<PAGE>
COLONIAL
HIGH YIELD MUNICIPAL FUND
[Graphic Omitted]
SEMIANNUAL REPORT
MAY 31, 1997
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
<PAGE>
COLONIAL HIGH YIELD MUNICIPAL FUND HIGHLIGHTS
DECEMBER 1, 1996 - MAY 31, 1997
INVESTMENT OBJECTIVE: Colonial High Yield Municipal Fund seeks a high level of
after-tax total return by pursuing current income exempt from ordinary federal
income tax and opportunities for long-term appreciation from a portfolio
primarily invested in medium- to lower-grade municipal bonds.
THE FUND IS DESIGNED TO OFFER:
|X| Potential for high tax-free income
|X| Expert credit analysis
|X| Experienced professional management
PORTFOLIO MANAGER COMMENTARY: "Your Fund owns a high percentage of Industrial
Revenue (IDR) Bonds. IDRs are issued by corporations rather than municipalities
and carry a tax exemption for a variety of reasons. For example, they may be
part of a revitalization project bringing jobs to a depressed area. Our ability
to evaluate the credit quality of these securities helps us provide extra value
- -- and income -- to individual investors."
-- Bonny Boatman and Peter Andersen
COLONIAL HIGH YIELD MUNICIPAL FUND PERFORMANCE
CLASS A CLASS B
Inception dates 9/1/94 6/8/92
- --------------------------------------------------------------------------------
Six-month distributions declared per share1 $0.307 $0.269
- --------------------------------------------------------------------------------
SEC yields on 5/31/972 5.33% 4.83%
- --------------------------------------------------------------------------------
Taxable-equivalent SEC yields3 8.82% 8.00%
- --------------------------------------------------------------------------------
Six-month total returns, assuming reinvestment 2.07% 1.69%
of all distributions and no sales charge or
contingent deferred sales charge (CDSC)
- --------------------------------------------------------------------------------
Net asset value per share on 5/31/97 $10.06 $10.06
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.
QUALITY BREAKDOWN (as of 5/31/97)
- --------------------------------------------------------------------------------
AAA .............................4.8% BB ..............................3.6%
AA ..............................5.2% B ...............................0.3%
A ..............................13.1% Non-rated ......................42.8%
BBB ............................28.0% Cash and equivalents ............2.2%
Quality weightings are 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 quality weightings in the future.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Harold W. Cogger]
I'm pleased to present your Fund's semiannual report for the six months ending
May 31, 1997.
During the period, the economy was strong, corporate profits continued to grow,
unemployment was at a 25-year low, and inflation continued. For investors in the
stock market, the environment couldn't get much better.
But people who invest in bonds saw it differently. They saw stronger than
expected economic growth in the first part of 1997, creating fears of renewed
inflation. They saw the Federal Reserve Board raising short-term interest rates
in an attempt to slow down the economy. And they saw long-term interest rates
rise steadily.
Between December 1 and mid-April, yields on the benchmark 30-year U.S. Treasury
bond rose from 6.36% to 7.17%. Interest rates on all other bond categories, such
as high yield municipal bonds, rose as well.
Fortunately, by late April the environment began to improve for bond investors.
Interest rates eased downward, the economy was slowing, inflation was still low
and the Federal Reserve Board decided against boosting short-term rates a second
time in two months.
But when the dust settled, interest rates were still moderately higher on
May 31, 1997 compared to December 1, 1996. That means that the prices of
fixed-income securities in your portfolio declined somewhat.
The best news is that your tax-exempt income remains very strong, particularly
compared to inflation. And that's a main attraction of fixed-income investing.
This report provides you with a closer look at your Fund's performance as well
as the portfolio manager's investment strategy. In addition, the report lists
every security in the portfolio as of May 31, 1997, organized by categories such
as education, healthcare and housing.
Thank you for the opportunity to help you meet your investment goals.
Sincerely,
/s/ Harold W. Cogger
Harold W. Cogger
President
July 16, 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.
PORTFOLIO MANAGEMENT REPORT
BONNY BOATMAN AND PETER ANDERSEN are portfolio co-managers of Colonial High
Yield Municipal Fund. Ms. Boatman is senior vice president of Colonial
Management Associates, Inc. and Director of the Municipal Bond Department. Mr.
Andersen is vice president of Colonial Management Associates, Inc.
STRONG ECONOMY BOOSTS HIGH YIELD MUNIS
The issuers of high yield municipal bonds are financially less attractive than
investment grade bond issuers. For example, they may have higher levels of debt.
That's why their bonds offer more income. It's vitally important that these
issuers stay financially healthy. Just like "a rising tide lifts all boats," a
strong economy helps these issuers meet their commitments.
Because credit quality is such an important factor in this portfolio, it tends
to overshadow other factors affecting high yield municipal bonds. That's why
rising interest rates -- so crucial to most types of bonds -- have less of a
negative impact on this portfolio.
SCARCE SUPPLY, BOOMING DEMAND
Another factor contributing to your Fund's performance is scarce supply and
strong demand.
New issues of bonds are scarce. Municipalities are awash in tax revenue from the
booming economy. They don't need to issue bonds as urgently to raise cash.
Meanwhile, demand for high yield municipal bonds is strong as investors try to
do better than the rates offered by AAA-rated bonds. Interest rates may be a
little bit higher than they were six months ago, but they're relatively low
compared to where they've been over the past 20 years. Getting the extra yield
from high yield municipal bonds is important to many investors in this interest
rate environment.
So, the scarce supply of bonds and the strong demand for them pushes prices
upward.
TOTAL RETURN MAY BE MODEST, BUT INCOME IS STRONG
For the period, the total return for Class A Shares, based on net asset value,
was 2.07%. In comparison, the Lehman Brothers Municipal Bond Index, a
broad-based unmanaged index that tracks the performance of the municipal bond
market, posted a return of 1.68% for the same period. So even though total
return was modest, we outperformed, the market benchmark.
As of May 31, 1997, your Fund's 30-day yield was 5.33% on Class A shares. For
those of you in the maximum 39.6% effective federal tax bracket, that's
equivalent to a taxable yield of 8.82%.
FINDING DIAMONDS IN THE ROUGH
Unlike investment grade bonds, non-rated bonds are not well followed by the
investment community. But that's a great opportunity to uncover gems and buy
bonds that we think have the potential for a higher credit rating due to
improved circumstances.
WHERE WE'RE HEADED
Investing in high yield municipal bonds requires a specialized skill. These
securities are often low rated or are not rated at all. That puts a special
responsibility on our analytical staff to search for securities that appear
undervalued and have the potential for capital appreciation. We will continue to
search for these bonds as well as providing you with the highest tax-exempt
income consistent with prudent portfolio management.
COLONIAL HIGH YIELD MUNICIPAL FUND INVESTMENT PERFORMANCE
Change in Value of $10,000 from 6/30/92 - 5/31/97
Based on NAV and CDSC for Class B Shares
NAV w/CDSC LEHMAN
June 30, 1992 $10,000 $10,000 $10,000
July 31, 1992 10,251 10,251 10,300
Aug. 31, 1992 10,194 10,194 10,200
Sept. 30, 1992 10,227 10,227 10,266
Oct. 31, 1992 10,180 10,180 10,165
Nov. 30, 1992 10,264 10,264 10,347
Dec. 31, 1992 10,369 10,369 10,453
Jan. 31, 1993 10,433 10,433 10,575
Feb. 28, 1993 10,653 10,653 10,957
Mar. 31, 1993 10,625 10,625 10,841
April 30, 1993 10,711 10,711 10,950
May 31, 1993 10,745 10,745 11,012
June 30, 1993 10,874 10,874 11,196
July 31, 1993 10,909 10,909 11,211
Aug. 31, 1993 11,103 11,103 11,444
Sept. 30, 1993 11,202 11,202 11,575
Oct. 31, 1993 11,238 11,238 11,597
Nov. 30, 1993 11,187 11,187 11,494
Dec. 31, 1993 11,261 11,261 11,737
Jan. 31, 1994 11,369 11,369 11,871
Feb. 28, 1994 11,227 11,227 11,564
Mar. 31, 1994 10,851 10,851 11,093
April 30, 1994 10,827 10,827 11,187
May 31, 1994 10,902 10,902 11,284
June 30, 1994 10,922 10,922 11,215
July 31, 1994 11,077 11,077 11,420
Aug. 31, 1994 11,097 11,097 11,460
Sept. 30, 1994 11,016 11,016 11,292
Oct. 31, 1994 10,890 10,890 11,091
Nov. 30, 1994 10,727 10,727 10,891
Dec. 31, 1994 10,877 10,877 11,130
Jan. 31, 1995 11,131 11,131 11,449
Feb. 28, 1995 11,399 11,399 11,782
Mar. 31, 1995 11,527 11,527 11,917
April 30, 1995 11,538 11,538 11,931
May 31, 1995 11,844 11,844 12,312
June 30, 1995 11,808 11,808 12,204
July 31, 1995 11,878 11,878 12,320
Aug. 31, 1995 11,985 11,985 12,476
Sept. 30, 1995 12,104 12,104 12,555
Oct. 31, 1995 12,271 12,271 12,737
Nov. 30, 1995 12,488 12,488 12,949
Dec. 31, 1995 12,621 12,621 13,073
Jan. 31, 1996 12,669 12,669 13,172
Feb. 28, 1996 12,619 12,619 13,083
Mar. 31, 1996 12,467 12,467 12,916
April 30, 1996 12,463 12,463 12,879
May 31, 1996 12,460 12,460 12,874
June 30, 1996 12,582 12,582 13,015
July 31, 1996 12,640 12,640 13,132
Aug. 31, 1996 12,674 12,674 13,129
Sept. 30, 1996 12,810 12,810 13,313
Oct. 31, 1996 12,946 12,946 13,463
Nov. 30, 1996 12,123 13,123 17,710
Dec. 31, 1996 13,092 13,092 13,652
Jan. 31, 1997 13,114 13,114 13,678
Feb. 28, 1997 13,237 13,237 13,804
Mar. 31, 1997 13,124 13,124 13,619
April 30, 1997 13,194 13,194 13,734
May 31, 1997 $13,345 $13,145 $13,940
A $10,000 investment in Class A shares made on 9/1/94 at net asset value (NAV)
would have been valued at $12,274 on 5/31/97. The same investment based on
maximum offering price (MOP) would have grown to $11,691 on 5/31/97.
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 June 30, 1997 (Most Recent Quarter End)
CLASS A SHARES CLASS B SHARES
INCEPTION 9/1/94 6/8/92
NAV MOP NAV w/CDSC
- --------------------------------------------------------------------------------
1 YEAR 8.06% 2.92% 7.25% 2.25%
- --------------------------------------------------------------------------------
5 YEARS -- -- 6.18 5.86
- --------------------------------------------------------------------------------
SINCE INCEPTION 7.95 6.11 6.33 6.02
- --------------------------------------------------------------------------------
Return 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. MOP returns include the maximum sales charge of
4.75%. The CDSC returns reflect the maximum charge of 5% for one year, 2% for
five years and 1% since inception.
Past performance cannot predict future results.
Effective August 1, the Fund will offer Class C shares.
<PAGE>
INVESTMENT PORTFOLIO
MAY 31, 1997 (UNAUDITED, IN THOUSANDS)
MUNICIPAL BONDS - 95.6% PAR VALUE
- -------------------------------------------------------------------------------
EDUCATION - 0.3%
LOCAL GENERAL OBLIGATIONS
AZ Apache County School District,
Number 010, Round Valley
Project of 1987, Series 1990-C,
9.875% 07/01/05 $ 500 $ 546
--------
- -------------------------------------------------------------------------------
HEALTH - 16.3%
HOSPITALS - 8.7%
AL Alabama Special Care Facilities Authority,
Montgomery Healthcare,
Series 1989,
11.000% 10/01/19 295 301
DE State Economic Development Authority,
Riverside Hospital,
Series 1992-A,
9.500% 01/01/22 605 783
FL Tarpon Springs Health Facilities
Authority Hospital, Tarpon Springs
Hospital Foundation, Series 1988,
8.750% 05/01/12 1,000 1,044
GA Clayton Hospital Authority,
The Woodlands Foundation, Inc.,
Series 1991-A,
9.750% 05/01/21(a) 1,500 975
ID State Health Facilities Authority,
IHC Hospitals, Inc.,
7.780% 02/15/21 1,000 1,083
IL State Health Facilities Authority,
Edgewater Medical Center,
Series A,
9.250% 07/01/24 2,000 2,360
NJ Health Care Facilities Financing
Authority, Raritan Bay Medical Center,
7.250% 07/01/27 2,000 2,092
OH Marion County,
Community Hospital,
Series 1996,
6.375% 05/15/11 1,000 1,024
PA Cambria County Hospital Authority,
Conemaugh Valley Memorial Hospital,
Series 1988-A,
8.875% 07/01/18 165 174
PA Delaware County Authority,
Southeastern Pennsylvania Obligated Group,
Series 1996,
6.000% 12/15/26 2,500 2,447
TN Chattanooga Health Education
and Housing Facilities Board,
North Park Hospital Project, Series 1993,
8.500% 02/01/23 980 1,019
TX Denison Texama Medical Center,
6.125% 08/15/17 1,000 1,002
VA Dickenson County Industrial Development
Authority, Volunteer Healthcare Systems, Inc.,
Series 1988-A,
10.750% 06/01/18(a) 390 117
VT State Educational & Health
Buildings Authority,
Springfield Hospital, Series A,
7.750% 01/01/13 775 840
WA State Health Care Facilities Authority,
Grays Harbor Community Hospital,
Series 1993:
7.200% 07/01/03(b) 195 213
8.025% 07/01/20 960 1,080
--------
16,554
--------
INTERMEDIATE CARE FACILITIES - 1.3%
IL Champaign,
Hoosier Care, Inc.,
Series 1989-A,
9.750% 08/01/19 490 524
IN Wabash First Mortgage, Hoosier
Care, Inc., Series 1989-A,
9.750% 08/01/19 490 524
MA State Health & Educational
Facilities Authority,
Corporation for Independent Living,
8.100% 07/01/18 600 643
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19 335 $ 386
Series 1992-C,
9.750% 08/01/19 330 380
--------
2,457
--------
NURSING HOMES - 6.3%
DE State Economic Development Authority,
Churchman Village Project,
Series A,
10.000% 03/01/21 745 879
DE Sussex County, Healthcare Facility,
Delaware Health Corp.,
Series 1994-A,
7.600% 01/01/24 1,000 1,003
FL Broward County,
Beverly Enterprises, Inc.,
9.800% 11/01/10 615 677
FL Flagler County Industrial
Development Authority,
South Florida Properties, Series 1988,
10.500% 12/01/18 915 825
FL Gadsden County Industrial
Development Authority,
Florida Properties, Inc., Series 1988-A,
10.450% 10/01/18 340 350
IA State Finance Authority,
Care Initiatives Project,
Series 1996,
9.250% 07/01/25 500 613
KS Halstead Industrial Health Care
Project,
10.250% 08/01/13(a) 335 134
MA State Industrial Finance Agency,
GF/Massachusetts, Inc.,
Series 1994,
8.300% 07/01/23 990 995
MI Cheboygan County Economic
Development Corp.,
Metro Health Foundation Project, Series 1993,
10.000% 11/01/22(b) 600 540
MO Grove Industrial Development Authority,
First Mortgage Health Care Facility,
Heritage Manor GR, Series 1988,
10.250% 11/01/13 425 $ 382
NJ Economic Development Authority
Geriatric and Medical Service,
Inc., Series A,
10.500% 05/01/04 95 102
OH Lucas County,
Gericare, Inc.,
Series 1988-B,
10.500% 06/01/18 300 303
PA Charteirs Valley
Industrial and Commercial Authority,
Beverly Enterprises, Inc., Series 1985,
10.000% 06/01/07 1,720 1,815
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19 440 427
PA Delaware County Authority,
Main Line and Haverford Nursing,
Series 1992,
9.000% 08/01/22 50 55
PA Lackawanna County Industrial Authority,
Greenridge Nursing Center,
10.500% 12/01/10 195 212
PA Luzerne County Industrial
Development Authority,
Millville Nursing Center,
10.500% 12/01/12 230 218
PA Montgomery County Higher Education
& Health Authority,
Roslyn-Hatboro, Inc. Project,
9.000% 11/15/22 300 303
PA Philadelphia Authority for Industrial
Development,
RHA/Philadelphia Project,
10.250% 11/01/18 735 732
VA Virginia Beach Development Authority,
Beverly Enterprises,
Series 1985,
10.000% 04/01/10 230 252
WA Kitsap County Housing Authority,
Martha & Mary Nursing Home,
7.100% 02/20/36 1,000 $ 1,089
--------
11,906
--------
- --------------------------------------------------------------------------------
HOUSING - 18.8%
ASSISTED LIVING/SENIOR - 5.1%
CT State Authority,
First Mortgage Gross Health Care,
Church-Avery Project, Series 1990,
9.000% 04/01/20 500 539
FL Clearwater Housing Authority,
Hampton Apartments,
Series 1994,
8.250% 05/01/24 2,000 2,095
IL State Development Finance Authority,
Care Institute, Inc.,
8.250% 06/01/25 2,000 2,095
MN Roseville,
Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 1,270 1,210
NY Glen Cove Housing Authority,
8.250% 10/01/26 2,000 1,995
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993-A,
8.250% 05/01/23 615 637
TX Bell County Health Facilities
Development Corp., Care Institutions, Inc.,
9.000% 11/01/24 1,000 1,089
--------
9,660
--------
MULTI-FAMILY - 7.6%
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 2,000 1,900
FL State Housing Finance Agency,
Windsong Apartments,
Series 1993-C,
9.250% 01/01/19 750 755
MN Lakeville,
Southfork Apartment Project,
Series 1989-A,
9.875% 02/01/20 700 707
MN Washington County Housing &
Redevelopment Authority,
Cottages of Aspen, Series 1992,
9.250% 06/01/22 495 $ 537
MN White Bear Lake,
Birch Lake Townhomes Project,
Series 1989-A,
9.750% 07/15/19 750 748
NC Eastern Carolina Regional Housing
Authority, New River Apartments-Jacksonville,
Series 1994,
8.250% 09/01/14 1,440 1,476
Resolution Trust Corp.,
Pass Through Certificates,
Series 1993-A,
8.500% 12/01/16(b) 4,248 4,418
SC State Housing Finance and Development,
Multi-family Housing Finance Revenue,
Westbridge Apartments, Series A,
9.500% 09/01/20 620 629
TN Franklin Industrial Board,
Landings Apartment Project,
Series 1996-B,
8.750% 04/01/27 1,800 1,791
TX Galveston Pass Through Certificates,
Health Facilities Center,
8.000% 08/01/23 1,000 1,026
VA Alexandria Redevelopment
& Housing Authority, Courthouse
Commons Apartments, Series 1990-A,
10.000% 01/01/21 500 504
--------
14,491
--------
SINGLE-FAMILY - 6.1%
AK State Housing Finance Corp.,
Series 1992-A2,
6.750% 12/01/24 1,685 1,740
CO Housing Finance Authority,
Series D-1,
7.375% 06/01/26 2,000 2,182
CO State Housing Finance Authority,
Series 1997 A-2,
7.250% 05/01/27 800 873
MO State Housing Development Commission,
Series C,
7.250% 09/01/26 2,755 $ 3,054
NJ State Housing & Mortgage Finance Agency,
Series 1989-D,
7.700% 10/01/29 1,055 1,099
PA State Housing Finance Agency,
Series 1994-42,
6.850% 04/01/25 2,435 2,563
--------
11,511
--------
- --------------------------------------------------------------------------------
OTHER - 3.5%
LOCAL APPROPRIATED - 0.5%
CA Taft Public Financing Authority,
Community Correctional Facilities Project,
Series 1997-A,
5.950% 01/01/11 1,000 1,005
--------
REFUNDED/ESCROW/SPECIAL OBLIGATIONS (C) - 3.0%
CA Colton Public Financing Authority,
Series 1995,
7.500% 10/01/20 1,000 1,160
MA State Industrial Finance Agency:
Mary Ann Morse Nursing Home, Inc.:
Series 1990,
9.000% 10/01/20 930 1,073
Series 1991-I,
10.000% 01/01/21 500 601
MI State Hospital Finance Authority,
Detroit Osteopathic Hospital,
Series 1987-A,
7.500% 11/01/10 500 517
MN Mille Lacs Capital Improvement Authority,
Mille Lacs Band of Chippewa,
Series 1992-A,
9.250% 11/01/12 640 794
MO Hannibal Industrial Development Authority,
Regional Healthcare Systems,
Series 1992,
9.500% 03/01/22 1,000 1,234
NC Lincoln County,
Lincoln County Hospital,
9.000% 05/01/07 315 $ 373
--------
5,752
--------
- --------------------------------------------------------------------------------
OTHER REVENUE - 29.8%
CHEMICALS - 5.5%
SC York County,
Hoechst Celanese Corp.,
Series 1994,
5.700% 01/01/24 4,535 4,512
WA Spokane Kaiser Aluminum,
7.600% 03/01/27 2,500 2,556
WY Sweetwater County,
FMC Corp. Project,
Series 1994-A,
7.000% 06/01/24 3,325 3,525
--------
10,593
--------
HOTELS/CAMPS/LODGING - 1.3%
MN Burnsville Commercial Development,
Holiday Inn Project,
10.600% 06/01/06 500 507
PA Philadelphia Authority Starwood,
6.500% 10/01/27 2,000 1,955
--------
2,462
--------
MANUFACTURING - 9.9%
AZ Greenlee County Industrial
Development Authority,
Phelps Dodge Corp.,
5.450% 06/01/09 2,000 1,990
AZ Tucson Airport Authority,
Lockheed Aeromod Center, Inc.,
Series 1990,
8.700% 09/01/19 2,500 2,809
GA Wayne County Development Authority,
Solid Waste Disposal, ITT Royonier, Inc.,
Series 1990,
8.000% 07/01/15 500 545
LA Vidalia,
Alcoa Co. of America Project,
5.875% 09/01/13 2,000 2,040
MD Baltimore County Pollution Control,
Bethlehem Steel Corp.,
7.500% 06/01/15 2,000 2,100
MN Brooklyn Park,
TL Systems Corp.,
Series 1991,
10.000% 09/01/16 530 $ 650
MN Buffalo,
Von Ruden Manufacturing, Inc.,
Series 1989,
10.500% 09/01/14 775 853
OH Cuyahoga County,
Joy Technologies, Inc.,
Series 1992,
8.750% 09/15/07 360 403
TN McKenzie Individual Development Board,
American Lantern Co.,
10.500% 05/01/16 463 490
TX Trinity River Authority,
Texas Instruments Project,
Series 1996,
6.200% 03/01/20 2,000 2,028
WA Pilchuck Public Development Corp.,
Goodrich (B.F.) Co. Tramco Project,
Series 1993,
6.000% 08/01/23 4,500 4,393
WV Weirton Pollution Control, Weirton
Steel Corp., Series 1989,
8.625% 11/01/14 500 519
--------
18,820
--------
MISCELLANEOUS RETAIL - 1.1%
OH Lake County,
North Madison Properties,
Series 1993,
8.819% 09/01/11 545 573
VA Virginia Beach Development Authority,
SC Diamond Associates, Inc.,
8.000% 12/01/10 1,465 1,566
--------
2,139
--------
OTHER REVENUE - 5.8%
DC District of Columbia,
Carnegie Endowment,
Series 1996,
5.750% 11/15/10 1,155 1,169
IL State Development Agency,
7.750% 06/01/10 2,000 2,175
IN Hammond,
American Maize Products Co.,
Series 1994,
8.000% 12/01/24 2,000 $ 2,250
LA Port New Orleans Industrial Development,
Continental Grain Co., Series 1993,
7.500% 07/01/13 2,000 2,148
MD Baltimore,
Park Charles Project,
Series 1986,
8.000% 01/01/10 655 689
TX Gulf Coast Waste Disposal Authority,
Quaker Oats Co.,
Series 1994,
5.700% 05/01/06 2,500 2,594
--------
11,025
--------
PAPER PRODUCTS - 5.2%
GA Rockdale County Development
Authority, Solid Waste Disposal, Visy
Paper, Inc., Series 1993,
7.500% 01/01/26 1,800 1,852
LA DeSoto Parish,
International Paper,
6.550% 04/01/19 1,000 1,040
MI State Strategic Fund:
Blue Water Fiber Project,
Series 1994,
8.000% 01/01/12(a) 2,000 1,340
Great Lakes Pulp & Fibre Project,
Series 1994,
10.250% 12/01/16(a) 2,000 910
SC Darlington County:
Industrial Development Authority,
Sonoco Products Co. Project,
6.125% 06/01/25 2,000 2,063
Sonoco Products Co.,
Series 1996,
6.000% 04/01/26 1,500 1,535
WA Walla Walla Public Corp.,
Ponderosa Fibres Project,
Series 1995,
9.125% 01/01/26 1,230 1,079
--------
9,819
--------
PETROLEUM REFINING - 1.0%
WA Pierce County Economic
Development Corp.,
Occidental Petroleum Co.,
5.800% 09/01/29 2,000 $ 1,893
--------
- --------------------------------------------------------------------------------
RESOURCE RECOVERY - 3.7%
MISCELLANEOUS DISPOSAL - 2.4%
CT State Development
Authority,
Sewer Sludge Disposal Facilities,
Series 1996,
8.250% 12/01/06 1,000 1,018
CT State Disposal Facility,
Netco Waterbury Ltd.,
Series 1995,
9.375% 06/01/16 1,500 1,663
MA State Industrial Finance Agency:
Massachusetts Environmental Services,
Series 1994-A,
8.750% 11/01/21 990 970
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 915 994
--------
4,645
--------
RECYCLING - 0.1%
GA Fulton County Development
Authority,
Very, Inc.,
10.500% 12/01/07 115 120
--------
RESOURCE RECOVERY - 1.2%
PA Delaware County BFI,
6.200% 07/01/19 2,225 2,250
--------
- --------------------------------------------------------------------------------
TAX-BACKED - 2.1%
MELLO-ROOS/1915 ACT - 0.5%
CA Carson,
Series 1992,
7.375% 09/02/22 965 1,006
--------
SALES & EXCISE TAX - 0.6%
IL State Development Finance Authority,
City of Marion Project,
Series 1991,
9.625% 09/15/21 1,185 1,221
--------
SPECIAL ASSESSMENT - 1.0%
CA Pleasanton Joint Powers Financing
Reassurement Subordinated Revenue,
Series 1993-B,
6.750% 09/02/17 1,870 $ 1,907
--------
- --------------------------------------------------------------------------------
TRANSPORTATION - 12.6%
AIR TRANSPORTATION - 7.7%
CO Denver City & County
Airport,
United Airlines, Inc.,
Series 1992-A,
6.875% 10/01/32 3,000 3,101
IL Chicago O'Hare International Airport
Special Facility,
United Airlines, Inc., Series 1988-A,
8.400% 05/01/18 935 1,007
IN Indianapolis Airport Authority,
Federal Express Corp.,
Series 1994,
7.100% 01/15/17 4,000 4,325
TX Alliance Airport Authority,
American Airlines Project,
7.500% 12/01/29 2,000 2,140
TX Dallas-Fort Worth International Airport,
American Airlines, Inc., Series 1990,
7.500% 11/01/25 2,000 2,138
TX Houston Continental,
6.125% 07/15/17 2,000 1,948
--------
14,659
--------
AIRPORTS - 2.0%
CO Denver City & County Airport:
Airport System, Series 1992-C,
6.750% 11/15/22 1,250 1,313
Denver International Airport,
Series 1991-D,
7.750% 11/15/21 2,000 2,205
Stapleton International Airport,
Series 1990-A,
8.500% 11/15/23 250 280
--------
3,798
--------
TURNPIKES/TOLLROADS/BRIDGES - 2.9%
CA Foothill Eastern Transportation
Corridor Agency,
Series 1995-A,
(d) 01/01/15 8,000 2,670
CA San Joaquin Hills Transportation
Corridor Agency,
Series 1993:
(d) 01/01/23 5,250 $ 1,063
5.000% 01/01/33 2,000 1,705
--------
5,438
--------
- --------------------------------------------------------------------------------
UTILITY - 8.5%
INDIVIDUAL POWER PRODUCER - 4.4%
FL Martin County Industrial
Development Authority,
Indiantown Co-Generation Project, Series 1994-A,
7.875% 12/15/25 1,000 1,123
MD State Energy Financing Administration,
AES Warrior Co-Generation Project,
7.400% 09/01/19 1,250 1,294
NY Port Authority of New York &
New Jersey, KIAC Partners,
Series 1996-IV,
6.750% 10/01/11 2,000 2,104
PA Economic Development Finance
Authority, Colver Project, Series D,
7.150% 12/01/18 3,650 3,846
--------
8,367
--------
INVESTOR OWNED - 3.1%
IL Bryant,
Central Illinois Light Co.,
Series 1993,
5.900% 08/01/23 1,750 1,761
NM Farmington San Juan,
6.375% 04/01/22 2,000 2,035
NY State Energy Research & Development
Authority,
Consolidated Edison Co., Series 1991-A,
7.500% 01/01/26 1,250 1,337
OH State Water Development Pollution
Collateralized Control, The Cleveland
Electric Illumination, Series 1987 A-2,
9.750% 11/01/22 250 254
OH State Water Development Pollution
Control Facilities Revenue, Pennsylvania
Power Co.,
8.100% 01/15/20 500 $ 533
--------
5,920
--------
JOINT POWER AUTHORITY - 0.3%
MN Southern Minnesota Municipal
Power Agency, Series 1994-A,
(d) 01/01/25 2,660 555
--------
WATER & SEWER - 0.7%
LA Public Facility Belmont Water
Authority,
9.000% 03/15/24(b) 585 526
MS Five Lakes Utility District,
8.250% 07/15/24 400 391
NJ State Economic Development
Authority,
Hills Development Co.,
10.500% 09/01/08 400 402
--------
1,319
--------
TOTAL MUNICIPAL BONDS (cost of $177,680)(e) 181,838
--------
SHORT-TERM OBLIGATIONS - 2.2%
- -------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES(f)
AZ Pinal County Industrial Development
Authority, Magma Copper Co.,
4.100% 12/01/09 300 300
FL Pinellas County Health Facilities
Authority, Series 1985,
4.100% 12/01/15 2,400 2,400
IN Portage Economic Development,
4.050% 08/01/30 300 300
MI Farmington Hills Hospital
Finance Authority,
Botsford General Hospital, Series 1991-B,
4.100% 02/15/16 1,200 1,200
--------
TOTAL SHORT-TERM OBLIGATIONS 4,200
========
OTHER ASSETS & LIABILITIES, NET - 2.2% 4,215
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $190,253
========
- -------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) This issuer is in default of certain debt covenants. Income is not being
accrued.
(b) These securities are exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At May
31, 1997, the value of these securities amounted to $5,697 or 3.0% of net
assets.
(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) Zero coupon bond.
(e) Cost for federal income tax purposes is $177,695.
(f) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of May 31, 1997.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
MAY 31, 1997 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $177,680) $ 181,838
Short-term obligations 4,200
----------
186,038
Receivable for:
Interest $ 4,104
Investments sold 735
Fund shares sold 451
Other 4 5,294
------- ---------
Total Assets 191,332
LIABILITIES
Payable for:
Distributions 848
Fund shares repurchased 222
Accrued:
Deferred Trustees fees 3
Other 6
-------
Total Liabilities 1,079
----------
NET ASSETS $ 190,253
==========
Net asset value & redemption price per share -
Class A ($46,559/4,627) $ 10.06
==========
Maximum offering price per share - Class A
($10.06/0.9525) $ 10.56(a)
==========
Net asset value & offering price per share -
Class B ($143,694/14,280) $ 10.06(b)
==========
COMPOSITION OF NET ASSETS
Capital paid in $ 190,603
Overdistributed net investment income (61)
Accumulated net realized loss (4,447)
Net unrealized appreciation 4,158
----------
$ 190,253
==========
(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 SIX MONTHS ENDED MAY 31, 1997
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Interest $ 6,535
EXPENSES
Management fee $ 516
Service fee 232
Distribution fee - Class B 540
Transfer agent 148
Bookkeeping fee 37
Trustees fee 9
Custodian fee 2
Audit fee 15
Legal fee 10
Registration fee 17
Reports to shareholders 7
Amortization of deferred
organization expenses 9
Other 9 1,551
------- --------
Net Investment Income 4,984
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain 7
Net unrealized depreciation during
the period (1,566)
-------
Net Loss (1,559)
--------
Net Increase in Net Assets from Operations $ 3,425
========
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six months Year ended
(in thousands) ended May 31 November 30
----------------------------
INCREASE (DECREASE) IN NET ASSETS 1997 1996
Operations:
Net investment income $ 4,984 $ 9,306
Net realized gain 7 73
Net unrealized depreciation (1,566) (634)
-------- --------
Net Increase from Operations 3,425 8,745
Distributions:
From net investment income - Class A (1,242) (1,682)
In excess from net investment income (18) --
From net investment income - Class B (3,794) (7,931)
In excess from net investment income (56) --
-------- --------
(1,685) (868)
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 12,792 22,506
Value of distributions reinvested - Class A 430 467
Cost of shares repurchased - Class A (3,743) (3,674)
-------- --------
9,479 19,299
-------- --------
Receipts for shares sold - Class B 16,355 31,304
Value of distributions reinvested - Class B 1,668 3,532
Cost of shares repurchased - Class B (18,184) (26,537)
-------- --------
(161) 8,299
-------- --------
Net Increase from Fund Share
Transactions 9,318 27,598
-------- --------
Total Increase 7,633 26,730
NET ASSETS
Beginning of period 182,620 155,890
-------- --------
End of period (net of overdistributed and
including undistributed net investment
income of $61 and $51, respectively) $190,253 $ 182,620
======== =========
NUMBER OF FUND SHARES
Sold - Class A 1,272 2,243
Issued for distributions reinvested - Class A 43 47
Repurchased - Class A (373) (364)
-------- --------
942 1,926
-------- --------
Sold - Class B 1,628 3,109
Issued for distributions reinvested - Class B 166 351
Repurchased - Class B (1,810) (2,643)
-------- --------
(16) 817
-------- --------
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 High Yield Municipal 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 a high level of after-tax total return by pursuing current income exempt
from ordinary federal income tax and opportunities for long-term appreciation
from a portfolio primarily invested in medium- to lower-grade municipal bonds.
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.
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.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses of $95,525 in
connection with its organization, initial registration with the Securities and
Exchange Commission and various states, and the initial public offering of its
shares. These expenses were deferred and were amortized on a straight-line basis
over five years.
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
Tax-Exempt Insured 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 by 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 $15,205
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $168,251 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires the payment of a service fee to
the Distributor equal to 0.25% annually of the Fund's net assets as of 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 $25,791,910 and
$17,590,930, respectively.
Unrealized appreciation (depreciation) at May 31, 1997, based on cost of
investments for federal income tax purposes was approximately:
Gross unrealized appreciation $ 7,841,000
Gross unrealized depreciation (3,698,000)
-----------
Net unrealized appreciation $ 4,143,000
===========
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
---------- ------------
1997 $ 133,000
1998 590,000
1999 364,000
2000 302,000
2002 1,731,000
2003 2,383,000
-----------
$ 5,503,000
===========
The loss carryforwards expiring in 1997, 1998, and 1999, respectively, were
acquired in the merger with Colonial VIP High Yield Municipal Bond Fund.
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
OTHER: There are certain risks arising from geographic concentration in any
state. Certain revenue or tax related events in a state may impair the ability
of certain issuers of municipal securities to pay principal and interest on
their obligations.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
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>
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
------- ------- ------- -------
Net asset value -
Beginning of period $ 10.160 $ 10.160 $ 10.230 $ 10.230
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.301 0.263 0.624 0.548
Net realized and
unrealized gain (loss) (0.094) (0.094) (0.051) (0.051)
-------- -------- -------- --------
Total from Investment
Operations 0.207 0.169 0.573 0.497
-------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.303) (0.265) (0.643) (0.567)
In excess of net
investment income (0.004) (0.004) - -
-------- -------- -------- --------
Total Distributions Declared
to Shareholders (0.307) (0.269) (0.643) (0.567)
-------- -------- -------- --------
Net asset value -
End of period $ 10.060 $ 10.060 $ 10.160 $ 10.160
======== ======== ======== ========
Total return (b) 2.07%(c) 1.69%(c) 5.86% 5.07%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.09%(d)(e) 1.84%(d)(e) 1.10%(d) 1.85%(d)
Net investment income 5.96%(d)(e) 5.21%(d)(e) 6.19%(d) 5.44%(d)
Portfolio turnover 10%(c) 10%(c) 8% 8%
Net assets at end
of period (000) $ 46,559 $143,694 $ 37,420 $145,200
(a) Class A shares were initially offered on September 1, 1994. 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) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(e) Annualized.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended November 30
- ----------------------------------------------------------
1995 1994
Class A Class B Class A Class B
------- ------- ------- -------
$ 9.330 $ 9.330 $ 9.800 $ 10.320
-------- -------- -------- --------
0.656 0.583 0.188 0.605
0.912 0.912 (0.496) (1.016)
-------- -------- -------- --------
1.568 1.495 (0.308) (0.411)
-------- -------- -------- --------
(0.668) (0.595) (0.162) (0.579)
- - - -
-------- -------- -------- --------
(0.668) (0.595) (0.162) (0.579)
-------- -------- -------- --------
$ 10.230 $ 10.230 $ 9.330 $ 9.330
======== ======== ======== ========
17.28% 16.42% (3.15)%(c) (4.10)%
======== ======== ======== ========
1.17%(d) 1.92%(d) 1.15%(e) 1.90%
6.67%(d) 5.92%(d) 7.19%(e) 6.44%
26% 26% 25% 25%
$ 17,997 $137,893 $ 6,027 $113,549
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Period ended
Year ended November 30 November 30
--------------------------------------------
1993 1992
Class B Class B(a)
------- -------
Net asset value -
Beginning of period $ 10.070 $ 10.000
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.609 0.338(b)
Net realized and
unrealized gain 0.277 0.041
-------- --------
Total from Investment
Operations 0.886 0.379
-------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.636) (0.309)
-------- --------
Net asset value -
End of period $ 10.320 $ 10.070
======== ========
Total return (c) 9.00% 3.80%(d)(e)
======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.94% 2.00%(f)
Fees waived by
the Adviser -- 0.01%(f)
Net investment income 5.95% 6.83%(f)
Portfolio turnover 31% 13%(f)
Net assets at end
of period (000) $120,523 $ 63,390
(a) The Fund commenced investment operations on June 8, 1992.
(b) Net of fees and expenses waived or borne by the Adviser which amounted to
$0.000.
(c) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(d) Not annualized.
(e) Had the Adviser not waived or reimbursed a portion of expenses, total return
would have been reduced.
(f) Annualized.
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial High Yield Municipal Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial High Yield Municipal 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 High Yield Municipal
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
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
HM-03/773D-0597 M (7/97)
