<PAGE>
[LOGO]
COLONIAL
INTERMEDIATE TAX-EXEMPT FUND
----------------------------
[graphic omitted]
----------------------------
ANNUAL REPORT
NOVEMBER 30, 1996
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
<PAGE>
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
DECEMBER 1, 1995 - NOVEMBER 30, 1996
INVESTMENT OBJECTIVE: 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.
PORTFOLIO MANAGER COMMENTARY: "The past 12 months have been volatile for fixed
income investments as long-term interest rates on long-term U.S. Government
bonds varied from as low as 5.94% to as high as 7.19%. However, recent economic
activity has made us cautiously optimistic on the investment environment going
forward and we will position the Fund to take advantage of these changes."
-- William Loring
COLONIAL INTERMEDIATE TAX-EXEMPT FUND PERFORMANCE
CLASS A CLASS B
Inception date 2/1/93 2/1/93
Distributions declared per share* $0.367 $0.316
SEC yields on 11/30/96** 4.42% 3.91%
Taxable-equivalent SEC yields*** 7.32% 6.47%
12-month total returns, assuming 5.23% 4.55%
reinvestment of all distributions and
no sales charge or contingent
deferred sales charge (CDSC)
Net asset value per share on 11/30/96 $7.88 $7.88
*A portion of the Fund's income may be subject to the alternative minimum tax.
**The 30-day SEC yields on November 30, 1996 reflect the portfolio's earning
power, net of expenses, expressed as an annualized percentage of the maximum
offering price per share at the end of the period.
***Taxable-equivalent SEC yields are based on the maximum federal income tax
rate of 39.6%.
The Fund may at times purchase tax-exempt securities at a discount, and some or
all of this discount may be included in the Fund's ordinary income which will be
taxable when distributed.
QUALITY BREAKDOWN MATURITY BREAKDOWN
(as of 11/30/96) (as of 11/30/96)
AAA ....................... 56.9% 1-3 years ................. 1.7%
AA ........................ 14.8% 3-5 years ................. 7.2%
A ......................... 6.8% 5-7 years ................. 29.6%
BBB........................ 18.6% 7-10 years ................ 37.4%
Not rated ................. 2.1% 10-15 years ............... 16.4%
Cash and equivalents ...... 0.8% 15-20 years ............... 6.9%
Cash and equivalents ...... 0.8%
Quality and maturity breakdowns are calculated as a percentage of total net
assets. Because the fund is actively managed, there can be no guarantee the Fund
will maintain these quality and maturity breakdowns in the future.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OF HAROLD W. COGGER]
I am pleased to present your Fund's annual report for the fiscal year ended
November 30, 1996. This report reflects on the investment environment of the
past 12 months and on the performance of your Fund.
While the Federal Reserve Board lowered short-term interest rates early in the
period, stronger than expected economic reports in February 1996 brought the
Fed's easing trend to a halt. As a result, long-term interest rates were rising
during most of the period, having a negative effect on fixed income investments.
However, with recent statistics suggesting an easing pace of economic activity
and a continued benign inflation outlook, we are hopeful that bond market
volatility will be somewhat reduced in the months ahead.
There was some good news for the tax-exempt sector. Low supply and strong retail
market support, enabled municipal bonds to outperform Treasury bonds for much of
the year. The post-election conditions should promote a period of stability for
the tax-exempt market as the flat tax initiative is now a receding memory.
In the domestic stock market, generally favorable conditions prevailed until
July, when a price-based correction took place. Since then, the market has
rebounded nicely with the Dow Jones Industrial Average setting several new
records. Internationally, the Tiger countries of the Pacific Rim continue to
offer a good combination of growth and value. In the European markets,
short-term interest rates continue to be much lower than long-term rates. We
expect these conditions to prevail until we see an increase in economic
activity.
Our economic expectations include growth continuing at a slower, but more
sustainable rate, and our outlook for 1997 is relatively bright.
The following report will provide you with specific information on your Fund's
performance as well as an in-depth discussion with your portfolio manager. As
always, we thank you for the opportunity to help you meet your investment goals
through the Colonial family of funds.
Respectfully,
/s/ Harold W. Cogger
------------------------------
Harold W. Cogger
President
January 10, 1997
Because market conditions change frequently, there can be no assurance that the
trends described here will continue, come to pass or affect Fund performance.
<PAGE>
PORTFOLIO MANAGEMENT REPORT
WILLIAM LORING is portfolio manager for Colonial Intermediate Tax-Exempt Fund
and vice president of Colonial Management Associates, Inc.
Q. HAS YOUR INVESTMENT STRATEGY CHANGED OVER THE PAST 12 MONTHS?
A. The Fund shifted its strategy during the first quarter of the year in
response to changes in expected economic conditions. As interest rates rose, the
Fund reduced its effective maturity, decreasing its sensitivity to interest
rates in order to stem losses from any further rate increases. However, during
the last quarter of the year, we began to see signs of economic activity that
would be positive for fixed income investments, such as a slight increase in
unemployment and a slowdown in housing starts. We shifted the Fund's market
neutral position to one that is slightly bullish. Therefore, we slightly
increased the Fund's sensitivity to interest rates by extending the effective
maturity of the portfolio.
Q. WHAT FACTORS CONTRIBUTED TO PERFORMANCE DURING THIS PERIOD?
A. The increase in interest rates early in the year had a negative effect on
performance. Later in the year, as we became more positive on the fixed income
investment environment and extended the Fund's average maturity, performance
benefited from a decline in long-term rates.
Q. HOW DID THE FUND'S 12-MONTH PERFORMANCE COMPARE TO THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX?
A. The Fund underperformed the Lehman Brothers Municipal Bond Index, a
broad-based, unmanaged index that tracks the performance of the municipal bond
market. The total return for Class A shares, based on net asset value, was 5.23%
while the return on the Index was 5.89%. The Fund's shorter average maturity
relative to the Index contributed to its underperformance.
Q. WHAT IS YOUR OUTLOOK FOR THE TAX-EXEMPT BOND MARKET?
A. We are somewhat optimistic about the market's prospects over the next few
months. Reports indicate that while the economy is clearly not growing at a
rapid, potentially inflationary pace, there are no significant signs of
potentially recessionary weaknesses, either. Therefore, we are anticipating
moderate growth going forward and we see nothing on the horizon to cause us to
be either strongly bullish or strongly bearish. We also view the passing of the
election year to be a stabilizing factor for municipal bonds, as the election of
a good mix of Democrats and Republicans should put fears of radical tax reform
to rest. At this time, we view tax-exempt bonds as slightly undervalued and
representative of a long-term buying opportunity.
<PAGE>
COLONIAL INTERMEDIATE TAX-EXEMPT FUND INVESTMENT PERFORMANCE
Change in Value of $10,000 from 2/1/93 - 11/30/96
Based on NAV and MOP for Class A Shares
Label A B C
citefa.xls nav mop
Feb 1, 93 10000 9675 10000
Feb 28, 93 10307.89 9972.886 10362
Mar 31, 93 10213.52 9881.576 10252
Apr 30, 93 10320.25 9984.843 10355
May 31, 93 10373.49 10036.35 10414
Jun 30, 93 10535.27 10192.87 10588
Jul 31, 93 10575.32 10231.62 10601
Aug 31, 93 10765.27 10415.4 10822
Sep 30, 93 10860.35 10507.39 10946
Oct 31, 93 10887.68 10533.83 10967
Nov 30, 93 10817.58 10466.01 10870
Dec 31, 93 11011.5 10653.62 11099
Jan 31, 94 11136.89 10774.94 11226
Feb 28, 94 10886.34 10532.53 10935
Mar 31, 94 10521.89 10179.93 10490
Apr 30, 94 10634.65 10289.02 10579
May 31, 94 10704.77 10356.86 10671
Jun 30, 94 10718.94 10370.58 10605
Jul 31, 94 10835.73 10483.57 10800
Aug 31, 94 10881.54 10527.89 10837
Sep 30, 94 10798.58 10447.63 10678
Oct 31, 94 10658.19 10311.8 10489
Nov 30, 94 10487.12 10146.29 10299
Dec 31, 94 10650.09 10303.96 10526
Jan 31, 95 10814.78 10463.3 10826
Feb 28, 95 11039.49 10680.71 11141
Mar 31, 95 11161.63 10798.88 11269
Apr 30, 95 11165.94 10803.05 11283
May 31, 95 11437.46 11065.74 11643
Jun 30, 95 11366.7 10997.28 11541
Jul 31, 95 11521.48 11147.04 11650
Aug 31, 95 11674.17 11294.76 11798
Sep 30, 95 11751.92 11369.98 11873
Oct 31, 95 11890.15 11503.72 12045
Nov 30, 95 12013.39 11622.95 12245
Dec 31, 95 12075.43 11682.97 12363
Jan 31, 96 12183.56 11787.59 12456
Feb 29, 96 12138.06 11743.58 12372
Mar 31, 96 12030.29 11639.31 12214
Apr 30, 96 12015.18 11624.69 12179
May 31, 96 11999.88 11609.89 12175
Jun 30, 96 12094.37 11701.3 12307
Jul 31, 96 12204.88 11808.22 12419
Aug 31, 96 12222.25 11825.03 12416
Sep 30, 96 12334.61 11933.74 12590
Oct 31, 96 12431.57 12027.54 12732
Nov 30, 96 12641.69 12230.84 12965
COLONIAL INTERMEDIATE TAX-EXEMPT FUND INVESTMENT PERFORMANCE
Change in Value of $10,000 from 2/1/93 - 11/30/96
Based on NAV and Maximum CDSC for Class B Shares
Label A B C
citefb.xls nav mop
Feb 1, 93 10000 10000 10000
Feb 28, 93 10302.44 10302.44 10362
Mar 31, 93 10202.49 10202.49 10252
Apr 30, 93 10303.49 10303.49 10355
May 31, 93 10350.99 10350.99 10414
Jun 30, 93 10506.89 10506.89 10588
Jul 31, 93 10541.28 10541.28 10601
Aug 31, 93 10725.1 10725.1 10822
Sep 30, 93 10814.25 10814.25 10946
Oct 31, 93 10835.77 10835.77 10967
Nov 30, 93 10760.44 10760.44 10870
Dec 31, 93 10947.54 10947.54 11099
Jan 31, 94 11066.36 11066.36 11226
Feb 28, 94 10811.48 10811.48 10935
Mar 31, 94 10443.72 10443.72 10490
Apr 30, 94 10549.88 10549.88 10579
May 31, 94 10613.77 10613.77 10671
Jun 30, 94 10622.06 10622.06 10605
Jul 31, 94 10732 10732 10800
Aug 31, 94 10771.55 10771.55 10837
Sep 30, 94 10683.57 10683.57 10678
Oct 31, 94 10538.71 10538.71 10489
Nov 30, 94 10363.86 10363.86 10299
Dec 31, 94 10519.3 10519.3 10526
Jan 31, 95 10676.39 10676.39 10826
Feb 28, 95 10892.4 10892.4 11141
Mar 31, 95 11006.97 11006.97 11269
Apr 30, 95 11005.26 11005.26 11283
May 31, 95 11266.93 11266.93 11643
Jun 30, 95 11191.27 11191.27 11541
Jul 31, 95 11337.57 11337.57 11650
Aug 31, 95 11481.76 11481.76 11798
Sep 30, 95 11552 11552 11873
Oct 31, 95 11681.6 11681.6 12045
Nov 30, 95 11796.42 11796.42 12245
Dec 31, 95 11851.02 11851.02 12363
Jan 31, 96 11950.68 11950.68 12456
Feb 29, 96 11899.55 11899.55 12372
Mar 31, 96 11787.29 11787.29 12214
Apr 30, 96 11766.03 11766.03 12179
May 31, 96 11744.59 11744.59 12175
Jun 30, 96 11830.56 11830.56 12307
Jul 31, 96 11932.4 11932.4 12419
Aug 31, 96 11942.89 11942.89 12416
Sep 30, 96 12046.21 12046.21 12590
Oct 31, 96 12134.39 12134.39 12732
Nov 30, 96 12332.93 12232.93 12965
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indexes are not investments, do not incur fees or expenses, and it is not
possible to invest in an index.
AVERAGE ANNUAL TOTAL RETURNS
As of December 31, 1996 (Most Recent Quarter End)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
INCEPTION 2/1/93 2/1/93
NAV MOP NAV W/CDSC
- --------------------------------------------------------------------------------
1 YEAR 4.32% 0.93% 3.64% (0.34)%
SINCE INCEPTION 6.07% 5.18% 5.39% 5.17%
Return and value of an investment will vary, resulting in a gain or loss on
sale. All results shown assume reinvestment of distributions. Net asset value
(NAV) returns do not include sales charges or CDSC. Maximum offering price (MOP)
returns include the maximum sales charge of 3.25%. The CDSC returns reflect the
maximum charge of 4% for one year and 1% since inception. Past performance
cannot predict future results.
<PAGE>
INVESTMENT PORTFOLIO
NOVEMBER 30, 1996 (IN THOUSANDS)
MUNICIPAL BONDS - 98.0% PAR VALUE
- -------------------------------------------------------------------------------
EDUCATION - 27.2%
EDUCATION - 10.3%
CT State Health & Educational
Facilities Authority,
University of New Haven, Series 1996 D,
6.000% 07/01/06 $ 100 $ 102
MN State Higher Education Facilities
Authority, MacAlester College,
Series 4-C,
6.000% 03/01/01 500 529
NY New York Dormitory Authority
State University of New York,
Series 1989 B,
7.100% 05/15/01 100 109
NY State Dormitory Authority,
New York City University,
Series 1995 A,
5.625% 07/01/16 500 495
NY State Dormitory Authority,
New York City University,
Series 1995 A,
5.500% 07/01/00 500 521
OH State Higher Education Commission,
Series II-B,
5.750% 11/01/04 500 541
TX Brazos Higher Educational
Facilities Authority,
Series 1992-A,
6.600% 03/01/00 330 343
-------
2,640
-------
SCHOOL DISTRICT GENERAL OBLIGATION - 11.3%
AZ Maricopa County Unified School
District N0. 69, Paradise Valley,
Series 1995,
6.350% 07/01/10 500 561
MI Berkley, City School District,
7.000% 01/01/09(a) 500 588
MN West St. Paul,
Independent School District No. 197,
(b) 02/01/04 1,585 1,123
OH Olmstead Falls Local School District,
6.850% 12/15/11 550 624
-------
2,896
-------
- -------------------------------------------------------------------------------
STUDENT LOAN - 5.6%
NM State Educational Assistance
Foundation,
Series 1-A,
6.200% 12/01/01 500 527
OH State Student Loan Funding Corporation
Series A,
5.750% 08/01/03 800 836
SC State Educational Assistance Authority
Student Loan Revenue Bonds, Series 1991,
6.200% 09/01/99 50 52
-------
1,415
-------
- --------------------------------------------------------------------------------
HEALTHCARE - 8.0%
HOSPITAL - 7.2%
AL East Health Care Authority
Health Care Facilities and Tax Anticipation
Series 1993,
5.625% 09/01/04 50 52
HI State Department Budget & Finance
Special Purpose Mortgage,
Kapiolani Health Care System, Series 1993,
5.500% 07/01/01 110 113
MI Dickinson County,
Memorial Hospital System,
7.625% 11/01/05 300 322
MN Brainerd Health Care Facilities,
St. Joseph Medical Center Series 1993-D,
5.300% 02/15/02 50 52
OH Cuyahoga County,
Meridia Health System,
6.300% 08/15/06 890 963
OH Green Springs,
St. Francis Health Care Center,
Series 1994-A,
7.000% 05/15/04 100 107
PA Philadelphia Hospitals & Higher
Educational Facilities, Temple
University Hospital, Series 1993,
5.750% 11/15/99 100 103
TX Health Facilities Development
Corp. Hospital, All Saints
Episcopal Hospitals, Series 1993-A,
5.800% 08/15/04 80 85
TX Tarrant County Health Facilities
Development Corp. Hospital, Fort
Worth Osteopathic Hospital, Series 1993,
5.800% 05/15/04 50 53
-------
1,850
-------
NURSING HOME - 0.8%
KY Jefferson County Health Facilities
Beverly Enterprises, Inc., Series 1985-B,
9.750% 08/01/07 95 104
MA State Industrial Finance Agency,
Belmont Home Care Project,
Series A,
7.970% 01/01/99 100 102
-------
206
-------
- --------------------------------------------------------------------------------
HOUSING - 7.2%
MULTI-FAMILY - 1.2%
MA State Housing Finance Agency,
Series 1992-C,
6.350% 05/15/03 200 213
NJ State Housing and Mortgage Finance
Agency,
6.500% 05/01/03 85 90
-------
303
-------
SINGLE-FAMILY - 1.9%
NH State Housing Finance Authority,
Single Family Mortgage, Series 1990-A,
6.850% 07/01/98 165 168
RI Housing and Mortgage Finance
Corp., Homeownership
Opportunity, Series 6-B:
6.500% 04/01/03 100 105
6.500% 10/01/03 200 211
-------
484
-------
PUBLIC FACILITIES IMPROVEMENT - 4.1%
NY State Urban Development Corporation,
6.250% 04/01/02 500 529
VA State Public Building Authority,
5.625% 08/01/02 500 529
-------
1,058
-------
- --------------------------------------------------------------------------------
OTHER REVENUE - 2.5%
JUSTICE & PUBLIC ORDER - 2.5%
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
NY State Urban Development Corporation
Series 1995,
5.700% 04/01/09 500 509
-------
641
-------
- --------------------------------------------------------------------------------
RETAIL TRADE - 0.7%
MISCELLANEOUS RETAIL
IA Economic Development Finance Authority,
Mason City Shopping Center,
6.250% 12/01/96 50 50
IA State Finance Authority,
Mason City Shopping Center,
8.500% 12/01/04 50 52
VA Virginia Beach Development Authority,
SC Diamond Associates, Inc.,
8.000% 12/01/10 75 81
-------
183
-------
- --------------------------------------------------------------------------------
RESOURCE RECOVERY - 4.7%
CO-GENERATION - 2.1%
CA Sacramento Co-generation Authority,
Procter & Gamble Project,
6.500% 07/01/14 500 528
-------
LAND FILL - 0.4%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 90 96
-------
MISCELLANEOUS DISPOSAL - 0.3%
OH Lake County,
North Madison Properties,
Series 1993,
8.069% 09/01/01 85 87
-------
RESOURCE RECOVERY - 1.9%
FL Lake County Resources Industrial
Development, Recovery Group,
5.400% 10/01/03 $ 500 499
-------
- --------------------------------------------------------------------------------
GENERAL OBLIGATION - 21.0%
AZ Phoenix General Obligation,
6.125% 07/01/03 500 547
HI Honolulu City & County,
Series 1995,
6.000% 11/01/10 500 545
IL Joliet,
Series 1993-A,
5.300% 01/01/02 65 67
LA State
Series 1993-A,
5.300% 08/01/04 145 151
MA Haverhill,
Series A,
5.900% 06/15/02 200 214
MA New Bedford,
6.000% 10/15/02 625 676
NJ State,
Series D,
(b) 02/15/04 90 65
NY New York City,
Series 1997 A,
7.000% 08/01/06 1,000 1,106
OH Trumbull County,
5.100% 12/01/03 500 519
TX State,
Series B,
5.800% 10/01/04 1,000 1,082
WI Racine General Obligation,
TIF Number 8,
5.400% 12/01/03 375 388
-------
5,360
-------
- --------------------------------------------------------------------------------
SALES & EXCISE TAX -2.4%
CT State,
Series 1996-C,
6.000% 10/01/06 500 547
LA Sulphur Public Import Sales & Use
Tax, Series 1993-ST,
5.650% 04/01/04 50 53
-------
600
-------
- --------------------------------------------------------------------------------
TRANSPORTATION - 14.9%
AIRPORT - 2.3%
CO Denver City & County Airport
Airport System, Series 1992-C,
6.250% 11/15/00 50 52
TX Dallas-Fort Worth Regional Airport,
Series 1992-B,
6.000% 11/01/02 500 538
-------
590
-------
TURNPIKE/TOLLROAD/BRIDGE - 12.6%
CA Foothill, Eastern Transportation
Corridor Agency, State Toll Road,
Senior Lien, Series A,
(b) 01/01/04 500 337
IN State Transportation Finance Authority,
Series 1993-A,
5.250% 06/01/09 600 608
KY State Turnpike Authority Economic
Development Revitalization Projects,
Series 1992,
5.500% 01/01/01 50 52
KY State Turnpike Authority,
Revitalization Projects,
6.500% 07/01/08 1,000 1,136
NV Clark County Highway Improvement,
5.700% 07/01/03 500 533
OH State Turnpike Commission,
Series 1996 A,
6.000% 02/15/06 500 549
-------
3,215
-------
- --------------------------------------------------------------------------------
UTILITY - 9.4%
Joint Power Authority - 0.4%
TX State Municipal Power Agency,
(b) 09/01/15 250 88
-------
MUNICIPAL ELECTRIC - 0.2%
WA Grant County Public Utilities,
District Number 002,
Electric System Series 1993-E,
5.300% 01/01/03 50 51
-------
WATER & SEWER - 8.8%
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(a) 1,035 1,118
TX Houston Water & Sewer System,
Series C,
5.900% 12/01/05 1,000 1,079
-------
2,251
-------
TOTAL INVESTMENTS (cost of $23,992)(c) 25,041
-------
SHORT TERM OBLIGATIONS - 0.8%
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (d)
FL Pinellas County Health Facilities Authority,
Series 1985,
4.000% 12/01/15 100 100
NY State,
Series 1994 A4,
4.000% 08/01/21 100 100
-------
TOTAL SHORT-TERM OBLIGATIONS 200
-------
OTHER ASSETS & LIABILITIES, NET - 1.2% 318
- --------------------------------------------------------------------------------
NET ASSETS -100.0% $25,559
-------
NOTES TO INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
(a) These securities, or a portion thereof, with a total market value of
$1,813, are being used to collateralize open futures contracts.
(b) Zero coupon bond.
(c) Cost for federal income tax purposes is the same.
(d) Variable rate demand notes are considered short-term obligations.
Interest rates change periodically on specified dates. These securities
are payable on demand and are secured by either letters of credit or
other credit support agreements from banks. The rates listed are as of
November 30, 1996.
Short futures contracts open at November 30, 1996 are as follows:
Par value Unrealized
covered by Expiration depreciation
Type contracts month at 11/30/96
- --------------------------------------------------------------------------------
Municipal bonds $200 December $6
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1996
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $23,992) $ 25,041
Short-term obligations 200
--------
25,241
Receivable for:
Interest 415
Investments sold 10
Deferred organization expense 18
Other 43 486
---- ---------
Total Assets 25,727
LIABILITIES
Payable for:
Distributions 95
Fund shares repurchased 52
Variation margin on futures 2
Payable to Adviser 3
Accrued:
Deferred Trustees fees 2
Other 14
----
Total Liabilities 168
--------
NET ASSETS $ 25,559
========
Net asset value & redemption price per share -
Class A ($12,479/1,584) $7.88
========
Maximum offering price per share - Class A
($7.88/0.9675) $8.14(a)
========
Net asset value & offering price per share -
Class B ($13,080/1,660) $7.88(b)
========
COMPOSITION OF NET ASSETS
Capital paid in $ 25,113
Undistributed net investment income 49
Accumulated net realized loss (646)
Net unrealized appreciation (depreciation) on:
Investments 1,049
Open futures contracts (6)
---------
$ 25,559
========
(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.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1996
(in thousands)
INVESTMENT INCOME
Interest $ 1,407
EXPENSES
Management fee $ 145
Service fee 53
Distribution fee - Class B 89
Transfer agent 42
Bookkeeping fee 27
Trustees fee 12
Custodian fee 1
Audit fee 17
Legal fee 6
Registration fee 22
Reports to shareholders 5
Amortization of deferred organization expenses 15
Other 3
--------
437
Fees and expenses waived or borne by
the Adviser (190) 247
-------- ---------
Net Investment Income 1,160
---------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 249
Closed futures contracts (69)
--------
Net Realized Gain 180
Net unrealized appreciation (depreciation)
during the period on:
Investments (174)
Open futures contracts 55
--------
Net Unrealized Depreciation (119)
---------
Net Gain 61
---------
Net Increase in Net Assets from Operations $ 1,221
=========
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Year ended
(in thousands) November 30
---------------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
---------- -----------
Operations:
Net investment income $ 1,160 $ 1,335
Net realized gain (loss) 180 (557)
Net unrealized appreciation (depreciation) (119) 3,026
-------- --------
Net Increase from Operations 1,221 3,804
Distributions:
From net investment income - Class A (598) (707)
From net investment income - Class B (556) (656)
-------- --------
67 2,441
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 1,572 3,913
Value of distributions reinvested - Class A 393 478
Cost of shares repurchased - Class A (2,838) (9,071)
-------- --------
(873) (4,680)
-------- --------
Receipts for shares sold - Class B 901 2,057
Value of distributions reinvested - Class B 379 449
Cost of shares repurchased - Class B (3,052) (3,059)
-------- --------
(1,772) (553)
-------- --------
Net Decrease from Fund Share
Transactions (2,645) (5,233)
-------- --------
Total Decrease (2,578) (2,792)
NET ASSETS
Beginning of period 28,137 30,929
======== ========
End of period (including undistributed net
investment income of $49 and $26,
respectively) $ 25,559 $ 28,137
======== ========
NUMBER OF FUND SHARES
Sold - Class A 202 524
Issued for distributions reinvested - Class A 50 63
Repurchased - Class A (365) (1,219)
-------- --------
(113) (632)
-------- --------
Sold - Class B 116 273
Issued for distributions reinvested - Class B 49 59
Repurchased - Class B (393) (405)
-------- --------
(228) (73)
-------- --------
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
NOTE 1. ACCOUNTING POLICIES
................................................................................
ORGANIZATION: Colonial Intermediate 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's
investment objective is to seek as high a level of after-tax total return as is
consistent with moderate volatility, by pursuing current income exempt
from federal income tax and opportunities for appreciation from a portfolio
primarily invested in investment grade, intermediate-term municipal bonds.
The Fund may issue an unlimited number of shares. The Fund offers Class A
shares sold with a front-end sales charge and Class B shares which are
subject to an annual distribution fee and a contingent deferred sales charge.
Class B shares will convert to Class A shares when they have been
outstanding approximately eight years.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Debt securities generally are
valued by a pricing service based upon market transactions for normal,
institutional-size trading units of similar securities. When management
deems it appropriate, an over-the-counter or exchange bid quotation is used.
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:
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.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses of $75,021
in connection with its organization, initial registration with the Securities
and Exchange Commission and with various states, and the initial public
offering of its shares. These expenses were deferred and are being
amortized on a straight-line basis over five years.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is
recorded on the accrual basis. Original issue discount is accreted to
interest income over the life of a security with a corresponding increase
in the cost basis; market discount is not accreted. Premium is amortized
against interest income with a corresponding decrease in the cost basis.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records
distributions daily and pays monthly.
The amount and character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. Reclassifications are
made to the Fund's capital accounts to reflect income and gains
available for distribution (or available capital loss carryforwards)
under income tax regulations.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
................................................................................
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is
the investment Adviser of the Fund and furnishes accounting and other
services and office facilities for a monthly fee equal to 0.55% annually of
the Fund's average net assets.
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing
services for $27,000 per year plus 0.035% of the Funds 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
for a monthly fee equal to 0.14% annually of the Fund's average net assets
and receives 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, 1996, the Fund has been advised that the Distributor retained net
underwriting discounts of $1,235, on sales of the Fund's Class A
shares and received contingent deferred sales charges (CDSC)
of $35,866 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires the payment of a service
fee to the Distributor equal to 0.20% 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 0.65% annually of the average net
assets attributable to Class B shares.
The CDSC and the fees received from the 12b-1 plan are used principally
as repayment to the Distributor for amounts paid by the Distributor to
dealers who sold such shares.
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive fees
and bear certain Fund expenses to the extent that total expenses (exclusive
of service and distribution fees, brokerage commissions, interest, taxes, and
and extraordinary expenses, if any) exceed 0.40% annually of the Fund's
average net assets.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the Adviser.
The 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 the Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
................................................................................
INVESTMENT ACTIVITY: During the year ended November 30, 1996,
purchases and sales of investments, other than short-term obligations,
were $5,205,571 and $8,446,432, respectively.
Unrealized appreciation (depreciation) at November 30, 1996, based on
cost of investments for both financial statement and federal income tax
purposes was:
Gross unrealized appreciation $1,050,044
Gross unrealized depreciation (1,250)
----------
Net unrealized appreciation $1,048,794
==========
CAPITAL LOSS CARRYFORWARDS: At November 30, 1996, capital loss
carryforwards available (to the extent provided in regulations) to offset
future realized gains were approximately as follows:
Year of Capital loss
expiration carryforward
------------ -------------
2003 $ 491,000
Expired capital loss carryforwards, if any, are recorded as a
reduction of capital paid in.
To the extent loss carryforwards are used to offset any future realized
gains, it is unlikely that such gains would be distributed since they
may be taxable to shareholders as ordinary income.
OTHER: The Fund may focus its investments in certain industries,
subjecting it to greater risk than a fund that is more diversified.
The Fund 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 the Funds Statement of Assets and
Liabilities at any given time.
NOTE 4. LINE OF CREDIT
................................................................................
The Fund may borrow up to 10% of its net assets under a line of credit
for temporary or emergency purposes. Any borrowings bear interest at
one of the following options determined at the inception of the loan: (1)
federal funds rate plus 1/2 of 1%, (2) the lending bank's base rate or (3)
IBOR offshore loan rate plus 1/2 of 1%. There were no borrowings
under the line of credit during the year ended November 30, 1996.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period are as follows:
Year ended November 30
--------------------------------------------
1996 1995
Class A Class B Class A Class B
-------- -------- -------- --------
Net asset value -
Beginning of period $ 7.850 $ 7.850 $ 7.210 $ 7.210
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.375 0.324 0.387 0.338
Net realized and
unrealized gain (loss) 0.022 0.022 0.641 0.641
-------- -------- -------- --------
Total from Investment
Operations 0.397 0.346 1.028 0.979
-------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.367) (0.316) (0.388) (0.339)
-------- -------- -------- --------
Net asset value -
End of period $ 7.880 $ 7.880 $ 7.850 $ 7.850
======== ======== ======== ========
Total return (c) (d) 5.23% 4.55% 14.56% 13.82%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses 0.60%(f) 1.25%(f) 0.36%(f) 1.01%(f)
Fees and expenses waived or
borne by the Adviser 0.72%(f) 0.72%(f) 0.96%(f) 0.96%(f)
Net investment income 4.75%(f) 4.10%(f) 5.03%(f) 4.38%(f)
Portfolio turnover 20% 20% 69% 69%
Net assets at end
of period (000) $ 12,479 $ 13,080 $ 13,317 $ 14,820
(a) Net of fees and expenses
waived or borne by the
Adviser which amounted to $ 0.057 $ 0.057 $ 0.074 $ 0.074
(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.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
All of the distributions will be treated as exempt income for federal income
tax purposes.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended Period ended
November 30 November 30
-------------------------- ------------------------------
1994 1993 (B)
Class A Class B Class A Class B
------- ------- ------- -------
$ 7.810 $ 7.810 $ 7.500 $ 7.500
------- ------- ------- -------
0.366 0.317 0.305 0.263
(0.596) (0.596) 0.302 0.302
------- ------- ------- -------
(0.230) (0.279) 0.607 0.565
------- ------- ------- -------
(0.370) (0.321) (0.297) (0.255)
------- ------- ------- -------
$ 7.210 $ 7.210 $ 7.810 $ 7.810
======= ======= ======= =======
(3.05)% (3.68)% 8.18%(e) 7.61%(e)
======= ======= ======= =======
0.20% 0.85% 0.20%(g) 0.85%(g)
1.07% 1.07% 1.33%(g) 1.33%(g)
4.85% 4.20% 4.53%(g) 3.88%(g)
26% 26% 5%(g) 5%(g)
$16,791 $14,138 $14,700 $ 9,396
$ 0.080 $ 0.080 $ 0.090 $ 0.090
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST IV AND THE SHAREHOLDERS OF
COLONIAL INTERMEDIATE 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 Intermediate Tax-Exempt
Fund (a series of Colonial Trust IV) at November 30, 1996, 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, 1996 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 10, 1997
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Intermediate Tax-Exempt Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Intermediate Tax-Exempt Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call
Colonial at 1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Intermediate
Tax-Exempt Fund. This report may also be used as sales literature when preceded
or accompanied by the current prospectus which provides details of sales
charges, investment objectives and operating policies of the Fund.
<PAGE>
[Logo] Colonial
Mutual Funds
Earning Your Trust for
More Than 60 Years
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, C.S. First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
COLONIAL INVESTMENT SERVICES, INC. Distributor (C) 1997
One of the Liberty Financial Companies (NYSE: L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
IM-02/105D-1296 M (1/97)
[Recycle Symbol] Printed on recycled paper
