funds with portfolio securities which are primarily
listed on foreign exchanges may experience trading and changes in NAV on days on
which such Fund does not determine NAV due to differences in closing policies
among exchanges. This may significantly affect the NAV of the Fund's redeemable
securities on days when an investor cannot redeem such securities. The net asset
value of the Municipal Money Market Portfolio will not be determined on days
when the Exchange is closed unless, in the judgment of the Municipal Money
Market Portfolio's Board of Trustees, the net asset value of the Municipal Money
Market Portfolio should be determined on any such day, in which case the
determination will be made at 3:00 p.m., Chicago time. 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 the
Adviser 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 Trust's
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. Trading on certain foreign securities markets may not take place on
all business days in New York, and trading on some foreign securities markets
takes place on days which are not business days in New York and on which the
Fund's NAV is not calculated. 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 each Colonial 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 Trust's Trustees.
(The following two paragraphs are applicable only to Colonial Newport Tiger Fund
- - "Adviser" in these two paragraphs refers to the Fund's Adviser which is
Newport Fund Management, Inc.)
Trading in securities on stock exchanges and over -the-counter markets in the
Far East is normally completed well before the close of the business day in New
York. Trading on Far Eastern securities markets may not take place on all
business days in New York, and trading on some Far Eastern securities markets
does take place on days which are not business days in New York and on which the
Fund's NAV is not calculated.
The calculation of the Fund's NAV accordingly may not take place
contemporaneously with the determination of the prices of the Fund's portfolio
securities used in such calculations. Events affecting the values of portfolio
securities that occur between the time their prices are determined and the close
of the Exchange (when the Fund's NAV is calculated) will not be reflected in the
Fund's calculation of NAV unless the Adviser, acting under procedures
established by the Board of Trustees of the Trust, deems that the particular
event would materially affect the Fund's NAV, in which case an adjustment will
be made. Assets or liabilities initially expressed in terms of foreign
currencies are translated prior to the next determination of the NAV of the
Fund's shares into U.S. dollars at prevailing market rates.
Amortized Cost for Money Market Funds (this section currently applies only to
Colonial Government Money Market Fund, a series of Colonial Trust II- see
"Amortized Cost for Money Market Funds" under "Other Information Concerning the
Portfolio" in Part 1 of the SAI of Colonial Municipal Money Market Fund for
information relating to the Municipal Money Market Portfolio)
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 Trust's Trustees have adopted
procedures intended to stabilize a money market fund's NAV per share at $1.00.
When a money market fund's market value deviates from the amortized cost of
$1.00, and results in a material dilution to existing shareholders, the Trust's
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 Trust's Trustees to present minimal credit risk.
See the Statement of Assets and Liabilities in the shareholder report of the
Colonial Government Money Market 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 prior to
the time at which shares are valued 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 the time at which the Fund values its shares, 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.
The Fund receives the entire NAV of shares sold. For shares subject to an
initial sales charge, CISI's commission is the sales charge shown in the Fund's
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 a FSF on the Investment Account Application
("Application"). CISI generally retains 100% of any asset-based sales charge
(distribution fee) or contingent deferred sales charge. Such charges generally
reimburse CISI for any up-front and/or ongoing commissions paid to FSFs.
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, D, T
or Z shares. The Colonial money market funds will not issue certificates.
Shareholders may send any certificates which have been previously acquired to
CISC for deposit to their account.
SPECIAL PURCHASE PROGRAMS/INVESTOR SERVICES
The following special purchase programs/investor services may be changed or
eliminated at any time.
Fundamatic Program. As a convenience to investors, shares of most Colonial funds
may be purchased through the Colonial Fundamatic Program. Preauthorized monthly
bank drafts or electronic funds transfer for a fixed amount of at least $50 are
used to purchase a Colonial fund's 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). If your
fFundamatic purchase is by electronic funds transfer, you may request the
Fundamatic purchase for any day. 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 $100 or more 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. The
designated amount will be exchanged on the third Tuesday of each month. There is
no charge for 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 fund, exchange
between the same Class of 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 Colonial fund will extend the
time of the Automated Dollar Cost Averaging program.
An exchange is a capital sale transaction for federal income 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 your instructions to Colonial Investors
Service Center, Inc. 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.
CISI offers several plans by which an investor may obtain reduced initial or
contingent deferred sales charges . These plans may be altered or discontinued
at any time. See "Programs For Reducing or Eliminating Sales Charges" for more
information.
Tax-Sheltered Retirement Plans. CISI offers 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 these 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.
Consultation with a competent financial and tax adviser 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.
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. Telephone
redemption privileges are suspended for 30 days after an address change is
effected.
Colonial cash connection. Dividends and any other distributions, including
Systematic Withdrawal Plan (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 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
another Colonial fund. 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.
PROGRAMS FOR REDUCING OR ELIMINATING SALES CHARGES
Right of Accumulation and Statement of Intent (Class A and Class T shares only)
(Class T shares can only be purchased by the shareholders of Colonial Newport
Tiger Fund who already own Class T shares). Reduced sales charges on Class A and
T shares can be effected by combining a current purchase with prior purchases of
Class A, B, C, D, T and Z 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 funds' 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 Class B, C, D, T
and Z 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. A Colonial fund may
terminate or amend this Right of Accumulation.
Any person may qualify for reduced sales charges on purchases of Class A and T
shares made within a thirteen-month period pursuant to a Statement of Intent
("Statement"). A shareholder may include, as an accumulation credit toward the
completion of such Statement, the value of all Class A, B, C D, T and Z shares
held by the shareholder on the date of the Statement in Colonial funds (except
shares of any Colonial money market fund, unless such shares were acquired by
exchange from Class A shares of another non-money market Colonial fund). The
value is determined at the public offering price on the date of the Statement.
Purchases made through reinvestment of distributions do not count toward
satisfaction 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 or T 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.
Colonial Asset Builder Investment Program (this section currently applies only
to the Class A shares of Colonial Growth Shares Fund and The Colonial Fund, each
a series of Colonial Trust III). A reduced sales charge applies to a purchase of
certain Colonial funds' 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. Shareholders in this program are subject to a 5% sales charge. 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. Shareholders are
subject to a 1% fee on the amount invested if they do not complete the Program.
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 Withdrawal Plan Share Certificates
Sponsored Arrangements Exchange Privilege
$50,000 Fast Cash Colonial Cash Connection
Right of Accumulation Automatic Dividend Diversification
Telephone Redemption Reduced Sales Charges for any "person"
Statement of Intent
*Exchanges may be made to other Colonial funds offering the Program.
Because of the unavailability of certain services, this 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 funds shares, investors should consult their FSF to
determine whether it is appropriate. The Plan does not assure a profit nor
against loss in declining markets.
Reinstatement Privilege. An investor who has redeemed Class A, B, D or T shares
may, upon request, reinstate within one year 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 reinstatement request and payment. Any
CDSC paid at the time of the redemption will be credited to the shareholder upon
reinstatement. The period between the redemption and the reinstatement will not
be counted in aging the reinstated 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 of any capital gains realized on the prior sale of fund shares,
but to the extent any such shares were sold at a loss, some or all of the loss
may be disallowed for tax purposes. Consult your tax adviser.
Privileges of Colonial Employees or Financial Service Firms (in this section,
the "Adviser" refers to Colonial Management Associates, Inc.) i. Class A shares
of certain funds may be sold at NAV to the following individuals whether
currently employed or retired: Trustees of funds advised or administered by the
Adviser ; directors, officers and employees of the the Adviser , CISI and other
companies affiliated with the Adviser l; 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.
Sponsored Arrangements. Class A and Class T shares (Class T shares can only be
purchased by the shareholders of Colonial Newport Tiger Fund who already own
Class T 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 organization's group, the term of the organization's existence and certain
characteristics of the members of its group. The Colonial funds reserve the
right to revise the terms of or to suspend or discontinue sales pursuant to
sponsored plans at any time.
Class A and Class T shares (Class T shares can only be purchased by the
shareholders of Colonial Newport Tiger Fund who already own Class T 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.
Net Asset Value Exchange Privilege (in this section, the "Adviser" refers to
Colonial Management Associates, Inc.). Class A shares of certain funds may also
be purchased at reduced or no sales charge by investors moving from another
mutual fund complex or a discretionary account and by participants in certain
retirement plans. In lieu of the commissions described in the Prospectus, the
Adviser will pay the FSF a quarterly service fee which is the service fee
established for each applicable Colonial fund .
Waiver of Contingent Deferred Sales Charges (CDSCs) (in this section, the
"Adviser" refers to Colonial Management Associates, Inc.) (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. If the account is transferred to a new registration
and then a redemption is requested, the applicable CDSC will
be charged.
2. Systematic Withdrawal Plan (SWP). CDSCs may be waived on
redemptions occurring pursuant to a monthly,
quarterly or semi-annual
SWP established with the Adviser , 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. See below under "Investors Services" -
Systematic Withdrawal Plan.
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 sole life
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.
The CDSC also may be waived where the FSF agrees to return all or an agreed upon
portion of the commission earned on the sale of the shares being redeemed.
HOW TO SELL SHARES
Shares may also be sold on any day the Exchange is open, either directly to the
Fund or through the shareholder's . 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 only after the check has cleared (which may take up to 15 days).
To sell shares directly to the Fund, send a signed letter of instruction or
stock power form to CISC, 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 FSFs, CISC, and many banks. Additional documentation is required
for sales by corporations, agents, fiduciaries, surviving joint owners and
individual retirement account holders. Call CISC for more information
1-800-345-6611.
FSFs must receive requests before the time at which the Fund's shares are valued
to receive that day's price, are responsible for furnishing all necessary
documentation to CISC and may charge for this service.
Systematic Withdrawal Plan
If a shareholder's Account Balance is at least $5,000, the shareholder may
establish a (SWP). A specified dollar amount or percentage of the then current
net asset value of the shareholder's investment in any Colonial fund designated
by the shareholder will be paid monthly, quarterly or semi-annually 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 the 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. No CDSCs apply to a redemption pursuant to a
SWP of 12% or less, 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% 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 the 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 account.
A fund 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 fund 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.
Telephone Redemptions. All shareholders and/or their financial advisers are
automatically eligible to redeem up to $50,000 of the fund's shares by calling
1-800-422-3737 toll free any business day between 9:00 a.m. and the close of
trading of the Exchange (normally 4:00 p.m. Eastern time). Telephone redemption
privileges for larger amounts may be elected on the Application. CISC 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 30 days and proceeds and confirmations will
only be mailed or sent to the address of record. Shareholders and/or their
financial advisers will be required to provide their name, address and account
number. Financial advisers will also be required to provide their broker 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.
Checkwriting (in this section, the "Adviser" refers to Colonial Management
Associates, Inc.) (Available only on the Class A and Class C shares of certain
Colonial funds) Shares may be redeemed by check if a shareholder completed an
Application and Signature Card. The Adviser 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; the shareholder will be charged a $15
service fee for each check returned. 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.
Non cash Redemptions. For redemptions of any single shareholder within any
90-day period exceeding the lesser of $250,000 or 1% of a Colonial fund's net
asset value, a Colonial fund may make the payment or a portion of the payment
with portfolio securities held by that Colonial fund instead of cash, in which
case the redeeming shareholder may incur brokerage and other costs in selling
the securities received.
DISTRIBUTIONS
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. Undelivered distribution checks returned by the post office will be
invested in your account.
Shareholders may 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.
Shares of most 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. The daily dividends for Colonial Municipal Money Market Fund will be
earned starting with the day after that fund receives payments for the shares.
HOW TO EXCHANGE SHARES
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. Class T and Z shares may be
exchanged for Class A shares of the other Colonial funds. The prospectus of each
Colonial 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 by calling 1-800-248-2828.
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 and Class T 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.
SUSPENSION OF REDEMPTIONS
A Colonial fund may not suspend shareholders' right of redemption or postpone
payment for more than seven days unless the 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 MEETINGS
As described under the caption "Organization and History" in the Prospectus of
each Colonial fund, 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 of 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 management 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 the
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 Colonial 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, the fund 's
distribution rate reflects total amounts actually paid to shareholders, while
yield reflects the current earning power of the fund's portfolio securities (net
of the fund's expenses). The fund's yield for any period may be more or less
than the amount actually distributed in respect of such period.
The fund may compare its performance to various unmanaged indices published by
such sources as listed in Appendix II.
The fund may also refer to quotations, graphs and electronically transmitted
data from sources believed by Colonialthe Adviser to be reputable, and
publications in the press pertaining to a fund's performance or to the Adviser
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.
<PAGE>
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.
Provisional Ratings. The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, although addressing credit
quality subsequent to completion of the project, makes no comments on the
likelihood of, or the risk of default upon failure of, such completion. The
investor should exercise his own judgment with respect to such likelihood and
risk.
Municipal Notes:
SP-1. Notes rated SP-1 have very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety characteristics
are designated as SP-1+.
SP-2. Notes rated SP-2 have satisfactory capacity to pay principal and interest.
Notes due in three years or less normally receive a note rating. Notes maturing
beyond three years normally receive a bond rating, although the following
criteria are used in making that assessment:
Amortization schedule (the larger the final maturity relative to other
maturities, the more likely the issue will be rated as a note).
Source of payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be rated as a note).
Demand Feature of Variable Rate Demand Securities:
S&P assigns dual ratings to all long-term debt issues that have as part of their
provisions a demand feature. The first rating addresses the likelihood of
repayment of principal and interest as due, and the second rating addresses only
the demand feature. The long-term debt rating symbols are used for bonds to
denote the long-term maturity, and the commercial paper rating symbols are
usually used to denote the put (demand) option (for example, AAA/A-1+).
Normally, demand notes receive note rating symbols combined with commercial
paper symbols (for example, SP-1+/A-1+).
Commercial Paper:
A. Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designations 1, 2, and 3 to indicate the relative degree to safety.
A-1. This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are designed A-1+.
Corporate Bonds:
The description of the applicable rating symbols and their meanings is
substantially the same as the Municipal Bond ratings set forth above.
<PAGE>
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 a 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 that 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 that
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.
Conditional Ratings. Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally. These are
bonds secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
conditions attach. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
Note: Those bonds in the Aa, A, Baa, Ba, and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa 1,
A 1, Baa 1, Ba 1, and B 1.
Municipal Notes:
MIG 1. This designation denotes best quality. There is present strong protection
by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG 2. This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
MIG 3. This designation denotes favorable quality. All security elements are
accounted for, but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
Demand Feature of Variable Rate Demand Securities:
Moody's may assign a separate rating to the demand feature of a variable rate
demand security. Such a rating may include:
VMIG 1. This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
VMIG 2. This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
VMIG 3. This designation denotes favorable quality. All security elements are
accounted for, but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
Commercial Paper:
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment capacity of rated issuers:
Prime-1 Highest Quality
Prime-2 Higher Quality
Prime-3 High Quality
If an issuer represents to Moody's that its Commercial Paper obligations are
supported by the credit of another entity or entities, Moody's, in assigning
ratings to such issuers, evaluates the financial strength of the indicated
affiliated corporations, commercial banks, insurance companies, foreign
governments, or other entities, but only as one factor in the total rating
assessment.
Corporate Bonds:
The description of the applicable rating symbols (Aaa, Aa, A) and their meanings
is identical to that of the Municipal Bond ratings as set forth above, except
for the numerical modifiers. Moody's applies numerical modifiers 1, 2, and 3 in
the Aa and A classifications of its corporate bond rating system. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a midrange ranking; and the modifier 3
indicates that the issuer ranks in the lower end of its generic rating category.
<PAGE>
APPENDIX II
1994
<TABLE>
<CAPTION>
SOURCE CATEGORY RETURN (%)
<S> <C> <C>
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 Funds -7.52
Lipper Connecticut Municipal Bond Funds -7.04
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 Bonds -0.28
Lipper Global Flexible Portfolio Funds -3.03
Lipper Growth Funds -2.15
Lipper Growth & Income Funds -0.94
Lipper High Current Yield Bond Funds -3.83
Lipper High Yield Municipal Bond Debt -4.99
Lipper Fixed Income Funds -3.62
Lipper Insured Municipal Bond Average -6.47
Lipper Intermediate Muni Bonds -3.53
Lipper Intermediate (5-10) U.S. Government Funds -3.72
Lipper Massachusetts Municipal Bond Funds -6.35
Lipper Michigan Municipal Bond Funds -5.89
Lipper Mid Cap Funds -2.05
Lipper Minnesota Municipal Bond Funds -5.87
Lipper U.S. Government Money Market Funds 3.58
Lipper Natural Resources -4.20
Lipper New York Municipal Bond Funds -7.54
Lipper North Carolina Municipal Bond Funds -7.48
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 Bond) -1.37
Swiss Bank 10 Year Germany (Corporate Bond) 4.09
Swiss Bank 10 Year Japan (Corporate Bond) 7.95
Swiss Bank 10 Year Canada (Corporate Bond) -14.10
Swiss Bank 10 Year Australia (Corporate Bond) 0.52
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 International 10 Year United Kingdom (Equity) -1.63
Morgan Stanley Capital International 10 Year Germany (Equity) 5.11
Morgan Stanley Capital International 10 Year Italy (Equity) 12.13
Morgan Stanley Capital International 10 Year Sweden (Equity) 18.80
Morgan Stanley Capital International 10 Year United States (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 Index 4.367
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
Bloomberg NA NA
Credit Lyonnais NA NA
Lipper Pacific Region Funds -12.07
Statistical Abstract of the U.S. NA NA
World Economic Outlook NA NA
</TABLE>
*in U.S. currency
Part B of Post-Effective Amendment No. 41 filed with the Commission on
September 25, 1995 (Colonial Municipal Money Market Fund), is incorporated
herein in its entirety by reference.
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A
Summary of Expenses (for Colonial High Yield
Municipal Fund, Colonial Tax-Exempt Insured
Fund, Colonial Tax-Exempt Fund, Colonial Short-
Term Tax-Exempt Fund, Colonial Intermediate Tax-
Exempt Fund and Colonial Utilities Fund)
Summary of Expenses (for Colonial Municipal
Money Market Fund, incorporated by reference to
Part A of Post-Effective Amendment No. 41 filed
with the Commission on September 25, 1995)
The Fund's Financial History (for Colonial High
Yield Municipal Fund, Colonial Tax-Exempt
Insured Fund, Colonial Tax-Exempt Fund, Colonial
Short-Term Tax-Exempt Fund, Colonial
Intermediate Tax-Exempt Fund and Colonial
Utilities Fund)
The Fund's Financial History (for Colonial
Municipal Money Market Fund, incorporated by
reference to Part A of Post-Effective Amendment
No. 41 filed with the Commission on September
25, 1995)
Included in Part B
Colonial Tax-Exempt Fund (CTEF)
-------------------------------
Investment portfolio, November 30, 1995
Statement of assets and liabilities,
November 30, 1995
Statement of operations, Year ended November 30,
1995
Statement of changes in net assets, Years ended
November 30, 1995 and 1994
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial Tax-Exempt Insured Fund (CTEIF)
----------------------------------------
Investment portfolio, November 30, 1995
Statement of assets and liabilities,
November 30, 1995
Statement of operations, Year ended
November 30, 1995
Statement of changes in net assets, Years ended
November 30, 1995 and 1994
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial Municipal Money Market Fund
(CMMMF)(formerly Colonial Tax-Exempt Money
Market Fund (CTEMMF)) (incorporated by reference
to Part B of Post-Effective Amendment No. 41
filed with the Commission on September 25, 1995)
-------------------------------------------------
Investment portfolio, June 30, 1995
Statement of assets and liabilities, Period
ended June 30, 1995, unaudited Six Months ended
May 31, 1995
Statement of operations, Period ended June 30,
1995, unaudited Six Months ended May 31, 1995
Statement of changes in net assets, Period ended
June 30, 1995, unaudited Six Months ended May
31, 1995, Year ended November 30, 1994
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial Utilities Fund (CUF)
-------------------------------
Investment portfolio, November 30, 1995
Statement of assets and liabilities,
November 30, 1995
Statement of operations, Year ended
November 30, 1995
Statement of changes in net assets, Years ended
November 30, 1995 and 1994
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial High Yield Municipal Fund (CHYMF)
------------------------------------------
Investment portfolio, November 30, 1995
Statement of assets and liabilities,
November 30, 1995
Statement of operations, Year ended November 30, 1995
Statement of changes in net assets, Years ended
November 30, 1995 and 1994
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial Intermediate Tax-Exempt Fund (CITEF)
---------------------------------------------
Investment portfolio, November 30, 1995
Statement of assets and liabilities, November 30, 1995
Statement of operations, Year ended November 30, 1995
Statement of changes in net assets, Years ended
November 30, 1995 and 1994
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial Short-Term Tax-Exempt Fund (CSTTEF)
--------------------------------------------
Investment portfolio, November 30, 1995
Statement of assets and liabilities, November 30, 1995
Statement of operations, Year ended November 30, 1995
Statement of changes in net assets, Years ended
November 30, 1995 and 1994
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)
2.(a) Amended By-Laws (2/16/96)
3. Not Applicable
4. Form of Specimen of Share Certificate (f)
5. (a) Management Agreement (CTEF, CTEIF, CHYMF)
(a)(1) Amendment No. 2 to Management Agreement (CTEF, CTEIF, CHYMF)
(a)(2) Management Agreement (CUF)
(a)(3) Form of Management Agreement between CTEMMF
and Colonial Management Associates, Inc. (CMMMF)(m)
(a)(4) Management Agreement (CITEF)
(a)(5) Management Agreement (CSTTEF)
(b) Form of Pricing and Bookkeeping Agreement (h)
(b)(1) Form of Pricing and Bookkeeping Agreement
between Colonial Trust IV, on behalf of
CMMMF, and Colonial Management Associates, Inc. (m)
6. (a) Distributor's Contract with Colonial
Investment Services, Inc. (m)
(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 incorporated by reference
and made a part of this Registration
Statement
Amendment No. 5 to Schedule A to the Amended
(a)(1) and Restated Shareholders' Servicing and
Transfer Agent Agreement
(b) Form of Agreement and Plan of Reorganization
(CTEMMF and CUF) (g)
(c) Form of Administration Agreement between
Colonial Trust IV, on behalf of CMMMF, and
Colonial Management Associates, Inc. (m)
(d) Form of Indemnification Agreement between
Colonial Trust IV, on behalf of CMMMF, and
SR&F Base Trust, on behalf of SR&F Municipal
Money Portfolio (m)
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 (CTEF,
CTEIF, CUF, CHYMF)
(a)(i) Consent of Independent Accountants (CTEMMF)(n)
(a)(ii) Consent of Independent Accountants (CITEF, CSTTEF)
(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) (m)
(d)(2) Calculation of Yield (CTEMMF) (m)
(e)(1) Calculation of Performance Information (CHYMF)
(e)(2) Calculation of Yield (CHYMF)
(f)(1) Calculation of PerformanceInformation (CITEF)
(f)(2) Calculation of Yield (CITEF)
(g)(1) Calculation of PerformanceInformation (CSTTEF)
(g)(2) Calculation of Yield (CSTTEF)
(h)(1) Calculation of Performance Information(Portfolio)(n)
(h)(2) Calculation of Yield (Portfolio)(n)
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)(n)
(h) Financial Data Schedule (Class B)(CTEMMF)(n)
(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: Robert J. Birnbaum,
Tom Bleasdale, Lora S. Collins, James E.
Grinnell, William D. Ireland, Jr., Richard
W. Lowry, William E. Mayer, James L. Moody,
Jr., John J. Neuhauser, George L. Shinn,
Robert L. Sullivan and Sinclair Weeks, Jr.
- ----------------------------------
(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.
(l) Incorporated by reference to Post-Effective
Amendment No. 40 filed on or about 3/20/95.
(m) Incorporated by reference to Post-Effective
Amendment No. 40 filed on or about 7/27/95.
(n) Incorporated by reference to Post-Effective
Amendment No. 41 filed on or about 9/25/95.
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 2/29/96
Shares of beneficial 80,197 Class A record holders (CTEF)
interest
13,139 Class B record holders
Shares of beneficial 6,088 Class A record holders (CTEIF)
interest
1,182 Class B record holders
Shares of beneficial 23,207 Class A record holders (CUF)
interest
49,527 Class B record holders
Shares of beneficial 745 Class A record holders (CMMMF)
interest
57 Class B record holders
Shares of beneficial 447 Class A record holders (CHYMF)
interest
3,885 Class B record holders
Shares of beneficial 121 Class A record holders (CSTTEF)
interest
Shares of beneficial 367 Class A record holders (CITEF)
interest
402 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.
See the form of Indemnification Agreement entered into by
Registrant, on behalf of CMMMF, and the SR&F Base Trust
(Base Trust), on behalf of SR&F Municipal Money Portfolio
(Portfolio), relating to liability in connection with
information relating to the Base Trust and the Portfolio
contained in Part B of this Registration Statement and
filed as Exhibit 9.(d) hereto.
The Registrant's adviser, Colonial Management Associates,
Inc. (Colonial), has an ICI Mutual Insurance Company
Directors and Officers/Errors and Omissions Liability
insurance policy. The policy provides indemnification to
the Registrant's trustees and officers.
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
(1940 Act). Colonial Advisory Services, Inc. (CASI), an affiliate of Colonial
Management Associates, Inc., is also registered as an investment adviser under
the 1940 Act. As of the end of its fiscal year, December 31, 1995, CASI had
one institutional, corporate or other account under management or supervision,
the market value of which was approximately $31.4 million. As of the end of
its fiscal year, December 31, 1995, Colonial Management Associates, Inc. was
the investment adviser and/or administrator to 38 mutual funds in the Colonial
Group of Funds, the market value of which investment companies was
approximately $16,439.3 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
addresses* Affiliation
of officers and with Period is through 3/1/96. Other
directors of investment business, profession, vocation or
investment adviser adviser employment connection Affiliation
- ------------------ ---------- -------------------------------- -----------
Archer, Joseph A. V.P.
Berliant, Allan V.P.
Bertelson, Lisa V.P.
Bertocci, Bruno V.P. Stein Roe Global Capital Mngmt. Principal
Bissonette, Michael V.P. Colonial Advisory Services, V.P.
Inc.
Boatman, Bonny E. Dir.;
Sr.V.P.;
IPC Mbr.
Campbell, Kimberly V.P.
Carnabucci,
Dominick V.P.
Carroll, Sheila A. Sr.V.P.;
Dir.
Citrone, Frank V.P.
Cogger, Harold W. Dir.;Pres.; The Colonial Group, Inc. Dir.; Pres.;
Chairman; CEO; Chrm.
CEO;IPC Mbr. Colonial Trusts I through VII Pres.
Exe. Cmte. Colonial High Income
Municipal Trust Pres.
Colonial InterMarket Income
Trust I Pres.
Colonial Intermediate High
Income Fund Pres.
Colonial Investment Grade
Municipal Trust Pres.
Colonial Municipal Income
Trust Pres.
Liberty Financial Exec V.P.;
Companies, Inc. Dir.
Colonial Advisory Services, Dir. Chrm.,
Inc. CEO & Pres.
Colonial Investors Service
Center, Inc. Dir.
Collins, Anne V.P.
Conlin, Nancy V.P.; Colonial Investors Service
Asst. Center, Inc. Asst. Clerk
Sec.; The Colonial Group, Inc. Asst. Clerk
Asst Colonial Advisory Services,
Clerk and Inc. Asst. Clerk
Counsel Colonial Investment Services,
Inc. Asst. Clerk
Colonial Trusts I through VII Asst. Sec.
Colonial High Income
Municipal Trust Asst. Sec.
Colonial InterMarket Income
Trust I Asst. Sec.
Colonial Intermediate High
Income Fund Asst. Sec.
Colonial Investment Grade
Municipal Trust Asst. Sec.
Colonial Municipal Income
Trust Asst. Sec.
Cordes, Susan V.P.
Daniszewski, V.P. Colonial Investment Services,
Joseph J. Inc. V.P.
DiSilva, Linda V.P.
Ericson, Carl C. Dir; Sr. Colonial Intermediate High
V.P. Income Fund V.P.
Colonial Advisory Services,
Inc. V.P.
Evans, C. Frazier Dir.; Colonial Investment Services,
Sr.V.P. Inc. Sr. V.P.
Feingold, Andrea S. V.P. Colonial Intermediate High
Income Fund V.P.
Colonial Advisory Services,
Inc. V.P.
Finnemore, V.P. Colonial Advisory Services,
Leslie W. Inc. V.P.
Gerokoulis, V.P. Colonial Investment Services,
Stephen A. Inc. Sr. V.P.
Harasimowicz, V.P. Colonial Investment Services,
Stephen Inc. V.P.
Harris, David V.P. Stein Roe Global Capital Mngmt. Principal
Hartford, Brian V.P.
Haynie, James P. V.P. Colonial Advisory Services,
Inc. V.P.
Johnson, Gordon A. V.P.
Koonce, Michael H. V.P.; Colonial Trusts I through VII Asst. Sec.
Asst. Colonial High Income
Sec.; Municipal Trust Asst. Sec.
Asst. Colonial InterMarket Income
Clerk & Trust I Asst. Sec.
Counsel Colonial Intermediate High
Income Fund Asst. Sec.
Colonial Investment Grade
Municipal Trust Asst. Sec.
Colonial Municipal Income
Trust Asst. Sec.
Colonial Investment Services,
Inc. Asst. Clerk
Colonial Investors Service
Center, Inc. Asst. Clerk
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 VII Controller
Asst. Colonial High Income
Treasurer Municipal Trust Controller
Colonial InterMarket Income
Trust I Controller
Colonial Intermediate High
Income Fund Controller
Colonial Investment Grade
Municipal Trust Controller
Colonial Municipal Income
Trust Controller
MacKinnon, Dir.;
Donald S. Sr.V.P.
McCue, Gerard A. V.P. Colonial Advisory Services,
Inc. V.P.
McGregor, Dir.; Colonial Investment Services, Pres.; CEO;
Jeffrey L. Sr.V.P. Inc. Dir.
O'Brien, David V.P.
O'Neill, Charles A. Sr.V.P.; Colonial Investment Services,
Dir. Inc. Exec. V.P.
Peters, Helen F. Dir.; Colonial Advisory Services,
Sr.V.P.; Inc. Sr. V.P.
IPC Mbr.
Rao, Gita V.P.
Rie, Daniel Sr.V.P.; Colonial Advisory Services,
IPC Mbr.; Inc. Sr. V.P.
Dir.
Scoon, Davey S. Dir.; Colonial Advisory Services,
Exe.V.P.; Inc. Dir.
IPC Mbr.; Colonial High Income
Exec. Comm. Municipal Trust V.P.
Mbr. Colonial InterMarket Income
Trust I V.P.
Colonial Intermediate High
Income Fund V.P.
Colonial Investment Grade
Municipal Trust V.P.
Colonial Municipal Income
Trust V.P.
Colonial Trusts I through VII V.P.
Colonial Investors Service Dir; Pres.
Center, Inc.
The Colonial Group, Inc. COO; Ex. V.P.
Seibel, Sandra L. V.P.
Shore, Janet V.P. and Colonial High Income
Compliance Municipal Trust Asst. Sec.
Offr.; Colonial InterMarket Income
IPC Mbr. Trust I Asst. Sec.
Colonial Intermediate High
Income Fund Asst. Sec.
Colonial Investment Grade
Municipal Trust Asst. Sec.
Colonial Municipal Income
Trust Asst. Sec.
Colonial Trusts I through VII Asst. Sec.
Colonial Investment Services,
Inc. Asst. Clerk
Silver, Richard A. Dir.; Colonial Advisory Services,
Sr.V.P.; Inc. Treasurer
Treasurer Colonial High Income Treasurer &
& CFO Municipal Trust CFO
Colonial InterMarket Income Treasurer &
Trust I CFO
Colonial Intermediate High Treasurer &
Income Fund CFO
Colonial Investment Grade Treasurer &
Municipal Trust CFO
Colonial Municipal Income Treasurer &
Trust CFO
Colonial Trusts I through VII Treasurer &
CFO
Colonial Investors Service Treasurer
Center, Inc.
The Colonial Group, Inc. Treasurer &
CFO
Colonial Investment Services, Treasurer,
Inc. CFO & Dir.
Stern, Arthur O. Exe.V.P.; Colonial Advisory Services,
Dir.; Inc. Clerk
Sec.; Colonial High Income
Clrk. & Municipal Trust Secretary
Gnrl. Colonial InterMarket Income
Counsel; Trust I Secretary
IPC Mbr. Colonial Intermediate High
Income Fund Secretary
Colonial Investment Grade
Municipal Trust Secretary
Colonial Municipal Income
Trust Secretary
Colonial Trusts I through VII Secretary
Colonial Investors Service
Center, Inc. Clerk
The Colonial Group, Inc. Exec. V.P.;
Clerk; General
Counsel
Colonial Investment Services, Dir., Chrmn.
Inc. Counsel; Clrk.
Stevens, Richard V.P.
Waas, Robert S. V.P.
Wallace, John V.P.- Corp. Colonial Advisory Services,
Finance and Inc. Controller
Controller
- ------------------------------------------------
*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 III, Colonial Trust IV, Colonial Trust V,
Colonial Trust VI and Colonial Trust VII:
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 R. V.P. None
Barsokas, David Regional V.P. None
Cairns, David Regional V.P. None
Chrzanowski, Regional V.P. None
Daniel
Clapp, Elizabeth A. V.P. None
Daniszewski, V.P. None
Joseph J.
Davey, Cynthia Sr. V.P. None
Donovan, John 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 G. V.P. None
Evans, C. Frazier Sr. V.P. None
Feldman, David Regional V.P. None
Flaherty, Michael Regional V.P. None
Gerokoulis, Sr. V.P. None
Stephen A.
Goldberg, Matthew Regional V.P. None
Hannon, Lisa Regional V.P. None
Harasimowicz, V.P. None
Stephen
Hayes, Mary V.P. None
Elizabeth
Hodgkins, Joseph Regional V.P. None
Howard, Craig Sr. V.P. None
Karagiannis, Sr. V.P. None
Marilyn
Kavolius, Mark Regional V.P. None
Kelley, Terry M. Regional V.P. None
Kelson, David W. Sr. V.P. None
Kilkenny Ann R. Sr. V.P. None
Lloyd, Judith H. Sr. V.P. None
McGregor, Jeffrey L. Director, CEO, None
President, COO
Meriwether, Jan V.P.
Murphy, Robert F. Sr. V.P. None
O'Neill, Charles A. Exec. V.P. None
Palmer, Laura V.P. None
Penitsch, Marilyn L. Regional V.P. None
Potter, Cheryl Regional V.P. None
Reed, Christopher B. Regional V.P. None
Ross, Gary J. 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
Stern, Arthur O. Clerk and Secretary
Counsel, Dir.,
Chairman
VanEtten, Keith H. V.P. None
Villanova, Paul Regional V.P. None
Wallace, John 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)
UMB, n.a. (formerly United Missouri Bank, n.a.)
(CHYMF, CTEF, CTEIF, CTEMMF, CITEF, CSTTEF)
928 Grand Avenue, Kansas City, Missouri 64106
Rule 31a-1(b),(2),(3)
Rule 31a-2(a),(2)
Boston Safe Deposit and Trust Company (CUF)
One Boston Place, Boston, Massachusetts 02108
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]
Part C of Post-Effective Amendment No. 41 filed with the
Commission on September 25, 1995 (Colonial Municipal Money Market Fund), is
incorporated herein in its entirety by reference.
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 this Registration Statement 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 this Registration Statement is
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 the requirements for
effectiveness of the Registration Statement pursuant to Rule
485(b) and has duly caused this Post-Effective Amendment No. 42
to its Registration Statement under the Securities Act of 1933
and Amendment No. 40 to its Registration Statement under the
Investment Company Act of 1940, to be signed in this City of
Boston in the Commonwealth of Massachusetts on this 22nd day of
March, 1996.
COLONIAL TRUST IV
By: /s/ HAROLD W. COGGER
---------------------------
Harold W. Cogger, 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/ HAROLD W. COGGER President March 22, 1996
----------------
Harold W. Cogger
/s/ RICHARD A. SILVER Treasurer and March 22, 1996
----------------- Chief Financial
Richard A. Silver Officer
/s/ PETER L. LYDECKER Controller March 22, 1996
-----------------
Peter L. Lydecker
/s/ ROBERT J. BIRNBAUM Trustee
------------------
Robert J. Birnbaum
/s/ TOM BLEASDALE Trustee
-------------
Tom Bleasdale
/s/ LORA S. COLLINS Trustee
---------------
Lora S. Collins
/s/ JAMES E. GRINNELL Trustee
-----------------
James E. Grinnell
/s/ WILLIAM D. IRELAND, Jr. Trustee /s/ MICHAEL H. KOONCE
----------------------- -----------------
William D. Ireland, Michael H. Koonce
Attorney-in-fact
/s/ RICHARD W. LOWRY Trustee For each Trustee
---------------- March 22, 1996
Richard W. Lowry
/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
2.(a) Amended By-Laws (2/16/96)
5.(a) Management Agreement (CTEF, CTEIF, CHYMF)
5.(a)(1) Amendment No. 2 to Management Agreement (CTEF, CTEIF, CHYMF)
5.(a)(2) Management Agreement (CUF)
5.(a)(4) Management Agreement (CITEF)
5.(a)(5) Management Agreement (CSTTEF)
9.(a)(1) Amendment No. 5 to Schedule A to the Amended and Restated
Shareholders' Servicing and Transfer Agent Agreement
11.(a) Consent of Independent Accountants (CTEF, CTEIF, CUF, CHYMF)
11.(a)(ii) Consent of Independent Accountants (CITEF, CSTTEF)
16.(a)(1) Calculation of Performance Information (CTEF)
16.(a)(2) Calculation of Yield (CTEF)
16.(b)(1) Calculation of Performance Information (CTEIF)
16.(b)(2) Calculation of Yield (CTEIF)
16.(c)(1) Calculation of Performance Information (CUF)
16.(c)(2) Calculation of Yield (CUF)
16.(e)(1) Calculation of Performance Information (CHYMF)
16.(e)(2) Calculation of Yield (CHYMF)
16.(f)(1) Calculation of Performance Information (CITEF)
16.(f)(2) Calculation of Yield (CITEF)
16.(g)(1) Calculation of Performance Information (CSTTEF)
16.(g)(2) Calculation of Yield (CSTTEF)
17.(a) Financial Data Schedule (Class A) (CTEF)
17.(b) Financial Data Schedule (Class B) (CTEF)
17.(c) Financial Data Schedule (Class A) (CTEIF)
17.(d) Financial Data Schedule (Class B) (CTEIF)
17.(e) Financial Data Schedule (Class A) (CUF)
17.(f) Financial Data Schedule (Class B) (CUF)
17.(i) Financial Data Schedule (Class A) (CHYMF)
17.(j) Financial Data Schedule (Class B) (CHYMF)
17.(k) Financial Data Schedule (Class A) (CITEF)
17.(l) Financial Data Schedule (Class B) (CITEF)
17.(m) Financial Data Schedule (Class A) (CSTTEF)
18. Power of Attorney for: Robert J. Birnbaum, Tom Bleasdale,
Lora S. Collins, James E. Grinnell, William D. Ireland, Jr.,
Richard W. Lowry, William E. Mayer, James L. Moody, Jr.,
John J. Neuhauser, George L. Shinn, Robert L. Sullivan and
Sinclair Weeks, Jr.
Amended 10/9/92 - Section 11
Amended 2/16/96 - Section 3.1, paragraph 2
BY-LAWS
OF
COLONIAL TRUST IV
Section 1. Agreement and Declaration of Trust and Principal
Office
1.1 Agreement and Declaration of Trust. These By-Laws
shall be subject to the Agreement and Declaration of
Trust, as from time to time in effect (the "Declaration
of Trust"), of Colonial Trust IV, a Massachusetts
business trust established by the Declaration of Trust
(the "Trust").
1.2 Principal Office of the Trust. The principal office of
the Trust shall be located in Boston, Massachusetts.
Section 2. Shareholders
2.1 Shareholder Meetings. A meeting of the shareholders of
the Trust or of any one or more series or classes of
shares may be called at any time by the Trustees, by
the president or, if the Trustees and the president
shall fail to call any meeting of shareholders for a
period of 30 days after written application of one or
more shareholders who hold at least 10% of all
outstanding shares of the Trust, if shareholders of all
series are required under the Declaration of Trust to
vote in the aggregate and not by individual series at
such meeting, or of any series or class, if
shareholders of such series or class are entitled under
the Declaration of Trust to vote by individual series
or class at such meeting, then such shareholders may
call such meeting. If the meeting is a meeting of the
shareholders of one or more series or classes of
shares, but not a meeting of all shareholders of the
Trust, then only the shareholders of such one or more
series or classes shall be entitled to notice of and to
vote at the meeting. Each call of a meeting shall
state the place, date, hour and purpose of the meeting.
2.2 Place of Meetings. All meetings of the shareholders
shall be held at the principal office of the Trust, or,
to the extent permitted by the Declaration of Trust, at
such other place within the United States as shall be
designated by the Trustees or the president of the
Trust.
2.3 Notice of Meetings. A written notice of each meeting
of shareholders, stating the place, date and hour and
the purposes of the meeting, shall be given at least
seven days before the meeting to each shareholder
entitled to vote thereat by leaving such notice with
him or her or at his or her residence or usual place of
business or by mailing it, postage prepaid, and
addressed to such shareholder at his or her address as
it appears in the records of the Trust. Such notice
shall be given by the secretary or an assistant
secretary or by an officer designated by the Trustees.
No notice of any meeting of shareholders need be given
to a shareholder if a written waiver of notice,
executed before or after the meeting by such
shareholder or his or her attorney thereunto duly
authorized, is filed with the records of the meeting.
2.4 Ballots. No ballot shall be required for any election
unless requested by a shareholder present or
represented at the meeting and entitled to vote in the
election.
2.5 Proxies. Shareholders entitled to vote may vote either
in person or by proxy in writing dated not more than
six months before the meeting named therein, which
proxies shall be filed with the secretary or other
person responsible to record the proceedings of the
meeting before being voted. Unless otherwise
specifically limited by their terms, such proxies shall
entitle the holders thereof to vote at any adjournment
of such meeting but shall not be valid after the final
adjournment of such meeting. The placing of a
shareholder's name on a proxy pursuant to telephonic or
electronically transmitted instructions obtained
pursuant to procedures reasonably designed to verify
that such instructions have been authorized by such
shareholder shall constitute execution of such proxy by
or on behalf of such shareholder.
Section 3. Trustees
3.1 Committees and Advisory Board. The Trustees may
appoint from their number an executive committee and
other committees. Except as the Trustees may otherwise
determine, any such committee may make rules for
conduct of its business. The Trustees may appoint an
advisory board to consist of not less than two nor more
than five members. The members of the advisory board
shall be compensated in such manner as the Trustees may
determine and shall confer with and advise the Trustees
regarding the investments and other affairs of the
Trust. Each member of the advisory board shall hold
office until the first meeting of the Trustees
following the next meeting of the shareholders and
until his or her successor is elected and qualified, or
until he or she sooner dies, resigns, is removed or
becomes disqualified, or until the advisory board is
sooner abolished by the Trustees.
In addition, the Trustees may appoint a Dividend
Committee of not less than three persons, who may (but
need not) be Trustees.
No special compensation shall be payable to members of
the Dividend Committee. Each member of the Dividend
Committee will hold office until the successors are
elected and qualified or until the member dies,
resigns, is removed, becomes disqualified or until the
Committee is abolished by the Trustees.
3.2 Regular Meetings. Regular meetings of the Trustees may
be held without call or notice at such places and at
such times as the Trustees may from time to time
determine, provided that notice of the first regular
meeting following any such determination shall be given
to absent Trustees.
3.3 Special Meetings. Special meetings of the Trustees may
be held at any time and at any place designated in the
call of the meeting, when called by the president or
the treasurer or by two or more Trustees, sufficient
notice thereof being given to each Trustee by the
secretary or an assistant secretary or by the officer
or one of the Trustees calling the meeting.
3.4 Notice. It shall be sufficient notice to a Trustee to
send notice by mail at least forty-eight hours or by
telegram at least twenty-four hours before the meeting
addressed to the Trustee at his or her usual or last
known business or residence address or to give notice
to him or her in person or by telephone at least twenty-
four hours before the meeting. Notice of a meeting
need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the
meeting, is filed with the records of the meeting, or
to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the
lack of notice to him or her. Neither notice of a
meeting nor a waiver of a notice need specify the
purposes of the meeting.
3.5 Quorum. At any meeting of the Trustees one-third of
the Trustees then in office shall constitute a quorum;
provided, however, a quorum shall not be less than two.
Any meeting may be adjourned from time to time by a
majority of the votes cast upon the question, whether
or not a quorum is present, and the meeting may be held
as adjourned without further notice.
Section 4. Officers and Agents
4.1 Enumeration; Qualification. The officers of the Trust
shall be a president, a treasurer, a secretary and such
other officers, if any, as the Trustees from time to
time may in their discretion elect or appoint. The
Trust may also have such agents, if any, as the
Trustees from time to time may in their discretion
appoint. Any officer may be but none need be a Trustee
or shareholder. Any two or more offices may be held by
the same person.
4.2 Powers. Subject to the other provisions of these By-
Laws, each officer shall have, in addition to the
duties and powers herein and in the Declaration of
Trust set forth, such duties and powers as are commonly
incident to his or her office as if the Trust were
organized as a Massachusetts business corporation and
such other duties and powers as the Trustees may from
time to time designate, including without limitation
the power to make purchases and sales of portfolio
securities of the Trust pursuant to recommendations of
the Trust's investment adviser in accordance with the
policies and objectives of that series of shares set
forth in its prospectus and with such general or
specific instructions as the Trustees may from time to
time have issued.
4.3 Election. The president, the treasurer and the
secretary shall be elected annually by the Trustees.
Other elected officers are elected by the Trustees.
Assistant officers are appointed by the elected
officers.
4.4 Tenure. The president, the treasurer and the secretary
shall hold office until their respective successors are
chosen and qualified, or in each case until he or she
sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office at
the pleasure of the Trustees. Each agent shall retain
his or her authority at the pleasure of the Trustees.
4.5 President and Vice Presidents. The president shall be
the chief executive officer of the Trust. The
president shall preside at all meetings of the
shareholders and of the Trustees at which he or she is
present, except as otherwise voted by the Trustees.
Any vice president shall have such duties and powers as
shall be designated from time to time by the Trustees.
4.6 Treasurer and Controller. The treasurer shall be the
chief financial officer of the Trust and subject to any
arrangement made by the Trustees with a bank or trust
company or other organization as custodian or transfer
or shareholder services agent, shall be in charge of
its valuable papers and shall have such other duties
and powers as may be designated from time to time by
the Trustees or by the president. Any assistant
treasurer shall have such duties and powers as shall be
designated from time to time by the Trustees.
The controller shall be the chief accounting officer of
the Trust and shall be in charge of its books of
account and accounting records. The controller shall
be responsible for preparation of financial statements
of the Trust and shall have such other duties and
powers as may be designated from time to time by the
Trustees or the president.
4.7 Secretary and Assistant Secretaries. The secretary
shall record all proceedings of the shareholders and
the Trustees in books to be kept therefor, which books
shall be kept at the principal office of the Trust. In
the absence of the secretary from any meeting of
shareholders or Trustees, an assistant secretary, or if
there be none or he or she is absent, a temporary clerk
chosen at the meeting shall record the proceedings
thereof in the aforesaid books.
Section 5. Resignations and Removals
Any Trustee, officer or advisory board member may resign at
any time by delivering his or her resignation in writing to
the president, the treasurer or the secretary or to a
meeting of the Trustees. The Trustees may remove any
officer elected by them with or without cause by the vote of
a majority of the Trustees then in office. Except to the
extent expressly provided in a written agreement with the
Trust, no Trustee, officer, or advisory board member
resigning, and no officer or advisory board member removed
shall have any right to any compensation for any period
following his or her resignation or removal, or any right to
damages on account of such removal.
Section 6. Vacancies
A vacancy in any office may be filled at any time. Each
successor shall hold office for the unexpired term, and in
the case of the presidents, the treasurer and the secretary,
until his or her successor is chosen and qualified, or in
each case until he or she sooner dies, resigns, is removed
or becomes disqualified.
Section 7. Shares of Beneficial Interest
7.1 Share Certificates. No certificates certifying the
ownership of shares shall be issued except as the
Trustees may otherwise authorize. In the event that
the Trustees authorize the issuance of share
certificates, subject to the provisions of Section 7.3,
each shareholder shall be entitled to a certificate
stating the number of shares owned by him or her, in
such form as shall be prescribed from time to time by
the Trustees. Such certificate shall be signed by the
president or a vice president and by the treasurer or
an assistant treasurer. Such signatures may be
facsimiles if the certificate is signed by a transfer
agent or by a registrar, other than a Trustee, officer
or employee of the Trust. In case any officer who has
signed or whose facsimile signature has been placed on
such certificate shall have ceased to be such officer
before such certificate is issued, it may be issued by
the Trust with the same effect as if he or she were
such officer at the time of its issue.
In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue
receipts therefor or keep accounts upon the books of
the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes
hereunder, to be the holders of certificates for such
shares as if they had accepted such certificates and
shall be held to have expressly assented and agreed to
the terms hereof.
7.2 Loss of Certificates. In the case of the alleged loss
or destruction or the mutilation of a share
certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees may
prescribe.
7.3 Discontinuance of Issuance of Certificates. The
Trustees may at any time discontinue the issuance of
share certificates and may, by written notice to each
shareholder, require the surrender of share
certificates to the Trust for cancellation. Such
surrender and cancellation shall not affect the
ownership of shares in the Trust.
Section 8. Record Date and Closing Transfer Books
The Trustees may fix in advance a time, which shall not be
more than 90 days before the date of any meeting of
shareholders or the date for the payment of any dividend or
making of any other distribution to shareholders, as the
record date for determining the shareholders having the
right to notice and to vote at such meeting and any
adjournment thereof or the right to receive such dividend or
distribution, and in such case only shareholders of record
on such record date shall have such right, notwithstanding
any transfer of shares on the books of the Trust after the
record date; or without fixing such record date the Trustees
may for any of such purposes close the transfer books for
all or any part of such period.
Section 9. Seal
The seal of the Trust shall, subject to alteration by the
Trustees, consist of a flat-faced circular die with the word
"Massachusetts" together with the name of the Trust and the
year of its organization, cut or engraved thereon; but,
unless otherwise required by the Trustees, the seal shall
not be necessary to be placed on, and its absence shall not
impair the validity of, any document, instrument or other
paper executed and delivered by or on behalf of the Trust.
Section 10. Execution of Papers
Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all
deeds, leases, transfers, contracts, bonds, notes, checks,
drafts and other obligations made, accepted or endorsed by
the Trust shall be signed, and all transfers of securities
standing in the name of the Trust shall be executed, by the
president or by one of the vice presidents or by the
treasurer or by whomsoever else shall be designated for that
purpose by the vote of the Trustees and need not bear the
seal of the Trust.
Section 11. Fiscal Year
Except as from time to time otherwise provided by the
Trustees, President, Secretary, Controller or Treasurer, the
fiscal year of the Trust shall end on November 30.
Section 12. Amendments
These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any
meeting of the Trustees, or by one or more writings signed
by such a majority.
MANAGEMENT AGREEMENT
AGREEMENT dated as of March 27, 1995, between COLONIAL TRUST IV,
a Massachusetts business trust (Trust), with respect to COLONIAL
TAX-EXEMPT FUND, COLONIAL TAX-EXEMPT INSURED FUND AND COLONIAL
HIGH YIELD MUNICIPAL FUND (Funds), and COLONIAL MANAGEMENT
ASSOCIATES, INC., a Massachusetts corporation (Adviser).
In consideration of the promises and covenants herein, the
parties agree as follows:
1. The Adviser will manage the investment of the assets of the
Funds in accordance with its prospectus and statement of
additional information and will perform the other services
herein set forth, subject to the supervision of the Board of
Trustees of the Trust. The Adviser may delegate its
investment responsibilities to a sub-adviser.
2. In carrying out its investment management obligations, the
Adviser shall:
(a) evaluate such economic, statistical and financial
information and undertake such investment research as it
shall believe advisable; (b) purchase and sell securities and
other investments for the Funds in accordance with the
procedures described in its prospectus and statement of
additional information; and (c) report results to the Board
of Trustees of the Trust.
3. The Adviser shall furnish at its expense the following:
(a) office space, supplies, facilities and equipment; (b)
executive and other personnel for managing the affairs of the
Funds (including preparing financial information of the Funds
and reports and tax returns required to be filed with public
authorities, but exclusive of those related to custodial,
transfer, dividend and plan agency services, determination of
net asset value and maintenance of records required by
Section 31(a) of the Investment Company Act of 1940, as
amended, and the rules thereunder (1940 Act)); and (c)
compensation of Trustees who are directors, officers,
partners or employees of the Adviser or its affiliated
persons (other than a registered investment company).
4. The Adviser shall be free to render similar services to
others so long as its services hereunder are not impaired
thereby.
5. The Funds shall pay the Adviser monthly a fee at the annual
rate of 0.60% of the first $1 billion, 0.55% in excess of $1
billion, 0.50% in excess of $3 billion and 0.45% in excess of
$4 billion of the combined average daily net assets of
Colonial Tax-Exempt Fund, Colonial Tax-Exempt Insured Fund
and Colonial High Yield Municipal Fund.
6. If the operating expenses of the Funds for any fiscal year
exceed the most restrictive applicable expense limitation for
any state in which shares are sold, the Adviser's fee shall
be reduced by the excess but not to less than zero.
Operating expenses shall not include brokerage, interest,
taxes, deferred organization expenses, Rule 12b-1
distribution fees, service fees and extraordinary expenses,
if any. The Adviser may waive its compensation (and bear
expenses of the Funds) to the extent that expenses of the
Funds exceed any expense limitation the Adviser declares to
be effective.
7. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, shall continue until two
years from its date of execution and from year to year
thereafter so long as approved annually in accordance with
the 1940 Act; (b) may be terminated without penalty on
sixty days' written notice to the Adviser either by vote of
the Board of Trustees of the Trust or by vote of a majority
of the outstanding shares of the Funds; (c) shall
automatically terminate in the event of its assignment; and
(d) may be terminated without penalty by the Adviser on
sixty days' written notice to the Trust.
8. This Agreement may be amended in accordance with the 1940
Act.
9. For the purpose of the Agreement, the terms "vote of a
majority of the outstanding shares", "affiliated person" and
"assignment" shall have their respective meanings defined in
the 1940 Act and exemptions and interpretations issued by the
Securities and Exchange Commission under the 1940 Act.
10 In the absence of willful misfeasance, bad faith or gross
. negligence on the part of the Adviser, or reckless disregard
of its obligations and duties hereunder, the Adviser shall
not be subject to any liability to the Trust or the Funds, to
any shareholder of the Trust or the Funds or to any other
person, firm or organization, for any act or omission in the
course of, or connected with, rendering services hereunder.
COLONIAL TRUST IV on behalf of
COLONIAL TAX-EXEMPT FUND
COLONIAL TAX-EXEMPT INSURED FUND
COLONIAL HIGH YIELD MUNICIPAL FUND
By: PETER L. LYDECKER
-----------------
Peter L. Lydecker
Title: Controller
COLONIAL MANAGEMENT ASSOCIATES, INC.
By: ARTHUR O. STERN
---------------
Arthur O. Stern
Title: Executive Vice President
A copy of the document establishing the Trust is filed with the
Secretary of The Commonwealth of Massachusetts. This Agreement
is executed by officers not as individuals and is not binding
upon any of the Trustees, officers or shareholders of the Trust
individually but only upon the assets of the Funds.
funds/general/contract/ctefman
AMENDMENT NO. 2 TO MANAGEMENT AGREEMENT
Effective January 1, 1996, the Agreement dated March 27,
1995,and amended on July 1, 1995, between COLONIAL TRUST IV
(Trust) on behalf of Colonial Tax-Exempt Fund, Colonial Tax-
Exempt Insured Fund and Colonial High Yield Municipal Fund
(collectively, the "Funds") and COLONIAL MANAGEMENT
ASSOCIATES, INC. (Adviser) is hereby amended to replace
Section 5 in its entirety:
5. The Funds shall pay the Adviser monthly a fee at the
annual rate of 0.60% of the first $1 billion, 0.55% in
excess of $1 billion, 0.50% in excess of $3 billion and
0.45% in excess of $4 billion of the combined average
daily net assets of Colonial Tax-Exempt Fund, Colonial
Tax-Exempt Insured Fund and Colonial High Yield
Municipal Fund; provided, however that the monthly fee
otherwise payable by Colonial Tax-Exempt Fund after
application of the foregoing provision shall be reduced
by an amount equal to the product of (a) 0.05%12 times
(b) the lesser of $1 billion or the excess of Colonial
Tax-Exempt Fund's average daily net assets for the
month over $2 billion; and provided, further however,
that the monthly fee otherwise payable by Colonial Tax-
Exempt Fund after application of the foregoing clauses
(a) and (b) shall be further reduced by an amount
calculated as follows: (i) for January through March
1996, the reduction shall be (0.01% 12) times the
Fund's average daily net assets for the month, (ii) for
April through June 1996, the reduction shall be (0.02%
12) times the Fund's average daily net assets for the
month, (iii) for July through September 1996, the
reduction shall be (0.03% 12) times the Fund's average
daily net assets for the month, and (iv) for months
after September 1996, the reduction shall be
(0.04% 12) times the Fund's average daily net assets
for the month.
COLONIAL TRUST IV on behalf of
COLONIAL TAX-EXEMPT FUND
COLONIAL TAX-EXEMPT INSURED FUND
COLONIAL HIGH YIELD MUNICIPAL FUND
By: PETER L. LYDECKER
-----------------
Peter L. Lydecker
Title: Controller
COLONIAL MANAGEMENT ASSOCIATES, INC.
By: ARTHUR O. STERN
---------------
Arthur O. Stern
Title: Executive Vice President
A copy of the document establishing the Trust is filed with
the Secretary of The Commonwealth of Massachusetts. This
Amendment is executed by officers not as individuals and is
not binding upon any of the Trustees, officers or
shareholders of the Trust individually but only upon the
assets of Colonial Tax-Exempt Fund, Colonial Tax-Exempt
Insured Fund and Colonial High Yield Municipal Fund.
S:\FUNDS\GENERAL\CONTRACT\CTEFAMD2.DOC
MANAGEMENT AGREEMENT
AGREEMENT dated as of March 27, 1995, between COLONIAL TRUST IV,
a Massachusetts business trust (Trust), with respect to COLONIAL
UTILITIES FUND (Fund), and COLONIAL MANAGEMENT ASSOCIATES, INC.,
a Massachusetts corporation (Adviser).
In consideration of the promises and covenants herein, the
parties agree as follows:
1. The Adviser will manage the investment of the assets of the
Fund in accordance with its prospectus and statement of
additional information and will perform the other services
herein set forth, subject to the supervision of the Board of
Trustees of the Trust. The Adviser may delegate its
investment responsibilities to a sub-adviser.
2. In carrying out its investment management obligations, the
Adviser shall:
(a) evaluate such economic, statistical and financial
information and undertake such investment research as it
shall believe advisable; (b) purchase and sell securities and
other investments for the Fund in accordance with the
procedures described in its prospectus and statement of
additional information; and (c) report results to the Board
of Trustees of the Trust.
3. The Adviser shall furnish at its expense the following:
(a) office space, supplies, facilities and equipment; (b)
executive and other personnel for managing the affairs of the
Fund (including preparing financial information of the Fund
and reports and tax returns required to be filed with public
authorities, but exclusive of those related to custodial,
transfer, dividend and plan agency services, determination of
net asset value and maintenance of records required by
Section 31(a) of the Investment Company Act of 1940, as
amended, and the rules thereunder (1940 Act)); and (c)
compensation of Trustees who are directors, officers,
partners or employees of the Adviser or its affiliated
persons (other than a registered investment company).
4. The Adviser shall be free to render similar services to
others so long as its services hereunder are not impaired
thereby.
5. The Fund shall pay the Adviser monthly a fee at the annual
rate of 0.65% of the average daily net assets of the Fund.
6. If the operating expenses of the Fund for any fiscal year
exceed the most restrictive applicable expense limitation for
any state in which shares are sold, the Adviser's fee shall
be reduced by the excess but not to less than zero.
Operating expenses shall not include brokerage, interest,
taxes, deferred organization expenses, Rule 12b-1
distribution fees, service fees and extraordinary expenses,
if any. The Adviser may waive its compensation (and bear
expenses of the Fund) to the extent that expenses of the Fund
exceed any expense limitation the Adviser declares to be
effective.
7. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, shall continue until two
years from its date of execution and from year to year
thereafter so long as approved annually in accordance with
the 1940 Act; (b) may be terminated without penalty on
sixty days' written notice to the Adviser either by vote of
the Board of Trustees of the Trust or by vote of a majority
of the outstanding shares of the Fund; (c) shall
automatically terminate in the event of its assignment; and
(d) may be terminated without penalty by the Adviser on
sixty days' written notice to the Trust.
8. This Agreement may be amended in accordance with the 1940
Act.
9. For the purpose of the Agreement, the terms "vote of a
majority of the outstanding shares", "affiliated person" and
"assignment" shall have their respective meanings defined in
the 1940 Act and exemptions and interpretations issued by the
Securities and Exchange Commission under the 1940 Act.
10 In the absence of willful misfeasance, bad faith or gross
. negligence on the part of the Adviser, or reckless disregard
of its obligations and duties hereunder, the Adviser shall
not be subject to any liability to the Trust or the Fund, to
any shareholder of the Trust or the Fund or to any other
person, firm or organization, for any act or omission in the
course of, or connected with, rendering services hereunder.
COLONIAL TRUST IV on behalf of
COLONIAL UTILITIES FUND
By: PETER L. LYDECKER
-----------------
Peter L. Lydecker
Title: Controller
COLONIAL MANAGEMENT ASSOCIATES, INC.
By: ARTHUR O. STERN
---------------
Arthur O. Stern
Title: Executive Vice President
A copy of the document establishing the Trust is filed with the
Secretary of The Commonwealth of Massachusetts. This Agreement
is executed by officers not as individuals and is not binding
upon any of the Trustees, officers or shareholders of the Trust
individually but only upon the assets of the Fund.
funds/general/contract/cufman
MANAGEMENT AGREEMENT
AGREEMENT dated as of March 27, 1995, between COLONIAL TRUST IV,
a Massachusetts business trust (Trust), with respect to COLONIAL
INTERMEDIATE TAX-EXEMPT FUND (Fund), and COLONIAL MANAGEMENT
ASSOCIATES, INC., a Massachusetts corporation (Adviser).
In consideration of the promises and covenants herein, the
parties agree as follows:
1. The Adviser will manage the investment of the assets of the
Fund in accordance with its prospectus and statement of
additional information and will perform the other services
herein set forth, subject to the supervision of the Board of
Trustees of the Trust. The Adviser may delegate its
investment responsibilities to a sub-adviser.
2. In carrying out its investment management obligations, the
Adviser shall:
(a) evaluate such economic, statistical and financial
information and undertake such investment research as it
shall believe advisable; (b) purchase and sell securities and
other investments for the Fund in accordance with the
procedures described in its prospectus and statement of
additional information; and (c) report results to the Board
of Trustees of the Trust.
3. The Adviser shall furnish at its expense the following:
(a) office space, supplies, facilities and equipment; (b)
executive and other personnel for managing the affairs of the
Fund (including preparing financial information of the Fund
and reports and tax returns required to be filed with public
authorities, but exclusive of those related to custodial,
transfer, dividend and plan agency services, determination of
net asset value and maintenance of records required by
Section 31(a) of the Investment Company Act of 1940, as
amended, and the rules thereunder (1940 Act)); and (c)
compensation of Trustees who are directors, officers,
partners or employees of the Adviser or its affiliated
persons (other than a registered investment company).
4. The Adviser shall be free to render similar services to
others so long as its services hereunder are not impaired
thereby.
5. The Fund shall pay the Adviser monthly a fee at the annual
rate of 0.55% of the average daily net assets of the Fund.
6. If the operating expenses of the Fund for any fiscal year
exceed the most restrictive applicable expense limitation for
any state in which shares are sold, the Adviser's fee shall
be reduced by the excess but not to less than zero.
Operating expenses shall not include brokerage, interest,
taxes, deferred organization expenses, Rule 12b-1
distribution fees, service fees and extraordinary expenses,
if any. The Adviser may waive its compensation (and bear
expenses of the Fund) to the extent that expenses of the Fund
exceed any expense limitation the Adviser declares to be
effective.
7. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, shall continue until two
years from its date of execution and from year to year
thereafter so long as approved annually in accordance with
the 1940 Act; (b) may be terminated without penalty on
sixty days' written notice to the Adviser either by vote of
the Board of Trustees of the Trust or by vote of a majority
of the outstanding shares of the Fund; (c) shall
automatically terminate in the event of its assignment; and
(d) may be terminated without penalty by the Adviser on
sixty days' written notice to the Trust.
8. This Agreement may be amended in accordance with the 1940
Act.
9. For the purpose of the Agreement, the terms "vote of a
majority of the outstanding shares", "affiliated person" and
"assignment" shall have their respective meanings defined in
the 1940 Act and exemptions and interpretations issued by the
Securities and Exchange Commission under the 1940 Act.
10 In the absence of willful misfeasance, bad faith or gross
. negligence on the part of the Adviser, or reckless disregard
of its obligations and duties hereunder, the Adviser shall
not be subject to any liability to the Trust or the Fund, to
any shareholder of the Trust or the Fund or to any other
person, firm or organization, for any act or omission in the
course of, or connected with, rendering services hereunder.
COLONIAL TRUST IV on behalf of
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
By: PETER L. LYDECKER
-----------------
Peter L. Lydecker
Title: Controller
COLONIAL MANAGEMENT ASSOCIATES, INC.
By: ARTHUR O. STERN
---------------
Arthur O. Stern
Title: Executive Vice President
A copy of the document establishing the Trust is filed with the
Secretary of The Commonwealth of Massachusetts. This Agreement
is executed by officers not as individuals and is not binding
upon any of the Trustees, officers or shareholders of the Trust
individually but only upon the assets of the Fund.
MANAGEMENT AGREEMENT
AGREEMENT dated as of March 27, 1995, between COLONIAL TRUST IV,
a Massachusetts business trust (Trust), with respect to COLONIAL
SHORT-TERM TAX-EXEMPT FUND (Fund), and COLONIAL MANAGEMENT
ASSOCIATES, INC., a Massachusetts corporation (Adviser).
In consideration of the promises and covenants herein, the
parties agree as follows:
1. The Adviser will manage the investment of the assets of the
Fund in accordance with its prospectus and statement of
additional information and will perform the other services
herein set forth, subject to the supervision of the Board of
Trustees of the Trust. The Adviser may delegate its
investment responsibilities to a sub-adviser.
2. In carrying out its investment management obligations, the
Adviser shall:
(a) evaluate such economic, statistical and financial
information and undertake such investment research as it
shall believe advisable; (b) purchase and sell securities and
other investments for the Fund in accordance with the
procedures described in its prospectus and statement of
additional information; and (c) report results to the Board
of Trustees of the Trust.
3. The Adviser shall furnish at its expense the following:
(a) office space, supplies, facilities and equipment; (b)
executive and other personnel for managing the affairs of the
Fund (including preparing financial information of the Fund
and reports and tax returns required to be filed with public
authorities, but exclusive of those related to custodial,
transfer, dividend and plan agency services, determination of
net asset value and maintenance of records required by
Section 31(a) of the Investment Company Act of 1940, as
amended, and the rules thereunder (1940 Act)); and (c)
compensation of Trustees who are directors, officers,
partners or employees of the Adviser or its affiliated
persons (other than a registered investment company).
4. The Adviser shall be free to render similar services to
others so long as its services hereunder are not impaired
thereby.
5. The Fund shall pay the Adviser monthly a fee at the annual
rate of 0.50% of the average daily net assets of the Fund.
6. If the operating expenses of the Fund for any fiscal year
exceed the most restrictive applicable expense limitation for
any state in which shares are sold, the Adviser's fee shall
be reduced by the excess but not to less than zero.
Operating expenses shall not include brokerage, interest,
taxes, deferred organization expenses, Rule 12b-1
distribution fees, service fees and extraordinary expenses,
if any. The Adviser may waive its compensation (and bear
expenses of the Fund) to the extent that expenses of the Fund
exceed any expense limitation the Adviser declares to be
effective.
7. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, shall continue until two
years from its date of execution and from year to year
thereafter so long as approved annually in accordance with
the 1940 Act; (b) may be terminated without penalty on
sixty days' written notice to the Adviser either by vote of
the Board of Trustees of the Trust or by vote of a majority
of the outstanding shares of the Fund; (c) shall
automatically terminate in the event of its assignment; and
(d) may be terminated without penalty by the Adviser on
sixty days' written notice to the Trust.
8. This Agreement may be amended in accordance with the 1940
Act.
9. For the purpose of the Agreement, the terms "vote of a
majority of the outstanding shares", "affiliated person" and
"assignment" shall have their respective meanings defined in
the 1940 Act and exemptions and interpretations issued by the
Securities and Exchange Commission under the 1940 Act.
10 In the absence of willful misfeasance, bad faith or gross
. negligence on the part of the Adviser, or reckless disregard
of its obligations and duties hereunder, the Adviser shall
not be subject to any liability to the Trust or the Fund, to
any shareholder of the Trust or the Fund or to any other
person, firm or organization, for any act or omission in the
course of, or connected with, rendering services hereunder.
COLONIAL TRUST IV on behalf of
COLONIAL SHORT-TERM TAX-EXEMPT FUND
By: PETER L. LYDECKER
-----------------
Peter L. Lydecker
Title: Controller
COLONIAL MANAGEMENT ASSOCIATES, INC.
By: ARTHUR O. STERN
---------------
Arthur O. Stern
Title: Executive Vice President
A copy of the document establishing the Trust is filed with the
Secretary of The Commonwealth of Massachusetts. This Agreement
is executed by officers not as individuals and is not binding
upon any of the Trustees, officers or shareholders of the Trust
individually but only upon the assets of the Fund.
funds/general/contract/sttefman
AMENDMENT NO. 5 TO SCHEDULE A
Terms used in the Schedule and not defined herein shall
have the meaning specified in the AMENDED AND RESTATED
SHAREHOLDERS' SERVICING AND TRANSFER AGENT AGREEMENT dated
July 1, 1991, and as amended from time to time (the
"Agreement"). Payments under the Agreement to CSC shall be
made in the first two weeks of the month following the month
in which a service is rendered or an expense incurred. This
Amendment No. 5 to Schedule A shall be effective as of March
1, 1996, and supersedes the original Schedule A and
Amendment Nos. 1, 2, 3 and 4 to Schedule A.
1. Each Fund that is a series of the Trust shall pay
CSC for the services to be provided by CSC under the
Agreement an amount equal to the sum of the following:
(a) The Fund's Share of CSC Compensation
PLUS
(b) The Fund's Allocated Share of CSC
Reimbursable Out-of-Pocket Expenses.
In addition, CSC shall be entitled to retain as additional
compensation for its services all CSC revenues for
Distributor Fees, fees for wire, telephone, redemption and
exchange orders, IRA trustee agent fees and account
transcripts due CSC from shareholders of any Fund and
interest (net of bank charges) earned with respect to
balances in the accounts referred to in paragraph 2 of the
Agreement.
2. All determinations hereunder shall be in
accordance with generally accepted accounting principles and
subject to audit by the Fund's independent accountants.
3. Definitions
"Allocated Share" for any month means that
percentage of CSC Reimbursable Out-of-Pocket
Expenses which would be allocated to the Fund for
such month in accordance with the methodology
described in Exhibit 1 hereto.
"CSC Reimbursable Out-of-Pocket Expenses"
means (i) out-of-pocket expenses incurred on
behalf of the Fund by CSC for stationery, forms,
postage and similar items, (ii) networking account
fees paid to dealer firms by CSC on shareholder
accounts established or maintained pursuant to the
National Securities Clearing Corporation's
networking system, which fees are approved by the
Trustees from time to time and (iii) fees paid by
CSC or its affiliates to third-party dealer firms
or transfer agents that maintain omnibus accounts
with a Fund in respect of expenses similar to
those referred to in clause (i) above, to the
extent the Trustees have approved the
reimbursement by the Fund of such fees.
"Distributor Fees" means the amount due CSC
pursuant to any agreement with the Fund's
principal underwriter for processing, accounting
and reporting services in connection with the sale
of shares of the Fund.
"Fund" means each of the open-end investment
companies advised by CMA that are series of the
Trusts which are parties to the Agreement.
"Fund's Share of CSC Compensation" for any
month means 1/12 of the following applicable
percentage of the average daily closing value of
the total net assets of such Fund for such month:
Equity Funds: Percent
------------ -------
The Colonial Fund 0.25
Colonial Growth Shares Fund
Colonial U.S. Fund for Growth
Colonial Global Equity Fund
Colonial Global Natural Resources Fund
Colonial Small Stock Fund
Colonial International Fund for Growth
Taxable Bond Funds:
Colonial U.S. Government Fund 0.18
Colonial Adjustable Rate U.S. Government Fund
Colonial Federal Securities Fund
Colonial Income Fund
Tax-Exempt Funds
Colonial Tax-Exempt Insured Fund 0.14
Colonial Tax-Exempt Fund
Colonial High Yield Municipal Fund
Colonial California Tax-Exempt Fund
Colonial Connecticut Tax-Exempt Fund
Colonial Florida Tax-Exempt Fund
Colonial Intermediate Tax-Exempt Fund
Colonial Massachusetts Tax-Exempt Fund
Colonial Michigan Tax-Exempt Fund
Colonial Minnesota Tax-Exempt Fund
Colonial New York Tax-Exempt Fund
Colonial North Carolina Tax-Exempt Fund
Colonial Ohio Tax-Exempt Fund
Colonial Short-Term Tax-Exempt Fund
Money Market Funds:
Colonial Government Money Market Fund 0.20
Colonial Municipal Money Market Fund
Others:
Colonial High Yield Securities Fund 0.25
Colonial Strategic Income Fund 0.20
Colonial Utilities Fund 0.20
Colonial Strategic Balanced Fund 0.25
Colonial Global Utilities Fund 0.20
Colonial Newport Tiger Fund 0.25
Agreed:
EACH TRUST ON BEHALF OF EACH FUND DESIGNATED
IN APPENDIX I FROM TIME TO TIME
By: ARTHUR O. STERN
---------------------------
Arthur O. Stern, Secretary
COLONIAL INVESTORS SERVICE CENTER, INC.
By: MARY MCKENZIE
------------------------------------
Mary McKenzie, Senior Vice President
COLONIAL MANAGEMENT ASSOCIATES, INC.
By: ARTHUR O. STERN
-----------------------------------------
Arthur O. Stern, Executive Vice President
EXHIBIT 1
METHODOLOGY OF ALLOCATING CSC
REIMBURSABLE OUT-OF-POCKET EXPENSES
1. CSC Reimbursable Out-of-Pocket Expenses are allocated
to the Colonial Funds as follows:
A. Identifiable Based on actual services
performed and invoiced to
a Fund.
B. Unidentifiable Allocation will be based
on three evenly weighted
factors.
- number of shareholder accounts
- number of transactions
- average assets
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. 42
to the registration statement on Form N-1A (the
"Registration Statement") of our reports dated January 12,
1996, relating to the financial statements and financial
highlights appearing in the November 30, 1995 Annual Reports
to Shareholders of Colonial High Yield Municipal 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
in to the Registration Statement. We also consent to the
references to us under the Heading "The Fund's Financial
History" in the Prospectuses and "Independent Accountants"
in the Statements of Additional Information.
PRICE WATERHOUSE LLP
- --------------------
Price Waterhouse LLP
Boston, Massachusetts
March 22, 1996
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. 42
to the registration statement on Form N-1A (the
"Registration Statement") of our reports dated January 12,
1996, relating to the financial statements and financial
highlights appearing in the November 30, 1995 Annual Report
to Shareholders of Colonial Intermediate Tax-Exempt Fund
and Colonial Short-Term Tax-Exempt Fund, each a series of
Colonial Trust IV, which are also incorporated by reference
in to the Registration Statement. We also consent to the
references to us under the Heading "The Funds' Financial
History" in the Prospectus and "Independent Accountants"
in the Statements of Additional Information.
PRICE WATERHOUSE LLP
- --------------------
Price Waterhouse LLP
Boston, Massachusetts
March 22, 1996
<TABLE>
<CAPTION>
PERFORMANCE CALCULATION
COLONIAL TAX-EXEMPT FUND - CLASS A
Fiscal Year End: 11/30/95
1 YEAR ENDING 11/30/95 5 YEARS ENDING 11/30/95 10 YEARS ENDING 11/30/95
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 $12.18 $12.18 $12.89 $12.89 $12.76 $12.76
Initial Shares 78.202 82.102 73.894 77.580 74.647 78.370
Shares From Dist. 4.652 4.885 27.837 29.225 78.018 81.911
End of Period NAV $13.72 $13.72 $13.72 $13.72 $13.72 $13.72
Total Return 13.68% 19.35% 39.58% 46.54% 109.46% 119.91%
Average Annual
Total Return 13.68% 19.35% 6.90% 7.94% 7.67% 8.20%
</TABLE>
PERFORMANCE CALCULATION
COLONIAL TAX-EXEMPT FUND - CLASS B
Fiscal Year End: 11/30/95
Inception Date: 5/5/92
SINCE INCEPTION
1 YEAR ENDING 11/30/95 5/5/92 TO 11/30/95
Standard Non-Standard Standard Non-Standard
------------ ------------ ------------ ------------
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 $12.18 $12.18 $13.23 $13.23
Initial Shares 82.102 82.102 75.586 75.586
Shares From Dist. 4.244 4.244 15.913 15.913
End of Period NAV $13.72 $13.72 $13.72 $13.72
CDSC 5.00% 3.00%
Total Return 13.47% 18.47% 22.54% 25.54%
Average Annual
Total Return 13.47% 18.47% 5.85% 6.57%
COLONIAL TAX-EXEMPT FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 11/30/95
a-b 6
FUND YIELD = 2 ----- +1 -1
c-d
a = dividends and interest earned during
the month ................................ $18,517,584
b = expenses (exclusive of distribution fee)
accrued during the month.................. 3,045,803
c = average dividend shares outstanding
during the month ......................... 262,069,895
d = class A maximum offering price per share
on the last day of the month ............. $14.40
CLASS A YIELD ........................... 4.97%
=========
Class A yield/(1-Load)
ie: 4.97%/(1-.0475)=yield on NAV= 5.22%
Less: Distribution fee (.75)
-----
CLASS B YIELD ........................... 4.47%
=========
TAX-EQUIVALENT YIELD: CLASS A........... 8.23%
=========
CLASS B........... 7.40%
=========
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, CLASS A YEAR END NOV-30-1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
TAX-EXEMPT FUND, CLASS A YEAR END NOV-30-1995.
</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-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 3274564
<INVESTMENTS-AT-VALUE> 3516674
<RECEIVABLES> 106800
<ASSETS-OTHER> 88
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3623562
<PAYABLE-FOR-SECURITIES> 19874
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23671
<TOTAL-LIABILITIES> 43545
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2950832
<SHARES-COMMON-STOCK> 226745
<SHARES-COMMON-PRIOR> 234576
<ACCUMULATED-NII-CURRENT> 2504
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 81578
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 236090
<NET-ASSETS> 3580017
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 239927
<OTHER-INCOME> 0
<EXPENSES-NET> 38822
<NET-INVESTMENT-INCOME> 301105
<REALIZED-GAINS-CURRENT> (17179)
<APPREC-INCREASE-CURRENT> 423407
<NET-CHANGE-FROM-OPS> 607333
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 177765
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 47093
<NUMBER-OF-SHARES-REDEEMED> 62434
<SHARES-REINVESTED> 2510
<NET-CHANGE-IN-ASSETS> 281829
<ACCUMULATED-NII-PRIOR> 1059
<ACCUMULATED-GAINS-PRIOR> (62796)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19170
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 38822
<AVERAGE-NET-ASSETS> 63054564
<PER-SHARE-NAV-BEGIN> 12.180
<PER-SHARE-NII> 0.771
<PER-SHARE-GAIN-APPREC> 1.535
<PER-SHARE-DIVIDEND> 0.776
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.720
<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, CLASS B YEAR END NOV-30-1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
TAX-EXEMPT FUND, CLASS B YEAR END NOV-30-1995.
</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-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 3274564
<INVESTMENTS-AT-VALUE> 3516674
<RECEIVABLES> 106800
<ASSETS-OTHER> 88
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3623562
<PAYABLE-FOR-SECURITIES> 19874
<SENIOR-LONG-TERM-DEBT> 3516674
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 23671
<SENIOR-EQUITY> 43545
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 472170
<SHARES-COMMON-PRIOR> 34196
<ACCUMULATED-NII-CURRENT> 36100
<OVERDISTRIBUTION-NII> 2504
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 81578
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 236090
<DIVIDEND-INCOME> 3580017
<INTEREST-INCOME> 0
<OTHER-INCOME> 239927
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 38822
<REALIZED-GAINS-CURRENT> 201108
<APPREC-INCREASE-CURRENT> (17179)
<NET-CHANGE-FROM-OPS> 423407
<EQUALIZATION> 607333
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 23492
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 2673
<SHARES-REINVESTED> 5573
<NET-CHANGE-IN-ASSETS> 996
<ACCUMULATED-NII-PRIOR> 281829
<ACCUMULATED-GAINS-PRIOR> 1059
<OVERDISTRIB-NII-PRIOR> 62796
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 19170
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 38822
<PER-SHARE-NAV-BEGIN> 462763
<PER-SHARE-NII> 12.180
<PER-SHARE-GAIN-APPREC> 0.673
<PER-SHARE-DIVIDEND> 1.535
<PER-SHARE-DISTRIBUTIONS> 0.668
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.720
<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
STATEMENTS OF COLONIAL TAX-EXEMPT INSURED FUND, CLASS A YEAR END NOV-30-1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF
COLONIAL TAX-EXEMPT INSURED FUND, CLASS B YEAR END NOV-30-1995
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
<SERIES>
<NUMBER> 2
<NAME> COLONIAL TAX-EXEMPT INSURED FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 267288
<INVESTMENTS-AT-VALUE> 291891
<RECEIVABLES> 5381
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 297272
<PAYABLE-FOR-SECURITIES> 4246
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2116
<TOTAL-LIABILITIES> 6362
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 222359
<SHARES-COMMON-STOCK> 28750
<SHARES-COMMON-PRIOR> 26701
<ACCUMULATED-NII-CURRENT> 185
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5548)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24317
<NET-ASSETS> 290910
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 17529
<OTHER-INCOME> 0
<EXPENSES-NET> 3311
<NET-INVESTMENT-INCOME> 14218
<REALIZED-GAINS-CURRENT> 819
<APPREC-INCREASE-CURRENT> 30648
<NET-CHANGE-FROM-OPS> 45685
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12225
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7915
<NUMBER-OF-SHARES-REDEEMED> 6739
<SHARES-REINVESTED> 873
<NET-CHANGE-IN-ASSETS> 46200
<ACCUMULATED-NII-PRIOR> 397
<ACCUMULATED-GAINS-PRIOR> (7325)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1544
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3311
<AVERAGE-NET-ASSETS> 231948
<PER-SHARE-NAV-BEGIN> 7.450
<PER-SHARE-NII> 0.416
<PER-SHARE-GAIN-APPREC> 0.937
<PER-SHARE-DIVIDEND> 0.423
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.380
<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, CLASS B YEAR END NOV-30-1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENT OF
COLONIAL TAX-EXEMPT INSURED FUND, CLASS B YEAR END NOV-30-1995.
</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-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 267288
<INVESTMENTS-AT-VALUE> 291891
<RECEIVABLES> 5381
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 297272
<PAYABLE-FOR-SECURITIES> 4246
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2116
<TOTAL-LIABILITIES> 6362
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 49597
<SHARES-COMMON-STOCK> 5969
<SHARES-COMMON-PRIOR> 6149
<ACCUMULATED-NII-CURRENT> 185
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5548
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24317
<NET-ASSETS> 290910
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 17529
<OTHER-INCOME> 0
<EXPENSES-NET> 3311
<NET-INVESTMENT-INCOME> 14218
<REALIZED-GAINS-CURRENT> 819
<APPREC-INCREASE-CURRENT> 30648
<NET-CHANGE-FROM-OPS> 45685
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2207
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 639
<NUMBER-OF-SHARES-REDEEMED> 977
<SHARES-REINVESTED> 158
<NET-CHANGE-IN-ASSETS> 46200
<ACCUMULATED-NII-PRIOR> 397
<ACCUMULATED-GAINS-PRIOR> (7325)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1544
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3311
<AVERAGE-NET-ASSETS> 48560
<PER-SHARE-NAV-BEGIN> 7.450
<PER-SHARE-NII> 0.357
<PER-SHARE-GAIN-APPREC> 0.937
<PER-SHARE-DIVIDEND> 0.364
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.380
<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 SCHUDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS
OF COLONIAL UTILITIES FUND, CLASS A YEAR END NOV-30-1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL UTILITIES FUND,
CLASS A YEAR END NOV-30-1995
</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-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1132092
<INVESTMENTS-AT-VALUE> 1219947
<RECEIVABLES> 9212
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1229159
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7857
<TOTAL-LIABILITIES> 7857
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 420967
<SHARES-COMMON-STOCK> 27851
<SHARES-COMMON-PRIOR> 31835
<ACCUMULATED-NII-CURRENT> 796
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (102080)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 87855
<NET-ASSETS> 1221302
<DIVIDEND-INCOME> 71455
<INTEREST-INCOME> 859
<OTHER-INCOME> 0
<EXPENSES-NET> 19932
<NET-INVESTMENT-INCOME> 52382
<REALIZED-GAINS-CURRENT> (21504)
<APPREC-INCREASE-CURRENT> 260221
<NET-CHANGE-FROM-OPS> 291099
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 19543
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3230
<NUMBER-OF-SHARES-REDEEMED> 8370
<SHARES-REINVESTED> 1156
<NET-CHANGE-IN-ASSETS> 104710
<ACCUMULATED-NII-PRIOR> 1754
<ACCUMULATED-GAINS-PRIOR> (80576)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7486
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19932
<AVERAGE-NET-ASSETS> 385246
<PER-SHARE-NAV-BEGIN> 111.720
<PER-SHARE-NII> 0.640
<PER-SHARE-GAIN-APPREC> 2.659
<PER-SHARE-DIVIDEND> 0.649
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.37
<EXPENSE-RATIO> 1.21
<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 UTILITITES FUND, CLASS B YEAR END NOV-30-1995 AND IS
QUALIFIED IN ITS ENTREITY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
UTILITIES FUND, CLASS B YEAR END NOV-30-1995
</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-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1132092
<INVESTMENTS-AT-VALUE> 1219947
<RECEIVABLES> 9212
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1229159
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7857
<TOTAL-LIABILITIES> 7857
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 813764
<SHARES-COMMON-STOCK> 57110
<SHARES-COMMON-PRIOR> 63446
<ACCUMULATED-NII-CURRENT> 796
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (102080)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 87855
<NET-ASSETS> 1221302
<DIVIDEND-INCOME> 741455
<INTEREST-INCOME> 859
<OTHER-INCOME> 0
<EXPENSES-NET> 19932
<NET-INVESTMENT-INCOME> 52382
<REALIZED-GAINS-CURRENT> (21504)
<APPREC-INCREASE-CURRENT> 260221
<NET-CHANGE-FROM-OPS> 291099
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 33675
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4945
<NUMBER-OF-SHARES-REDEEMED> 13428
<SHARES-REINVESTED> 2147
<NET-CHANGE-IN-ASSETS> 104740
<ACCUMULATED-NII-PRIOR> 1754
<ACCUMULATED-GAINS-PRIOR> (80576)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7486
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19932
<AVERAGE-NET-ASSETS> 779142
<PER-SHARE-NAV-BEGIN> 11.720
<PER-SHARE-NII> 0.544
<PER-SHARE-GAIN-APPREC> 2.659
<PER-SHARE-DIVIDEND> 0.553
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.370
<EXPENSE-RATIO> 1.96
<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, CLASS A YEAR END NOV-30-1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF
COLONIAL HIGH YIELD MUNICIPAL FUND, CLASS A YEAR END NOV-30-1995
</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-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 146556
<INVESTMENTS-AT-VALUE> 152914
<RECEIVABLES> 4423
<ASSETS-OTHER> 15
<OTHER-ITEMS-ASSETS> 6358
<TOTAL-ASSETS> 157352
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 1140
<OTHER-ITEMS-LIABILITIES> 322
<TOTAL-LIABILITIES> 1462
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 153609
<SHARES-COMMON-STOCK> 13479
<SHARES-COMMON-PRIOR> 12174
<ACCUMULATED-NII-CURRENT> 337
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4414)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6358
<NET-ASSETS> 155890
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10820
<OTHER-INCOME> 0
<EXPENSES-NET> 2562
<NET-INVESTMENT-INCOME> 8258
<REALIZED-GAINS-CURRENT> (2355)
<APPREC-INCREASE-CURRENT> 14952
<NET-CHANGE-FROM-OPS> 20855
<EQUALIZATION> 00855
<DISTRIBUTIONS-OF-INCOME> (8390)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4338
<NUMBER-OF-SHARES-REDEEMED> (2319)
<SHARES-REINVESTED> 399
<NET-CHANGE-IN-ASSETS> 36314
<ACCUMULATED-NII-PRIOR> 432
<ACCUMULATED-GAINS-PRIOR> (2042)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 759
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2562
<AVERAGE-NET-ASSETS> 11538
<PER-SHARE-NAV-BEGIN> 9.33
<PER-SHARE-NII> 0.656
<PER-SHARE-GAIN-APPREC> 0.912
<PER-SHARE-DIVIDEND> 0.668
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.23
<EXPENSE-RATIO> 1.17
<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 HIGH YIELD MUNICIPAL FUND, CLASS B YEAR END NOV-30-1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF
COLONIAL HIGH YIELD MUNICIPAL FUND, CLASS B YEAR END NOV-30-1995
</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-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 146556
<INVESTMENTS-AT-VALUE> 152914
<RECEIVABLES> 4423
<ASSETS-OTHER> 15
<OTHER-ITEMS-ASSETS> 6358
<TOTAL-ASSETS> 157352
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 1140
<OTHER-ITEMS-LIABILITIES> 322
<TOTAL-LIABILITIES> 1462
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 153609
<SHARES-COMMON-STOCK> 13479
<SHARES-COMMON-PRIOR> 12174
<ACCUMULATED-NII-CURRENT> 337
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4414)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6358
<NET-ASSETS> 155890
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10820
<OTHER-INCOME> 0
<EXPENSES-NET> 2562
<NET-INVESTMENT-INCOME> 8258
<REALIZED-GAINS-CURRENT> (2355)
<APPREC-INCREASE-CURRENT> 14952
<NET-CHANGE-FROM-OPS> 20855
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8390)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4338
<NUMBER-OF-SHARES-REDEEMED> (2319)
<SHARES-REINVESTED> 399
<NET-CHANGE-IN-ASSETS> 36314
<ACCUMULATED-NII-PRIOR> 432
<ACCUMULATED-GAINS-PRIOR> (2042)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 759
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2562
<AVERAGE-NET-ASSETS> 126441
<PER-SHARE-NAV-BEGIN> 9.33
<PER-SHARE-NII> 0.583
<PER-SHARE-GAIN-APPREC> 0.912
<PER-SHARE-DIVIDEND> 0.595
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.23
<EXPENSE-RATIO> 1.92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE>
<CAPTION>
PERFORMANCE CALCULATION
COLONIAL TAX EXEMPT INSURED FUND - CLASS A
Fiscal Year End: 11/30/95
1 YEAR ENDING 11/30/95 5 YEARS ENDING 11/30/95 10 YEARS ENDING 11/30/95
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 $7.45 $7.45 $7.66 $7.66 $7.15 $7.15
Initial Shares 127.852 134.228 124.347 130.548 133.217 139.860
Shares From Dist. 6.884 7.234 40.874 42.907 117.840 123.714
End of Period NAV $8.38 $8.38 $8.38 $8.38 $8.38 $8.38
Total Return 12.91% 18.55% 38.46% 45.36% 110.39% 120.88%
Average Annual
Total Return 12.91% 18.55% 6.72% 7.77% 7.72% 8.25%
</TABLE>
PERFORMANCE CALCULATION
COLONIAL TAX-EXEMPT INSURED FUND - CLASS B
Fiscal Year End: 11/30/95
Inception Date: 5/5/92
SINCE INCEPTION
1 YEAR ENDING 11/30/95 5/5/92 TO 11/30/95
Standard Non-Standard Standard Non-Standard
------------ ------------------- ------------ -------------
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 $7.45 $7.45 $7.91 $7.91
Initial Shares 134.228 134.228 126.422 126.422
Shares From Dist. 6.196 6.196 23.143 23.143
End of Period NAV $8.38 $8.38 $8.38 $8.38
CDSC 5.00% 3.00%
Total Return 12.68% 17.68% 22.34% 25.34%
Average Annual
Total Return 12.68% 17.68% 5.80% 6.52%
COLONIAL TAX-EXEMPT INSURED FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 11/30/95
a-b 6
FUND YIELD = 2 ----- +1 -1
c-d
a = dividends and interest earned during
the month ................................ $1,320,194
b = expenses (exclusive of distribution fee)
accrued during the month................. 234,843
c = average dividend shares outstanding
during the month ......................... 34,930,137
d = class A maximum offering price per share
on the last day of the month ............. $8.80
CLASS A YIELD .......................... 4.28%
=========
Class A yield/(1-Load)
ie: 4.28%/(1-.0475)=yield on NAV= 4.49%
Less: Distribution fee (.75)
-----
CLASS B YIELD .......................... 3.74%
=========
TAX-EQUIVALENT YIELD: CLASS A........... 7.09%
=========
CLASS B........... 6.19%
=========
<TABLE>
<CAPTION>
PERFORMANCE CALCULATION
COLONIAL UTILITIES FUND - CLASS A
Fiscal Year End: 11/30/95
1 YEAR ENDING 11/30/95 5 YEARS ENDING 11/30/95 10 YEARS ENDING 11/30/95
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 $11.72 $11.72 $10.09 $10.09 $12.36 $12.36
Initial Shares 81.271 85.324 94.377 99.083 77.048 80.890
Shares From Dist. 4.168 4.374 32.830 34.465 87.495 91.858
End of Period NAV $14.37 $14.37 $14.37 $14.37 $14.37 $14.37
Total Return 22.78% 28.90% 82.80% 91.91% 136.45% 148.24%
Average Annual
Total Return 22.78% 28.90% 12.82% 13.93% 8.99% 9.52%
</TABLE>
PERFORMANCE CALCULATION
COLONIAL UTILITIES FUND - CLASS B
Fiscal Year End: 11/30/95
Inception Date: 5/5/92
SINCE INCEPTION
1 YEAR ENDING 11/30/95 5/5/92 TO 11/30/95
Standard Non-Standard Standard Non-Standard
------------ --------------- ------------ -------------
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 $11.72 $11.72 $12.31 $12.31
Initial Shares 85.324 85.324 81.235 81.235
Shares From Dist. 3.720 3.720 13.815 13.815
End of Period NAV $14.37 $14.37 $14.37 $14.37
CDSC 5.00% 3.00%
Total Return 22.96% 27.96% 33.59% 36.59%
Average Annual
Total Return 22.96% 27.96% 8.44% 9.11%
COLONIAL UTILITIES FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 11/30/95
a-b 6
FUND YIELD = 2 ----- +1 -1
c-d
a = dividends and interest earned during
the month ................................ $ 5,327,821
b = expenses (exclusive of distribution fee)
accrued during the month.................. 1,249,259
c = average dividend shares outstanding
during the month ......................... 85,462,150
d = class A maximum offering price per share
on the last day of the month ............. $15.09
CLASS A YIELD ........................... 3.82%
======
Class A yield/(1-Load)
ie: 3.82%/(1-.0475)=yield on NAV= 4.01%
Less: Distribution fee (.75)
-----
CLASS B YIELD ........................... 3.26%
======
PERFORMANCE CALCULATION
COLONIAL HIGH YIELD MUNICIPAL FUND - CLASS A
Fiscal Year End: 11/30/95
Inception Date: 9/1/94
1 YEAR ENDING 11/30/95 INCEPTION TO DATE
9/1/94 TO 11/30/95
Standard Non-Standard Standard Non-Standard
------------ ------------------ ----------- ---------------
Initial Inv. $1,000.00 $1,000.00 $1,000.00 $1,000.00
Max. Load 4.75% 4.75%
Amt. Invested $952.50 $1,000.00 $952.50 $1,000.00
Initial NAV $9.33 $9.33 $9.80 $9.80
Initial Shares 102.090 107.181 97.194 102.041
Shares From Dist. 7.104 7.458 8.561 8.992
End of Period NAV $10.23 $10.23 $10.23 $10.23
Total Return 11.71% 17.28% 8.19% 13.59%
Average Annual
Total Return 11.71% 17.28% 6.50% 10.74%
PERFORMANCE CALCULATION
COLONIAL HIGH YIELD MUNICIPAL FUND - CLASS B
Fiscal Year End: 11/30/95
Inception Date: 6/8/92
1 YEAR ENDING 11/30/95 6/8/92 TO 11/30/95
Standard Non-Standard Standard Non-Standard
------------ --------------- ------------ -------------
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 $9.33 $9.33 $10.00 $10.00
Initial Shares 107.181 107.181 100.000 100.000
Shares From Dist. 6.617 6.617 23.471 23.471
End of Period NAV $10.23 $10.23 $10.23 $10.23
CDSC 5.00% 3.00%
Total Return 11.42% 16.42% 23.31% 26.31%
Average Annual
Total Return 11.42% 16.42% 6.20% 6.94%
COLONIAL HIGH YIELD MUNICIPAL FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 11/30/95
a-b 6
FUND YIELD = 2 ----- +1 -1
c-d
a = dividends and interest earned during
the month ................................ $911,043
b = expenses (exclusive of distribution fee)
accrued during the month................. 247,545
c = average dividend shares outstanding
during the month ......................... 15,124,951
d = class A maximum offering price per share
on the last day of the month ............. $10.74
CLASS A YIELD .......................... 4.95%
======
Class A yield/(1-Load)
ie: 4.95%/(1-.0475)=yield on NAV= 5.20%
Less: Distribution fee (.75)
-----
CLASS B YIELD .......................... 4.45%
======
TAX-EQUIVALENT YIELD: CLASS A........... 8.20%
======
CLASS B........... 7.37%
======
PERFORMANCE CALCULATION
COLONIAL INTERMEDIATE TAX-EXEMPT FUND - CLASS A
Fiscal Year End: 11/30/95
Inception Date: 2/1/93
SINCE INCEPTION
1 YEAR ENDED 11/30/95 2/1/93 TO 11/30/95
Standard Non-Standard Standard Non-Standard
------------ ------------ ----------- -----------
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 $7.21 $7.21 $7.50 $7.50
Initial Shares 134.189 138.696 129.000 133.333
Shares From Dis 6.999 7.234 19.068 19.705
End of Period NAV $7.85 $7.85 $7.85 $7.85
Total Return 10.83% 14.56% 16.23% 20.14%
Average Annual
Total Return 10.83% 14.56% 5.46% 6.70%
PERFORMANCE CALCULATION
COLONIAL INTERMEDIATE TAX-EXEMPT FUND - CLASS B
Fiscal Year End: 11/30/95
Inception Date: 2/1/93
SINCE INCEPTION
1 YEAR ENDED 11/30/95 2/1/93 TO 11/30/95
Standard Non-Standard Standard Non-Standard
------------ ---------------- ---------- ------------
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 $7.21 $7.21 $7.50 $7.50
Initial Shares 138.696 138.696 133.333 133.333
Shares From Dist. 6.301 6.301 16.941 16.941
End of Period NAV $7.85 $7.85 $7.85 $7.85
CDSC 4.00% 2.00%
Total Return 9.82% 13.82% 15.97% 17.97%
Average Annual
Total Return 9.82% 13.82% 5.37% 6.01%
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 11/30/95
a- 6
FUND YIELD = 2 ----- +1 -1
c-d
ADJUSTED
YIELD YIELD*
a = dividends and interest earned during ----------- --------
the month ............................... $115,100 $115,100
b = expenses (exclusive of distribution fee)
accrued during the month................. 14,013 29,580
c = average dividend shares outstanding
during the month ........................ 3,608,977 3,608,977
d = class A maximum offering price per share
on the last day of the month ............ $8.11 $8.11
CLASS A YIELD ......................... 4.18% 3.53%
======== ========
Class A yield/(1-Load)
ie: 4.18%/(1-.0325)=yield on NAV= 4.32%
Less: Distribution fee (.65)
------
CLASS B YIELD .......................... 3.67% 3.00%
======== ========
TAX-EQUIVALENT YIELD: CLASS A............ 6.92%
========
CLASS B............ 6.08%
========
* Without voluntary expense limit.
PERFORMANCE CALCULATION
COLONIAL SHORT TERM TAX-EXEMPT FUND - CLASS A
Fiscal Year End: 11/30/95
Inception Date: 2/1/93
SINCE INCEPTION
1 YEAR ENDED 11/30/95 2/1/93 TO 11/30/95
Standard Non-Standard Standard Non-Standard
----------- ---------------- ------------ ------------
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 $7.42 $7.42 $7.50 $7.50
Initial Shares 133.423 134.771 132.000 133.333
Shares From Dist. 5.242 5.294 12.653 12.782
End of Period NAV $7.53 $7.53 $7.53 $7.53
Total Return 4.41% 5.47% 8.92% 10.02%
Average Annual
Total Return 4.41% 5.47% 3.07% 3.43%
COLONIAL SHORT TERM TAX-EXEMPT FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 11/30/95
a-b 6
FUND YIELD = 2 ----- +1 -1
c-d
ADJUSTED
YIELD YIELD*
----------- ---------
a = dividends and interest earned during
the month ............................... $39,745 $39,745
b = expenses accrued during the month ....... 4,936 13,545
c = average dividend shares outstanding
during the month ........................ 1,574,598 1,574,598
d = maximum offering price per share
on the last day of the month ............ $7.61 $7.61
FUND YIELD ........................ 3.51% 2.64%
======== ========
TAX-EQUIVALENT YIELD............... 5.81%
========
* Without voluntary expense limit
POWER OF ATTORNEY FOR SIGNATURE
The undersigned constitutes Truman S. Casner, Harold W. Cogger, Nancy
L. Conlin, Ellen Harrington, Peter L. Lydecker, Michael H. Koonce,
Peter MacDougall, Janet E. Shore, Richard A. Silver and Arthur O.
Stern individually, as my true and lawful attorney, with full power
to each of them to sign for me and in my name, any and all
registration statements and any and all amendments to the
registration statements filed under the Securities Act of 1933 or the
Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration
requirements in my capacity as a trustee or officer of certain mutual
funds, for which Colonial Investment Services, Inc. serves as
principal underwriter (Colonial Mutual Funds). This Power of
Attorney authorizes the above individuals to sign my name and will
remain in full force and effect until specifically rescinded by me.
I specifically permit this Power of Attorney to be filed, as an
exhibit to a registration statement or amendment to registration
statement, of any or all Colonial Mutual Funds, with the Securities
and Exchange Commission and I request that this Power of Attorney
then constitute authority to sign additional amendments and
registration statements by virtue of its incorporation by reference
into the registration statements and amendments for Colonial Mutual
Funds.
In witness, I have signed this Power of Attorney on this 16th day of
February, 1996.
ROBERT J. BIRNBAUM
- ------------------
Robert J. Birnbaum
POWER OF ATTORNEY FOR SIGNATURE
The undersigned constitutes Truman S. Casner, Harold W. Cogger, Nancy
L. Conlin, Ellen Harrington, Peter L. Lydecker, Michael H. Koonce,
Peter MacDougall, Janet E. Shore, Richard A. Silver and Arthur O.
Stern individually, as my true and lawful attorney, with full power
to each of them to sign for me and in my name, any and all
registration statements and any and all amendments to the
registration statements filed under the Securities Act of 1933 or the
Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration
requirements in my capacity as a trustee or officer of certain mutual
funds, for which Colonial Investment Services, Inc. serves as
principal underwriter (Colonial Mutual Funds). This Power of
Attorney authorizes the above individuals to sign my name and will
remain in full force and effect until specifically rescinded by me.
I specifically permit this Power of Attorney to be filed, as an
exhibit to a registration statement or amendment to registration
statement, of any or all Colonial Mutual Funds, with the Securities
and Exchange Commission and I request that this Power of Attorney
then constitute authority to sign additional amendments and
registration statements by virtue of its incorporation by reference
into the registration statements and amendments for Colonial Mutual
Funds.
In witness, I have signed this Power of Attorney on this 16th day of
February, 1996.
TOM BLEASDALE
- --------------
Tom Bleasdale
POWER OF ATTORNEY FOR SIGNATURE
The undersigned constitutes Truman S. Casner, Harold W. Cogger, Nancy
L. Conlin, Ellen Harrington, Peter L. Lydecker, Michael H. Koonce,
Peter MacDougall, Janet E. Shore, Richard A. Silver and Arthur O.
Stern individually, as my true and lawful attorney, with full power
to each of them to sign for me and in my name, any and all
registration statements and any and all amendments to the
registration statements filed under the Securities Act of 1933 or the
Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration
requirements in my capacity as a trustee or officer of certain mutual
funds, for which Colonial Investment Services, Inc. serves as
principal underwriter (Colonial Mutual Funds). This Power of
Attorney authorizes the above individuals to sign my name and will
remain in full force and effect until specifically rescinded by me.
I specifically permit this Power of Attorney to be filed, as an
exhibit to a registration statement or amendment to registration
statement, of any or all Colonial Mutual Funds, with the Securities
and Exchange Commission and I request that this Power of Attorney
then constitute authority to sign additional amendments and
registration statements by virtue of its incorporation by reference
into the registration statements and amendments for Colonial Mutual
Funds.
In witness, I have signed this Power of Attorney on this 16th day of
February, 1996.
JAMES E. GRINNELL
- -----------------
James E. Grinnell
POWER OF ATTORNEY FOR SIGNATURE
The undersigned constitutes Truman S. Casner, Harold W. Cogger, Nancy
L. Conlin, Ellen Harrington, Peter L. Lydecker, Michael H. Koonce,
Peter MacDougall, Janet E. Shore, Richard A. Silver and Arthur O.
Stern individually, as my true and lawful attorney, with full power
to each of them to sign for me and in my name, any and all
registration statements and any and all amendments to the
registration statements filed under the Securities Act of 1933 or the
Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration
requirements in my capacity as a trustee or officer of certain mutual
funds, for which Colonial Investment Services, Inc. serves as
principal underwriter (Colonial Mutual Funds). This Power of
Attorney authorizes the above individuals to sign my name and will
remain in full force and effect until specifically rescinded by me.
I specifically permit this Power of Attorney to be filed, as an
exhibit to a registration statement or amendment to registration
statement, of any or all Colonial Mutual Funds, with the Securities
and Exchange Commission and I request that this Power of Attorney
then constitute authority to sign additional amendments and
registration statements by virtue of its incorporation by reference
into the registration statements and amendments for Colonial Mutual
Funds.
In witness, I have signed this Power of Attorney on this 16th day of
February, 1996.
WILLIAM D. IRELAND, JR.
- -----------------------
William D. Ireland, Jr.
POWER OF ATTORNEY FOR SIGNATURE
The undersigned constitutes Truman S. Casner, Harold W. Cogger, Nancy
L. Conlin, Ellen Harrington, Peter L. Lydecker, Michael H. Koonce,
Peter MacDougall, Janet E. Shore, Richard A. Silver and Arthur O.
Stern individually, as my true and lawful attorney, with full power
to each of them to sign for me and in my name, any and all
registration statements and any and all amendments to the
registration statements filed under the Securities Act of 1933 or the
Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration
requirements in my capacity as a trustee or officer of certain mutual
funds, for which Colonial Investment Services, Inc. serves as
principal underwriter (Colonial Mutual Funds). This Power of
Attorney authorizes the above individuals to sign my name and will
remain in full force and effect until specifically rescinded by me.
I specifically permit this Power of Attorney to be filed, as an
exhibit to a registration statement or amendment to registration
statement, of any or all Colonial Mutual Funds, with the Securities
and Exchange Commission and I request that this Power of Attorney
then constitute authority to sign additional amendments and
registration statements by virtue of its incorporation by reference
into the registration statements and amendments for Colonial Mutual
Funds.
In witness, I have signed this Power of Attorney on this 16th day of
February, 1996.
RICHARD W. LOWRY
- -----------------
Richard W. Lowry
POWER OF ATTORNEY FOR SIGNATURE
The undersigned constitutes Truman S. Casner, Harold W. Cogger, Nancy
L. Conlin, Ellen Harrington, Peter L. Lydecker, Michael H. Koonce,
Peter MacDougall, Janet E. Shore, Richard A. Silver and Arthur O.
Stern individually, as my true and lawful attorney, with full power
to each of them to sign for me and in my name, any and all
registration statements and any and all amendments to the
registration statements filed under the Securities Act of 1933 or the
Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration
requirements in my capacity as a trustee or officer of certain mutual
funds, for which Colonial Investment Services, Inc. serves as
principal underwriter (Colonial Mutual Funds). This Power of
Attorney authorizes the above individuals to sign my name and will
remain in full force and effect until specifically rescinded by me.
I specifically permit this Power of Attorney to be filed, as an
exhibit to a registration statement or amendment to registration
statement, of any or all Colonial Mutual Funds, with the Securities
and Exchange Commission and I request that this Power of Attorney
then constitute authority to sign additional amendments and
registration statements by virtue of its incorporation by reference
into the registration statements and amendments for Colonial Mutual
Funds.
In witness, I have signed this Power of Attorney on this 16th day of
February, 1996.
WILLIAM E. MAYER
- ----------------
William E. Mayer
POWER OF ATTORNEY FOR SIGNATURE
The undersigned constitutes Truman S. Casner, Harold W. Cogger, Nancy
L. Conlin, Ellen Harrington, Peter L. Lydecker, Michael H. Koonce,
Peter MacDougall, Janet E. Shore, Richard A. Silver and Arthur O.
Stern individually, as my true and lawful attorney, with full power
to each of them to sign for me and in my name, any and all
registration statements and any and all amendments to the
registration statements filed under the Securities Act of 1933 or the
Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration
requirements in my capacity as a trustee or officer of certain mutual
funds, for which Colonial Investment Services, Inc. serves as
principal underwriter (Colonial Mutual Funds). This Power of
Attorney authorizes the above individuals to sign my name and will
remain in full force and effect until specifically rescinded by me.
I specifically permit this Power of Attorney to be filed, as an
exhibit to a registration statement or amendment to registration
statement, of any or all Colonial Mutual Funds, with the Securities
and Exchange Commission and I request that this Power of Attorney
then constitute authority to sign additional amendments and
registration statements by virtue of its incorporation by reference
into the registration statements and amendments for Colonial Mutual
Funds.
In witness, I have signed this Power of Attorney on this 16th day of
February, 1996.
JAMES L. MOODY, JR.
- -------------------
James L. Moody, Jr.
POWER OF ATTORNEY FOR SIGNATURE
The undersigned constitutes Truman S. Casner, Harold W. Cogger, Nancy
L. Conlin, Ellen Harrington, Peter L. Lydecker, Michael H. Koonce,
Peter MacDougall, Janet E. Shore, Richard A. Silver and Arthur O.
Stern individually, as my true and lawful attorney, with full power
to each of them to sign for me and in my name, any and all
registration statements and any and all amendments to the
registration statements filed under the Securities Act of 1933 or the
Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration
requirements in my capacity as a trustee or officer of certain mutual
funds, for which Colonial Investment Services, Inc. serves as
principal underwriter (Colonial Mutual Funds). This Power of
Attorney authorizes the above individuals to sign my name and will
remain in full force and effect until specifically rescinded by me.
I specifically permit this Power of Attorney to be filed, as an
exhibit to a registration statement or amendment to registration
statement, of any or all Colonial Mutual Funds, with the Securities
and Exchange Commission and I request that this Power of Attorney
then constitute authority to sign additional amendments and
registration statements by virtue of its incorporation by reference
into the registration statements and amendments for Colonial Mutual
Funds.
In witness, I have signed this Power of Attorney on this 16th day of
February, 1996.
JOHN J. NEUHAUSER
- -----------------
John J. Neuhauser
POWER OF ATTORNEY FOR SIGNATURE
The undersigned constitutes Truman S. Casner, Harold W. Cogger, Nancy
L. Conlin, Ellen Harrington, Peter L. Lydecker, Michael H. Koonce,
Peter MacDougall, Janet E. Shore, Richard A. Silver and Arthur O.
Stern individually, as my true and lawful attorney, with full power
to each of them to sign for me and in my name, any and all
registration statements and any and all amendments to the
registration statements filed under the Securities Act of 1933 or the
Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration
requirements in my capacity as a trustee or officer of certain mutual
funds, for which Colonial Investment Services, Inc. serves as
principal underwriter (Colonial Mutual Funds). This Power of
Attorney authorizes the above individuals to sign my name and will
remain in full force and effect until specifically rescinded by me.
I specifically permit this Power of Attorney to be filed, as an
exhibit to a registration statement or amendment to registration
statement, of any or all Colonial Mutual Funds, with the Securities
and Exchange Commission and I request that this Power of Attorney
then constitute authority to sign additional amendments and
registration statements by virtue of its incorporation by reference
into the registration statements and amendments for Colonial Mutual
Funds.
In witness, I have signed this Power of Attorney on this 16th day of
February, 1996.
GEORGE L. SHINN
- ---------------
George L. Shinn
POWER OF ATTORNEY FOR SIGNATURE
The undersigned constitutes Truman S. Casner, Harold W. Cogger, Nancy
L. Conlin, Ellen Harrington, Peter L. Lydecker, Michael H. Koonce,
Peter MacDougall, Janet E. Shore, Richard A. Silver and Arthur O.
Stern individually, as my true and lawful attorney, with full power
to each of them to sign for me and in my name, any and all
registration statements and any and all amendments to the
registration statements filed under the Securities Act of 1933 or the
Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration
requirements in my capacity as a trustee or officer of certain mutual
funds, for which Colonial Investment Services, Inc. serves as
principal underwriter (Colonial Mutual Funds). This Power of
Attorney authorizes the above individuals to sign my name and will
remain in full force and effect until specifically rescinded by me.
I specifically permit this Power of Attorney to be filed, as an
exhibit to a registration statement or amendment to registration
statement, of any or all Colonial Mutual Funds, with the Securities
and Exchange Commission and I request that this Power of Attorney
then constitute authority to sign additional amendments and
registration statements by virtue of its incorporation by reference
into the registration statements and amendments for Colonial Mutual
Funds.
In witness, I have signed this Power of Attorney on this 16th day of
February, 1996.
ROBERT L. SULLIVAN
- ------------------
Robert L. Sullivan
POWER OF ATTORNEY FOR SIGNATURE
The undersigned constitutes Truman S. Casner, Harold W. Cogger, Nancy
L. Conlin, Ellen Harrington, Peter L. Lydecker, Michael H. Koonce,
Peter MacDougall, Janet E. Shore, Richard A. Silver and Arthur O.
Stern individually, as my true and lawful attorney, with full power
to each of them to sign for me and in my name, any and all
registration statements and any and all amendments to the
registration statements filed under the Securities Act of 1933 or the
Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration
requirements in my capacity as a trustee or officer of certain mutual
funds, for which Colonial Investment Services, Inc. serves as
principal underwriter (Colonial Mutual Funds). This Power of
Attorney authorizes the above individuals to sign my name and will
remain in full force and effect until specifically rescinded by me.
I specifically permit this Power of Attorney to be filed, as an
exhibit to a registration statement or amendment to registration
statement, of any or all Colonial Mutual Funds, with the Securities
and Exchange Commission and I request that this Power of Attorney
then constitute authority to sign additional amendments and
registration statements by virtue of its incorporation by reference
into the registration statements and amendments for Colonial Mutual
Funds.
In witness, I have signed this Power of Attorney on this 16th day of
February, 1996.
SINCLAIR WEEKS, JR.
- -------------------
Sinclair Weeks, Jr.
POWER OF ATTORNEY FOR SIGNATURE
The undersigned constitutes Truman S. Casner, Harold W. Cogger, Nancy
L. Conlin, Ellen Harrington, Peter L. Lydecker, Michael H. Koonce,
Peter MacDougall, Janet E. Shore, Richard A. Silver and Arthur O.
Stern individually, as my true and lawful attorney, with full power
to each of them to sign for me and in my name, any and all
registration statements and any and all amendments to the
registration statements filed under the Securities Act of 1933 or the
Investment Company Act of 1940 with the Securities and Exchange
Commission for the purpose of complying with such registration
requirements in my capacity as a trustee or officer of certain mutual
funds, for which Colonial Investment Services, Inc. serves as
principal underwriter (Colonial Mutual Funds). This Power of
Attorney authorizes the above individuals to sign my name and will
remain in full force and effect until specifically rescinded by me.
I specifically permit this Power of Attorney to be filed, as an
exhibit to a registration statement or amendment to registration
statement, of any or all Colonial Mutual Funds, with the Securities
and Exchange Commission and I request that this Power of Attorney
then constitute authority to sign additional amendments and
registration statements by virtue of its incorporation by reference
into the registration statements and amendments for Colonial Mutual
Funds.
In witness, I have signed this Power of Attorney on this 16th day of
February, 1996.
LORA S. COLLINS
- ----------------
Lora S. Collins
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL INTERMEDIATE TAX-EXEMPT FUND, CLASS A YEAR END
NOV-30-1995 AND IS QUALIFIED INITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS OF COLONIAL INTERMEDIATE TAX-EXEMPT FUND, CLASS A YEAR END
NOV-30-1995
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
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<NAME> COLONIAL INTERMEDIATE TAX-XEMPT FUND, CLASS A
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<INTEREST-INCOME> 1532
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL INTERMEDIATE TAX-EXEMPT FUND, CLASS B YEAR END
NOV-30-1995 AND IS QUALFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS OF COLONIAL INTERMEDIATE TAX-EXEMPT FUND, CLASS B YEAR END
NOV-30-1995
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
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<NAME> COLONIAL INTERMEDIATE TAX-EXEMPT FUND, CLASS B
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<ASSETS-OTHER> 62
<OTHER-ITEMS-ASSETS> 0
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<SENIOR-LONG-TERM-DEBT> 264
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<EXPENSES-NET> 197
<NET-INVESTMENT-INCOME> 1335
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<NET-CHANGE-FROM-OPS> 3804
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<DISTRIBUTIONS-OF-INCOME> 1363
<DISTRIBUTIONS-OF-GAINS> 0
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<SHARES-REINVESTED> 59
<NET-CHANGE-IN-ASSETS> (2792)
<ACCUMULATED-NII-PRIOR> 33
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<GROSS-EXPENSE> 470
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<PER-SHARE-NII> 0.338
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<PER-SHARE-DIVIDEND> 0.339
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<AVG-DEBT-PER-SHARE> 0
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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
COLONIAL SHORT TERM TAX-EXEMPT FUND YEAR END 11-30-1994.
</LEGEND>
<CIK> 0000276716
<NAME> COLONIAL TRUST IV
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<NAME> COLONIAL SHORT TERM TAX-EXEMPT FUND, CLASS A
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<INVESTMENTS-AT-VALUE> 12651
<RECEIVABLES> 223
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 2219
<TOTAL-ASSETS> 15093
<PAYABLE-FOR-SECURITIES> 1237
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93
<TOTAL-LIABILITIES> 1330
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13943
<SHARES-COMMON-STOCK> 1854
<SHARES-COMMON-PRIOR> 659
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (21)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (183)
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<INTEREST-INCOME> 438
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<EXPENSES-NET> 63
<NET-INVESTMENT-INCOME> 375
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<APPREC-INCREASE-CURRENT> (190)
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<DISTRIBUTIONS-OF-INCOME> 372
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<DISTRIBUTIONS-OTHER> 0
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<NUMBER-OF-SHARES-REDEEMED> 2798
<SHARES-REINVESTED> 39
<NET-CHANGE-IN-ASSETS> 8802
<ACCUMULATED-NII-PRIOR> 12
<ACCUMULATED-GAINS-PRIOR> (1)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 63
<INTEREST-EXPENSE> 0
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<AVERAGE-NET-ASSETS> 12644
<PER-SHARE-NAV-BEGIN> 7.530
<PER-SHARE-NII> 0.215
<PER-SHARE-GAIN-APPREC> (0.105)
<PER-SHARE-DIVIDEND> 0.220
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.420
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
