<PAGE>
[LOGO]
COLONIAL
TAX-EXEMPT INSURED FUND
-----------------------
[graphic omitted]
-----------------------
ANNUAL REPORT
NOVEMBER 30, 1996
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
<PAGE>
COLONIAL TAX-EXEMPT INSURED FUND HIGHLIGHTS
DECEMBER 1, 1995 - NOVEMBER 30, 1996
INVESTMENT OBJECTIVE: 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.
THE FUND IS DESIGNED TO OFFER:
|X| High monthly tax-free income
|X| Long-term appreciation
|X| Diversification
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 TAX-EXEMPT INSURED FUND PERFORMANCE
CLASS A CLASS B
Inception dates 11/20/85 5/5/92
Distributions declared per share* $0.408 $0.347
SEC yields on 11/30/96** 4.17% 3.62%
Taxable-equivalent SEC yields*** 6.90% 5.99%
12-month total returns, assuming reinvestment 4.48% 3.70%
of all distributions and no sales charge
or contingent deferred sales charge (CDSC)
Net asset value per share on 11/30/96 $8.33 $8.33
*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.
MATURITY BREAKDOWN (as of 11/30/96)
3 - 5 years....................... 9.4% 15 - 20 years.................. 32.4%
5 - 7 years........................1.0% 20 - 25 years.................. 24.5%
7 - 10 years...................... 2.0% 25+ years.......................16.2%
10 - 15 years.................... 13.2% Cash and equivalents.............1.3%
Maturity breakdown is calculated as a percentage of total net assets. Because
the Fund is actively managed, there can be no guarantee the Fund will continue
to maintain these maturity weightings 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 of Colonial Tax-Exempt Insured 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 economic conditions. As interest rates rose, the Fund
acted to decrease its sensitivity to changes in interest rates and to stem
potential losses from further rate increases by reducing the effective maturity
of the portfolio. 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 uptick in unemployment and a slowdown in housing starts. We shifted the
Fund's market neutral position to one that is slightly bullish; we slightly
increased the Fund's sensitivity to interest rates by extending the effective
maturity of the portfolio by about one-half year. Of course, the credit quality
of the portfolio continued to be of the highest quality, with over 90% of the
Fund's holdings carrying a rating of AAA by a major bond rating agency.
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. However, our strategic shift to a more market neutral position
allowed the Fund to recover some of the ground it lost when rates changed
direction. As we became more positive on the fixed income investment environment
and extended the Fund's duration, increasing its sensitivity to changes in
interest rates, 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 4.48%
while the return on the Index was 5.89%. It is important to note that the Index
contains lower quality bonds in addition to AAA-rated municipal bonds; these
lower quality bonds typically generate higher returns.
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
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 TAX-EXEMPT INSURED FUND INVESTMENT PERFORMANCE
Change in Value of $10,000 from 11/30/86 - 11/30/96
Based on NAV and MOP for Class A Shares
DATE NAV MOP Lehman
---- --- --- ------
Nov 30, 86 10000 9525 10,000
Dec 31, 86 9950.74 9478.08 9,972
Mar 31, 87 10179.09 9695.58 10,214
Jun 30, 87 9624.93 9167.74 9,937
Sep 30, 87 9288.71 8847.50 9,690
Dec 31, 87 9722.76 9260.93 10,122
Mar 31, 88 10052.99 9575.47 10,471
Jun 30, 88 10241.77 9755.29 10,674
Sep 30, 88 10531.40 10031.16 10,947
Dec 31, 88 10797.08 10284.22 11,151
Mar 31, 89 10893.53 10376.09 11,225
Jun 30, 89 11432.22 10889.19 11,890
Sep 30, 89 11427.76 10884.94 11,898
Dec 31, 89 11787.56 11227.66 12,354
Mar 31, 90 11830.81 11268.85 12,409
Jun 30, 90 12078.95 11505.20 12,699
Sep 30, 90 12057.89 11485.14 12,707
Dec 31, 90 12537.53 11942.00 13,255
Mar 31, 91 12807.61 12199.24 13,554
Jun 30, 91 13082.06 12460.67 13,844
Sep 30, 91 13515.07 12873.11 14,382
Dec 31, 91 14005.58 13340.32 14,864
Mar 31, 92 14005.31 13340.06 14,909
Jun 30, 92 14487.21 13799.06 15,473
Sep 30, 92 14811.15 14107.62 15,885
Dec 31, 92 15049.55 14334.70 16,174
Mar 31, 93 15618.26 14876.40 16,775
Jun 30, 93 16061.11 15298.20 17,324
Sep 30, 93 16541.75 15756.02 17,910
Dec 31, 93 16698.44 15905.27 18,161
Mar 31, 94 15770.62 15021.52 17,164
Jun 30, 94 15905.07 15149.58 17,353
Sep 30, 94 15959.29 15201.23 17,472
Dec 31, 94 15672.46 14928.02 17,222
Mar 31, 95 16806.95 16008.62 18,440
Jun 30, 95 16987.19 16180.30 18,884
Sep 30, 95 17399.95 16573.45 19,427
Dec 31, 95 18396.72 17522.87 20,229
Mar 31, 96 17830.94 16983.97 19,985
Jun 30, 96 17968.54 17115.04 20,138
Sep 30, 96 18380.56 17507.48 20,600
Nov 30, 96 18962.03 18061.33 21,214
A $10,000 investment in Class B shares made on May 5, 1992 at net asset value
(NAV) would have been valued at $12,997 on November 30, 1996. The same
investment based on contingent deferred sales charge (CDSC) would have grown to
$12,797 on November 30, 1996.
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.
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/96 (Most Recent Quarter End)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
INCEPTION 11/20/85 5/5/92
NAV MOP NAV w/CDSC
- --------------------------------------------------------------------------------
1 YEAR 2.26% (2.60)% 1.50% (3.37)%
- --------------------------------------------------------------------------------
5 YEARS 6.08% 5.05% -- --
- --------------------------------------------------------------------------------
10 YEARS 6.58% 6.06% -- --
- --------------------------------------------------------------------------------
SINCE INCEPTION 7.74% 7.27% 5.59% 5.24%
- --------------------------------------------------------------------------------
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. Past performance cannot predict future
results.
<PAGE>
INVESTMENT PORTFOLIO
NOVEMBER 30, 1996 (IN THOUSANDS)
MUNICIPAL BONDS - 97.6% PAR VALUE
- -------------------------------------------------------------------------------
EDUCATION - 14.7%
EDUCATION - 7.6%
IL Chicago Board of Education,
Series 1992-A,
6.250% 01/01/15 $ 6,000 $ 6,600
IN Whitko Middle School Building
Corp. First Mortgage, Series 1991,
6.750% 07/15/12 1,000 1,108
MA Health and Educational Facilities:
Harvard University, Series N,
6.250% 04/01/20 6,760 7,596
Northeastern University:
Series 1988-B,
7.600% 10/01/10 1,000 1,077
Series E,
6.550% 10/01/22 1,500 1,611
UT State Municipal Finance Co-Operative
Local Government, Pooled Capital
Improvement,
6.800% 05/01/12 1,000 1,090
WV School Building Authority, Capital
Import Revenue Bonds, Series 1990-B,
6.750% 07/01/17 75 81
--------
19,163
--------
SCHOOL DISTRICT GENERAL OBLIGATIONS - 5.7%
AZ Maricopa County School District,
Number 8 Osborn,
7.500% 07/01/08 1,235 1,511
AZ Mohave County Unified High School
District, Series B,
8.500% 07/01/06 250 322
GA Columbia County School District,
Series A,
6.750% 04/01/08 1,695 1,966
MI Brighton Area School District,
Series II,
(a) 05/01/17 10,340 3,309
MI Johannesburg & Lewiston Schools,
Series 1996,
5.000% 05/01/16 2,415 2,300
PA Philadelphia School District
Series B,
5.500% 09/01/25
5,000 4,994
--------
14,402
--------
STUDENT LOAN - 1.4%
AL State Higher Education Loan Corp.,
Series 1994-C,
5.850% 09/01/04 (b) 1,000 1,044
NM State Educational Assistance
Foundation, Series A,
6.700% 04/01/02 200 210
PA State Higher Education Assistance
Student Loan, RIB (variable rate),
Series 1990-B,
11.031% 03/01/20 2,000 2,180
--------
3,434
--------
- -------------------------------------------------------------------------------
HEALTHCARE - 8.0%
HOSPITALS - 7.0%
AZ Scottsdale Industrial Development
Authority, Scottsdale Memorial Hospital,
Series 1987-A,
8.500% 09/01/17 500 525
IL Health Facilities Authority:
Methodist Health Services Corp.,
Series 1985-G,
8.000% 08/01/15 955 1,040
RIB (variable rate), Series 1992-B,
9.943% 05/01/21 500 590
Rockford Memorial Hospital,
Series B,
6.750% 08/15/18 50 53
MA Health and Educational Facilities Authority:
McLean Hospital, Series C,
6.625% 07/01/15 500 543
New England Deaconess Hospital,
Series D,
6.875% 04/01/22 2,500 2,747
Valley Regional Health System, Series C,
7.000% 07/01/08 (b) 1,585 1,852
MS State Hospital Equipment and
Facilities Authority,
Rush Medical Foundation Project,
6.700% 01/01/18 250 267
NV Reno Hospital, St. Mary's Regional
Medical Center, Series 1991-A,
6.700% 07/01/21
1,000 1,080
OK State Industrial Authority,
Baptist Medical Center, Series C,
7.000% 08/15/04 (b) 1,500 1,701
TN Knox City Health Education and
Housing Facilities
5.250% 01/01/15 5,000 4,887
WI State Health & Educational
Facilities Authority:
Bellin Memorial Hospital,
6.625% 02/15/08 1,000 1,129
Milwaukee Regional Medical Center
Series 1990,
7.500% 08/01/11 1,000 1,095
Waukesha Memorial Hospital,
7.250% 08/15/19 60 67
--------
17,576
--------
NURSING HOME - 1.0%
WA State Housing Finance Commission,
Franciscan Elder Care Corp.,
Series 1991,
6.875% 01/01/21 2,250 2,438
--------
- -------------------------------------------------------------------------------
HOUSING - 3.8%
MULTI-FAMILY - 1.1%
IL Onterie Center Housing Finance Corp.,
Onterie Center Project, Series 1992-A,
7.050% 07/01/27 2,000 2,115
KY State Housing Corp.,
Series 1985-A,
8.875% 07/01/19 80 81
MD Howard County Medical Mortgage
Heartlands Elderly Apartments,
Series 1985,
8.875% 12/01/10 495 522
--------
2,718
--------
SINGLE-FAMILY - 2.7%
AK State Housing Finance Corp.,
Series 1990-A2,
7.000% 12/01/11 210 223
FL Brevard County Housing Finance Authority,
Series C,
7.000% 09/01/23 40 42
MA State Housing Finance Agency:
Series 21,
7.125% 06/01/25 1,310 1,389
Series A,
6.400% 01/01/09 2,000 2,115
MS Housing Finance Corporation, Single
Family Mortgage,
8.250% 10/15/18 2,805 2,942
--------
6,711
--------
- -------------------------------------------------------------------------------
OTHER REVENUE - 4.0%
JUSTICE & PUBLIC ORDER - 3.4%
IN State Office Building Commission,
Women's Prison,
Series B,
6.250% 07/01/16 8,000 8,670
--------
OTHER REVENUE - 0.6%
CA Fairs Financing Authority,
Series 1991,
6.500% 07/01/11 1,300 1,394
--------
- -------------------------------------------------------------------------------
PUBLIC FACILITIES IMPROVEMENT - 0.0%
IL State Dedicated Tax,
Civic Center, Series A,
7.000% 12/15/13 200 219
--------
- -------------------------------------------------------------------------------
PUBLIC INFRASTRUCTURE - 1.2%
FL Gulf Breeze,
Local Government Loan Program,
Series 1985-B,
8.000% 12/01/15 1,000 1,092
MI Municipal Bond Authority, Local
Government Loan Program:
Series 1991-C,
(a) 06/15/15 3,380 1,208
Series G,
(a) 05/01/18 2,000 600
--------
2,900
--------
- -------------------------------------------------------------------------------
REFUNDED/ESCROW/SPECIAL OBLIGATIONS (c) - 11.0%
CA Alameda County,
Series 1985-1,
7.250% 12/01/08 (b) 1,300 1,472
CA East Bay Municipal Utilities District,
Series 1990,
7.500% 06/01/18
2,500 2,819
CA Los Angeles County Transport Commission
Sales Tax, Metropolitan Train,
Series 1991-A,
6.750% 07/01/18 1,000 1,121
FL Dunedin,
Mease Health Care Center,
Series 1991,
6.750% 11/15/11 100 112
FL Hollywood Water & Sewer Revenue,
6.750% 10/01/11 50 56
IL Chicago,
Central Public Library Project,
Series 1988-C,
6.850% 01/01/17 1,000 1,129
IL Decatur,
6.900% 10/01/14 250 274
MA Bay Transportation Authority:
General Transportation System,
Series 1990-A,
7.625% 03/01/15 2,000 2,240
Certificates of Participation,
Series 1990-A,
7.650% 08/01/15 1,000 1,135
MI Chippewa Valley Schools,
Series 1992,
6.375% 05/01/15 4,545 4,977
NY New York City Municipal Finance
Authority Water and Sewer Systems
Series 1991-C,
7.000% 06/15/16 1,500 1,684
NY State Dormitory Authority,
City University System, Series 1990-F,
7.500% 07/01/20 2,000 2,252
NY State Medical Care Facilities
Finance Agency, St. Luke's-Roosevelt
Hospital Center, Series 1989-B,
7.450% 02/15/29 500 557
OK State Industrial Authority,
Baptist Medical Center, Series A,
7.000% 08/15/14 150 167
OR Portland International Airport,
7.100% 07/01/21 950 1,069
PA Pittsburgh Water & Sewer Authority,
Series A,
6.500% 09/01/14 270 299
SC Charleston County Certificate
of Participation, Series 1991,
7.100% 06/01/11 2,000 2,260
SC Piedmont Municipal Power Agency,
Series 1991-A,
6.125% 01/01/07 75 83
TN Chattanooga-Hamilton County
RIB (variable rate), Series 1991-B,
10.027% 05/25/21 1,000 1,227
TX Austin Utilities System Revenue,
7.000% 05/15/16 1,200 1,347
TX Colorado River Municipal Water
District, Water Transmission Facilities,
Series 1991-A,
6.625% 01/01/21 250 271
TX Harris County Health Facilities
Development Corp.,
Texas Children's Hospital, Series A,
7.000% 10/01/19 50 55
WI State Health & Educational
Facilities Authority,
Waukesha Memorial Hospital,
7.250% 08/15/19 940 1,052
--------
27,658
--------
- -------------------------------------------------------------------------------
RESOURCE RECOVERY - 0.6%
RESOURCE RECOVERY
SC Charleston County Solid Waste User Fee,
6.500% 01/01/09 (b) 1,405 1,542
--------
- -------------------------------------------------------------------------------
TAX-BACKED - 9.6%
GENERAL OBLIGATION - 6.7%
AZ Tucson,
Series 1994-G,
7.625% 07/01/14 3,140 3,976
CA State,
Series 1995,
10.000% 10/01/06 (b) 1,000 1,395
CO Highlands Ranch Metropolitan
District No. 2, Series 1996,
6.500% 06/15/12 1,000 1,126
DC District of Columbia
General Obligation, Series 1993-B1,
5.500% 06/01/09 1,000 1,019
IL Chicago,
Series 1995 A-2,
6.250% 01/01/14 4,000 4,410
LA New Orleans, Series 1991,
(a) 09/01/16 2,000 660
MD Baltimore:
7.000% 10/15/08 300 355
7.000% 10/15/09 (b) 1,055 1,249
NV Clark County, Series A,
7.500% 06/01/07 350 423
NV Las Vegas-Clark County Library District,
7.500% 02/01/02 1,000 1,130
WA Bellevue Convention Center Authority,
(a) 02/01/24 5,000 1,050
--------
16,793
--------
SALES & EXCISE TAX - 1.7%
IL Metropolitan Pier & Exposition
Authority,
Series 1996-A,
5.250% 06/15/27 4,625 4,451
--------
TAX ALLOCATION - 1.2%
NY State Local Government Assistance Corp.,
Series 1993-E,
5.000% 04/01/21 3,175 2,992
--------
- -------------------------------------------------------------------------------
TRANSPORTATION - 13.4%
AIRPORT - 4.3%
GA Atlanta Airport Facilities Revenue,
Series A,
6.500% 01/01/07 (b) 1,000 1,136
HI State, Airport System Revenue,
Series 2,
6.750% 07/01/21 250 269
IL Chicago O'Hare International Airport
Special Facility, International Terminal,
6.750% 01/01/12 (b) 300 322
NV Clark County Airport Improvement
McCarren International Airport Las Vegas
Series 1988,
8.250% 07/01/15 3,500 3,780
OR Portland International Airport,
7.100% 07/01/21 50 55
PA Allegheny County Airport,
Greater Pittsburgh International,
Series 1988-C,
8.250% 01/01/16 3,250 3,441
TX Dallas-Fort Worth Regional Airport,
Series A,
7.375% 11/01/11 1,380 1,616
TX Houston Airport System Revenue,
Series A,
6.750% 07/01/21 200 213
--------
10,832
--------
TRANSPORTATION - 7.6%
DC Metropolitan Area Transit Authority,
6.000% 07/01/10 1,000 1,078
IL Regional Transportation Authority,
Series C,
7.750% 06/01/20 5,000 6,519
MA Massachusetts Bay Transportation
Authority,
Series B,
5.375% 03/01/25 5,000 4,937
MA State Port Authority,
7.500% 07/01/20 1,000 1,096
OH Greater Cleveland Regional
Transportation Authority,
Series 1996,
5.600% 12/01/11 2,000 2,045
SC State Ports Authority,
Series 1991:
6.500% 07/01/06 250 269
6.750% 07/01/21 3,000 3,225
--------
19,169
--------
TURNPIKE/TOLLROAD/BRIDGE - 1.5%
NY Triborough Bridge & Tunnel Authority,
Series A,
6.625% 01/01/17 250 271
PR Commonwealth of Puerto Rico Highway
& Transportation Authority,
Series 1996-Y,
6.250% 07/01/12 3,000 3,353
TX Harris County,
Toll Road Revenue,
6.500% 08/15/11 120 130
--------
3,754
--------
- -------------------------------------------------------------------------------
UTILITY - 31.3%
INVESTOR OWNED - 5.0%
DE State Economic Development Authority,
New Castle County Gas
System,
Series 1991-C,
7.150% 07/01/21 1,000 1,107
HI State Department of Budget & Finance,
Hawaiian Electric Co.,
Series A,
6.600% 01/01/25 4,000 4,330
MI St. Clair County Economic
Development Corp.,
Detroit Edison Co., Series 1993 AA,
6.400% 08/01/24 1,000 1,094
NV Clark County Pollution Control
Nevada Power Company, Series 1992-B,
6.600% 06/01/19 3,500 3,832
NY New York Energy Research & Development
Adjusted Gas Facilities,
Brooklyn Union Gas Company, Series 1989-B
6.750% 02/01/24 2,000 2,190
--------
12,553
--------
JOINT POWER AUTHORITY - 9.1%
CA Southern California Power Authority,
Palo Vero Project,
Series 1989-A,
5.000% 07/01/15 5,500 5,218
GA Municipal Electrical Authority,
Special Obligation, Project One,
Fifth Cross,
6.400% 01/01/13 1,000 1,124
MN Southern Minnesota Municipal
Power Agency,
Series A:
(a) 01/01/24 10,000 2,188
5.000% 01/01/16 1,000 934
SC Piedmont Municipal Power Agency,
Series 1991-A,
6.125% 01/01/07 425 461
TX State Municipal Power Agency:
(a) 09/01/10 (b) 5,000 2,388
(a) 09/01/11 7,900 3,545
(a) 09/01/12 3,000 1,271
(a) 09/01/15 8,975 3,175
(a) 09/01/17 7,600 2,404
WA State Public Power Supply System,
Nuclear Project No. 2, Series A,
6.500% 07/01/05 200 217
--------
22,925
--------
MUNICIPAL ELECTRIC - 4.7%
AK Anchorage:
Series 1993,
8.000% 12/01/09 (b) 1,000 1,263
Series 1996,
6.500% 12/01/10 3,075 3,467
PR Puerto Rico Electric Power Authority,
Series 1989-O,
5.000% 07/01/12 2,900 2,748
SC State Public Service Authority,
Series A,
6.250% 01/01/22 3,500 3,719
SD Heartland Consumers Power District,
6.000% 01/01/09 300 326
WA Clark County Public Utilities
District Number 001 Electric System,
6.500% 01/01/11 200 212
--------
11,735
--------
WATER & SEWER - 12.5%
CA Central Coast Water Authority,
State Water Project Regional Facilities,
Series 1996-A,
5.000% 10/01/22 2,000 1,877
FL Reedy Creek Improvement District,
Series 1994-1,
5.000% 10/01/19 5,000 4,669
FL Saint John's County Water and Sewer
Saint Augustine Shores System,
Series 1991-A:
(a) 06/01/13 2,600 1,056
(a) 06/01/14 1,500 578
GA Fulton County Water and Sewer
6.375% 01/01/14 6,000 6,742
IL Kankakee Sewer,
Series 1991,
7.000% 05/01/16 1,000 1,105
MD Baltimore,
Series 1996-A,
5.500% 07/01/26 1,500 1,507
PA Pottstown Borough Authority Sewer,
Guaranteed Sewer Revenue, Series 1991,
(a) 11/01/16 1,000 330
VA Loudoun County Sanitation Authority,
Series 1992,
6.250% 01/01/16 1,000 1,074
VA Prince William County Services
Authority,
5.000% 07/01/21 4,900 4,520
VA Roanoke County,
Water System Revenue, Series 1993,
5.000% 07/01/21 3,500 3,273
VA Virginia Beach Water and Sewer,
5.125% 02/01/19 4,880 4,648
--------
31,379
--------
TOTAL MUNICPAL BONDS (cost of $225,070) (d) 245,408
--------
SHORT-TERM OBLIGATIONS - 1.3%
- -------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (e)
IL State Educational Facilities Authority,
3.600% 12/01/25 1,000 1,000
MI Farmington Hills Hospital
Finance Authority,
Botsford General Hospital, Series 1991-B,
4.100% 02/15/16 1,400 1,400
MI Flint Hospital Building Authority,
Hurley Medical Center, Series 1995-B,
3.450% 07/01/15 600 600
OH Twinsburg,
United Stationers Supply Co., Series 1996,
4.200% 12/01/11 300 300
--------
TOTAL SHORT-TERM OBLIGATIONS 3,300
--------
OTHER ASSETS & LIABILITIES, NET - 1.1% 2,626
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $251,334
========
<PAGE>
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) These securities, or a portion thereof, with a total market value of
$13,408, are being used to collateralize open futures contracts.
(c) The Fund has been informed that the issuer has placed direct obligations of
the U.S. Government in an irrevocable trust, solely for the payment of the
interest and principal.
(d) 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, 1996.
Short futures contracts open at November 30, 1996:
Par value Unrealized
covered Expiration depreciation
Type by contracts month at 11/30/96
-----------------------------------------------------------------
Treasury bond $5,000 March $45
Acronym Name
-------------- -------------------------------
RIB Residual Interest Bond
SUMMARY OF SECURITIES BY INSURER
% of
Insurer Net Assets
------- ----------
Municipal Bond Insurance Agency 31.0
AMBAC Indemnity Corporation 31.7
Financial Guarantee Insurance Company 23.7
Uninsured Securities 7.9
Financial Security Assurance 2.9
Capital Guarantee Insurance Company 1.0
Bond Investment Guarantee Insurance 1.0
Connie Lee Insurance Company 0.8
---------
100.0
=========
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 $225,070) $ 245,408
Short-term obligations 3,300
----------
248,708
Receivable for:
Interest $ 4,561
Investments sold 20
Fund shares sold 6
Other 29 4,616
------------ ----------
Total Assets 253,324
LIABILITIES
Payable for:
Distributions 987
Fund shares repurchased 931
Variation margin on futures 47
Accrued:
Deferred Trustees fees 3
Other 22
------------
Total Liabilities 1,990
----------
NET ASSETS $ 251,334
==========
Net asset value & redemption price per share -
Class A ($206,713/24,821) $8.33
==========
Maximum offering price per share - Class A
($8.33/0.9525) $8.75 (a)
==========
Net asset value & offering price per share -
Class B ($44,621/5,358) $8.33 (b)
==========
COMPOSITION OF NET ASSETS
Capital paid in $ 236,102
Undistributed net investment income 63
Accumulated net realized loss (5,124)
Net unrealized appreciation (depreciation) on:
Investments 20,338
Open futures contracts (45)
----------
$ 251,334
==========
(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
Interest $ 15,919
EXPENSES
Management fee $ 1,475
Service fee 666
Distribution fee - Class B 350
Transfer agent 430
Bookkeeping fee 103
Trustees fee 27
Custodian fee 11
Audit fee 34
Legal fee 6
Registration fee 25
Reports to shareholders 16
Other 21
-------------
3,164
Custodian Credits Earned (11) 3,153
------------
Net Investment Income 12,766
------------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 2,333
Closed futures contracts (611)
-------------
Net Realized Gain 1,722
Net unrealized appreciation (depreciation)
during the period on:
Investments (4,265)
Open futures contracts 241
-------------
Net Unrealized Loss (4,024)
------------
Net Loss (2,302)
------------
Net Increase in Net Assets from Operations $ 10,464
============
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 $ 12,766 $ 14,218
Net realized gain 1,722 819
Net unrealized appreciation (depreciation) (4,024) 30,648
---------- -----------
Net Increase from Operations 10,464 45,685
Distributions:
From net investment income - Class A (10,994) (12,225)
From net investment income - Class B (1,979) (2,207)
---------- -----------
(2,509) 31,253
---------- -----------
Fund Share Transactions:
Receipts for shares sold - Class A 12,464 20,382
Receipts for shares issued in the acquisition
of Liberty Financial Insured Municipal Fund - 42,751
Value of distributions reinvested - Class A 6,488 6,971
Cost of shares repurchased - Class A (51,021) (53,716)
---------- -----------
(32,069) 16,388
---------- -----------
Receipts for shares sold - Class B 3,033 5,062
Value of distributions reinvested - Class B 1,129 1,259
Cost of shares repurchased - Class B (9,160) (7,762)
---------- -----------
(4,998) (1,441)
---------- -----------
Net Increase (Decrease) from
Fund Share Transactions (37,067) 14,947
---------- -----------
Total Increase (Decrease) (39,576) 46,200
NET ASSETS
Beginning of period 290,910 244,710
---------- -----------
End of period (including undistributed net
investment income of $63 and $230,
respectively) $ 251,334 $ 290,910
=========== ===========
NUMBER OF FUND SHARES
Sold - Class A 1,521 2,596
Issued in the acquisition of Liberty
Financial Insured Municipal Fund - 5,319
Issued for distributions reinvested - Class A 791 873
Repurchased - Class A (6,241) (6,739)
---------- -----------
(3,929) 2,049
---------- -----------
Sold - Class B 370 639
Issued for distributions reinvested - Class B 138 158
Repurchased - Class B (1,119) (977)
---------- -----------
(611) (180)
---------- -----------
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
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's objective is to seek as high a level
of after-tax total return, as is consistent with prudent risk, by pursuing
current income exempt from federal income tax and opportunities for long-term
appreciation from a portfolio primarily invested in insured municipal bonds. 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 period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies that are 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.
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 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
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 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:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $1 billion 0.60%
Next $2 billion 0.55%
Next $1 billion 0.50%
Over $4 billion 0.45%
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus 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 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 Fund's
principal underwriter. During the year ended November 30, 1996, the Fund has
been advised that the Distributor retained net underwriting discounts of $18,783
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $142,383 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.
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.
The Fund has an agreement with its custodian bank under which $11,217 of
custodian fees have been reduced by balance credits applied during the period
ended November 30, 1996. The Fund could have invested a portion of the assets
utilized in connection with the expense offset arrangements in an income
producing asset if it had not entered into such agreements.
NOTE 3. PORTFOLIO INFORMATION
................................................................................
INVESTMENT ACTIVITY: During the year ended November 30, 1996, purchases and
sales of investments, other than short-term obligations were $66,342,099 and
$104,998,323, 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 $ 20,396,083
Gross unrealized depreciation (58,479)
-------------
Net unrealized appreciation $ 20,337,604
=============
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
---------- ------------
2002 $ 3,002,000
Of the loss carryforwards expiring in 2002, $310,000 was acquired in the merger
with Liberty Financial Insured Municipal Fund. The 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,
1996, invested in Massachusetts and in Illinois.
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 purchase or sell 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 the 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 a position 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 variation margin recorded in the Fund's 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.
NOTE 5. 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:
Year ended November 30
---------------------------------------------
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
Net asset value -
Beginning of period $ 8.380 $ 8.380 $ 7.450 $ 7.450
------- ------- ------- -------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.403 0.342 0.418 0.359
Net realized and
unrealized gain (loss) (0.045) (0.045) 0.935 0.935
------- ------- ------- -------
Total from Investment
Operations 0.358 0.297 1.353 1.294
------- ------- ------- -------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment income (0.408) (0.347) (0.423) (0.364)
------- ------- ------- -------
Net asset value -
End of period $ 8.330 $ 8.330 $ 8.380 $ 8.380
======= ======= ======= =======
Total return (a) 4.48% 3.70% 18.55% 17.68%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.05%(b) 1.80%(b) 1.05%(b) 1.80%(b)
Net investment income 4.92%(b) 4.17%(b) 5.20%(b) 4.45%(b)
Portfolio turnover 25% 25% 31% 31%
Net assets at end
of period (000) $206,713 $ 44,621 $240,894 $ 50,016
(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.
- ------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (unaudited)
All of the income 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:
Year ended November 30
------------------------------------------------------
1994 1993
Class A Class B Class A Class B
------- ------- ------- -------
$ 8.420 $ 8.420 $ 8.080 $ 8.080
------- ------- ------- -------
0.439 0.378 0.456 0.395
(0.977) (0.977) 0.338 0.338
------- ------- ------- -------
(0.538) (0.599) 0.794 0.733
------- ------- ------- -------
(0.432) (0.371) (0.454) (0.393)
------- ------- ------- -------
$ 7.450 $ 7.450 $ 8.420 $ 8.420
======= ======= ======= =======
(6.61%) (7.31%) 10.00% 9.20%
======= ======= ======= =======
1.05% 1.80% 1.07% 1.82%
5.44% 4.69% 5.44% 4.69%
36% 36% 12% 12%
$198,909 $45,801 $241,610 $46,035
<PAGE>
FINANCIAL HIGHLIGHTS - continued
Year ended November 30
-------------------------------
1992
Class A Class B(a)
------- -------
Net asset value -
Beginning of period $ 7.880 $ 7.910
------- -------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.480 0.240
Net realized and
unrealized gain 0.200 0.170
------- -------
Total from Investment
Operations 0.680 0.410
------- -------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment income (0.480) (0.240)
------- -------
Net asset value -
End of period $ 8.080 $ 8.080
======= =======
Total return (b) 8.85% 5.23%(c)
======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.10% 1.85%(d)
Net investment income 5.97% 5.22%(d)
Portfolio turnover 7% 7%
Net assets at end
of period (000) $ 217,782 $ 16,519
(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, 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>
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 Tax-Exempt Insured Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Tax-Exempt Insured 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 Tax-Exempt Insured
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) 1997
One of the Liberty Financial Companies (NYSE:L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
TI-02/107D-1296 M (1/97)
[recycle symbol] Printed on recycled paper
