<PAGE>
COLONIAL
TAX-EXEMPT FUND
[BITMAP GRAPHIC]
ANNUAL REPORT
NOVEMBER 30, 1996
----------------------------
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
----------------------------
<PAGE>
COLONIAL TAX-EXEMPT FUND HIGHLIGHTS
December 1, 1995 - November 30, 1996
INVESTMENT OBJECTIVE: Colonial Tax-Exempt 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 investment-grade municipal
bonds.
THE FUND IS DESIGNED TO OFFER:
- Potential for high monthly tax-free income and long-term growth
- Diversification
- Emphasis on quality
PORTFOLIO MANAGER COMMENTARY: "The Fund's 1996 fiscal year was a volatile one
for fixed income investments, as interest rates on long-term U.S. Government
Bonds varied from as low as 5.94% to as high as 7.19%. Since September, we have
seen some shifts in the economy that would create a more favorable environment
for bonds and we have begun to position the Fund to take advantage of these
changes." -- N Bonny Boatman and Robert Waas
<TABLE>
COLONIAL TAX-EXEMPT FUND PERFORMANCE
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
Inception dates 11/21/78 5/5/92
Distributions declared per share* $0.755 $0.655
SEC Yields on 11/30/96** 5.28% 4.79%
Taxable-equivalent SEC yields*** 8.74% 7.93%
12-month total returns, assuming reinvestment 4.47% 3.70%
of all distributions and no sales charge or
contingent deferred sales charge (CDSC)
Net asset value per share on 11/30/96 $13.55 $13.55
- ----------
<FN>
* A PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO THE ALTERNATIVE MINIMUM
TAX.
** THE 30-DAY SEC YIELDS ON NOVEMBER 30, 1996, REFLECT THE PORTFOLIO'S EARNING
POWER, NET OF EXPENSES, EXPRESSED AS AN ANNUALIZED PERCENTAGE OF THE
MAXIMUM OFFERING PRICE PER SHARE AT THE END OF THE PERIOD.
*** TAXABLE-EQUIVALENT SEC YIELDS ARE BASED ON THE MAXIMUM FEDERAL INCOME TAX
RATE OF 39.6%.
</TABLE>
<TABLE>
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.
<CAPTION>
QUALITY BREAKDOWN MATURITY BREAKDOWN
(as of November 30, 1996) (as of November 30, 1996)
- ------------------------- ------------------------------------------------
<S> <C> <C> <C> <C> <C>
AAA ........... 54.0% 0-1 year ........ 0.3% 10-15 years ..... 12.1%
AA ............ 11.0% 1-3 years ....... 0.2% 15-20 years ..... 23.8%
A ............. 8.4% 3 -5 years ...... 2.5% 20-25 years ..... 31.6%
BBB ........... 7.6% 5-7 years ....... 0.4% 25 years+ ....... 24.7%
BB ............ 0.1% 7-10 years ...... 2.6% Cash & equiv. ... 1.8%
B ............. 0.2%
Non-rated ..... 16.9%
Cash & Equiv .. 1.8%
</TABLE>
Quality and maturity breakdowns are calculated as a percentage of total net
assets. Because the Fund is actively managed, there can be no guarantee the Fund
will continue to maintain these quality and maturity breakdowns in the future.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
I am pleased to present your Fund's annual report
for the fiscal year ended November 30, 1996. This [PHOTOGRAPH]
report reflects on the investment environment of the
past 12 months and on the performance of your Fund.
While the Federal Reserve Board lowered short-term interest rates early in the
period, stronger than expected economic reports in February 1996 brought the
Fed's easing trend to a halt. As a result, long-term interest rates were rising
during most of the period, having a negative effect on fixed income investments.
However, with recent statistics suggesting an easing pace of economic activity
and a continued benign inflation outlook, we are hopeful that bond market
volatility will be somewhat reduced in the months ahead.
There was some good news for the tax-exempt sector. Low supply and strong retail
market support, enabled municipal bonds to outperform Treasury bonds for much of
the year. The post-election conditions should promote a period of stability for
the tax-exempt market as the flat tax initiative is now a receding memory.
In the domestic stock market, generally favorable conditions prevailed until
July, when a price-based correction took place. Since then, the market has
rebounded nicely with the Dow Jones Industrial Average setting several new
records. Internationally, the Tiger countries of the Pacific Rim continue to
offer a good combination of growth and value. In the European markets,
short-term interest rates continue to be much lower than long-term rates. We
expect these conditions to prevail until we see an increase in economic
activity.
Our economic expectations include growth continuing at a slower, but more
sustainable rate, and our outlook for 1997 is relatively bright.
The following report will provide you with specific information on your Fund's
performance as well as an in-depth discussion with your portfolio manager. As
always, we thank you for the opportunity to help you meet your investment goals
through the Colonial family of funds.
Respectfully,
/s/ Harold W. Cogger
- ------------------------
Harold W. Cogger
President
January 10, 1997
Because market conditions change frequently, there can be no assurance that the
trends described here will continue, come to pass or affect Fund performance.
3
<PAGE>
PORTFOLIO MANAGEMENT REPORT
BONNY BOATMAN AND ROBERT WAAS are portfolio co-managers of Colonial Tax-Exempt
Fund. Ms. Boatman is senior vice president of Colonial Management Associates,
Inc. and Director of the Municipal Bond Department. Mr. Waas is vice president
of Colonial Management Associates, Inc.
Q. HAS YOUR INVESTMENT STRATEGY CHANGED OVER THE PAST 12 MONTHS?
A. Our strategy has changed a couple of times in response to volatile
fixed-income market conditions. At the beginning of the year, the Fund was
positioned to perform well in a declining interest rate environment. As interest
rates reversed direction and began to increase early in the period, we took a
more defensive approach, we began to increase the Fund's holdings of shorter
effective maturities to reduce the expected price swings in response to interest
rate changes. This strategy was maintained for much of the year, until we began
to see some shifts in the investment landscape in September, when a series of
weaker economic reports created a more favorable climate for fixed income
investments. We began to position the Fund to take advantage of these changes by
adding to our holdings of zero coupon bonds, which modestly increased the Fund's
sensitivity to changes in interest rates.
Q. WHAT FACTORS CONTRIBUTED TO PERFORMANCE DURING THIS PERIOD?
A. The biggest factor during the first half of the year was the sudden, sharp
upward move in interest rates that had a negative effect on fixed income inves
tments. Our increase in defensive investments had a positive contribution to
performance as these securities had good price stability, lower volatility and
attractive current income characteristics. During the last quarter of the Fund's
fiscal year, we initiated positions in more interest rate sensitive securities
such as the Foothills Transportation Corridor zero-coupon bonds. This BBB-rated
California tollroad project is experiencing better than expected traffic flows,
the bonds enjoy good liquidity and we believe we are being compensated for the
risks associated with the project.
Offsetting these positive factors was a sizable investment in two paper
recycling projects. These bonds suffered serious declines in value as a result
of the commodity nature of recycled pulp, as pulp prices fell to all-time lows.
A combination of a reduction in our holdings and lower security prices has
resulted in these investments declining to 1.41% of the Fund's net assets. We
are hopeful that our remaining holdings may benefit as market conditions
improve.
Q. HOW DID THE FUND'S 12 MONTH PERFORMANCE COMPARE TO THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX?
A. The Fund underperformed the Lehman Brothers Municipal Bond Index, a
broad-based, unmanaged index that tracks the performance of the municipal bond
market. The total return for the Fund's Class A shares, based on net asset
value, was 4.47% while the return on the Index was 5.89%. The Fund
underperformed the Index due to the Fund's lower sensitivity to interest rate
changes in the last three months of the year, when downward changes in rates
were positive contributors to performance.
4
<PAGE>
Q. WHAT IS YOUR OUTLOOK FOR THE TAX-EXEMPT BOND MARKET?
A. While the economy will probably continue to demonstrate a mix of strong and
weak quarters, we do see more than anecdotal evidence that the economy is
slowing down. Therefore, we anticipate that the interest rate environment could
continue to be choppy. However, we believe that the next three to six months
will be generally positive for fixed income investments. In addition, with the
election year behind us and a balance of Democrats and Republicans in Congress,
we believe that political conditions will promote stability in the tax-exempt
bond market.
COLONIAL TAX-EXEMPT FUND'S PERFORMANCE VS.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
Change in Value of $10,000 from 11/30/86 -11/30/96
Based on NAV and MOP for Class A Shares
[LINE GRAPH]
A $10,000 investment in Class B shares made on May 5, 1992 at net asset value
(NAV) would have been valued at $13,017 on November 30, 1996. The same
investment based on CDSC would have grown to $12,817 on November 30, 1996. The
Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indexes are not investments, do not incur fees or expenses, and it is not
possible to invest in an index.
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/96 (Most Recent Quarter End)
<CAPTION>
- -------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
INCEPTION 11/21/78 5/5/92
NAV MOP NAV W/CDSC
- -------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
1 YEAR 2.68% (2.20)% 1.91% (2.94)%
- -------------------------------------------------------------------------------
5 YEARS 6.30% 5.27% -- --
- -------------------------------------------------------------------------------
10 YEARS 6.82% 6.30% -- --
- -------------------------------------------------------------------------------
SINCE INCEPTION -- -- 5.68% 5.33%
- -------------------------------------------------------------------------------
</TABLE>
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 reflects the maximum charges of
5% for one year and 2% since inception. Past performance cannot predict future
results.
5
<PAGE>
<TABLE>
<CAPTION>
Label A B C
Label CTEF MOP NAV LEHMAN
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
1 9/30/85 9525 10000 10000
- ----------------------------------------------------------
2 9708 10192 10088
- ----------------------------------------------------------
3 10477 11000 11110
- ----------------------------------------------------------
4 10449 10970 11041
- ----------------------------------------------------------
5 10894 11437 11635
- ----------------------------------------------------------
6 11248 11809 12037
- ----------------------------------------------------------
7 11531 12106 12328
- ----------------------------------------------------------
8 11189 11747 11993
- ----------------------------------------------------------
9 10940 11485 11695
- ----------------------------------------------------------
10 11299 11863 12217
- ----------------------------------------------------------
11 11663 12245 12638
- ----------------------------------------------------------
12 11957 12553 12882
- ----------------------------------------------------------
13 12230 12840 13213
- ----------------------------------------------------------
14 12474 13096 13457
- ----------------------------------------------------------
15 12569 13196 13547
- ----------------------------------------------------------
16 13108 13761 14349
- ----------------------------------------------------------
17 13136 13791 14358
- ----------------------------------------------------------
18 13482 14154 14909
- ----------------------------------------------------------
19 13554 14230 14975
- ----------------------------------------------------------
20 13841 14531 15325
- ----------------------------------------------------------
21 13903 14596 15334
- ----------------------------------------------------------
22 14350 15065 15996
- ----------------------------------------------------------
23 14686 15418 16358
- ----------------------------------------------------------
24 15005 15753 16706
- ----------------------------------------------------------
25 15564 16340 17356
- ----------------------------------------------------------
26 16034 16833 17939
- ----------------------------------------------------------
27 16112 16916 17993
- ----------------------------------------------------------
28 16671 17503 18675
- ----------------------------------------------------------
29 17100 17953 19171
- ----------------------------------------------------------
30 17359 18225 19520
- ----------------------------------------------------------
31 17935 18829 20244
- ----------------------------------------------------------
32 18413 19331 20907
- ----------------------------------------------------------
33 19011 19959 21613
- ----------------------------------------------------------
34 19223 20181 21916
- ----------------------------------------------------------
35 18191 19098 20713
- ----------------------------------------------------------
36 18271 19182 20943
- ----------------------------------------------------------
37 18350 19265 21086
- ----------------------------------------------------------
38 18018 18916 20783
- ----------------------------------------------------------
39 19415 20383 22253
- ----------------------------------------------------------
40 19695 20677 22790
- ----------------------------------------------------------
41 20116 21120 23445
- ----------------------------------------------------------
42 20946 21991 24180
- ----------------------------------------------------------
</TABLE>
<PAGE>
CTEF
CTEF.XLS NAV MOP
- -----------------------------------
11/30/86 00: 10000 9525
- -----------------------------------
12/31/86 00: 9975.804 9501.953
- -----------------------------------
3/31/87 00: 10226.36 9740.609
- -----------------------------------
6/30/87 00: 9923.274 9451.919
- -----------------------------------
9/30/87 00: 9701.85 9241.012
- -----------------------------------
12/31/87 00: 10020.88 9544.891
- -----------------------------------
3/31/88 00: 10343.7 9852.378
- -----------------------------------
6/30/88 00: 10604.2 10100.5
- -----------------------------------
9/30/88 00: 10846.08 10330.89
- -----------------------------------
12/31/88 00: 11063 10537.51
- -----------------------------------
3/31/89 00: 11146.73 10617.26
- -----------------------------------
6/30/89 00: 11624,66 11072.49
- -----------------------------------
9/30/89 00: 11649.79 11096.43
- -----------------------------------
12/31/89 00: 11956.59 11388.65
- -----------------------------------
3/31/90 00: 12020.8 11449.82
- -----------------------------------
6/30/90 00: 12274.73 11691.68
- -----------------------------------
9/30/90 00: 12330.12 11744.43
- -----------------------------------
12/31/90 00: 12726.14 12121.65
- -----------------------------------
3/31/91 00: 13024.18 12405.53
- -----------------------------------
6/30/91 00: 13307.18 12675.09
- -----------------------------------
9/30/91 00: 13802.94 13147.3
- -----------------------------------
12/31/91 00: 14219.64 13544.21
- -----------------------------------
3/31/92 00: 14289.28 13610.54
- -----------------------------------
6/30/92 00: 14785.29 14082.99
- -----------------------------------
9/30/92 00: 15165.44 14445.09
- -----------------------------------
12/31/92 00: 15395.36 14664.08
- -----------------------------------
3/31/93 00: 15905.89 15150.36
- -----------------------------------
6/30/93 00: 16329.85 15554.18
- -----------------------------------
9/30/93 00: 16860.01 16059.16
- -----------------------------------
12/31/93 00: 17047.97 16238.19
- -----------------------------------
3/31/94 00: 16133.1 15366.78
- -----------------------------------
6/30/94 00: 16203.69 15434.02
- -----------------------------------
9/30/94 00: 16273.79 15500.79
- -----------------------------------
12/31/94 00: 15979.43 15220.41
- -----------------------------------
3/31/95 00: 17218.02 16400.17
- -----------------------------------
6/30/95 00: 17466.94 16637.26
- -----------------------------------
9/30/95 00: 17840.49 16993.07
- -----------------------------------
12/31/95 00: 18798.17 17905.26
- -----------------------------------
3/31/96 00: 18387.9 17514.48
- -----------------------------------
6/30/96 00: 18480.63 17602.8
- -----------------------------------
9/30/96 00: 18875.19 17978.62
- -----------------------------------
11/30/96 00: 19406.85 118485.02
- -----------------------------------
Page 1
<PAGE>
Sheet 1
<TABLE>
<CAPTION>
Lehman Brothers Municipal Bond Index
- ------------------------------------
<S> <C>
11/30/86 $10,000
- ------------------------------------
12/31/86 9,972
- ------------------------------------
3/31/87 10,214
- ------------------------------------
6/30/87 9,937
- ------------------------------------
9/30/87 9,690
- ------------------------------------
12/31/87 10,122
- ------------------------------------
3/31/88 10,471
- ------------------------------------
6/30/88 10,674
- ------------------------------------
9/30/88 10,947
- ------------------------------------
12/31/88 11,151
- ------------------------------------
3/31/89 11,225
- ------------------------------------
6/30/89 11,890
- ------------------------------------
9/30/89 11,898
- ------------------------------------
12/31/89 12,354
- ------------------------------------
3/31/90 12,409
- ------------------------------------
6/30/90 12,699
- ------------------------------------
9/30/90 12,707
- ------------------------------------
12/31/90 13,255
- ------------------------------------
3/31/91 13,554
- ------------------------------------
6/30/91 13,844
- ------------------------------------
9/30/91 14,382
- ------------------------------------
12/31/91 14,864
- ------------------------------------
3/31/92 14,909
- ------------------------------------
6/30/92 15,473
- ------------------------------------
9/30/92 15,885
- ------------------------------------
12/31/92 16,174
- ------------------------------------
3/31/93 16,775
- ------------------------------------
6/30/93 17,324
- ------------------------------------
9/30/93 17,910
- ------------------------------------
12/31/93 18,161
- ------------------------------------
3/31/94 17,164
- ------------------------------------
6/30/94 17,353
- ------------------------------------
9/30/94 17,472
- ------------------------------------
12/31/94 17,222
- ------------------------------------
3/31/95 18,440
- ------------------------------------
6/30/95 18,884
- ------------------------------------
9/30/95 19,427
- ------------------------------------
12/31/95 20,229
- ------------------------------------
3/31/96 19,985
- ------------------------------------
6/30/96 20,138
- ------------------------------------
9/30/96 20,600
- ------------------------------------
11/30/96 $21,214
- ------------------------------------
Page 1
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
<CAPTION>
NOVEMBER 30, 1996 (IN THOUSANDS)
MUNICIPAL BONDS - 97.3% PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 8.6%
EDUCATION - 5.4%
AL State University Revenue,
Auburn University,
7.000% 06/01/11 $ 1,000 $ 1,108
AZ State University,
6.625% 06/01/09 1,000 1,084
IL Chicago Board Education:
Series 1992 A:
6.000% 01/01/20 4,000 4,300
6.250% 01/01/15 4,400 4,840
IN Purdue University,
Student Fee, Series B,
6.700% 07/01/15 1,100 1,221
MA Health and Educational Facilities Authority:
Amherst College, Series E,
6.750% 11/01/15 1,000 1,095
Berklee College of Music, Series C,
6.875% 10/01/21 4,380 4,807
MA State College Building Authority Project,
Series A,
7.500% 05/01/11 1,500 1,856
NY State Dormitory Authority:
City University System:
Series 1990-C:
7.000% 07/01/14 2,050 2,278
7.500% 07/01/10 19,875 23,502
Series 1993 A,
6.000% 07/01/20 21,850 22,669
Series F,
5.000% 07/01/14 9,700 8,876
Series 1993 F,
5.500% 07/01/12 5,000 4,887
State University of New York:
Series A,
5.875% 05/15/17 33,240 33,863
Series B,
5.000% 05/15/18 22,020 19,956
Series 1990 A,
7.500% 05/15/13 8,000 9,540
Series 1990 B,
7.000% 05/15/16 1,000 1,069
----- -- -- -- ----- -----
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/November 30, 1996
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series 1993 A,
5.500% 05/15/13 $ 9,000 $ 8,854
6.000% 07/01/20 6,140 6,662
OR State Health Sciences University,
Series 1995 A,
(a) 07/01/21 30,000 7,687
TX University of Texas,
Series 1996,
4.600% 07/01/08 5,660 5,434
--------
175,588
---------
SCHOOL DISTRICT GENERAL OBLIGATION - 3.1%
AZ Apache County School District
Number 010 Round Valley Project of 1987, Series 1990 C:
9.875% 07/01/05 1,500 1,665
10.800% 07/01/97 800 828
10.800% 07/01/98 1,000 1,091
10.800% 07/01/99 1,000 1,139
CA Clovis Unified School District,
Series 1996 D,
(a) 08/01/10 7,000 3,377
CO Douglas County School District
No. RE-1, Series 1996,
7.000% 12/15/12 6,000 7,170
FL State Board of Education:
Series 1992 A,
6.400% 06/01/19 11,000 11,784
Series 1993 D:
5.125% 06/01/22 14,500 13,721
5.200% 06/01/23 10,140 9,557
IL Chicago Board of Education,
Series 1996:
6.250% 12/01/11 2,830 3,124
6.250% 12/01/12 1,500 1,656
TX Conroe Independent School District,
Lot B:
5.000% 02/01/10 6,435 6,306
5.000% 02/01/11 6,765 6,562
TX Hurst Euless Bedford
Independent School District:
Series 1994,
6.500% 08/15/24 6,355 6,871
Series 1996,
5.250% 08/15/24 26,085 25,335
--------
100,186
--------
</TABLE>
7
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - CONT.
STUDENT LOAN - 0.1%
LA State Public Facility Authority,
Series A,
6.750% 09/01/06 $ 2,000 $ 2,130
VT State Student Assistance Financing
Program, Series B,
6.700% 12/15/12 2,000 2,140
------
4,270
------
- ----------------------------------------------------------------------------------
HEALTH - 14.1%
HOSPITALS - 7.8%
AL Alabama Special Care Facilities Authority,
Montgomery Healthcare, Series 1989,
11.000% 10/01/19 15,655 15,968
CA State Health Facilities Financing
Authority,
Kaiser Permanente, Series 1989 A,
7.000% 10/01/18 6,250 6,695
CA Statewide Communities Development
Authority,
Cedars-Sinai Medical Center, Series 1993,
5.400% 11/01/15 12,500 11,813
CT State Health & Educational
Facilities Authority,
New Britain Hospital, Series 1991 A,
7.750% 07/01/22 905 979
DE State Economic Development Authority,
Riverside Hospital,
Series 1992 A,
9.500% 01/01/22 1,155 1,526
FL Orange County Health Facilities Authority,
Orlando Regional Healthcare System,
Series 1996 A,
6.250% 10/01/16 4,000 4,420
FL St. Petersburg Health Facilities
Authority, Allegany Health System,
St. Joseph's Hospital, Inc., Series 1985 A,
7.000% 12/01/15 2,000 2,223
GA Clayton Hospital Authority,
The Woodlands Foundation Incorporated,
Series 1991 A,
9.750% 05/01/21 6,680 5,678
IL Health Facilities Authority:
Edgewater Medical Center,
Series A,
9.250% 07/01/24 8,435 9,300
</TABLE>
8
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RIB (variable rate), Series 1992 B,
9.943% 05/01/21 $ 4,800 $ 5,664
IL Naperville Economic Development,
Series 81,
13.000% 08/01/08 5,462 5,803
MA State Health & Educational
Facilities Authority,
Lowell General Hospital, Series 1991 A,
8.400% 06/01/11 2,500 2,769
ME State Health & Higher Educational
Facilities Authority,
Maine Medical Center, Series C,
5.000% 11/15/13 16,500 15,386
MO Hannibal Industrial Development,
Medical Systems of Northeast Missouri,
Series 1992,
9.500% 03/01/22 4,250 5,350
MS Hospital Equipment & Facilities
Authority, Pooled Loan Program,
7.500% 08/01/16 18,900 20,010
MT State Health Facility Authority,
Hospital Facilities, Series 1994,
RIB (variable rate),
6.699% 02/15/25 6,000 5,490
NC Charlotte-Mecklenburg Hospital
Authority, Series 1996 A,
5.750% 01/15/21 6,400 6,432
NJ Health Care Facilities Financing
Authority, Raritan Bay Medical Center,
7.250% 07/01/14 4,300 4,558
NV Reno Hospital, St. Mary's Regional
Medical Center, Series 1991 A,
6.700% 07/01/21 1,700 1,836
OK Oklahoma City Industrial & Cultural
Facilities Trust,
Hillcrest Health Center,
6.400% 08/01/14 4,320 4,379
PA Westmoreland County Redevelopment
Authority, First Mortgage, Harmon
House, Series A,
(a) 08/15/28 37,300 3,264
TN Chattanooga Health Education
and Housing Facilities Board,
North Park Hospital Project, Series 1993,
8.500% 02/01/23 42,380 44,340
</TABLE>
9
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HEALTH - CONT.
HOSPITALS - CONT.
TN Metropolitan Government, Nashville
& Davidson Counties:
Meharry Medical College,
6.875% 12/01/24 $29,750 $ 34,659
Volunteer Healthcare Systems,
Series 1988-A,
10.750% 06/01/18 (b) 18,880 5,664
TX Tarrant County Health Facilities
Development Corp., Community
Health Care Foundation, Inc., (b)(c)
10.125% 04/01/21 9,200 3,220
VA Dickenson County Industrial
Development Authority, Volunteer
Healthcare Systems, Inc., Series 1988 A
10.750% 06/01/18 (b) 2,500 750
VA Norfolk Industrial Development
Authority,
Sentara Hospital, Series A,
6.500% 11/01/13 2,500 2,687
VA Southampton County Industrial
Authority, Medical Facility of
America XLIII Project, Series 1986,
8.375% 12/15/26 3,000 3,118
VT Educational & Health Buildings
Financing Agency,
Springfield Hospital, Series A,
7.750% 01/01/13 1,975 2,160
WA Washington State Health Care
Facility:
Grays Harbor Community Hospital,
Series 1993:
7.200% 07/01/03 1,050 1,168
8.025% 07/01/20 6,380 7,297
Tacoma Multicare Medical Center,
7.875% 08/15/11 5,000 5,356
WI State Health & Educational
Facilities Authority, St. Luke's
Medical Center Project, Series 1991,
7.100% 08/15/19 2,550 2,805
--------
252,767
--------
</TABLE>
10
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTERMEDIATE CARE FACILITIES - 0.7%
IL Champaign,
Hoosier Care Inc.,
Series 1989 A,
9.750% 08/01/19 $ 1,465 $ 1,560
IN Wabash First Mortgage, Hoosier
Care, Incorporated, Series 1989 A,
9.750% 08/01/19 5,835 6,214
MA State Health & Educational
Facilities Authority,
Corporation for Independent Living,
8.100% 07/01/18 1,290 1,303
NY State Medical Care Facilities
Finance Agency, Mental Health Services
Facilities, Series 1993 F,
5.250% 02/15/19 5,000 4,781
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992 A,
9.750% 08/01/19 4,245 4,914
Series 1992 C,
9.750% 08/01/19 4,240 4,908
-------
23,680
-------
NURSING HOMES - 5.6%
CA San Diego Industrial Development,
8.750% 12/01/16 5,400 5,859
CO Health Facility,
American Housing Foundation I,
Series 1990,
10.250% 12/01/20 2,500 2,500
DE State Economic Development Authority,
Churchman Village Project,
Series A,
10.000% 03/01/21 7,245 8,540
DE Sussex County, Healthcare Facility,
Delaware Health Corporation, Series
1994 A,
7.600% 01/01/24 14,230 14,177
FL Collier County Industrial
Development Authority,
Beverly Enterprises, Inc., Series 1991,
10.750% 03/01/03 1,060 1,223
</TABLE>
11
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<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HEALTH - CONT.
NURSING HOMES - CONT.
FL Flagler County Industrial
Development Authority,
South Florida Properties, Series 1988,
10.500% 12/01/18 $ 8,925 $ 9,025
FL Gadsden County Industrial
Development Authority,
Florida Properties, Inc., Series 1988 A,
10.450% 10/01/18 6,065 6,247
FL Palm Beach County:
Beverly Enterprises-Florida, Inc.,
Series 1984,
10.000% 06/01/11 2,735 3,039
Hillcrest Manor Project,
10.250% 12/01/16 3,145 3,282
FL Volusia County Industrial
Development Authority, Beverly
Enterprises-Florida, Inc., Series 1987,
9.800% 12/01/07 840 862
IA Marion, Kentucky Iowa
Kentucky Iowa Corporation Project,
10.250% 01/01/20 990 1,025
IN Gary Industrial Economic Development,
West Side Health Care Center,
Series 1987 A,
11.500% 10/01/17 1,985 1,985
MA Boston, St. Joseph Nursing
Care Center, Inc., Series 1990,
10.000% 01/(d)20 310 340
MA State Industrial Finance Agency:
American Health Foundation Inc.,
Series 1989,
10.125% 03/01/19 3,220 3,393
Belmont Home Care Project:
Series A,
7.970% 01/01/99 290 296
Series 1995 A,
9.270% 01/01/25 10,405 11,120
GF/Massachusetts Inc.,
Series 1994,
8.300% 07/01/23 12,870 12,870
Seacoast Nursing Home,
Series 1991,
9.625% 12/01/21 4,945 5,458
</TABLE>
12
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<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MO St. Louis County Industrial
Development Authority, Nursing
Home, Cardinal Carberry Health
Center, Series 1991,
7.125% 03/20/23 $ 2,000 $ 2,165
NM Albuquerque Industrial Development
Authority, Manor Nursing Home,
12.000% 05/15/14 3,153 3,606
OH Ashtabula County,
First Mortgage,
Vilage Square Nursing Center, Inc., 1985,
12.000% 12/01/15 1,255 1,305
OH Franklin County,
Columbus West Health Care Co.,
Series 1986,
10.000% 09/01/16 3,015 2,864
OH Lucas County,
Gericare, Inc., Series 1988 B,
10.500% 06/01/18 2,995 3,017
OH Montgomery County,
Grafton Oaks Limited Partners,
Series 1986,
9.750% 12/01/16 695 660
OH Trumbull County,
12.000% 12/01/15 2,185 2,263
OH Washington County Industrial
Development, Marie Antoinette Care
Center, Series 1983,
6.867% 12/01/13 5,370 4,914
PA Cambria County Industrial
Development Authority,
Beverly Enterprises,
10.000% 06/18/12 1,900 2,394
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19 10,611 11,035
PA Delaware County Authority,
Main Line and Haverford Nursing,
Series 1992,
9.000% 08/01/22 9,420 10,291
PA Lackawanna County Industrial Authority,
Greenridge Nursing Center,
10.500% 12/01/10 1,890 2,072
</TABLE>
13
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HEALTH - CONT.
NURSING HOMES - CONT.
PA Luzerne County Industrial
Development Authority:
Beverly Enterprises,
Pennsylvania, Series 1983,
10.125% 11/01/08 $ 835 $ 923
Millville Nursing Center,
10.500% 12/01/12 3,780 3,591
PA Montgomery County Higher Education
& Health Authority,
Roslyn-Hatboro, Inc. Project,
9.000% 11/15/22 12,340 12,371
PA Philadelphia Authority For
Industrial Development:
First Mortgage, The Care Pavillion,
Series 1988,
10.250% 02/01/18 5,950 6,073
RHA/Philadelphia Project,
10.250% 11/01/18 9,345 9,660
PA Warren County Housing Finance
Corporation, Allegheny Manor,
7.500% 02/01/21 1,385 1,427
PA Washington County Industrial
Development Authority, Central
States, Series 1989,
10.250% 11/01/19 3,355 3,334
PA Wilkins Area Industrial Development
Authority, Oakmont Nursing Center,
Series 1984,
10.000% 07/01/11 1,100 1,246
TN Metropolitan Government, Nashville
& Davidson Counties Health &
Education Facilities, Central States,
Series 1989,
10.250% 11/01/19 770 765
TN Sumner County, Health, Education,
& Housing Facilities Board,
Gallatin Health Care, Series 1986:
9.750% 12/(b)03 160 112
9.750% 12/(b)04 175 123
9.750% 12/(b)05 225 158
9.750% 12/(b)06 220 154
10.250% 12/(b)16 2,400 1,680
</TABLE>
14
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<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TX Whitehouse Health Facilities
Development Corporation, Oak Brook
Health Care Center, Series 1989,
10.000% 12/01/19 $ 1,795 $ 1,847
VA Beach Development Authority,
Beverly Enterprises, Series 1985,
10.000% 04/01/10 935 1,037
--------
182,328
--------
- ----------------------------------------------------------------------------------
HOUSING - 13.1%
ASSISTED LIVING/SENIOR - 0.8%
IL State Development
Finance Authority,
Care Institute, Inc.,
8.250% 06/01/25 10,000 10,413
MN Roseville, Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 2,975 2,804
MS Lamar County Wesley Manor II:
8.750% 08/01/20 1,000 1,039
8.750% 02/01/29 1,610 1,673
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993 A,
8.250% 05/01/23 1,470 1,518
TX Bell County Health Facilities
Development Corp., Care
Institutions, Inc.,
9.000% 11/01/24 7,585 8,239
-------
25,686
-------
MULTI-FAMILY - 5.6%
AZ Maricopa County Industrial
Development Authority,
Advantage Point, Series 1996 A,
6.625% 07/01/26 2,750 2,788
AZ Mohave County Industrial Devlopment
Authority, Multi-family, Kingman
Station Apartments,
8.125% 10/01/26 2,850 3,024
AZ Phoenix Industrial Development
Authority, Chris Ridge Village
Project, Series 1992:
6.750% 11/01/12 650 678
6.800% 11/01/25 4,250 4,409
CO Health Facility, Birchwood
Manor, Series 1991 A,
7.625% 04/01/26 1,835 1,904
</TABLE>
15
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING - CONT.
MULTI-FAMILY - CONT.
DE Quaker Hill Housing Corp.,
Quaker Hill Apartments,
Series A,
7.550% 08/01/21 $ 6,225 $ 6,669
FL Clearwater Housing Authority,
Hampton Apartments,
Series 1994,
8.250% 05/01/24 3,475 3,670
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 10,600 10,070
FL State Housing Finance Agency,
Windsong Apartments,
Series 1993 C,
9.250% 01/01/19 1,230 1,242
GA Augusta Housing Authority Mortgage,
Mountain Ridge Holdings II,
Series A,
8.960% 09/(b)24 3,620 2,353
GA Savannah Housing Authority,
Plantation Oaks Apartments
Project, Series 1986,
9.625% 02/01/27 2,905 3,090
IL Carbondale,
Mill Street Apartments,
Series 1979,
7.375% 09/01/20 842 862
IL Charleston Non-Profit Corp.,
Cougills Manor Project,
6.875% 07/01/20 1,778 1,796
IL Chicago,
Jeffery Apartments,
Series 1987,
8.125% 08/01/30 2,385 2,459
IL East Moline Housing Finance Corp.,
Deerfield Woods Apartments,
7.500% 08/(e)21 2,384 2,459
IL Housing Development Authority,
Series 1990 A,
8.000% 06/01/26 680 711
IL Rockford:
8.700% 08/20/07 635 650
8.700% 08/20/26 4,455 4,561
</TABLE>
16
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<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LA Jefferson Housing Development,
Corporation Multiple Family,
Concordia Project, Series A,
7.700% 08/01/22 $2,570 $2,760
LA New Orleans Housing Development
Corp., Multi-family Housing Mortgage,
Southwood Patio, Series 1990-A,
7.700% 02/01/22 2,375 2,485
MA State Housing Finance Agency,
Series 1988 A,
8.400% 08/01/21 740 780
MN Washington County Housing &
Redevelopment Authority,
Cottages of Aspen, Series 1992,
9.250% 06/01/22 1,945 2,105
MN White Bear Lake,
Birch Lake Townhomes Project:
Series 1989 A,
9.750% 07/15/19 2,185 2,199
Series 1989 B,
(f) 07/15/19 291 503
MO St. Louis Area Housing Finance
Corp., Wellington Arms III,
Series 1979,
7.500% 01/01/21 2,046 2,070
MS Biloxi Urban Renewal,
Biloxi Apartments Project,
Series 1985:
9.500% 12/01/05 1,185 1,234
9.500% 12/01/10 1,235 1,287
9.500% 12/01/15 1,970 2,054
NC Eastern Carolina Regional Housing
Authority, New River
Apartments-Jacksonville, Series 1994,
8.250% 09/01/14 2,845 2,881
NE Omaha Housing Development
Corporation, Mortgage Notes, North
Omaha Homes,
7.375% 03/01/21 1,395 1,434
NJ State Housing & Mortgage Finance
Agency,
6.950% 11/01/13 5,090 5,370
NY Nyack Housing Assistance Corp.,
Nyack Plaza Apartments,
7.375% 06/(e)21 2,964 2,997
</TABLE>
17
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING - CONT.
MULTI-FAMILY - CONT.
NY State Housing Finance Agency,
Series 1996 A,
6.100% 11/01/15 $ 8,900 $ 9,211
Pass Through Certificates, Series
1993 A,
8.500% 12/(e)16 61,712 63,332
TN Knoxville Community Development,
Maple Oak Apartment Project,
Series 1992,
6.375% 10/15/08 2,510 2,601
TX Galveston Pass Health Facilities
Center, Pass Through Certificates,
8.000% 08/01/23 1,850 1,919
TX Laredo Housing Development Corp.,
Number 1,
7.375% 03/(e)21 2,095 2,114
UT Salt Lake City Housing Authority,
Hartland Apartments Project,
Series 1987 A,
8.875% 12/20/27 7,720 7,961
VA Alexandria Redevelopment
& Housing Authority, Courthouse
Commons Apartments:
Series 1990 A,
10.000% 01/01/21 760 768
Series 1990 B,
(f) 01/01/21 965 1,771
VA Norfolk Redevelopment & Housing
Authority, Multifamily Housing,
Dockside, Series 1991 A:
7.300% 12/01/16 1,315 1,389
7.375% 12/01/28 1,940 2,052
WA Washington Housing Development
Corp.,Parkview Apartments
Project,
7.500% 04/01/21 1,678 1,729
WA Washington State Housing Finance
Commission, Multifamily Housing,
Series 1988 A,
7.900% 07/01/30 1,455 1,508
WI Milwaukee Housing Authority
Mortgage, Windsor Court Project,
Series 1986,
8.700% 08/21/21 1,985 2,051
</TABLE>
18
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<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WY Rock Springs Housing Finance
Corporation, Bicentennial
Association II,
7.500% 05/01/20 $ 1,141 $ 1,174
--------
183,134
--------
SINGLE-FAMILY - 6.7%
AK State Housing Finance Corp.:
First Series 1991,
7.800% 12/01/30 2,200 2,274
Series 1992 A,
6.600% 12/01/23 11,750 13,072
AL State Housing Finance Authority,
Series 1990 C,
7.550% 04/01/16 655 690
CA State Housing Finance Authority,
Series 1984 B,
(a) 08/01/16 325 36
CO El Paso County Home Mortgage:
Series 1987 C,
8.300% 09/20/18 1,995 2,244
Series 1987 D,
8.150% 09/20/14 856 949
Series 1988 A,
8.375% 03/25/19 1,969 2,232
CO Housing Finance Authority:
Series C 1,
7.650% 12/01/25 4,920 5,560
Series D 1,
7.375% 06/01/26 5,000 5,575
Series A,
7.150% 11/01/14 805 857
Series 1991 A,
7.500% 05/01/29 4,745 4,982
Series 1996 A,
7.400% 11/01/27 5,500 6,153
Series 1996 B 1,
7.650% 11/01/26 2,750 3,101
CT State Housing Finance Authority,
Housing Mortgage Finance Program,
Series B 1, Sub B 1,
7.550% 11/15/08 10 10
FL Brevard County,
Housing Finance Authority,
Series 1985,
(a) 04/01/17 5,645 713
</TABLE>
19
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING - CONT.
SINGLE-FAMILY - CONT.
FL Lee County Housing Finance Authority,
Series 1996 A 1,
7.350% 03/01/27 $6,680 $ 7,381
GA Atlanta, Urban Residential
Finance Authority, Series 1988,
8.250% 10/01/21 1,135 1,152
IA Finance Authority Single Family:
Series A,
7.250% 07/01/16 1,015 1,073
Series 1992 B,
6.950% 07/01/24 9,915 10,460
IL Chicago, Series 1996 B,
7.625% 09/01/27 4,250 4,776
IL Rockford,
9.250% 02/01/00 890 913
IL State Housing Development
Authority:
Series B,
7.250% 08/01/17 1,290 1,358
Series C,
7.500% 08/01/17 220 230
IN State Housing Finance Authority:
GNMA Collateral Mortgage Program:
Series A 1,
7.850% 07/01/16 135 143
Series B 1,
7.600% 01/01/16 1,015 1,070
Single Family Housing,
Series 1987 C,
9.125% 07/01/18 2,910 3,027
KY Lousiville Residential,
Series 1984,
(a) 07/01/16 600 68
LA Calcasieu Parish:
Series 1987 A,
8.125% 12/01/12 1,279 1,297
Series 1988 B,
8.250% 06/01/12 3,171 3,243
LA Housing Financing Agency,
Series 1988,
8.300% 11/01/20 2,430 2,521
LA Jefferson Parish Home Mortgage,
Authority Single Family,
Series 1988 A,
8.300% 04/01/20 2,220 2,331
</TABLE>
20
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<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MA State Housing Finance Agency:
Series 21,
7.125% 06/01/25 $6,000 $ 6,398
Series 1987 A,
9.000% 12/01/18 1,595 1,651
Series 1988 B,
8.100% 08/01/23 840 883
MD State Community Development
Administration, Department of Housing
and Community Development Program:
1st Series,
7.300% 04/01/17 450 474
3rd Series,
7.250% 04/01/27 960 1,004
MN State Housing Finance Agency,
Series 1988 D,
8.250% 08/01/20 1,950 1,966
MN State Housing Finance Agency,
Single Family Mortgage, Series C,
7.100% 07/01/11 675 717
MO State Housing Development Commission:
Homeownership Loan Program,
Series 1996 A,
7.200% 09/01/26 7,795 8,565
Series C:
6.900% 07/01/18 845 885
7.250% 09/01/26 4,590 5,112
Series 1996 B,
7.550% 09/01/27 9,160 10,110
NE Investment Finance Authority,
Single Familty Mortgage,
RIB (variable rate):
Series 1990 B,
11.267% 03/15/22 7,000 7,735
Series 1990 2,
11.551% 09/10/30 3,500 3,916
NH State Housing Finance Authority,
Single Family Resources Mortgage,
Series 1989 B,
7.700% 07/01/29 2,450 2,588
NY State Mortgage Agency,
Home Owner Mortgage:
Series BB 2,
7.950% 10/01/15 1,395 1,440
Series HH-2,
7.850% 04/01/22 1,500 1,581
</TABLE>
21
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING - CONT.
SINGLE-FAMILY - CONT.
OH State Housing Finance Agency:
Series A2, RIB (variable rate),
9.909% 03/24/31 $6,300 $6,749
Series 1988 C,
8.125% 03/01/20 845 888
PA State Housing Finance Authority,
Series 39B,
6.750% 04/01/16 5,700 6,014
SC State Housing Authority,
Homeownership Mortgage,
Series 1988 A,
8.500% 07/01/08 2,000 2,070
TX Bexar County Housing Finance Corp.,
GNMA Collateralized Mortgage,
Series 1989 A,
8.200% 04/01/22 3,765 3,986
TX Corpus Christi Housing Finance Corp.,
Single Family Mortgage,
Lomas and Nettleton, Series C
10.000% 10/01/07 740 757
TX Harris County Housing Finance
Corp., Single Family,
Series 1987,
8.875% 12/01/17 2,355 2,434
TX Lubbock Housing Finance Corp.,
Single Family Series:
Series 1988 C,
8.375% 12/01/20 5,460 5,562
Series 1988 D,
8.375% 12/01/20 1,005 1,028
TX State Department Housing &
Community Affairs, Collateralized
Home Mortgage, Series 1992 B2,
RIB (variable rate),
9.866% 06/18/23 9,000 10,001
TX State Housing Agency Mortgage,
Single Family, Series A,
7.150% 09/01/12 655 695
UT State Housing Finance Agency,
Single Family Mortgage:
Senior A-1,
6.900% 07/01/12 875 923
Senior Issue B-1,
7.500% 07/01/16 140 148
</TABLE>
22
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<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior Issue B-2:
7.000% 07/01/16 $ 350 $ 367
7.700% 07/01/15 25 26
Series 1990 C2,
7.950% 07/01/10 290 308
Senior Issue D 2,
7.250% 07/01/11 410 436
Series E 1,
6.950% 07/01/11 1,530 1,614
Senior Series F 1,
7.400% 07/01/09 355 366
VA State Housing Authority
Commonwealth Mortgage:
Series A,
7.100% 01/01/17 1,000 1,050
Series B, Sub Series B-4,
6.850% 07/01/17 5,180 5,387
Series 1988 C, Subseries C 1,
7.800% 01/01/38 465 485
VT Housing Finance Agency, Home
Mortgage Purchase, Series 1989 A,
7.850% 12/01/29 3,920 4,101
WI State Housing & Economic
Development Authority,
Series A,
7.000% 09/01/09 985 1,048
WV State Housing Development Fund,
Series 1992 B,
7.200% 11/01/20 10,000 10,588
WY Community Development Authority,
Single Family Mortgage:
Series 1987 A,
7.875% 06/01/18 1,980 2,064
Series 1988 G,
7.250% 06/01/21 4,500 4,821
--------
218,432
--------
- ----------------------------------------------------------------------------------
OTHER - 10.9%
PUBLIC FACILITIES IMPROVEMENT - 1.4%
AK State Industrial Development
Authority, Series 1986:
8.625% 04/01/02 2,510 2,595
8.750% 04/01/07 2,905 3,005
FL Tampa Capital Improvement Program,
RaboBank, Series B,
8.375% 10/01/18 10,000 10,612
</TABLE>
23
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<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OTHER - CONT.
PUBLIC FACILITIES IMPROVEMENT - CONT.
NY State Dormitory Authority,
Judicial Facilities,
Series 1991 A,
9.500% 04/15/14 $ 9,000 $10,539
PR Commonwealth of Puerto Rico,
Infrastructure Finance Authority,
Series 1988 A,
7.900% 07/01/07 2,500 2,672
SC Charleston County,
Charleston Public Facilities Corp.,
Series 1995:
6.000% 12/01/07 3,110 3,363
6.000% 12/01/08 3,295 3,538
6.000% 12/01/09 3,495 3,726
6.000% 12/01/10 3,710 3,928
-------
43,978
-------
PUBLIC INFRASTRUCTURE - 2.0%
CA Los Angeles County Public Works
Financing Authority,
Multiple Facilities Project IV,
4.750% 12/01/13 10,000 9,138
CA San Diego County,
Series 1993,
5.625% 09/01/12 13,000 13,325
PA Philadelphia Municipal Authority,
Series B,
6.400% 11/15/16 40,260 42,625
-------
65,088
-------
REFUNDED/ESCROW/SPECIAL OBLIGATION (g) - 7.5%
AZ Pima County Industrial Development
Authority,
8.200% 09/01/21 12,370 16,267
CA Perris Community Facilities District,
Series 2-90,
8.750% 10/01/21 6,165 8,685
CA Pomona, Series A,
7.600% 05/01/23 10,000 12,800
CA Riverside County,
8.300% 11/01/12 10,000 13,038
CO Mesa County,
(a) 12/01/11 5,905 2,547
</TABLE>
24
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<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DC District Columbia Hospital,
Washington Hospital Center Corp.,
Series 1990 A:
8.750% 01/01/15 $10,000 $11,675
9.000% 01/01/08 1,690 1,992
DE Wilmington, Riverside Hospital,
Series 1988 A,
10.000% 10/01/03 300 333
GA State Municipal Electric Authority,
Series O,
8.125% 01/01/17 10,000 10,572
IL Chicago Public Building Commission,
Series 1990 A,
7.125% 01/01/15 4,010 4,321
IL Health Facility Authority,
United Medical Center-Formerly,
Series 1991:
8.125% 07/01/06 2,985 3,343
8.375% 07/01/12 1,500 1,813
IN Indianapolis Local Public
Improvement Bond Bank,
United Airlines Maintenance
Facility,
6.700% 01/01/17 4,000 4,470
IN St. Joseph County Hospital Authority,
South Bend Memorial Hospital,
9.400% 06/01/10 3,190 4,075
IN State University,
Student Fee,
7.000% 08/01/09 2,680 2,925
KY State Turnpike Authority,
7.250% 05/15/10 1,500 1,663
KY Trimble County,
Louisville Gas & Electric Co.,
Series B,
6.550% 11/01/20 130 144
LA State Public Facilities Authority,
Tulane University,
6.625% 11/15/21 455 512
MA Bay Transportation Authority,
General Transportation System:
Series A,
7.000% 03/01/11 1,000 1,120
Series 1990 B,
7.800% 03/01/10 3,300 3,783
</TABLE>
25
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OTHER - CONT.
REFUNDED/ESCROW/SPECIAL OBLIGATION (G) - CONT.
MA Boston,
Boston City Hospital Facilities,
Series 1990 A,
7.625% 02/15/21 $12,000 $13,605
MA General Obligation Bonds:
Series 1989 C,
7.000% 06/01/04 6,500 7,069
Series 1991 A,
7.625% 06/01/08 5,000 5,756
MA State Consolidated Loan,
Series C,
7.000% 08/01/12 2,000 2,255
MA State Industrial Finance Agency,
Mary Ann Morse Nursing Home, Inc.,
Series 1991 I,
10.000% 01/01/21 1,715 2,109
MA State Water Resources Authority,
Series 1990 A,
7.625% 04/01/14 2,000 2,245
MI Detroit,
Series 1990 A,
8.700% 04/01/10 10,000 11,537
NC Lincoln County,
Lincoln County Hospital,
9.000% 05/01/07 505 605
NV State, Prerefunded,
Series A,
6.800% 07/01/12 2,440 2,733
NV State,
Series A,
6.800% 07/01/12 60 66
NY New York City General Obligation,
Series 1991 D,
8.000% 08/01/18 5,085 5,924
NY State Dormitory Authority, State
University of New York, Series
1989 B,
7.250% 05/15/15 425 473
NY State Power Authority,
Series V,
8.000% 01/01/17 400 425
NY State Urban Development
Corp., State Facilities, Series 1991,
7.500% 04/01/20 4,950 5,649
</TABLE>
26
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NY Suffolk County Water Authority,
7.375% 06/01/12 $ 180 $ 194
NY Triborough Bridge & Tunnel
Authority, Series T,
7.000% 01/01/11 750 837
PA Convention Center Authority, Series
1989 A,
6.000% 09/01/19 5,000 5,344
PA State Industrial Development
Authority, Economic Development,
Series A,
7.000% 01/01/11 5,595 6,280
PA State University,
6.750% 07/01/09 750 811
PA Westmoreland County Municipal
Authority, Special Obligation, Series 1985,
9.125% 07/01/10 5,000 6,006
SC Piedmont Municipal Power Agency,
Series 1988,
(a) 01/01/13 18,570 7,799
TN Jackson Water and Sewer Revenue,
Series 1984,
10.375% 07/01/12 910 1,064
TX Austin Utilities System Revenue,
6.750% 05/15/12 3,500 3,881
TX Austin Utilities System Revenue,
Series A,
7.800% 11/15/12 200 218
TX Hidalgo County Health Services,
Mission Hospital Inc., Series A,
10.250% 02/01/25 4,785 5,742
TX Houston Water & Sewer System
Revenue, Series A,
7.125% 12/01/16 850 867
TX Hurst Euless Bedford
Independent School District,
Series 1994,
6.500% 08/15/24 13,645 15,265
TX San Antonio Electric & Gas Revenue,
Series 1988
8.000% 02/01/16 175 187
TX State Research Laboratory
Commission Finance Authority,
Superconducting Super Collider,
Series 1991,
6.950% 12/01/12 10,000 11,625
</TABLE>
27
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OTHER - CONT.
REFUNDED/ESCROW/SPECIAL OBLIGATION (G) - CONT.
UT Uintah County Pollution Control,
Series 1984 F2,
10.500% 06/15/14 $ 6,900 $ 8,599
WV States Parkways Economic
& Tourism Authority, Series 1989,
7.125% 07/01/19 1,990 2,172
--------
243,420
--------
- ----------------------------------------------------------------------------------
OTHER REVENUE - 4.4%
AMUSEMENTS & RECREATION - 0.1%
MN Mille Lacs Capital Improvement
Infrastructure, Band of Chippewa,
Series 1992 A,
9.250% 11/01/12 1,445 1,618
NM Red River Sports Facility, Red
River Ski Area, Series 1985,
12.000% 06/01/07 3,015 3,042
--------
CHEMICALS - 0.1%
IL Southwestern Illinois Development
Authority, Sewer Facilities, Monsanto
Company, Series 1991,
7.300% 07/15/15 3,000 3,398
--------
HOTELS/CAMPS/LODGING - 0.1%
MN Burnsville Commercial Development,
Holiday Inn Project,
10.600% 06/01/06 1,400 1,426
MN Minneapolis Commercial Development,
Hometel Associates Limited,
Series 1988,
10.500% 06/01/03 1,500 1,517
--------
2,943
--------
JUSTICE & PUBLIC ORDER - 1.9%
NY State Dormitory Authority, Court
Facilities Lease, City of New York,
Series 1993 A,
5.625% 05/15/13 8,000 7,800
NY State Urban Development
Correctional Facility:
Series A:
6.500% 01/01/10 14,595 16,547
6.500% 01/01/11 8,500 9,658
</TABLE>
28
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series 4,
5.375% 01/01/23 $10,000 $ 9,250
Series 1993,
5.500% 01/01/15 4,000 3,850
Series 1993 A,
5.500% 01/01/14 12,500 12,266
TN Franklin Industrial Board,
Landings Apartment Project,
Series 1996 B,
8.750% 04/01/27 3,600 3,609
-------
62,980
-------
MANUFACTURING - 0.3%
CO Mesa County Industrial Development,
Joy Technologies Inc.,
Series 1992,
8.500% 09/15/06 1,000 1,091
MN Brooklyn Park,
TL Systems Corp.,
Series 1991,
10.000% 09/01/16 320 398
MN Buffalo,
Von Ruden Manufacturing, Inc.,
Series 1989,
10.500% 09/01/14 1,415 1,579
OH Cuyahoga County,
Joy Technologies, Inc.,
Series 1992,
8.750% 09/15/07 1,340 1,477
PA Bucks County
Industrial Development,
Jorgensen Steel,
9.000% 06/01/05 4,000 4,060
------
8,605
------
MISCELLANEOUS RETAIL - 0.4%
DE Sussex County, Economic Development,
Rehoboth Mall Project,
7.250% 10/15/12 4,885 5,398
PA Bucks County,
Industrial Development,
Hechinger Company, Series 1984,
11.375% 11/15/04 2,320 2,412
PA Philadelphia Authority for
Industrial Development, Hechinger
Company, Series 1983,
11.375% 12/01/04 3,715 3,799
</TABLE>
29
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OTHER REVENUE - CONT.
MISCELLANEOUS RETAIL - CONT.
VA Halifax County Industrial
Development Authority O'Sullivan
Industries Project, Series 1988,
8.250% 10/01/08 $ 1,000 $ 1,077
-------
12,686
-------
OTHER REVENUE - 0.1%
MD Baltimore,
Parck Charles Project,
Seris 1986,
8.000% 01/01/10 1,615 1,708
PAPER PRODUCTS - 1.4%
GA Rockdale County Development
Authority, Solid Waste Disposal,
Visy Paper, Inc., Series 1993,
7.500% 01/01/26 10,100 10,479
GA Wayne County Development
Authority, Solid Waste Disposal,
ITT Royonier Inc., Series 1990,
8.000% 07/01/15 2,500 2,756
IA Cedar Rapids,
Weyerhaeuser Company Project,
9.000% 08/01/14 1,000 1,406
LA De Soto Parish,
International Paper Company,
Series A,
7.700% 11/01/18 1,250 1,431
MI State Strategic Fund,
Blue Water Fiber Project,
Series 1994,
8.000% 01/01/12 16,200 12,130
MI State Strategic Fund,
Great Lakes Pulp & Fibre Project,
Series 1994,
10.250% 12/(h)16 28,000 14,280
WA Walla Walla Public Corp.,
Ponderosa Fibres Project,
9.125% 01/01/26 3,080 2,872
-------
45,354
-------
</TABLE>
30
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RESOURCE RECOVERY - 1.0%
CO-GENERATION - 0.5%
FL Martin County Industrial
Development Authority,
Indiantown Cogeneration Project,
Series 1994 A,
7.875% 12/15/25 $7,500 $ 8,606
NY Port Authority of New York &
New Jersey, KIAC Partners,
Series 1996 IV:
6.750% 10/01/11 1,500 1,562
6.750% 10/01/19 7,000 7,228
-------
17,396
-------
MISCELLANEOUS DISPOSAL - 0.2%
CT State Development Authority,
Pfizer Inc. Project,
Series 1994,
7.000% 07/01/25 3,000 3,375
MA Boston Industrial Development
Finance Authority,
Jet-A-Way, Inc.,
10.500% 01/01/11 1,500 1,674
-------
5,049
-------
RESOURCE RECOVERY - 0.3%
VA Fairfax County Economic Development,
Ogden Martin Systems,
Series 1987 A,
7.750% 02/01/11 4,395 4,758
WA Spokane Regional Solid Waste
Management System, Series 1989-A,
7.875% 01/01/07 2,500 2,681
WA Spokane Regional Solid Waste
Management System, Series 1989-A,
7.750% 01/01/11 3,000 3,236
-------
10,675
-------
- ----------------------------------------------------------------------------------
TAX-BACKED - 9.6%
GENERAL OBLIGATION - 4.4%
AK North Slope Borough,
Series 1996 B,
(a) 06/30/07 45,000 26,269
CT City of Bridgeport,
Series 1996 A,
6.500% 09/01/08 1,435 1,622
</TABLE>
31
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX-BACKED - CONT.
GENERAL OBLIGATION - CONT.
MA City of Boston, Series 1992 A,
6.500% 07/01/12 $ 4,400 $ 4,779
MA City of Holyoke,
School Project Loan,
7.650% 08/01/09 1,250 1,370
MA City of Lawrence,
4.750% 02/15/14 6,250 5,656
MA City of Lowell:
8.000% 01/15/00 1,105 1,214
8.400% 01/15/09 1,000 1,145
MA General Obligation Bonds,
Series 1991 C,
6.750% 08/01/09 2,865 3,141
MA State, Series 1991 C,
6.750% 08/01/09 1,000 1,096
MI City of Detroit, Series 1990 B,
8.250% 04/01/10 5,000 5,469
NV State,
Colorado River Commission,
Hoover Dam Project, Series 1992,
6.600% 10/01/16 5,000 5,431
NY New York City:
Series 1995 B,
6.950% 08/15/12 4,000 4,545
Series 1997 A:
7.000% 08/01/06 5,000 5,531
7.000% 08/01/07 4,725 5,227
NY New York City General Obligation,
Series 1991 D:
8.000% 08/01/16 60 69
8.000% 08/01/18 75 86
NY State,
3.000% 03/15/01 405 377
PR Commonwealth of Puerto Rico,
Series 1987,
(a) 07/01/04 38,380 26,482
TN Shelby County, General Obligation,
School, Series 1992 A:
(a) 05/01/10 7,065 3,321
(a) 05/01/13 2,500 947
TN Shelby County, Public Improvement,
Series 1992 A:
(a) 05/01/10 15,750 7,422
</TABLE>
32
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<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(a) 05/01/11 $10,000 $ 4,375
(a) 05/01/12 15,130 6,165
(a) 05/01/13 5,000 1,894
TX Harris County,
Series 1996:
(a) 10/01/14 9,630 3,563
(a) 10/01/17 9,630 2,985
TX State,
Veterans Land,
Series 1989,
7.625% 12/01/13 5,375 5,872
WA State,
Series 1992 A,
6.250% 02/01/11 6,400 7,032
--------
143,085
--------
SALES & EXCISE TAX - 2.6%
CA Los Angeles County
Transportation Authority,
Series 1993 A,
5.000% 07/01/21 42,555 39,470
CA Riverside County
Transportation Commission,
Series A,
6.500% 06/01/09 6,500 7,215
IL Development Finance Authority,
City of Marion Project,
Series 1991,
9.625% 09/15/21 5,705 5,897
IL Metropolitan Pier & Exposition
Authority:
McCormick Place Expansion
Project, Series 1992 A,
(a) 06/15/11 20,000 8,975
Series 1996 A:
(a) 12/15/14 16,660 6,081
(a) 12/15/22 37,550 8,543
IL State, Series S,
5.000% 06/15/09 6,000 5,910
IL State Sales Tax,
Series N,
6.900% 06/15/09 1,000 1,102
--------
83,193
--------
</TABLE>
33
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAX-BACKED - CONT.
TAX ALLOCATION - 2.6%
CA San Jose Redevelopment
Agency, Merged Area Redevelopment
Project, Series 1993,
5.000% 08/01/21 $30,000 $28,013
NY State Local Government
Assistance Corp.:
Series D,
5.000% 04/01/23 26,425 24,377
Series 1993 C,
5.500% 04/01/17 13,475 13,677
Series 1996 A:
5.125% 04/01/10(i) 9,000 8,955
5.125% 04/01/11(i) 10,000 9,900
-------
84,922
-------
- ----------------------------------------------------------------------------------
TRANSPORTATION - 9.1%
Air Transportation - 0.1%
IN Indianapolis Airport Authority,
Federal Express Project,
7.100% 01/15/17 2,000 2,170
TN Memphis-Shelby County, Airport
Authority Special Facilities, Express
Airlines I, Inc., Series 1986,
10.000% 12/01/16 750 761
-------
2,931
-------
AIRPORT - 4.4%
CA Los Angeles Regional Airport
Improvement Corp., Los Angeles
International Airport,
6.800% 01/01/27 1,400 1,440
CO Denver City & County Airport:
Series C,
6.500% 11/15/12 10,625 12,006
Series D,
7.750% 11/15/23(j) 25,000 28,406
Series 1991 A,
8.750% 11/15/23 5,485 6,534
Series 1992 A,
7.250% 11/15/23 6,375 7,140
Series 1992 B,
7.250% 11/15/23 5,500 5,988
Stapleton International Airport,
Series 1990 A,
8.500% 11/15/23 5,000 5,769
</TABLE>
34
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FL Hillsborough County Aviation Authority,
Tampa International Airport,
Series A,
6.900% 10/01/11 $ 1,500 $ 1,618
HI State, Airport System Revenue:
Series 1991,
6.900% 07/01/12 4,250 4,957
Series 2,
7.000% 07/01/18 14,770 16,099
IL Chicago, O'Hare Internatinal Airport:
Series A,
5.000% 01/01/16 15,000 14,081
Series 1994 A,
6.375% 01/01/12 4,980 5,372
IN Transportation Finance
Authority, Series A,
6.750% 11/01/11 2,000 2,128
TX Dallas-Fort Worth Regional
Airport, Series A,
7.375% 11/01/11 6,000 7,028
VA Capital Region Airport
Commission, Series B,
8.125% 07/01/14 17,200 21,242
VA Metropolitan Washington D.C.
Airports Authority,
Series 1990 A,
7.600% 10/01/14 3,400 3,744
--------
143,552
--------
TRANSPORTATION - 2.5%
NJ State Transportation Trust Fund
Authority, Series B,
7.000% 06/15/12 47,000 55,989
NY Metropolitan Transportation
Authority, Transit Facilities,
Series 5,
6.900% 07/01/06 3,015 3,256
NY Port Authority of New York &
New Jersey, Series 83,
6.375% 10/15/17 3,500 3,754
PA Erie-Western Port Authority,
Series 1990,
8.625% 06/15/10 1,850 2,063
SC State Ports Authority,
Series 1991,
6.750% 07/01/21 13,250 14,244
</TABLE>
35
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION - CONT.
TRANSPORTATION - CONT.
WA Port of Seattle, Series 1990 B,
7.700% 12/01/11 $ 3,000 $ 3,341
-------
82,647
-------
TURNPIKE/TOLLROAD/BRIDGE - 2.1%
CA Foothill Eastern Transportation
Corridor Agency:
Series 1995 A:
(a) 01/01/20 19,915 4,854
(a) 01/01/27 6,555 1,024
(a) 01/01/28 23,540 3,443
(a) 01/01/30 33,550 4,320
State Toll Road,
Senior Lien, Series A,
(a) 01/01/29 3,085 424
FL State Mid-Bay Bridge Authority,
Series A,
6.875% 10/01/22 2,000 2,355
MA State Turnpike Authority,
Series A,
5.000% 01/01/20 15,765 14,661
NJ State Turnpike Authority,
Series 1991 C,
6.500% 01/01/16 7,000 8,033
NY State Thruway Authority Service
Contract, Local Highway,
5.250% 04/01/13 18,405 17,439
NY Triborough Bridge & Tunnel
Authority, Series L,
8.000% 01/01/07 300 318
TX Harris County, Series 1991,
6.750% 08/01/14 10,000 10,887
-------
67,758
-------
- ----------------------------------------------------------------------------------
UTILITY - 26.5%
INDIVIDUAL POWER PRODUCER - 0.3%
PA Economic Development Finance
Authority, Colver Project, Series D,
7.150% 12/01/18 10,000 10,488
-------
INVESTOR OWNED - 7.8%
AZ Pima County Industrial
Development Authority, Tucson
Electric Power Co., Series 1988 A,
7.250% 07/15/10 11,675 12,974
</TABLE>
36
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<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CA California Pollution Control
Financing Authority, Pacific Gas
& Electric Co., Series 1992 A,
6.625% 06/01/09 $ 5,350 $ 5,751
DE State Economic Development
Authority, Delmarva Power &
Light Co., Series 1990 A,
7.600% 03/01/20 5,000 5,500
FL Pinellas County,
Florida Power Corp.,
7.200% 12/01/14 1,000 1,098
HI State Department Budget and Finance,
RIB (variable rate),
Series 1993 B,
7.091% 12/15/23 10,000 9,350
IL Development Financial Authority:
Central Illinois Public Service Co.:
Series A,
7.600% 03/01/14 750 826
Series B,
7.600% 09/01/13 750 826
Commonwealth Edison Co. Project,
Series D,
6.750% 03/01/15 3,400 3,753
Pollution Control, Series 1991,
7.250% 06/01/11 5,625 6,047
IN Mt. Vernon,
Sothern Indiana Gas & Electric Co.,
Series 1984 A,
7.250% 03/01/14 4,500 4,933
IN Petersburg,
Indiana Power & Light Co.,
Series B,
5.400% 08/01/17 5,000 4,863
IN Sullivan Pollution Control, Merom
Station Project, Series 1991,
7.100% 04/01/19 10,000 10,763
KY Jefferson County Pollution Control
Revenue, Louisville Gas & Electric Co.,
Series A,
7.450% 06/15/15 750 821
KY Trimble County,
Louisville Gas & Electric Co.,
Series 1990 A,
7.625% 11/01/20 7,555 8,386
</TABLE>
37
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITY - CONT.
INVESTOR OWNED - CONT.
LA De Soto Parish,
Southwestern Electric Power Co.,
Series 1992,
7.600% 01/01/19 $ 6,000 $ 6,878
MI Monroe County,
Detroit Edison Co. Fermi 2 Project:
Series CC,
7.500% 12/01/19 6,565 7,262
Series 1990 I,
7.650% 09/01/20 8,000 8,910
MI St. Clair County Economic
Development Corp.,
Detroit Edison Co., Series 1933 AA,
6.400% 08/01/24 7,000 7,656
MS Claiborne County Pollution Control,
Middle South Energy, Inc.,
Series 1984 C,
9.875% 12/01/14 1,250 1,391
MT Forsyth, The Washington Power
Co., Series 1989,
7.125% 12/01/13 8,000 8,700
NV Clark County Industrial
Development, Nevada Power Co.:
Series 1990,
7.800% 06/01/20 4,250 4,781
NV Clark County, Series 1992 A,
6.700% 06/01/22 25,895 27,675
NV Humboldt County Pollution Control
Revenue, Idaho Power Co. Project,
8.300% 12/20/14 1,875 2,229
NY State Energy Research & Development
Authority:
Brooklyn Union Gas Co., Series 1993 A,
RIB (variable rate),
8.822% 04/01/20 13,000 14,755
Consolidated Edison Co.:
7.500% 01/01/26 4,250 4,632
Series 1989 C,
7.250% 11/01/24 7,000 7,376
Series 1991 A,
7.500% 01/01/26 4,000 4,335
Series 1992 A,
6.750% 01/15/27 4,265 4,585
Series 1993 B,
5.250% 08/15/20 23,500 22,501
</TABLE>
38
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<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OH State Air Quality Development Authority:
The Cleveland Electric Illuminating Co.,
Series 1992,
8.000% 12/01/13 $ 6,545 $ 7,690
Ohio Power Co. Project,
Series B,
7.400% 08/01/09 450 479
OK Muskogee, Oklahoma Gas &
Electric Project, Series A,
7.000% 03/01/17 1,300 1,332
TX Brazos River Authority:
Collateralized Pollution Control Bonds,
Texas Utilities Electric Co., Series 1989 C,
8.250% 01/01/19 13,000 13,975
Houston Light & Power Co.,
Series A:
6.700% 03/01/17 13,015 14,300
7.625% 05/01/19 900 979
TX Sabine River Authority,
Sothwestern Electric Power Co.,
Series 1996,
6.100% 04/01/18 4,375 4,594
WV Mason County Pollution Control,
Applachian Power Co., Series G,
7.400% 01/01/14 400 434
--------
253,340
--------
JOINT POWER AUTHORITY - 7.2%
CA Southern California Public Power
Authority, Palo Verde Power Project,
Sub-Series 1993,
5.350% 07/01/12 14,200 13,863
FL State Municipal Power Agency,
Series 1993,
5.100% 10/01/25 (j) 38,150 35,575
GA Burke County Development Authority,
Oglethorpe Power Corp.,
Series 1992,
8.000% 01/01/22 11,000 13,118
GA Municipal Electric Authority Power:
Series O,
7.400% 01/01/01 1,675 1,757
Series Z,
5.500% 01/01/20 24,000 24,360
Series 1993 C,
5.700% 01/01/19 20,000 20,800
</TABLE>
39
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITY - CONT.
JOINT POWER AUTHORITY - CONT.
MA State Municipal Wholesale
Electric Co., Series 1994 A,
RIB (variable rate),
6.552% 07/01/16 $22,900 $ 20,009
MN Southern Minnesota Municipal Power
Agency, Series A,
5.000% 01/01/16 6,000 5,602
SC Piedmont Municipal Power Agency:
Electric System, Series 1986 A,
7.250% 01/01/22 2,000 2,032
Series 1988,
(a) 01/01/13 25,885 10,645
Series 1993,
5.375% 01/01/25 9,055 9,045
TX State Municipal Power Agency:
5.000% 09/01/11 17,675 17,034
Series 1993:
(a) 09/01/13 12,440 4,945
(a) 09/01/14 33,885 12,749
(a) 09/01/16 9,250 3,087
(a) 09/01/17 15,000 4,744
UT Intermountain Power Agency:
Series 1993 B,
5.550% 07/01/11 19,000 19,119
State Power Supply,
Series B,
7.625% 07/01/08 100 106
WA State,
Public Power Supply System Nuclear
Project No. 3, Series 1993 C,
5.400% 07/01/12 14,000 13,720
--------
232,310
--------
MUNICIPAL ELECTRIC - 5.3%
AZ Salt River Project, Agricultural
Improvement & Power District
Electric System, Series A,
6.625% 01/01/12 1,500 1,598
FL Lakeland,
Series 1996 B,
6.000% 10/01/11 5,000 5,456
FL Orlando Utilities Commission:
RIB, (variable rate), Series 1993 B,
7.434% 10/06/13 5,000 5,081
</TABLE>
40
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series A,
5.000% 10/01/20 $15,000 $ 13,969
Series 1989 D,
5.000% 10/01/23 6,200 5,735
Series 1993 A,
5.250% 10/01/23 11,525 11,006
HI State Department of Budget & Finance,
Hawaiian Electric Co.,
Series 1990 C,
7.375% 12/01/20 5,965 6,584
NJ Cape May County Industrial Pollution
Control Financing Authority,
Atlantic City Electric Co., Series 1994 A,
7.200% 11/01/29 5,000 5,737
SC State Public Service Authority:
5.125% 01/01/32 27,150 25,148
Series C:
5.000% 01/01/18 10,000 9,363
5.125% 01/01/21 23,300 22,106
Series 1993 C,
5.000% 01/01/25 10,000 9,125
SD Heartland Consumers Power District,
Series 1992,
6.000% 01/01/12 3,650 3,928
TN Metropolitan Government, Nashville
& Davidson Counties,
Series 1996 A:
(a) 05/15/09 8,500 4,409
(a) 05/15/10 3,300 1,605
(a) 05/15/11 2,125 972
TX San Antonio:
Series 1989 B,
5.000% 02/01/16 10,000 9,350
Series 1992,
5.000% 02/01/17 9,000 8,404
WA Chelan County Public Utilities
District Number 001 Consolidate,
Series 1989 A Division I,
7.750% 07/01/21 4,500 4,894
WA Tacoma Electric System,
RIB (variable rate),
Series 1991 C,
8.942% 01/02/15 10,000 11,363
WI Public Power, Inc.,
Series 1993 B,
5.440% 07/01/14 5,400 5,265
--------
171,098
--------
</TABLE>
41
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITY - CONT.
WATER & SEWER - 5.9%
CA Los Angeles Wastewater Systems,
Series 1993 D,
5.200% 11/01/21 $10,000 $ 9,538
FL Hillsborough County,
Series 1991 A,
7.000% 08/01/14 5,000 5,513
FL Reedy Creek Improvement District,
Series 1994 1,
5.000% 10/01/19 23,190 21,654
ID State Water Resource Board,
Boise Water Corp., Series 1991,
7.250% 12/01/21 6,000 6,488
LA Public Facility Belmont Water
Authority
9.000% 03/15/24 (e) 1,460 1,528
MA State Water Resources Authority:
Series B,
5.000% 03/01/22 21,200 19,822
Series C,
4.750% 12/01/23 15,680 13,602
MS V Lakes Utility District,
8.250% 07/15/24 760 784
NJ State Economic Development Authority,
American Water Co., Series 1994 A,
6.875% 11/01/34 5,000 5,544
NY New York City Municipal Water
Finance Authority,
Series 1994 F,
5.500% 06/15/15 10 10
NY State Environmental Facilities
Corp.:
Pollution Control, New York
Municipal Water Finance Authority,
5.750% 06/15/12 19,260 20,319
Series E,
6.875% 06/15/10 15,000 16,556
NY Suffolk County Water Authority,
7.375% 06/01/12 20 21
PA Philadelphia,
Water & Waste Water Revenue,
Series 1993,
5.000% 06/15/16 15,000 14,081
TN Jackson Water and Sewer Revenue,
Series 1984,
10.375% 07/01/12 1,090 1,263
</TABLE>
42
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TX Houston Water & Sewer System
Revenue:
5.000% 12/01/18 $24,755 $ 23,486
Series B,
6.750% 12/01/08 2,155 2,354
Series C,
(a) 12/01/12 38,000 15,913
TX State Coastal Industrial
Water Authority,
Bayport Water System, Series 1978,
7.000% 12/15/03 2,200 2,200
VA Roanoke County,
Water System Revenue,
Series 1993,
5.000% 07/01/21 10,000 9,350
----------
190,026
----------
TOTAL MUNICIPAL BONDS (cost of $3,005,565)(k) 3,159,361
----------
SHORT-TERM OBLIGATIONS - 1.9%
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (l)
CA Irvine Ranch Water District,
3.900% 01/01/21 8,800 8,800
FL Pinellas County Health Facilities
Authority,
Series 1985,
4.000% 12/01/15 2,900 2,900
IL State Educational Facilities Authority,
3.600% 12/01/25 4,500 4,500
MI Monroe County Economic Development
Corp., Detroit Edison Co.,
Series CC,
4.050% 10/01/24 2,600 2,600
MS Perry County,
Leaf River Forest Project,
4.000% 03/01/02 700 700
NC Craven County Industrial Facilities &
Pollution Control Financing Authority,
John Hancock Resource Recovery, Inc.,
4.200% 05/01/11 3,100 3,100
NM Farmington,
Arizona Public Service Co.,
Four Corners Project, Series 1994 B,
4.000% 09/01/24 7,000 7,000
NY New York City,
Series 1994 B4,
4.250% 08/15/21 4,300 4,300
</TABLE>
43
<PAGE>
<TABLE>
Investment Portfolio/November 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VARIABLE RATE DEMAND NOTES (l) - CONT.
NY Niagara Mohawk Series 1985 A,
4.250% 07/01/15 $19,200 $ 19,200
----- -- -- -- ------ ------
NY State, Series 1994 A4,
4.000% 08/01/21 6,000 6,000
WI State Health Facilities Authority,
Fransican Health Care, Series A1,
3.550% 01/01/16 2,000 2,000
---------
TOTAL SHORT-TERM OBLIGATIONS 61,100
---------
OTHER ASSETS & LIABILITIES, NET - 0.8% 25,079
- ----------------------------------------------------------------------------------
NET ASSETS - 100.0% $3,245,540
----------
- ----------
<FN>
NOTES TO INVESTMENT PORTFOLIO:
- ----------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) This issuer is in default of certain debt covenants. Income is not being
accrued.
(c) Represents fair value as determined in good faith under the direction of
the Trustees.
(d) This is a restricted security which was acquired on April 2, 1990 at a cost
of $320. This security represents 0.0% of the Fund's net assets at
November 30, 1996.
(e) Securities exempt from registration under rule 144-A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At November 30,
1996, the value of these securities amounted to $72,430 or 2.2% of net
assets.
(f) Accrued interest accumulates in the value of the security and is
payable at redemption.
(g) The Fund has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
the principal and interest.
(h) Subsequent to November 30, 1996, this issuer is in default of certain
debt covenants. Income is not being accrued.
(i) This security has been purchased on a delayed delivery basis for
settlement at a future date beyond the customary settlement date.
(j) These securities, or a portion thereof, are being used to collateralize
the delayed delivery purchase indicated in note (i) above.
(k) Cost for federal income tax purposes is $3,007,136.
(l) Variable rate demand notes are considered short-term obligations.
Interest rates change periodically on specified dates. These securities
are payable on demand and are secured by either letters of credit or
other credit support agreements from banks. The rates listed are as of
November 30, 1996.
Acronym Name
------- ----
RIB Residual Interest Bond
</TABLE>
44
<PAGE>
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1996
<CAPTION>
(in thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $3,005,565) $3,159,361
Short-term obligations 61,100
----------
3,220,461
Cash $ 140
Receivable for:
Interest 61,579
Investments sold 12,299
Fund shares sold 538
Other 78 74,634
------- ----------
Total Assets 3,295,095
LIABILITIES
Payable for:
Investments purchased 30,125
Distributions 14,603
Fund shares repurchased 4,444
Accrued:
Transfer Agent fees 150
Deferred Trustees fees 26
Other 207
-------
Total Liabilities 49,555
----------
NET ASSETS $3,245,540
==========
Net asset value & redemption price per share -
Class A ($2,818,289/207,923) $ 13.55
==========
Maximum offering price per share - Class A
($13.55/0.9525) $ 14.23(a)
==========
Net asset value & offering price per share -
Class B ($427,251/31,521) $ 13.55(b)
==========
COMPOSITION OF NET ASSETS
Capital paid in $3,141,005
Undistributed net investment income 2,545
Accumulated net realized loss (51,806)
Net unrealized appreciation 153,796
----------
$3,245,540
==========
- ----------
<FN>
(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.
45
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1996
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $221,277
EXPENSES
Management fee $17,385
Service fee 8,365
Distribution fee - Class B 3,317
Transfer agent 5,532
Bookkeeping fee 763
Registration fee 68
Custodian fee 42
Audit fee 73
Trustees fee 180
Reports to shareholders 83
Legal fee 398
Other 233
-------
Total operating expenses 36,439
Interest expense (a) 36,439
------- --------
Net Investment Income 184,838
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 45,233
Closed futures contracts (8,970)
-------
Net Realized Gain 36,263
Net unrealized appreciation (depreciation)
during the period on:
Investments (88,314)
Open futures contracts 6,020
-------
Net Unrealized Loss (82,294)
--------
Net Loss (46,031)
--------
Net Increase in Net Assets from Operations $138,807
========
- ----------
<FN>
(a) Rounds to less than one.
</TABLE>
See notes to financial statements.
46
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
(in thousands) Year Ended November 30
---------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS 1996 1995
Operations:
Net investment income $ 184,838 $ 201,105
Net realized gain (loss) 36,263 (17,179)
Net unrealized appreciation (depreciation) (82,294) 423,407
---------- ----------
Net Increase from Operations 138,807 607,333
Distributions:
From net investment income - Class A (164,142) (177,765)
From net investment income - Class B (21,619) (23,492)
---------- ----------
(46,954) 406,076
---------- ----------
Fund Share Transactions :
Receipts for shares sold - Class A 420,494 395,136
Receipts for shares issued in the acquisition
of Liberty Financial Tax-Free Bond Fund -- 224,575
Value of distributions reinvested - Class A 91,754 98,351
Cost of shares repurchased - Class A (764,164) (817,386)
---------- ----------
(251,916) (99,324)
---------- ----------
Receipts for shares sold - Class B 22,446 34,958
Value of distributions reinvested - Class B 11,854 13,028
Cost of shares repurchased - Class B (69,907) (72,909)
---------- ----------
(35,607) (24,923)
---------- ----------
Net Decrease from Fund Share
Transactions (287,523) (124,247)
---------- ----------
Total Increase (Decrease) (334,477) 281,829
NET ASSETS
Beginning of period 3,580,017 3,298,188
---------- ----------
End of period (including undistributed
net investment income of
$2,545 and $2,504, respectively.) $3,245,540 $3,580,017
---------- ----------
NUMBER OF FUND SHARES
Sold - Class A 31,534 30,093
Issued in the acquisition of Liberty
Financial Tax-Free Bond Fund -- 17,000
Issued for distributions reinvested - Class A 6,835 7,510
Repurchased - Class A (57,191) (62,434)
---------- ----------
(18,822) (7,831)
---------- ----------
Sold - Class B 1,673 2,673
Issued for distributions reinvested - Class B 883 996
Repurchased - Class B (5,231) (5,573)
---------- ----------
(2,675) (1,904)
---------- ----------
</TABLE>
See notes to financial statements.
47
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Tax-Exempt Fund (the Fund), a series of Colonial Trust
IV, is a diversified portfolio of a Massachusetts business trust, registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund's investment objective is to seek as high a level
of after-tax total return as is consistent with prudent risk, by pursuing
current income exempt from federal income tax and opportunities for long-term
appreciation from a portfolio primarily invested in investment-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.
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.
48
<PAGE>
Notes to Financial Statements/November 30, 1996
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CON'T
- --------------------------------------------------------------------------------
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 and tax-exempt
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 amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
<TABLE>
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is the
investment Adviser of the Fund and furnishes accounting and other services and
office facilities for a monthly fee based on each Fund's pro rata portion of the
combined average net assets of the Fund, Colonial Tax-Exempt Insured Fund and
Colonial High Yield Municipal Fund as follows:
<CAPTION>
Average Net Assets Annual Fee Rate
------------------ ---------------
<S> <C>
First $1 billion 0.60%
Next $2 billion 0.55%
Next $1 billion 0.50%
Over $4 billion 0.45%
</TABLE>
Effective July 1, 1995 the management fee applicable to the Fund was reduced by
0.05% annually of the average net assets of the Fund between $2 billion and $3
billion.
49
<PAGE>
Notes to Financial Statements/November 30, 1996
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
<TABLE>
In addition, a further reduction was made on the net assets between $2 billion
and $3 billion based on the following schedule:
<CAPTION>
Cumulative Annualized
Effective Date Reduction
-------------- ---------------------
<S> <C>
January 1, 1996 0.01%
April 1, 1996 0.02%
July 1, 1996 0.03%
October 1, 1996 0.04%
</TABLE>
<TABLE>
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus a percentage of the Fund's average net assets as follows:
<CAPTION>
Average Net Assets Annual Fee Rate
------------------ ---------------
<S> <C>
First $50 million No charge
Next $950 million 0.035%
Next $1 billion 0.025%
Next $1 billion 0.015%
Over $3 billion 0.001%
</TABLE>
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer
Agent), an affiliate of the Adviser, provides shareholder services for a
monthly fee equal to 0.14% annually of the Fund's average net assets and
receives reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. During the year ended November 30, 1996, the Fund has
been advised that the Distributor retained net underwriting discounts of
$218,447 on sales of the Fund's Class A shares and received contingent deferred
sales charges (CDSC) of $1,201,109 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% annually of the average net assets attributable to
Class B shares.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
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.
50
<PAGE>
Notes to Financial Statements/November 30, 1996
- --------------------------------------------------------------------------------
OTHER - CONT.
The Fund has an agreement with its custodian bank under which $111,000 of
custodian fees have been reduced by balance credits applied during the period
ended November 30, 1996. Custodian fees reported in the Statement of Operations
include these credits. The Fund could have invested a portion of the assets
utilized in connection with the expense offset arrangements in an income
producing asset if it had not entered into such arrangements.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended November 30, 1996, purchases and
sales of investments, other than short-term obligations, were $1,356,942,287 and
$1,678,731,339, respectively.
<TABLE>
Unrealized appreciation (depreciation) at November 30, 1996, based on cost of
investments for federal income tax purposes was approximately:
<S> <C>
Gross unrealized appreciation $202,895,000
Gross unrealized depreciation (50,670,000)
------------
Net unrealized appreciation $152,225,000
------------
</TABLE>
<TABLE>
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:
<CAPTION>
Year of Capital loss
expiration carryforward
---------- ------------
<S> <C>
2002 $28,967,000
2003 4,478,000
-----------
$33,445,000
-----------
</TABLE>
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
OTHER: The Fund has greater than 10% of its net assets at November 30,
1996 invested in New York.
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.
51
<PAGE>
Notes to Financial Statements/November 30, 1996
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION - CON'T
- --------------------------------------------------------------------------------
Other - Con't.
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 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 positions 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 amount recognized in the Fund's Statement of
Assets and Liabilities at any given time.
NOTE 4. LINE OF CREDIT
- --------------------------------------------------------------------------------
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%.
The average daily loan balance for the year ended November 30, 1996 was $13,661,
at a weighted average interest rate of 5.625%. The maximum loan outstanding
during the period was $4,000,000.
NOTE 5. MERGER INFORMATION
- --------------------------------------------------------------------------------
On March 24, 1995 Liberty Financial Tax-Free Bond Fund(LFTFBF) was merged into
the Fund by a non-taxable exchange of 17,000,007 Class A shares of the Fund
(valued at $224,575,100) for 21,866,611 of LFTFBF shares then outstanding. The
assets of LFTFBF acquired included unrealized appreciation of $7,546,857. The
aggregate net assets of the Fund and LFTFBF immediately after the merger were
$3,663,697,413.
52
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<CAPTION>
Year ended November 30
-----------------------------------------------
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $13.720 $13.720 $12.180 $12.180
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.756 0.656 0.771 0.673
Net realized and
unrealized gain (loss) (0.171) (0.171) 1.535 1.535
------- ------- ------- -------
Total from Investment
Operations 0.585 0.485 2.306 2.208
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.755) (0.655) (0.766) (0.668)
------- ------- ------- -------
Net asset value -
End of period $13.550 $13.550 $13.720 $13.720
------- ------- ------- -------
Total return (a) 4.47% 3.70% 19.35% 18.47%
------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.99%(b) 1.74%(b) 1.01%(b) 1.76%(b)
Interest expense ---- ---- ---- ----
Net investment income 5.61%(b) 4.86%(b) 5.82%(b) 5.07%(b)
Portfolio turnover 40% 40% 41% 41%
Net assets at end
of period (in millions) $ 2,818 $ 427 $ 3,111 $ 469
<FN>
(a) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(b) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
</TABLE>
53
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
<TABLE>
Selected data for a share of each class outstanding throughout each period are
as follows:
<CAPTION>
Year ended November 30
--------------------------------------------
1994 1993
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $13.920 $13.920 $13.480 $13.480
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.795 0.695 0.842 0.740
Net realized and
unrealized gain (loss) (1.744) (1.744) 0.451 0.451
------- ------- ------- -------
Total from Investment
Operations (0.949) (1.049) 1.293 1.191
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.791) (0.691) (0.853) (0.751)
------- ------- ------- -------
Net asset value -
End of period $12.180 $12.180 $13.920 $13.920
------- ------- ------- -------
Total return (b) (7.08%) (7.78%) 9.80% 9.00%
------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.01% 1.76% 1.02% 1.77%
Net investment income 6.00% 5.25% 6.06% 5.31%
Portfolio turnover 56% 56% 28% 28%
Net assets at end
of period (in millions) $ 2,858 $ 440 $ 3,357 $ 430
<FN>
(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>
54
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONT.
<CAPTION>
Year ended November 30
--------------------------
1992
Class A Class B(a)
------- ----------
<S> <C>
$13.190 $13.230
------- -------
0.913 0.462
------- -------
0.277 0.248
------- -------
1.190 0.710
------- -------
(0.900) (0.460)
------- -------
$13.480 $13.480
------- -------
9.29% 9.29%(c)
------- -------
1.05% 1.80%(d)
6.81% 6.06%(d)
14% 14%
$ 2,899 $ 137
<FN>
- --------------------------------------------------------------------------------
Federal income tax information (unaudited)
All of the income distributions will be treated as exempt income
for federal income tax purposes.
</TABLE>
55
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST IV AND SHAREHOLDERS OF
COLONIAL TAX-EXEMPT FUND
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Tax-Exempt Fund (a series
of Colonial Trust IV) at November 30, 1996, the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and the financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of portfolio positions
at November 30, 1996 by correspondence with the custodian and brokers, and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 10, 1997
<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, 10:00 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
57
<PAGE>
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
Colonial account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale, or exchange,
you receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
COLONIAL SHAREHOLDER NEWS: Mailed with your quarterly account statements, this
newsletter highlights timely investment strategies, portfolio manager
commentary, and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information
are designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the
year, this statement may help you calculate your gain/loss for tax purposes.
(Usually mailed in February.)
58
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Tax-Exempt Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Tax-Exempt Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call Colonial at
1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Tax-Exempt Fund. This
report may also be used as sales literature when preceded or accompanied by the
current prospectus which provides details of sales charges, investment
objectives and operating policies of the Fund.
59
<PAGE>
[LOGO: COLONIAL MUTUAL FUNDS]
Mutual Funds for
Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore
Bank & Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, C.S. First
Boston Merchant Bank; and President and Chief Executive Officer, The First
Boston Corporation)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and
Consultant, The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
COLONIAL INVESTMENT SERVICES, INC., Distributor [copy right] 1997
One of the Liberty Financial Companies (NYSE:L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
TE-02/106D-1296 M (1/97)
