<PAGE>
COLONIAL
TAX-EXEMPT INSURED FUND
[GRAPHIC OMITTED]
SEMIANNUAL REPORT
MAY 31, 1997
NOT FDIC- | MAY LOSE VALUE
INSURED | NO BANK GUARANTEE
<PAGE>
COLONIAL TAX-EXEMPT INSURED FUND HIGHLIGHTS
DECEMBER 1, 1996 - MAY 31, 1997
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: "Fluctuating interest rates created a challenging
investment environment. However, the Fund maintained competitive performance by
investing selectively in good quality bonds in 'out of favor' sectors."
-- William Loring
COLONIAL TAX-EXEMPT INSURED FUND PERFORMANCE
CLASS A CLASS B
Inception dates 11/20/85 5/5/92
- -------------------------------------------------------------------------------
6-month distributions declared per share 1 $0.200 $0.170
- -------------------------------------------------------------------------------
SEC yields on 5/31/97 2 4.22% 3.68%
- -------------------------------------------------------------------------------
Taxable-equivalent SEC yields 3 6.99% 6.09%
- -------------------------------------------------------------------------------
Six-month total returns, assuming reinvestment 0.75% 0.38%
of all distributions and no sales charge
or contingent deferred sales charge (CDSC)
Net asset value per share on 5/31/97 $8.19 $8.19
1 A portion of the Fund's income may be subject to the alternative minimum tax.
2 The 30-day SEC yields on May 31, 1997, 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.
3 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 5/31/97)
- -------------------------------------------------------------------------------
1 - 3 years ..................1.2% 15 - 20 years ...............32.2%
3 - 5 years ..................8.9% 20 - 25 years ...............23.3%
5 - 7 years ..................0.5% 25+ years ...................12.2%
7 - 10 years .................2.4% Cash and equivalents .........2.8%
10 - 15 years ...............16.5%
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 the semiannual report for Colonial Tax-Exempt Insured
Fund. This report reflects on the investment environment for the six months
ended May 31, 1997.
The economy continued to grow at a healthy pace during the past six months. A
firm job market buoyed consumer confidence, resulting in strong retail, auto and
housing sales. The strength of the economy during the first quarter of 1997 led
the Federal Reserve Board to raise short-term interest rates in March for the
first time in two years. This action was a response to growing concern about
future wage and price inflation. As interest rates rose, bond prices declined.
Despite the increase in interest rates, investments in municipal bonds had
smaller price declines than those of some alternative fixed-income investments,
including Treasury bonds. A lower supply of new municipal issues, low dealer
inventories and strong demand helped support tax-exempt bond prices. In
addition, the specter of potential tax reform that would have negatively
affected municipal bonds faded with the outcome of the November presidential and
congressional elections.
The investment environment for municipal bonds was not without challenge. The
yield advantage for investing in lower quality municipal bonds was at an
historically low level, increasing the demand and price for the higher quality
bonds the Fund invests in. Narrow spreads combined with tight supply created
higher prices and lower yields for new investments. Additional uncertainty was
experienced as Congress struggled to reach a balanced budget agreement, although
a compromise reached later in the period encouraged municipal market investors.
The long-term benefits of investing in any municipal bond fund include tax-free
income, the opportunity to diversify your fixed-income portfolio and an
investment in America's infrastructure. Colonial Tax-Exempt Insured Fund
continues to offer you competitive after-tax total return.
As always, we thank you for the opportunity to help meet your investment goals
through the Colonial family of funds.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
July 16, 1997
<PAGE>
PORTFOLIO MANAGEMENT REPORT
WILLIAM LORING is portfolio manager of Colonial Tax-Exempt Insured Fund and vice
president of Colonial Management Associates, Inc.
INVESTMENT ENVIRONMENT REFLECTS ECONOMIC UNCERTAINTY
Economic reports at the beginning of the period suggested a slowdown in growth
that would be reflected in lower interest rates. However, retail, housing and
auto sales were all stronger than expected at the end of 1996. These reports
sparked fears of potential inflation, a negative for bonds, and bond prices
declined. As the economy continued its healthy pace of growth into 1997, the
Federal Reserve Board raised short-term interest rates in March and bond prices
declined further.
Municipal bond prices fell less than Treasury bond prices during the period.
Decreased supply and increased demand for tax-exempt bonds combined to provide a
relatively positive market environment. Further support for the municipal bond
sector was generated by fading fears of tax reform after the presidential and
congressional elections in November.
TIGHT YIELD SPREADS PRESENT INVESTMENT CHALLENGE
The yield spread, or advantage, for investing in lower quality bonds was reduced
to an historically low level. This increased demand for the highest rated
municipal bonds, including the insured bonds that make up close to 90% of the
portfolio. Heavier demand for high quality bonds combined with a decreased
supply of tax-exempt bonds overall resulted in higher prices and lower yields
for newly issued bonds.
In an effort to identify bonds that were more attractively priced and that
offered greater potential price gains, we looked closely at several sectors that
had been "out of favor". For example, we invested selectively in California
electric utility bonds. Deregulation and increased competition in the utility
industry have created uncertainty nationwide, and utility bond prices have
declined. In California, utilities are on the leading edge of the deregulatory
wave. Several of the State's electric utilities have already diversified their
businesses, cut costs and made other strategic changes that position them well
for the more competitive environment ahead.
Health care is another sector that has come under pressure as a result of
increased industry competition. Hospitals continue to cut costs and search for
innovative ways to compete and the industry is consolidating. We look for
issuers that would benefit from this trend -- smaller, community-based
facilities are an example. These health care providers would be attractive
merger candidates for a larger organization looking to increase their market
share.
POSITIVE OUTLOOK FOR THE REMAINDER OF 1997
We are optimistic that the investment environment will improve over the months
ahead. We don't believe that the Federal Reserve Board will increase interest
rates further unless there is substantial evidence that the economy is growing
too strongly or that inflation is increasing. Slower growth in the second
quarter points to lower interest rates by year-end if this trend continues. In
this environment, we have increased our investments in bonds that should benefit
from declining interest rates.
COLONIAL TAX-EXEMPT INSURED FUND INVESTMENT PERFORMANCE
Change in Value of $10,000 from 5/31/87 - 5/31/97
Based on NAV and MOP for Class A Shares
AS_OF_DATE NAV MOP LEHMAN MUNI BOND IX TR
5/31/87 10000 9525 5/31/87 $10,000
8/31/87 10432.75 9937.194 8/31/87 10,422
11/30/87 10333.87 9843.012 11/30/87 10,336
2/29/88 10903.54 10385.63 2/29/88 10,975
5/31/88 10798.87 10285.93 5/31/88 10,898
8/31/88 11060.95 10535.55 8/31/88 11,139
11/30/88 11371.83 10831.67 11/30/88 11,435
2/28/89 11627.32 11075.03 2/28/89 11,656
5/31/89 12060.94 11488.05 5/31/89 12,152
8/31/89 12229.88 11648.96 8/31/89 12,362
11/30/89 12516.89 11922.33 11/30/89 12,694
2/28/90 12627.98 12028.15 2/28/90 12,852
5/31/90 12808.65 12200.24 5/31/90 13,041
8/31/90 12887.27 12275.13 8/31/90 13,156
11/30/90 13349.36 12715.27 11/30/90 13,672
2/28/91 13672.64 13023.19 2/28/91 14,036
5/31/91 14019.74 13353.8 5/31/91 14,355
8/31/91 14282.16 13603.75 8/31/91 14,707
11/30/91 14638.94 13943.59 11/30/91 15,074
2/29/92 15011.33 14298.29 2/29/92 15,438
5/31/92 15239.83 14515.94 5/31/92 15,765
8/31/92 15738 14990.45 8/31/92 16,349
11/30/92 15934.55 15177.66 11/30/92 16,586
2/28/93 16860.58 16059.7 2/28/93 17,563
5/31/93 16893.67 16091.22 5/31/93 17,651
8/31/93 17506.63 16675.06 8/31/93 18,344
11/30/93 17527.99 16695.41 11/30/93 18,425
2/28/94 17542.66 16709.38 2/28/94 18,536
5/31/94 17077.27 16266.1 5/31/94 18,087
8/31/94 17331.01 16507.79 8/31/94 18,370
11/30/94 16369.1 15591.57 11/30/94 17,457
2/28/95 17799.82 16954.33 2/28/95 18,885
5/31/95 18465.15 17588.05 5/31/95 19,735
8/31/95 18478.38 17600.66 8/31/95 19,998
11/30/95 19404.16 18482.46 11/30/95 20,756
2/29/96 19476.21 18551.09 2/29/96 20,971
5/31/96 19010.86 18107.84 5/31/96 20,636
8/31/96 19353.41 18434.12 8/31/96 21,045
11/30/96 20272.89 19309.93 11/30/96 21,976
2/28/97 20253.21 19291.19 2/28/97 22,126
5/31/97 20425.94 19455.7 5/31/97 $22,345
A $10,000 investment in Class B shares made on May 5, 1992, at net asset value
(NAV) would have been valued at $13,046 on May 31, 1997. The same investment
based on contingent deferred sales charges (CDSC) would have grown to $12,846 on
May 31, 1997.
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indexes are not investments, do not incur fees or expenses and it is not
possible to invest in an index.
Average Annual Total Returns
As of 6/30/97 (Most Recent Quarter End)
- -------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
INCEPTION 11/20/85 5/5/92
NAV MOP NAV w/CDSC
- -------------------------------------------------------------------------------
1 YEAR 7.53% 2.42% 6.73% 1.73%
- -------------------------------------------------------------------------------
5 YEARS 5.93 4.90 5.14 4.81
- -------------------------------------------------------------------------------
10 YEARS 7.22 6.70 -- --
- -------------------------------------------------------------------------------
SINCE INCEPTION 7.65 7.20 5.51 5.35
- -------------------------------------------------------------------------------
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, 2% for five years and 1% since inception. Past performance
cannot predict future results.
Effective 8/1/97, the Fund will also offer Class C shares.
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO
MAY 31, 1997 (UNAUDITED, IN THOUSANDS)
MUNICIPAL BONDS - 97.3% PAR VALUE
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 13.5%
Education - 7.2%
IL Chicago Board of Education,
Series 1992-A,
6.250% 01/01/15 $ 6,000 $ 6,450
MA Health and Educational Facilities:
Harvard University, Series N,
6.250% 04/01/20 6,760 7,444
Northeastern University,
Series E,
6.550% 10/01/22 1,500 1,592
UT State Municipal Finance Co-Operative
Local Government, Pooled Capital
Improvement,
6.800% 05/01/12 1,000 1,080
WV School Building Authority, Capital
Import Revenue Bonds, Series 1990-B,
6.750% 07/01/17 75 81
---------
16,647
---------
SCHOOL DISTRICT GENERAL OBLIGATIONS - 4.8%
AZ Maricopa County School District,
Number 8 Osborn,
7.500% 07/01/08 1,235 1,491
AZ Mohave County Unified High School
District, Series B,
8.500% 07/01/06 250 316
CO El Paso County School District
No. 11, Series 1996,
7.100% 12/01/18 3,220 3,864
GA Columbia County School District,
Series A,
6.750% 04/01/08 1,695 1,939
MI Brighton Area School District,
Series II,
(a) 05/01/17 10,340 3,360
---------
10,970
---------
STUDENT LOAN - 1.5%
AL State Higher Education Loan Corp.,
Series 1994-C,
5.850% 09/01/04 1,000 1,035
NM State Educational Assistance
Foundation, Series A,
6.700% 04/01/02 $ 200 $ 208
PA State Higher Education Assistance
Student Loan, RIB (variable rate),
Series 1990-B,
10.828% 03/01/20 2,000 2,230
---------
3,473
---------
-------------------------------------------------------------------------------------------------------
HEALTHCARE - 9.9%
HOSPITALS - 8.9%
AZ Scottsdale Industrial Development
Authority, Scottsdale Memorial Hospital,
Series 1987-A,
8.500% 09/01/17 500 515
FL North Broward Hospital District,
5.375% 01/15/24 2,000 1,920
IL Health Facilities Authority:
Methodist Health Services Corp.,
Series 1985-G,
8.000% 08/01/15 955 1,024
Series 1992-B, RIB (variable rate),
9.446% 05/01/21 500 572
Rockford Memorial Hospital, Series B,
6.750% 08/15/18 50 54
MA Health and Educational Facilities Authority:
McLean Hospital, Series C,
6.625% 07/01/15 500 538
New England Deaconess Hospital,
Series D,
6.875% 04/01/22 2,500 2,713
Valley Regional Health System,
Series C,
7.000% 07/01/08 1,585 1,833
MS State Hospital Equipment and
Facilities Authority,
Rush Medical Foundation Project,
6.700% 01/01/18 250 264
NV Reno Hospital, St. Mary's Regional
Medical Center, Series 1991-A,
6.700% 07/01/21 1,000 1,069
OK State Industrial Authority,
Baptist Medical Center,
Series C,
7.000% 08/15/04 1,500 1,697
TN Knox City Health Education and
Housing Facilities,
5.250% 01/01/15 5,000 4,850
TX Harris County Health Facilities
Development Corp.,
Texas Children's Hospital, Series A,
7.000% 10/01/19 50 54
WI State Health & Educational
Facilities Authority:
Bellin Memorial Hospital, 6.625% 02/15/08(b) 1,000 1,110
Waukesha Memorial Hospital:
Series B: 7.250% 08/15/19 940 1,033
7.250% 08/15/19 60 66
Series 1990,
7.500% 08/01/11 1,000 1,083
---------
20,395
---------
NURSING HOMES - 1.0%
WA State Housing Finance Commission,
Franciscan Elder Care Corp.,
Series 1991,
6.875% 01/01/21(b) 2,250 2,410
---------
-------------------------------------------------------------------------------------------------------
HOUSING - 4.4%
MULTI-FAMILY - 2.1%
IL Onterie Center Housing Finance Corp.,
Onterie Center Project,
Series 1992-A,
7.050% 07/01/27 2,000 2,102
KY State Housing Corp.,
Series 1985-A,
8.875% 07/01/19 80 81
MA State Housing Finance Agency,
Series A,
6.400% 01/01/09 2,000 2,100
MD Howard County Medical Mortgage
Heartlands Elderly Apartments,
Series 1985,
8.875% 12/01/10 490 514
---------
4,797
---------
SINGLE-FAMILY - 2.3%
AK State Housing Finance Corp.,
Series 1990-A2,
7.000% 12/01/11 180 190
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 1,379
MS Housing Finance Corporation Single
Family Mortgage,
8.250% 10/15/18 2,640 2,752
WV State Housing Development Fund,
5.800% 05/01/17 1,000 1,017
---------
5,380
---------
-------------------------------------------------------------------------------------------------------
OTHER REVENUE - 4.4%
JUSTICE & PUBLIC ORDER - 3.8%
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 1,386
---------
-------------------------------------------------------------------------------------------------------
PUBLIC FACILITIES IMPROVEMENT - 2.1%
CA Sacramento County,
Public Facilities Project,
Series 1996,
5.000% 02/01/12 3,510 3,352
CA San Francisco Building Authority,
San Francisco Civic Center Complex,
Series 1996-A,
5.250% 12/01/16 1,500 1,447
---------
4,799
---------
-------------------------------------------------------------------------------------------------------
PUBLIC INFRASTRUCTURE - 2.4%
CA San Francisco Building Authority,
San Francisco Civic Center Complex,
5.250% 12/01/21 4,500 4,292
MI Municipal Bond Authority, Local
Government Loan Program,
Series 1991-C,
(a) 06/15/15 3,380 1,200
---------
5,492
---------
-------------------------------------------------------------------------------------------------------
REFUNDED/ESCROW/SPECIAL OBLIGATIONS (c) - 9.7%
CA Alameda County, Series 1985-1,
7.250% 12/01/08 1,300 1,445
CA East Bay Municipal Utilities District,
Series 1990,
7.500% 06/01/18 2,500 2,769
CA Los Angeles County Transport Commission
Sales Tax, Metropolitan Train,
Series 1991-A,
6.750% 07/01/18 1,000 1,104
FL Dunedin, Mease Health Care Center,
Series 1991,
6.750% 11/15/11 100 111
FL Hollywood Water & Sewer Revenue,
6.750% 10/01/11 50 55
IL Chicago, Central Public Library Project,
Series 1988-C,
6.850% 01/01/17 1,000 1,111
IL Decatur,
6.900% 10/01/14 250 270
IN Whitko Middle School Building
Corporation First Mortgage, Series 1991,
6.750% 07/15/12 1,000 1,091
MA Bay Transportation Authority:
Certificates of Participation,
Series 1990-A,
7.650% 08/01/15 1,000 1,111
General Transportation System,
Series 1990-A,
7.625% 03/01/15 2,000 2,202
NY New York City Municipal Finance
Authority Water and Sewer Systems
Series 1991-C,
7.000% 06/15/16 1,500 1,657
NY State Dormitory Authority,
City University System, Series 1990-F,
7.500% 07/01/20 2,000 2,210
NY State Medical Care Facilities
Finance Agency, St. Luke's-Roosevelt
Hospital Center, Series 1989-B,
7.450% 02/15/29 500 547
OK State Industrial Authority,
Baptist Medical Center,
Series A,
7.000% 08/15/14 150 164
OR Portland International Airport,
7.100% 07/01/21 950 1,132
PA Pittsburgh Water & Sewer Authority,
Series A,
6.500% 09/01/14 270 295
SC Charleston County Certificate
of Participation, Series 1991,
7.100% 06/01/11 2,000 2,222
TN Chattanooga-Hamilton County
Series 1991-B, RIB (variable rate),
9.632% 05/25/21 1,000 1,187
TX Austin Utilities System Revenue,
7.000% 05/15/16 1,200 1,326
TX Colorado River Municipal Water
District, Water Transmission Facilities,
Series 1991-A,
6.625% 01/01/21 250 267
---------
22,276
---------
-------------------------------------------------------------------------------------------------------
RESOURCE RECOVERY - 0.7%
SC Charleston County Solid Waste User Fee,
6.500% 01/01/09 1,405 1,530
---------
-------------------------------------------------------------------------------------------------------
TAX-BACKED - 12.3%
GENERAL OBLIGATION - 6.7%
AZ Tucson,
Series 1994-G,
7.625% 07/01/14 3,140 3,894
CA State,
Series 1995,
10.000% 10/01/06 1,000 1,370
CO Highlands Ranch Metropolitan
District No. 2, Series 1996,
6.500% 06/15/12 1,000 1,115
DC District of Columbia
General Obligation, Series 1993-B1,
5.500% 06/01/09 1,000 1,001
IL Chicago,
Series 1995 A-2,
6.250% 01/01/14 4,000 4,315
LA New Orleans, Series 1991,
(a) 09/01/16 2,000 665
MD Baltimore:
7.000% 10/15/08 300 349
7.000% 10/15/09 1,055 1,230
NV Clark County, Series A,
7.500% 06/01/07 350 417
NV Las Vegas-Clark County Library District,
7.500% 02/01/02 1,000 1,111
---------
15,467
---------
SALES & EXCISE TAX - 4.4%
FL Hillsborough County Capital
Improvement,
5.125% 07/01/22 $ 3,500 $ 3,272
FL State Jacksonville Transportation
Authority,
5.000% 07/01/13(d) 3,500 3,334
FL State Division of Bond Financing,
Department of Natural Resources,
5.000% 07/01/13 1,000 954
IL Metropolitan Pier & Exposition
Authority:
Series A,
(a) 06/15/17 3,800 1,178
McCormick Place Expansion
Project, Series A,
(a) 06/15/16 3,750 1,233
IL State Dedicated Tax,
Civic Center, Series A,
7.000% 12/15/13 200 216
---------
10,187
---------
TAX ALLOCATION - 1.2%
NY State Local Government Assistance Corp.,
Series 1993-E,
5.000% 04/01/21 3,175 2,889
---------
-------------------------------------------------------------------------------------------------------
TRANSPORTATION - 12.4%
AIRPORT - 2.1%
HI State, Airport System Revenue,
Series 2,
6.750% 07/01/21 250 265
IL Chicago O'Hare International Airport
Special Facility, International Terminal,
6.750% 01/01/12 300 320
NY Albany County Airport Authority,
Series 1997,
5.375% 12/15/17 1,500 1,438
NY Port Authority NY/NJ,
JFK International Air Terminal,
6.250% 12/01/08 1,000 1,082
OR Portland International Airport,
7.100% 07/01/21 50 55
TX Dallas-Fort Worth Regional Airport,
Series A,
7.375% 11/01/11 1,380 1,584
TX Houston Airport System Revenue,
Series A,
6.750% 07/01/21 200 211
---------
4,955
---------
TRANSPORTATION - 8.2%
DC Metropolitan Area Transit Authority,
6.000% 07/01/10 1,000 1,069
IL Regional Transportation Authority,
Series C,
7.750% 06/01/20 5,000 6,369
MA Massachusetts Bay Transportation
Authority, Series B,
5.375% 03/01/25 5,000 4,819
MA State Port Authority,
7.500% 07/01/20 1,000 1,081
OH Greater Cleveland Regional
Transportation Authority,
Series 1996,
5.600% 12/01/11 2,000 2,025
SC State Ports Authority:
Series 1991:
6.500% 07/01/06 250 267
6.750% 07/01/21 3,000 3,195
---------
18,825
---------
TURNPIKE/TOLLROAD/BRIDGE - 2.1%
IL Chicago, Skyway Bridge,
Series 1996,
5.375% 01/01/16 1,250 1,202
NY Triborough Bridge & Tunnel Authority,
Series A,
6.625% 01/01/17 250 268
PR Commonwealth of Puerto Rico Highway
& Transportation Authority,
Series 1996-Y,
6.250% 07/01/12 3,000 3,311
TX Harris County,
Toll Road Revenue,
6.500% 08/15/11 120 129
---------
4,910
---------
UTILITY - 25.5%
INVESTOR OWNED - 5.4%
DE State Economic Development Authority,
New Castle County Gas System,
Series 1991-C,
7.150% 07/01/21 $ 1,000 $ 1,094
HI State Department of Budget & Finance,
Hawaiian Electric Co.,
Series A,
6.600% 01/01/25 4,000 4,280
MI St. Clair County Economic
Development Corp.,
Detroit Edison Co., Series 1993-AA,
6.400% 08/01/24 1,000 1,074
NV Clark County Pollution Control
Nevada Power Company, Series 1992-B,
6.600% 06/01/19 3,500 3,789
NY New York Energy Research & Development
Adjusted Gas Facilities,
Brooklyn Union Gas Company Series 1989-B
6.750% 02/01/24 2,000 2,162
---------
12,399
---------
JOINT POWER AUTHORITY - 8.0%
CA Southern California Power Authority,
Palo Vero Project,
Series 1989-A,
5.000% 07/01/15 5,500 5,129
GA Municipal Electrical Authority,
Special Obligation, Project One,
Fifth Cross,
6.400% 01/01/13 1,000 1,109
MN Southern Minnesota Municipal Power
Agency,
Series A,
5.000% 01/01/16 1,000 921
SC Piedmont Municipal Power Agency,
Series 1991-A:
6.125% 01/01/07 425 458
6.125% 01/01/07 75 82
TX State Municipal Power Agency:
(a) 09/01/10 5,000 2,425
(a) 09/01/11 7,900 3,604
(a) 09/01/12 3,000 1,286
(a) 09/01/15 8,975 3,164
WA State Public Power Supply System,
Nuclear Project No. 2, Series A,
6.500% 07/01/05(b)(e) 200 214
---------
18,392
---------
MUNICIPAL ELECTRIC - 6.6%
AK Anchorage:
Series 1993,
8.000% 12/01/09 1,000 1,255
Series 1996,
6.500% 12/01/10 3,075 3,429
OH Cleveland,
Series 1996-1,
5.000% 11/15/24 4,000 3,655
PR Puerto Rico Electric Power Authority,
Series 1989-O,
5.000% 07/01/12 2,900 2,708
SC State Public Service Authority,
Series A,
6.250% 01/01/22 3,500 3,662
SD Heartland Consumers Power District,
6.000% 01/01/09 300 323
WA Clark County Public Utilities
District Number 001 Electric System,
6.500% 01/01/11 200 211
---------
15,243
---------
WATER & SEWER - 5.5%
CA Central Coast Water Authority,
State Water Project Regional Facilities,
Series 1996-A,
5.000% 10/01/22 2,000 1,838
FL Saint John's County Water and Sewer
Saint Augustine Shores System,
Series 1991-A:
(a) 06/01/13 2,600 1,072
(a) 06/01/14 1,500 579
GA Fulton County Water and Sewer,
6.375% 01/01/14 6,000 6,623
IL Kankakee Sewer,
Series 1991,
7.000% 05/01/16 1,000 1,090
PA Pottstown Borough Authority Sewer,
Guaranteed Sewer Revenue, Series 1991,
(a) 11/01/16 1,000 331
VA Loudoun County Sanitation Authority,
Series 1992,
6.250% 01/01/16 $ 1,000 $ 1,056
---------
12,589
---------
TOTAL MUNICIPAL BONDS (cost of $209,992) 224,081
---------
OPTIONS - 0.0% CONTRACTS
-------------------------------------------------------------------------------------------------------
July 1997 Treasury Bond Puts:
Strike price 107, expiration 6/20/97
80 11
July 1997 Treasury Bond Calls:
Strike price 112, expiration 6/21/97
150 24
---------
TOTAL OPTIONS (cost of $112) 35
---------
TOTAL INVESTMENTS - 97.3% (cost of $210,104)(f) 224,116
---------
SHORT-TERM OBLIGATIONS - 2.8% PAR
-------------------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (g)
FL Pinellas County Health Facilities
Authority,
Series 1985,
4.100% 12/01/15 700 700
IL State Educational Facilities Authority,
3.950% 12/01/25 900 900
IL State Health Facilities Authority,
Franciscan Sisters Health Corp.,
Series 1992,
4.150% 01/01/18 200 200
IN Portage Economic Development Revision,
Pedcor Investments, Series A,
4.050% 08/01/30 900 900
MI Farmington Hills Hospital
Finance Authority,
Botsford General Hospital, Series 1991-B,
4.100% 02/15/16 100 100
NY Niagara Mohawk Series 1985-A,
4.200% 07/01/15 1,000 1,000
NY State Energy Research & Development
Authority, Niagara Mohawk Power Corp.,
Series B,
4.250% 07/01/27 2,600 2,600
---------
TOTAL SHORT-TERM OBLIGATIONS 6,400
---------
OTHER ASSETS & LIABILITIES, NET - (0.1)% $ (289)
-------------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 230,227
==========
NOTES TO INVESTMENT PORTFOLIO:
-------------------------------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) These securities, or a portion thereof, with a total market value of $3,682, are being used to
collateralize the delayed delivery purchase indicated in note (d) below.
(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) This security has been purchased on a delayed delivery basis for settlement at a future date
beyond the customary settlement time.
(e) This security, or a portion thereof, with a total market value of $26, is being used to
collateralize open calls on futures.
(f) Cost for federal income tax purposes is the same.
(g) Variable rate demand notes are considered short-term obligations. Interest rates change
periodically on specified dates. These securities are payable on demand and are secured by
either letters of credit or other credit support agreements from banks. The rates listed are as
of May 31, 1997.
</TABLE>
ACRONYM NAME
- ----------------------- -----------------------------------
RIB Residual Interest Bond
SUMMARY OF SECURITIES BY INSURER
% of
Insurer Net Assets
------- ----------
Municipal Bond Insurance Agency 30.9
AMBAC Indemnity Corporation 30.6
Financial Guarantee Insurance Company 19.6
Uninsured Securities 12.1
Financial Security Assurance 3.7
Capital Guarantee Insurance Company 1.1
Bond Investment Guarantee Insurance 1.1
Connie Lee Insurance Company 0.9
-----
100.0
=====
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS & LIABILITIES
MAY 31, 1997 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $210,104) $ 224,116
Short-term obligations 6,400
---------
230,516
Receivable for:
Interest $ 4,376
Investments sold 3,290
Fund shares sold 266
Other 100 8,032
-------- ---------
Total Assets 238,548
LIABILITIES
Payable for:
Investments purchased 6,678
Distributions 909
Fund shares repurchased 719
Accrued:
Deferred Trustees fees 4
Other 11
--------
Total Liabilities 8,321
---------
NET ASSETS $ 230,227
=========
Net asset value & redemption price per share -
Class A ($189,410/23,122) $8.19
=========
Maximum offering price per share - Class A
($8.19/0.9525) $8.60(a)
=========
Net asset value & offering price per share -
Class B ($40,817/4,983) $8.19(b)
=========
COMPOSITION OF NET ASSETS
Capital paid in $ 219,162
Undistributed net investment income 93
Accumulated net realized loss (3,040)
Net unrealized appreciation 14,012
---------
$ 230,227
=========
(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.
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1997
(UNAUDITED)
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $ 7,036
EXPENSES
Management fee $ 661
Service fee 296
Distribution fee - Class B 158
Transfer agent 193
Bookkeeping fee 46
Trustees fee 12
Custodian fee 7
Audit fee 19
Legal fee 4
Registration fee 15
Reports to shareholders 7
Other 16 1,434
-------- --------
Net Investment Income 5,602
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 2,214
Closed futures contracts (33)
--------
Net Realized Gain 2,181
Net unrealized appreciation (depreciation)
during the period on:
Investments (6,326)
Open futures contracts 45
--------
Net Unrealized Loss (6,281)
--------
Net Loss (4,100)
--------
Net Increase in Net Assets from Operations $ 1,502
========
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
(in thousands) MAY 31 NOVEMBER 30
------------ -----------
INCREASE (DECREASE) IN NET ASSETS 1997 1996
Operations:
Net investment income $ 5,602 $ 12,766
Net realized gain 2,181 1,722
Net unrealized depreciation (6,281) (4,024)
--------- ---------
Net Increase from Operations 1,502 10,464
Distributions:
From net investment income - Class A (4,798) (10,994)
From net investment income - Class B (874) (1,979)
--------- ---------
(4,170) (2,509)
--------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 3,662 12,464
Value of distributions reinvested - Class A 2,888 6,488
Cost of shares repurchased - Class A (20,425) (51,021)
--------- ---------
(13,875) (32,069)
--------- ---------
Receipts for shares sold - Class B 602 3,033
Value of distributions reinvested - Class B 505 1,129
Cost of shares repurchased - Class B (4,169) (9,160)
--------- ---------
(3,062) (4,998)
--------- ---------
Net Decrease from
Fund Share Transactions (16,937) (37,067)
--------- ---------
Total Decrease (21,107) (39,576)
NET ASSETS
Beginning of period 251,334 290,910
--------- ---------
End of period (including undistributed net
investment income of $93 and $63,
respectively) $ 230,227 $ 251,334
========= =========
NUMBER OF FUND SHARES
Sold - Class A 448 1,521
Issued for distributions reinvested - Class A 352 791
Repurchased - Class A (2,499) (6,241)
--------- ---------
(1,699) (3,929)
--------- ---------
Sold - Class B 74 370
Issued for distributions reinvested - Class B 62 138
Repurchased - Class B (511) (1,119)
--------- ---------
(375) (611)
--------- ---------
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
In the opinion of management of Colonial Tax-Exempt Insured Fund (the Fund), a
series of Colonial Trust IV, the accompanying financial statements contain all
normal and recurring adjustments necessary for the fair presentation of the
financial position of the Fund at May 31, 1997, and the results of its
operations, the changes in its net assets and the financial highlights for the
six months then ended.
NOTE 2. ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
ORGANIZATION: The Fund is a diversified portfolio of a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund's investment 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 3. FEES AND COMPENSATION PAID TO AFFILIATES
- -------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is the
investment Adviser of the Fund and furnishes accounting and other services and
office facilities for a monthly fee based on each fund's pro rata portion of the
combined average net assets of the Fund, Colonial Tax-Exempt Fund, and Colonial
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.
Effective January 1, 1997, and continuing through calendar year 1997, the
Transfer Agent fee will be reduced 0.01% in cumulative monthly increments,
resulting in a decrease in the fee from 0.14% to 0.13% annually.
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 six months ended May 31, 1997, the Fund has
been advised that the Distributor retained net underwriting discounts of $4,138
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $71,921 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.25% annually of the Fund's net assets as of the 20th of
each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% of the average net assets attributable to Class B
shares.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
OTHER: The Fund pays no compensation to its officers, all of
whom are employees of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
- -------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the six months ended May 31, 1997, purchases and
sales of investments, other than short-term obligations were $40,043,021 and
$58,006,708, respectively.
Unrealized appreciation (depreciation) at May 31, 1997, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $ 14,264,474
Gross unrealized depreciation (252,569)
--------------
Net unrealized appreciation $ 14,011,905
==============
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 May 31, 1997,
invested in California and Massachusetts.
There are certain risks arising from geographic concentration in any state.
Certain revenue or tax related events in a state may impair the ability of
certain issuers of municipal securities to pay principal and interest on their
obligations.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
The Fund may 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 5. LINE OF CREDIT
- -------------------------------------------------------------------------------
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the six months ended May 31, 1997.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period
are as follows:
(Unaudited)
Six months ended Year ended
May 31 November 30
------------------------------- ----------------------------
1997 1996
Class A Class B Class A Class B
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 8.330 $ 8.330 $ 8.380 $ 8.380
-------- -------- -------- --------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.198 0.168 0.403 0.342
Net realized and
unrealized gain (loss) (0.138) (0.138) (0.045) (0.045)
-------- -------- -------- --------
Total from Investment
Operations 0.060 0.030 0.358 0.297
-------- -------- -------- --------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment income (0.200) (0.170) (0.408) (0.347)
-------- -------- -------- --------
Net asset value -
End of period $ 8.190 $ 8.190 $ 8.330 $ 8.330
======== ======== ======== ========
Total return (a) 0.75%(b) 0.38%(b) 4.48% 3.70%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.08%(c)(d) 1.83%(c)(d) 1.05%(c) 1.80%(c)
Net Investment income 4.85%(c)(d) 4.10%(c)(d) 4.92%(c) 4.17%(c)
Portfolio turnover 17%(b) 17%(b) 25% 25%
Net assets at end
of period (000) $189,410 $ 40,817 $206,713 $ 44,621
(a) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent
deferred sales charge.
(b) Not annualized.
(c) The benefits derived from custody credits and directed brokerage arrangements had no impact. Prior years' ratios
are net of benefits received, if any.
(d) Annualized.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period
are as follows:
Year ended November 30
--------------------------------------------------------------------------
1997 1996
Class A Class B Class A Class B
-------- -------- -------- --------
$ 7.450 $ 7.450 $ 8.420 $ 8.420
-------- -------- -------- --------
0.418 0.359 0.439 0.378
0.935 0.935 (0.977) (0.977)
-------- -------- -------- --------
1.353 1.294 (0.538) (0.599)
-------- -------- -------- --------
(0.423) (0.364) (0.432) (0.371)
-------- -------- -------- --------
$ 8.380 $ 8.380 $ 7.450 $ 7.450
======== ======== ======== ========
18.55% 17.68% (6.61)% (7.31)%
======== ======== ======== ========
1.05%(c) 1.80%(c) 1.05% 1.80%
5.20%(c) 4.45%(c) 5.44% 4.69%
31% 31% 36% 36%
$240,894 $ 50,016 $198,909 $ 45,801
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended November 30
--------------------------------------------------------------------------
1997 1996
Class A Class B Class A Class B
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 8.080 $ 8.080 $ 7.880 $ 7.910
-------- -------- -------- --------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment income 0.456 0.395 0.480 0.240
Net realized and
unrealized gain 0.338 0.338 0.200 0.170
-------- -------- -------- --------
Total from Investment
Operations 0.794 0.733 0.680 0.410
-------- -------- -------- --------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net
investment income (0.454) (0.393) (0.480) (0.240)
-------- -------- -------- --------
Net asset value -
End of period $ 8.420 $ 8.420 $ 8.080 $ 8.080
======== ======== ======== ========
Total return (b) 10.00% 9.20% 8.85% 5.23%(c)
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.07% 1.82% 1.10% 1.85%(d)
Net investment income 5.44% 4.69% 5.97% 5.22%(d)
Portfolio turnover 12% 12% 7% 7%
Net assets at end
of period (000) $241,610 $ 46,035 $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.
</TABLE>
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
COLONIAL CUSTOMER CONNECTION - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
For fund prices, dividends and capital gains information .......... press 1
For account information ........................................... press 2
To speak to a Colonial representative ............................. press 3
For yield and total return information ............................ press 4
For duplicate statements or new supply of checks .................. press 5
To order duplicate tax forms and year-end statements .............. press 6
(February through May)
To review your options at any time during your call ............... press *
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 a.m. to 8:00 p.m. ET, and Saturdays from February through
mid-April, 1 a.m. to 2:00 p.m. ET.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange or sell shares by telephone, call Monday to Friday, 9:00
a.m. to 7:00 p.m. ET. Transactions received after the close of the New York
Stock Exchange will receive the next business day's closing price.
LITERATURE - 1-800-426-3750
To request literature on any Colonial fund, call Monday to Friday, 8:30 a.m. to
6:30 p.m. ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial has one of the most extensive selections of shareholder services
available. Your financial adviser can help you arrange for any of these
services, or you can call Colonial directly at 1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50 on
most funds; $25 for an IRA account.
FREE EXCHANGES(1): Exchange all or part of your account into the same share
class of another Colonial fund, by phone or mail.
EASY ACCESS TO YOUR MONEY(1): Make withdrawals from your account by phone, by
mail or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it to Colonial within one year, you can reinvest in any
Colonial fund of the same share class without any penalty or sales charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Colonial account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th calendar day of each month unless the 10th falls on a
non-business day or the first business day of the week. If this occurs, the
payable date will be the previous business day. Dividends and capital gains must
be reinvested.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any
Colonial fund with a balance of $5,000 into the same share class of up to four
other Colonial funds. Minimum for each transfer is $100.
COLONIAL RETIREMENT PLANS: Choose from a broad range of retirement plans,
including IRAs.
(1) Redemptions and exchanges are made at the next determined net asset value
after the request is received by Colonial. Proceeds may be more or less than
your original cost. The exchange privilege may be terminated at any time.
Exchanges are not available on all funds. Investors who purchase Class B, Class
C or Class D shares (for applicable funds), or $1 million or more of Class A
shares, may be subject to a contingent deferred sales charge.
<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.
Retired (formerly Chairman of the Board and 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
Retired Partner, Peat Marwick Main & Co. (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
A Liberty Financial Company (NYSE: L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
TI-03/764D-0597 M (7/97)
