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[LOGO]
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COLONIAL
UTILITIES FUND
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ANNUAL REPORT
NOVEMBER 30, 1996
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[graphic omitted]
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
<PAGE>
COLONIAL UTILITIES FUND HIGHLIGHTS
DECEMBER 1, 1995 - NOVEMBER 30, 1996
INVESTMENT OBJECTIVE: Colonial Utilities Fund seeks primarily current income and
secondarily long-term growth.
THE FUND IS DESIGNED TO OFFER:
X Monthly income
X Long-term growth potential
X Diversification
PORTFOLIO MANAGER COMMENTARY: "While the total returns seen by utility stocks
during the Fund's 1996 fiscal year did not match the strong results enjoyed
during 1995, they did post fairly attractive returns in an environment that was
generally unfavorable for utility stocks." -- John Lennon
COLONIAL UTILITIES FUND PERFORMANCE
CLASS A CLASS B
Inception dates 3/4/92* 5/5/92
Distributions declared per share $0.603 $0.493
30-day SEC yields on 11/30/96** 3.75% 3.18%
12-month total returns, assuming
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC) 10.27% 9.45%
Net asset value per share on 11/30/96 $15.21 $15.21
* Date of adoption of the Fund's current investment policies.
** Reflects 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.
TOP FIVE HOLDINGS+ SECTOR BREAKDOWN+
(as of 11/30/96) (as of 11/30/96)
................................ ..................................
1. FPL Group, Inc. . . . . 4.5% Common Stocks & Convertible Stocks
2. NYNEX Corp. . . . . . . 4.3% Electric . . . . . . . 46.9%
3. Ameritech Corp. . . . . 4.1% Telephone . . . . . . 28.2%
4. GTE Corp. . . . . . . . 4.0% Natural Gas . . . . . 12.5%
5. BellSouth Corp. . . . . 3.7% Preferred Stocks . . . . 11.2%
Net Cash & Equivalents . 1.2%
+ Holdings and sector breakdowns are calculated as a percent of total net
assets. Because the Fund is actively managed, there can be no guarantee the Fund
will continue to hold these securities or maintain these sector weightings in
the future. Industry sectors in the following financial statements are based
upon the standard industrial clarification (SIC) published by the U.S. Office of
Management and Budget. The sector classifications used on this page are based
upon Colonial's defined criteria used in the investment process.
<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
JOHN LENNON and JAMES HAYNIE are portfolio co-managers of the Colonial Utilities
Fund. Mr. Lennon and Mr. Haynie are vice presidents of Colonial Management
Associates, Inc.
Q. HOW DID UTILITY STOCKS PERFORM DURING THE PAST 12 MONTHS?
A. The first six months of the period was generally weak for utility stocks,
with the Dow Jones Utility Average generating only a very modest total return of
0.1%. This weak investment environment was driven by rising interest rates, a
negative for utility stocks. Long-term interest rates, as measured by the yield
on the 30-year Treasury bond, increased from 6.13% at the beginning of the
period to 6.99% on May 31, 1996. However, the second half of the fiscal year was
more favorable. The Dow Jones Utility Average posted a total return of 15.4%, as
interest rates declined to 6.35% on November 30, 1996 and utility stocks
experienced four consecutive months of rising prices from August through
November.
Q. WHAT FACTORS AFFECTED PERFORMANCE DURING THIS PERIOD?
A. Interest rates were a significant factor, particularly in the first half when
rising rates limited performance. However, all three sectors of the utility
market in which the Fund is invested -- electric power, natural gas and
telephone -- were up during the second half. Electric stocks benefited from
merger activity and expectations of positive rulings regarding industry
deregulation in certain states. Natural gas stocks saw very positive returns as
a result of increased gas demand early in the year generated by severe winter
weather in many parts of the country. These stocks also benefited from merger
activity with other gas and electric companies. Telephone stocks were a weak
sector of the utility market as uncertainty continues regarding the onset of
competition fostered by the Telecommunications Act of 1996.
The Fund remained fully invested in utility stocks during the period and
benefited from significant investments in a number of stocks that had strong
price increases over the course of the year. These stocks included PanEnergy
Corp., Williams Companies and MCN Corporation in the natural gas sector, and
Portland General Corp. and Edison International in the electric power sector.
Q. HOW DID THE FUND'S PERFORMANCE COMPARE TO THE DOW JONES UTILITY AVERAGE AND
THE STANDARD & POOR'S 500 INDEX?
A. For the 12-month period ended November 30, 1996, the Fund underperformed both
the Dow Jones Utility Average and the Standard & Poor's 500 Index, two unmanaged
indexes that track the performance of utility stocks and U.S. stocks,
respectively. The total return for the Fund's Class A shares, based on net asset
value, was 10.3%, while the return on the Dow Jones Utility Average was 15.5%
and the return on the Standard & Poor's 500 Index was 27.8%. The 15 stock Dow
Jones Utility Average benefited significantly from its four natural gas
holdings. During the second half of the year, two of these four gas companies
signed merger agreements with electric utilities at substantial price premiums.
The Fund's exposure to natural gas issues was smaller and more diversified than
the Dow Jones Utility Average during the year. While the Fund underperformed the
S&P 500 Index, it is important to note that the Index tracks the broader market
and includes many industrial and financial companies that benefited from a
strong economy.
Q. WHAT IS YOUR OUTLOOK FOR THE UTILITY MARKET?
A. Our outlook hinges on a number of factors, most important among them being
the direction of interest rates. Over the first half of the year, the interest
rate environment is likely to be neutral for utility stock prices. The direction
of the stock market may also be a factor -- a more defensive environment could
benefit utility stocks. We expect to see further merger activity in all three
sectors which would be a plus, as would favorable resolution of regulatory
issues for both electric and telephone companies. Lastly, natural gas stocks
will more than likely need a cold winter for earnings to match or exceed those
of last year.
<PAGE>
COLONIAL UTILITIES FUND PERFORMANCE VS.
THE DOW JONES UTILITIES AVERAGE AND THE STANDARD & POOR'S 500 INDEX
Change in Value of $10,000 from 3/31/92 -- 11/30/96
Based on NAV and MOP for Class A Shares
DOW JONES
DATE NAV MOP UTILITIES S&P500
- --------------------------------------------------------------------------
Mar 31, 92 10000.00 9525.00 10000 10000
Apr 30, 92 10204.22 9719.52 10287 10293
May 31, 92 10443.32 9947.27 10467 10344
Jun 30, 92 10531.86 10031.59 10436 10190
Jul 31, 92 11084.16 10557.67 11169 10606
Aug 31, 92 11064.80 10539.22 10912 10389
Sep 30, 92 11130.52 10601.82 11066 10511
Oct 31, 92 11136.96 10607.96 11071 10547
Nov 30, 92 11126.12 10597.63 11061 10905
Dec 31, 92 11406.70 10864.88 11255 11039
Jan 31, 93 11618.48 11066.60 11562 11131
Feb 28, 93 12212.87 11632.76 12325 11283
Mar 31, 93 12306.49 11721.94 12472 11521
Apr 30, 93 12277.77 11694.58 12385 11243
May 31, 93 12257.98 11675.73 12403 11543
Jun 30, 93 12607.63 12008.77 12811 11576
Jul 31, 93 12835.03 12225.36 13116 11530
Aug 31, 93 13160.97 12535.82 13524 11966
Sep 30, 93 13043.30 12423.74 13247 11874
Oct 31, 93 12856.21 12245.54 12793 12120
Nov 30, 93 12261.09 11678.69 12049 12004
Dec 31, 93 12468.06 11875.82 12338 12149
Jan 31, 94 12265.85 11683.22 12181 12562
Feb 28, 94 11697.22 11141.60 11416 12221
Mar 31, 94 11382.07 10841.42 10722 11690
Apr 30, 94 11635.14 11082.47 10911 11839
May 31, 94 11141.66 10612.43 10263 12033
Jun 30, 94 10886.62 10369.50 9846 11738
Jul 31, 94 11290.28 10753.99 10380 12124
Aug 31, 94 11324.41 10786.50 10616 12619
Sep 30, 94 11038.97 10514.62 10262 12311
Oct 31, 94 11185.84 10654.51 10279 12587
Nov 30, 94 11152.65 10622.90 10259 12129
Dec 31, 94 11182.39 10651.23 10452 12309
Jan 31, 95 11911.96 11346.14 11142 12628
Feb 28, 95 11982.83 11413.65 11265 13120
Mar 31, 95 11887.67 11323.01 10975 13506
Apr 30, 95 12132.18 11555.90 11405 13904
May 31, 95 12679.49 12077.21 12188 14458
Jun 30, 95 12720.92 12116.68 12014 14794
Jul 31, 95 12801.62 12193.54 12149 15284
Aug 31, 95 13099.66 12477.42 12121 15322
Sep 30, 95 13824.13 13167.49 12915 15968
Oct 31, 95 14124.40 13453.49 12960 15911
Nov 30, 95 14375.16 13692.34 13128 16609
Dec 31, 95 15068.47 14352.72 13795 16929
Jan 31, 96 15359.15 14629.59 14161 17505
Feb 29, 96 14986.23 14274.38 13530 17667
Mar 31, 96 14834.72 14130.07 13203 17838
Apr 30, 96 14673.30 13976.32 13070 18100
May 31, 96 14693.51 13995.57 13140 18566
Jun 30, 96 15246.09 14521.90 13876 18637
Jul 31, 96 14650.60 13954.69 12952 17814
Aug 31, 96 14723.26 14023.90 13615 18190
Sep 30, 96 14753.01 14052.24 13845 19213
Oct 31, 96 15352.45 14623.21 14509 19743
Nov 30, 96 15851.04 15098.12 15163 21234
A $10,000 investment in Class B shares made on May 5, 1992, at net asset value
(NAV) would have grown to $14,950 on November 30, 1996. The same investment
after deducting the applicable contingent deferred sales charge (CDSC) would be
valued at $14,750 on November 30, 1996. The Dow Jones Utilities Average and the
Standard & Poor's 500 Index are two unmanaged indexes that track the performance
of utility stocks and U.S. stocks, respectively. Unlike mutual funds, indexes
are not investments, do not incur fees or charges, and it is not possible to
invest in indexes.
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/96 (Most Recent Quarter End)
- ------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
Inception 3/4/92* Inception 5/5/92
NAV MOP NAV W/CDSC
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1 YEAR 6.02% 0.98% 5.23% 0.23%
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5 YEARS 11.13% 10.05% -- --
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10 YEARS 9.57% 9.03% -- --
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SINCE INCEPTION 10.23% 9.13% 9.17% 8.86%
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*Change in investment policies.
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. NAV returns do not include sales charges
or CDSC. Maximum offering price (MOP) returns include the maximum sales charge
of 4.75%. The CDSC returns reflect the maximum charges of 5% for one year and 2%
since inception.
<PAGE>
INVESTMENT PORTFOLIO
NOVEMBER 30, 1996 (IN THOUSANDS)
COMMON STOCKS AND CONVERTIBLES - 87.7% SHARES VALUE
- -----------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES
COMMUNICATIONS - 27.8%
AT&T Corp. 100 $ 3,925
Ameritech Corp. 750 44,156
Bell Atlantic Corp. 400 25,150
BellSouth Corp. 1,000 40,375
Frontier Corp. 435 11,414
GTE Corp. 950 42,631
Lucent Technologies, Inc. 65 3,322
MCI Communications Corp. 250 7,625
NYNEX Corp. 1,000 46,375
Pacific Telesis Group, Inc. 300 11,100
Southwestern Bell Corp. 725 38,153
Sprint Corp. 100 4,187
360 Communications Co. 42 990
US West Communications Group 400 12,500
US West Media Group 400 7,550
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299,453
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ELECTRIC SERVICES - 47.3%
American Electric Power Co., Inc. 450 18,675
Boston Edison Co. 675 17,297
Carolina Power & Light Co. 150 5,494
Cincinnati Gas & Electric Co. 1,100 36,850
Citizens Utilities Co., 5% Convertible Preferred 100 4,825
DPL, Inc. 1,500 36,562
Detroit Edison Co. 773 24,730
Duke Power Co. 25 1,159
Eastern Utilities Associates 125 2,108
Edison International 850 16,894
Entergy Corp. 207 5,612
FPL Group, Inc. 1,050 48,431
GPU, Inc. 1,200 40,350
Houston Industries, Inc. 679 14,947
IES Industries, Inc. 400 12,250
KU Energy Corp. 200 6,025
Kansas City Power & Light Co. 675 19,069
Long Island Lighting Co. 450 8,944
MidAmerican Energy Co. 100 1,487
Ohio Edison Co. 300 6,900
PacifiCorp. 1,300 27,300
Portland General Corp. 500 21,500
Public Service Co. of Colorado 550 21,450
Public Service Enterprise Group, Inc. 200 5,725
Puget Sound Power & Light Co. 132 3,010
Rochester Gas & Electric Corp. 50 956
SCANA Corp. 325 8,856
Sierra Pacific Resources 250 7,156
Southern Co. 1,300 28,925
Texas Utilities Co. 775 30,613
Union Electric Co. 100 3,975
Utilicorp United, Inc. 350 9,406
Western Resources, Inc. 400 12,650
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510,131
----------
GAS SERVICES - 12.6%
Consolidated Natural Gas Co. 100 5,713
Energen Corp. 54 1,459
MCN Corp. 875 25,156
MCN Corp., PRIDES, 8.75% 35 998
MDU Resources Group, Inc. 214 4,782
Pacific Enterprises 400 12,250
PanEnergy Corp. 500 22,000
Peoples Energy Corp. 200 7,250
UGI Corp. 600 13,125
Williams Cos., Inc. 700 39,287
Williams Cos., Inc., $3.50 Convertible Preferred 37 3,261
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135,281
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TOTAL COMMON STOCKS AND CONVERTIBLES
(cost of $807,789) 944,865
----------
PREFERRED STOCKS - 9.6%
- -----------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES
ELECTRIC SERVICES - 8.7%
Arizona Public Service Co., $1.8125 Series W 180 4,500
Baltimore Gas & Electric Co., 6.75%, Series 1987 28 2,875
Boston Edison Co., 7.75% 100 2,500
Carolina Power & Light Co., 7.72% 30 3,067
Central Maine Power Co., 7.875% 16 1,504
Central Power & Light Co., 7.12% 16 1,548
Commonwealth Edison Co., 7.24% 52 5,026
Detroit Edison Co.:
7.74% 100 2,500
7.75% 100 2,575
Duke Power Co., 7.04% 20 2,100
Entergy Arkansas, Inc.:
7.80% 10 975
7.88% 9 877
Entergy Gulf States Utilities:
7.56% 18 1,613
8.80% 15 1,496
Entergy Gulf States Utilities $8.52 8 772
Entergy Louisiana, Inc., 8.00% 30 757
Jersey Central Power & Light Co.,
7.88%, Series E 15 1,519
Montana Power Co., $6.875 30 3,045
Niagara Mohawk Power Corp., 7.72%, Series I 26 1,987
Northern Indiana Public Service Co., 7.44% 9 905
Ohio Edison Co., 7.75% 240 5,940
PECO Energy Co., 7.48% 30 3,135
PSI Energy, Inc.:
6.875% 36 3,834
7.44% 235 5,963
Pennsylvania Power Co., 7.75% 15 1,335
Pennsylvania Power & Light Co., 6.75% 51 5,177
Southern California Edison Co., 7.36% 125 3,147
Texas Utilities Co., 7.98% 35 3,959
TU Electric Capital, TOPRS, 8.25% 680 17,085
Union Electric Co., $7.44 18 1,813
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93,529
----------
GAS SERVICES - 0.9%
Enron Corp., MIPS, 8.00% 400 9,850
Pacific Enterprises, $4.50 4 277
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TOTAL PREFERRED STOCKS (cost of $103,942) 10,127
----------
103,656
----------
ADJUSTABLE RATE PREFERRED STOCKS - 1.5%
- -----------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES
ELECTRIC SERVICES - 1.1%
Cleveland Electric Illuminating Co., Series L 65 5,135
Entergy Gulf States Utilities, Series A 18 1,651
Georgia Power Co., Series 1993 110 2,654
Illinois Power Co., Series A 25 1,125
Toledo Edison Co., Series A 40 810
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11,375
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GAS SERVICES - 0.4%
Enserch Corp., Series E 48 4,722
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TOTAL ADJUSTABLE RATE PREFERRED STOCKS (cost of $16,992) 16,097
----------
TOTAL INVESTMENTS - 98.8% (cost of $928,723) (a) 1,064,618
----------
SHORT-TERM OBLIGATIONS - 1.3% PAR
- -----------------------------------------------------------------------------
Repurchase agreement with Bankers Trust
Securities Corp., dated 11/29/96, due
12/02/96 at 5.650% collaterized by U.S.
Treasury bonds and notes with various
maturities to 2015, market value
$14,278 (repurchase proceeds $13,992) $ 13,985 13,985
----------
OTHER ASSETS & LIABILITIES, NET - (0.1)% (1,196)
- -----------------------------------------------------------------------------
NET ASSETS - 100.0%
$1,077,407
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NOTES TO INVESTMENT PORTFOLIO:
- ------------------------------------------------------------------------------
(a) Cost for federal income tax purposes is $928,853.
Acronym Name
------- ----
TOPRS Trust Originated Preferred Redeemable Securities
MIPS Monthly Income Preferred Stock
PRIDES Preferred Redeemable Increased Dividend Equity Securities
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 $928,723) $1,064,618
Short-term obligations 13,985
----------
1,078,603
Receivable for:
Dividends $4,374
Fund shares sold 355
Interest 4
Receivable due from Adviser 54
Other 28 4,815
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Total Assets 1,083,418
LIABILITIES
Payable for:
Distributions 3,136
Fund shares repurchased 2,744
Accrued:
Transfer Agent fees 72
Deferred Trustees fees 10
Other 49
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Total Liabilities 6,011
----------
NET ASSETS $1,077,407
==========
Net asset value & redemption price per share -
Class A ($348,384/22,909) $ 15.21
==========
Maximum offering price per share - Class A
($15.21/0.9525) $ 15.97 (a)
==========
Net asset value & offering price per share -
Class B ($729,023/47,940) $ 15.21 (b)
==========
COMPOSITION OF NET ASSETS
Capital paid in $1,042,449
Undistributed net investment income 1,273
Accumulated net realized loss (102,210)
Net unrealized appreciation 135,895
----------
$1,077,407
==========
(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, 1996
(in thousands)
INVESTMENT INCOME
Dividends $ 61,476
Interest 387
----------
61,863
EXPENSES
Management fee $ 7,437
Service fee 2,882
Distribution fee - Class B 5,869
Transfer agent 2,809
Bookkeeping fee 399
Registration fee 42
Custodian fee 50
Audit fee 44
Trustees fee 66
Reports to shareholders 26
Legal fee 8
Other 69
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Total operating expenses 19,701
Interest expense (a) 19,701
------ ----------
Net Investment Income 42,162
----------
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain 13,770
Net unrealized appreciation during
the period 48,040
-------
Net Gain 61,810
----------
Net Increase in Net Assets from Operations $ 103,972
==========
(a) Rounds to less than one.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended November 30
-------------------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
Operations:
Net investment income $ 42,162 $ 52,382
Net realized gain (loss) 13,770 (21,504)
Net unrealized appreciation 48,040 260,221
--------- ----------
Net Increase from Operations 103,972 291,099
Distributions:
From net investment income - Class A (15,364) (19,543)
From net investment income - Class B (26,326) (33,675)
--------- ----------
62,282 237,881
--------- ----------
Fund Share Transactions:
Receipts for shares sold - Class A 20,947 41,022
Value of distributions reinvested - Class A 11,490 14,696
Cost of shares repurchased - Class A (104,735) (106,875)
--------- ----------
(72,298) (51,157)
--------- ----------
Receipts for shares sold - Class B 53,077 62,927
Value of distributions reinvested - Class B 20,888 27,317
Cost of shares repurchased - Class B (207,844) (172,228)
--------- ----------
(133,879) (81,984)
--------- ----------
Net Decrease from Fund Share
Transactions (206,177) (133,141)
--------- ----------
Total Increase (Decrease) (143,895) 104,740
NET ASSETS
Beginning of period 1,221,302 1,116,562
--------- ----------
End of period (including undistributed
net investment income of $1,273 and
$796, respectively.) $1,077,407 $1,221,302
========== ==========
NUMBER OF FUND SHARES
Sold - Class A 1,421 3,230
Issued for distributions reinvested - Class A 784 1,156
Repurchased - Class A (7,147) (8,370)
--------- ----------
(4,942) (3,984)
--------- ----------
Sold - Class B 3,596 4,945
Issued for distributions reinvested - Class B 1,425 2,147
Repurchased - Class B (14,191) (13,428)
--------- ----------
(9,170) (6,336)
--------- ----------
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
NOTE 1. ACCOUNTING POLICIES
...............................................................................
ORGANIZATION: Colonial Utilities 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 primarily current
income and secondarily long-term growth. 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 revenues and expenses during the reporting year. 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: 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 and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B distribution fee), and realized and unrealized
gains (losses) are allocated to each class proportionately on a daily basis for
purposes of determining the net asset value of each class.
Class B per share data and ratios are calculated by adjusting the expense and
net investment income per share data and ratios for the Fund for the entire
period by the annualized distribution fee applicable to Class B shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records distributions daily
and pays monthly.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. 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.
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:
Average Net Assets Annual Fee Rate
------------------- -----------------
First $1 billion 0.65%
Over $1 billion 0.60%
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus a percentage of the Fund's average net assets as follows:
Average Net Assets Annual Fee Rate
-------------------- ----------------
First $50 million No charge
Next $950 million 0.035%
Next $1 billion 0.025%
Next $1 billion 0.015%
Over $3 billion 0.001%
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer
Agent), an affiliate of the Adviser, provides shareholder services for
a monthly fee equal to 0.20% 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 Fund's
principal underwriter. For the year ended November 30, 1996, the Fund has been
advised that the Distributor retained net underwriting discounts of $68,269 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $3,366,432 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.25% annually of the Fund's net assets as of the 20th of
each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% of the average net assets attributable to Class B
shares only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
...............................................................................
INVESTMENT ACTIVITY: During the year ended November 30, 1996, purchases and
sales of investments, other than short-term obligations, were $91,827,714 and
$296,945,222, respectively.
Unrealized appreciation (depreciation) at November 30, 1996, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $ 166,455,451
Gross unrealized depreciation (30,690,179)
------------------
Net unrealized appreciation $ 135,765,272
==================
<PAGE>
CAPITAL LOSS CARRYFORWARD: 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
------------ -----------------
1997 $ 22,439,000
1998 9,759,000
1999 3,592,000
2000 6,425,000
2001 6,391,000
2002 38,551,000
2003 21,504,000
------------
$108,661,000
============
Of the loss carryforwards expiring in 1997 and 1998, $1,158,000 and $5,427,000,
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,
subjecting it to greater risk than a fund that is more diversified.
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%.
The average daily loan balance for the year ended November 30, 1996 was $5,464,
at a weighted average interest rate of 5.31%. The maximum loan outstanding
during the period was $2,000,000.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class 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 $ 14.370 $ 14.370 $ 11.720 $ 11.720
--------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.612 0.502 0.640 0.544
Net realized and
unrealized gain (loss) 0.831 0.831 2.659 2.659
--------- -------- -------- --------
Total from Investment
Operations 1.443 1.333 3.299 3.203
--------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.603) (0.493) (0.649) (0.553)
--------- -------- -------- --------
Net asset value-
End of period $ 15.210 $ 5.210 $ 14.370 $ 14.370
========= ======== ======== ========
Total return (a) 10.27% 9.45% 28.90% 27.96%
========= ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Operating expenses 1.20%(b) 1.95%(b) 1.21%(b) 1.96%(b)
Interest expense - - - -
Net investment income 4.16%(b) 3.41%(b) 5.00%(b) 4.25%(b)
Portfolio turnover 8% 8% 7% 7%
Average commission rate (c) $ 0.0484 $ 0.0484 - -
Net assets at end
of period (in millions) $ 348 $ 729 $ 400 $ 821
(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.
(c) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which commissions are charged.
- -------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
100% of the distributions paid by the Fund from investment income earned
in the year ended November 30, 1996, qualify for the corporate dividends
received deduction.
- -------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGLIGHTS - CONTINUED
Year ended November 30
--------------------------------------------
1994 1993
Class A Class B Class A Class B
--------- -------- -------- --------
Net asset value -
Beginning of period $ 13.600 $ 13.600 $ 12.960 $ 12.960
--------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.681 0.587 0.713 0.612
Net realized and
unrealized gain (loss) (1.896) (1.896) 0.616 0.616
--------- -------- -------- --------
Total from Investment
Operations (1.215) (1.309) 1.329 1.228
--------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.665) (0.571) (0.689) (0.588)
--------- -------- -------- --------
Net asset value-
End of period $ 11.720 $ 11.720 $ 13.600 $ 13.600
========= ======== ======== ========
Total return (a) (9.04)% (9.73)% 10.20% 9.42%
========= ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Operating expenses 1.23% 1.98% 1.19% 1.94%
Interest expense
Net investment income 5.49% 4.74% 4.92% 4.17%
Portfolio turnover 16% 16% 6% 6%
Average commission rate (c) - - - -
Net assets at end
of period (in millions) $ 373 $ 744 $ 503 $ 971
<PAGE>
FINANCIAL HIGHLIGHTS - continued
Selected data for a share of each class outstanding throughout each period
are as follows:
Year ended November 30
--------------------------------
1992 (a)
Class A Class B (b)
------- -----------
Net asset value -
Beginning of period $ 11.440 $ 12.310
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.741 0.296
Net realized and
unrealized gain 1.517 0.691
-------- --------
Total from Investment
Operations 2.258 0.987
-------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.727) (0.337)
From capital paid in (0.011) (c) ---
-------- --------
Total Distributions
Declared to Shareholders (0.738) (0.337)
-------- --------
Net asset value -
End of period $ 12.960 $ 12.960
======== ========
Total return (d) 20.21% 6.06% (e)
======== ========
RATIOS TO AVERAGE NET ASSETS
Operating expenses 1.16% 1.91% (f)
Net investment income 5.52% 4.77% (f)
Portfolio turnover 35% 35%
Net assets at end
of period (in millions) $ 232 $ 156
(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 prior year.
The 1992 amount represents a reclassifaction 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) Not annualized.
(f) Annualized.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST IV AND THE SHAREHOLDERS OF
COLONIAL UTILITIES FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Utilities Fund (a series
of Colonial Trust IV) at November 30, 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, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 10, 1997
<PAGE>
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
Colonial account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale, or exchange, you
receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
COLONIAL SHAREHOLDER NEWS: Mailed with your quarterly account statements, this
newsletter highlights timely investment strategies, portfolio manager
commentary, and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Utilities Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Utilities 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 Utilities 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
Mutual Funds for
Planned Portfolios
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)1996
One of the Liberty Financial Companies (NYSE:L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
UF-02/08 4D-1196 M (1/97)
[recycle symbol] Printed on recycled paper
