<PAGE>
[Graphic of Government Building]
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COLONIAL INTERMEDIATE TAX-EXEMPT FUND Semiannual report
- --------------------------------------------------------------------------------
May 31, 1998
-----------------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
-----------------------------------
<PAGE>
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COLONIAL INTERMEDIATE TAX-EXEMPT FUND
DECEMBER 1, 1997 - MAY 31, 1998
PORTFOLIO MANAGER COMMENTARY: "The Fund was positioned to take advantage of the
declining interest rates that characterized the early and late parts of the
period. Our active portfolio management process generated competitive total
returns despite significant interest rate variability during the past six
months."
--William Loring
COLONIAL INTERMEDIATE TAX-EXEMPT FUND PERFORMANCE
CLASS A CLASS B CLASS C
Inception dates 2/1/93 2/1/93 8/1/97
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Six-month distributions declared per share(1) $0.192 $0.166 $0.184
- --------------------------------------------------------------------------------
SEC yields on 5/31/982 3.87% 3.34% 3.80%
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Taxable-equivalent SEC yields(3) 6.41% 5.53% 6.29%
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Six-month total returns, assuming 3.19% 2.85% 3.09%
reinvestment of all distributions and
no sales charge or contingent
deferred sales charge (CDSC)(4)
- --------------------------------------------------------------------------------
Net asset value per share on 5/31/98 $8.04 $8.04 $8.04
QUALITY BREAKDOWN(5) MATURITY BREAKDOWN(5)
(as of 5/31/98) (as of 5/31/98)
- -------------------------- --------------------------------------------------
AAA ............... 54.4% 0-3 years ....... 4.6% 15-20 years .... 7.4%
AA ................ 17.4% 3-5 years ....... 7.4% Over
A ................. 10.0% 5-7 years ....... 24.1% 20 years ....... 0.6%
BBB ............... 14.2% 7-10 years ...... 32.0% Cash
BB ................ 0.5% 10-15 years ..... 23.4% & equivalent ... 0.5%
Non-rated ......... 3.0%
Cash & equivalent . 0.5%
(1) A portion of the Fund's income may be subject to the alternative minimum
tax.
(2) The 30-day SEC yields on 5/31/98 reflect the portfolio's earning power, net
of expenses, expressed as an annualized percentage of the public offering
price at the end of the period. If the Adviser or Distributor had not waived
or borne certain Fund expenses SEC yields would have been 3.25% for Class A
shares, 2.71% for Class B shares and 2.70% for Class C shares.
(3) Taxable-equivalent SEC yields are based on the maximum federal income tax
rate of 39.6%. The Fund may at times purchase tax-exempt securities at a
discount. Some or all of this discount may be included in the Fund's
ordinary income, and is taxable when distributed.
(4) Performance results reflect any voluntary waivers or reimbursements of
expenses by the Adviser or Distributor. Absent these waivers or
reimbursement arrangements, performance results would have been lower.
(5) Quality and maturity breakdowns are calculated as a percentage of total
investments, including short-term obligations. Maturity breakdown is based
on each security's effective maturity, which reflects pre-refundings,
mandatory puts and other conditions that affect a bond's maturity. Because
the Fund is actively managed, there can be no guarantee the Fund will
maintain these quality and maturity breakdowns in the future.
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PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
----------------------------
[Photo of Stephen E. Gibson]
----------------------------
In June 1998, Harold Cogger retired as president of Colonial Intermediate
Tax-Exempt Fund's Board of Trustees. I would like to take this opportunity to
thank him for his guidance over the past few years and wish him well. As the new
president of the Fund, I am pleased to present the semiannual report for
Colonial Intermediate Tax-exempt Fund for the six-month period ending may 31,
1998.
A variety of factors caused bond prices to seesaw during the period, as
different sectors of the economy provided mixed signals to fixed-income
investors. The economic turmoil in Southeast Asia, its potential to slow U.S.
economic growth, and the possibility of interest rate increases by the Federal
Reserve Board were strong contributors to price volatility. By the end of the
period, fixed-income investors saw improving economic conditions. With hints
that growth might slow, investors' fear of inflation was reduced. As interest
rates dropped, bond prices finished on a positive note.
The tax-exempt market in which the Fund invests followed a similar pattern of
movement. In addition to the trends mentioned above, supply and demand factors
contributed to the rising and declining prices during the period. While the
environment was a challenging one for municipal bond fund managers, the Fund
posted favorable returns relative to its peers over the six-month period. The
following portfolio management report expands on these issues, provides details
on the Fund's strategies and performance, and offers some insight for the
investment period ahead.
For investors seeking competitive levels of tax-free income and the potential
for long-term price appreciation, Colonial Intermediate Tax-Exempt Fund remains
a sensible option for their investment portfolio.
Thank you for choosing Colonial Intermediate Tax-exempt Fund and for giving us
the opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
July 10, 1998
Because market and economic conditions change, there can be no assurance that
the trends described above or on the following pages will continue.
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<PAGE>
PORTFOLIO MANAGEMENT REPORT
WILLIAM LORING is portfolio manager of Colonial Intermediate Tax-Exempt Fund and
is vice president of Colonial Management Associates, Inc.
ECONOMIC AND MARKET FACTORS VARIED DURING THE PERIOD
Conditions for fixed-income investments varied during the period as the market's
expectations about the economy shifted. Early on, investors focused on the
economic crisis in Southeast Asia and its potential effect on the U.S. economy.
Anticipation of reduced export volume to the Pacific Rim generated a widespread
belief that the U.S. economy would slow down. As a result, interest rates
declined and bond prices moved up. During the middle part of the period the
trend was reversed, as mild winter weather resulted in earlier than typical
demand for construction in the United States. Continued strength in the stock
market helped create additional investor wealth, positive consumer sentiment,
and ultimately, higher levels of economic growth. However, by the end of the
period, growth once again settled back to more modest levels, as certain
measures of industrial production declined. This, in combination with continued
low inflation, reduced investors' fears that the Federal Reserve Board would
raise rates to keep economic growth in check. In response, bond prices recovered
nicely.
The tax-exempt bond market experienced price volatility similar to the broad
bond market. Early on, a low supply of new issues along with heavy seasonal
demand created a favorable environment which supported price increases for
municipal bonds. However, in the early months of 1998 the market found it
difficult to absorb unusually large increases in supply, and prices declined.
During this period, tax-exempt yields approached those of Treasury bonds, making
investments in municipal bonds relatively attractive on an after-tax basis. The
increased investor demand that followed helped municipal bond prices move up
strongly near the period's end.
FUND WAS POSITIONED TO BENEFIT FROM DECLINING INTEREST RATES
Based on our long-term outlook for low inflation and modest economic growth, we
structured the portfolio to take advantage of a potential decline in interest
rates. As interest rates fell, our focus on bonds with good call protection and
duration management had a positive effect on the Fund's performance.
By centering our attention on call-protected bonds, we sought to capitalize on
an anticipated decline in interest rates. Non-callable bonds perform well when
interest rates decline because issuers cannot "call" them before they mature in
order to refinance their debt obligations at lower interest rates. The longer
life span of these bonds makes their prices more sensitive to changes in
interest rates. This can translate into relatively large price gains when
interest rates fall.
Duration management is a strategy designed to help control the degree to which a
fund's share price will fluctuate in response to a change in interest rates.
Generally, the longer a fund's duration, the more movement you would expect to
see in its share price. By maintaining a duration that was slightly longer than
that of other intermediate funds, the portfolio experienced stronger share price
appreciation when interest rates fell during the period.
For the six-month period ending May 31, 1998, the Fund generated a total return
of 3.19% for Class A shares, based on net asset value. This compares favorably
with the performance of the Fund's Lipper competitive peer group, which averaged
3.04% for the same period.(1)
SEARCH FOR VALUE COVERED WIDESPREAD TERRITORY
We focused our efforts on finding credit value in specific industry sectors and
geographic regions. For example, we believe that opportunities for potential
price gains may be found in certain segments of the health care industry, such
as small, profitable community hospitals that represent the sole source of
health care for the local population. We are also searching for opportunities in
geographic regions that are experiencing improving demographic and economic
trends, such as California and New York.
While the Fund did not participate in the offering, we found the new issue for
the Long Island Power Authority (LIPA) noteworthy. LIPA'S debt offering in
excess of $3.7 billion represented the largest issuance in the history of the
municipal bond market. This deal was remarkable for several reasons. First, it
represented a new issuer in the market, as LIPA was formed through the merger of
the former Long Island Lighting Co. and Brooklyn Union Gas Co. Second, all three
nationally recognized bond rating agencies awarded the issue an investment-grade
rating despite the sheer size of the transaction. Third, the market generated
sufficient demand to "oversubscribe" the issue by creating more orders than
bonds available. Lastly, the issue's historic nature focused investors'
attention on the municipal market, increasing demand and prices for many other
tax-exempt issues.
OUTLOOK FOR A POSITIVE ECONOMIC AND MARKET ENVIRONMENT
Our long-term outlook remains positive. We expect that low inflation and modest
economic growth will continue. Sustained high levels of productivity and global
competition should keep inflation pressure low and unresolved issues in Asia
ought to keep the U.S. economy from growing too fast. Market fundamentals are
also positive. We expect that the current budget surplus will continue to limit
the U.S. government's need to borrow money, and therefore, the need to issue
Treasury securities. This may help create higher demand for alternative
fixed-income investments, including municipal bonds.
Going forward, the Fund remains positioned for a declining interest rate
environment. However, we anticipate some variability in interest rates over the
months ahead. Therefore, we will continue to actively manage all aspects of the
Fund to decrease the potential negative effects of rate volatility.
(1) Source: Lipper Analytical Services, Inc. Lipper rankings are based on the
Lipper Intermediate Municipal Debt Funds category. The Fund's Class A share
ranking is in the second quartile for the six-month period (ranked 48 out of
151 funds), in the first quartile for the one-year period (ranked 19 out of
143 funds) and in the first quartile for the five-year period (ranked 15 out
of 66 funds).
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<PAGE>
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COLONIAL INTERMEDIATE TAX-EXEMPT FUND'S INVESTMENT PERFORMANCE
VS. THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
Change in Value of $10,000 from 2/1/93 - 5/31/98
Based on NAV and POP for Class A Shares
NAV POP LEHMAN BROTHERS
--- --- ---------------
Jan. 31, 1993 $10,000 $ 9,675 $10,000
Feb. 28, 1993 10,308 9,973 10,362
Mar. 31, 1993 10,214 9,882 10,252
Apr. 30, 1993 10,320 9,985 10,355
May 31, 1993 10,373 10,036 10,414
Jun. 30, 1993 10,535 10,193 10,588
Jul. 31, 1993 10,575 10,232 10,601
Aug. 31, 1993 10,765 10,415 10,822
Sep. 30, 1993 10,860 10,507 10,946
Oct. 31, 1993 10,888 10,534 10,967
Nov. 30, 1993 10,818 10,466 10,870
Dec. 31, 1993 11,012 10,654 11,099
Jan. 31, 1994 11,137 10,775 11,226
Feb. 28, 1994 10,886 10,533 10,935
Mar. 31, 1994 10,522 10,180 10,490
Apr. 30, 1994 10,635 10,289 10,579
May 31, 1994 10,705 10,357 10,671
Jun. 30, 1994 10,719 10,371 10,605
Jul. 31, 1994 10,836 10,484 10,800
Aug. 31, 1994 10,882 10,528 10,837
Sep. 30, 1994 10,799 10,448 10,678
Oct. 31, 1994 10,658 10,312 10,489
Nov. 30, 1994 10,487 10,146 10,299
Dec. 31, 1994 10,650 10,304 10,526
Jan. 31, 1995 10,815 10,463 10,826
Feb. 28, 1995 11,039 10,681 11,141
Mar. 31, 1995 11,162 10,799 11,269
Apr. 30, 1995 11,166 10,803 11,283
May 31, 1995 11,437 11,066 11,643
Jun. 30, 1995 11,367 10,997 11,541
Jul. 31, 1995 11,521 11,147 11,650
Aug. 31, 1995 11,674 11,295 11,798
Sep. 30, 1995 11,752 11,370 11,873
Oct. 31, 1995 11,890 11,504 12,045
Nov. 30, 1995 12,013 11,623 12,245
Dec. 31, 1995 12,075 11,683 12,363
Jan. 31, 1996 12,184 11,788 12,456
Feb. 29, 1996 12,138 11,744 12,372
Mar. 31, 1996 12,030 11,639 12,214
Apr. 30, 1996 12,015 11,625 12,179
May 31, 1996 12,000 11,610 12,175
Jun. 30, 1996 12,094 11,701 12,307
Jul. 31, 1996 12,205 11,808 12,419
Aug. 31, 1996 12,222 11,825 12,416
Sep. 30, 1996 12,335 11,934 12,590
Oct. 31, 1996 12,432 12,028 12,732
Nov. 30, 1996 12,642 12,231 12,965
Dec. 31, 1996 12,597 12,188 12,910
Jan. 31, 1997 12,616 12,206 12,935
Feb. 28, 1997 12,732 12,319 13,053
Mar. 31, 1997 12,589 12,180 12,879
Apr. 30, 1997 12,641 12,230 12,987
May 31, 1997 12,791 12,375 13,183
Jun. 30, 1997 12,925 12,505 13,323
Jul. 31, 1997 13,258 12,827 13,692
Aug. 31, 1997 13,145 12,717 13,564
Sep. 30, 1997 13,297 12,865 13,725
Oct. 31, 1997 13,350 12,916 13,813
Nov. 30, 1997 13,437 13,000 13,894
Dec. 31, 1997 13,609 13,167 14,097
Jan. 31, 1998 13,714 13,268 14,242
Feb. 28, 1998 13,735 13,288 14,247
Mar. 31, 1998 13,721 13,275 14,259
Apr. 30, 1998 13,639 13,195 14,195
May 31, 1998 13,865 13,415 14,420
VALUE OF A $10,000 INVESTMENT MADE ON 2/1/93
As of 5/31/98
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CLASS A CLASS B CLASS C
NAV POP NAV w/CDSC NAV w/CDSC
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$13,865 $13,415 $13,396 $13,396 $13,447 $13,447
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
As of 5/31/98
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CLASS A CLASS B CLASS C
INCEPTION 2/1/93 2/1/93 8/1/97
NAV POP NAV W/CDSC NAV W/CDSC
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1 year 8.40% 4.88% 7.70% 3.70% 8.11% 7.11%
- --------------------------------------------------------------------------------
5 years 5.97 5.28 5.29 5.29 5.37 5.37
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Life 6.32 5.66 5.64 5.64 5.71 5.71
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Past performance cannot predict future results. Return and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charges or contingent deferred sales charges (CDSC). Public
offering price (POP) returns include the maximum sales charge of 3.25%. The CDSC
returns reflect the maximum charge of 4% for one year for Class B shares, and 1%
for one year for Class C shares.
Performance results reflect any voluntary waivers or reimbursement of Fund
expenses by the Adviser or Distributor. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
Class C share performance information includes returns of the Fund's Class B
shares (the oldest existing fund class with a simular cost structure) for
periods prior to its inception date. These Class B share returns are not
restated to reflect any expense differential (e.g., Rule 12b-1 fees) between
Class B and C shares.
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.
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<PAGE>
INVESTMENT PORTFOLIO
MAY 31, 1998 (UNAUDITED, IN THOUSANDS)
MUNICIPAL BONDS - 98.0% PAR VALUE
- ----------------------------------------------------------------------------
EDUCATION - 8.3%
EDUCATION - 0.5%
VT State Educational & Health Buildings
Finance Agency,
Norwich University, Series 1998,
5.750% 07/01/13 $ 100 $ 103
-------
Student Loan - 7.8%
NM State Educational Assistance
Foundation,
Series 1-A,
6.200% 12/01/01 400 424
OH State Student Loan Funding Corp.,
Series A,
5.750% 08/01/03 800 846
SC State Education Assistance Authority
Student Loan Revenue Bonds, Series 1991,
6.200% 09/01/99 50 51
TX Brazos Higher Educational
Facilities Authority,
Series 1992-A,
6.600% 03/01/00 330 342
-------
1,663
-------
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HEALTHCARE - 5.4%
HOSPITAL - 4.5%
AL East Health Care Authority,
Health Care Facilities,
Series 1993,
5.625% 09/01/04 50 53
MI Dickinson County,
Memorial Hospital System,
7.625% 11/01/05 275 313
NY State Dormitory Authority,
St. Clare's Hospital,
Series 1998-B,
4.900% 02/15/09 250 250
OH Green Springs,
St. Francis Health Care Center,
Series 1994-A,
7.000% 05/15/04 100 107
PA Philadelphia Hospitals and Higher
Educational Facilities, Temple
University Hospital, Series 1993,
5.750% 11/15/99 100 102
TX Health Facilities Development
Corp. Hospital, All Saints Episcopal
Hospitals, Series 1993-A,
5.800% 08/15/04 80 86
TX Tarrant County Health Facilities
Development Corp. Hospital, Fort
Worth Osteopathic Hospital, Series 1993,
5.800% 05/15/04 50 54
-------
965
-------
NURSING HOME - 0.9%
KY Jefferson County Health Facilities,
Beverly Enterprises, Inc., Series 1985-B,
9.750% 08/01/07 90 97
MA State Industrial Finance Agency,
Belmont Home Care Project,
Series A,
7.970% 01/01/99 100 101
-------
198
-------
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HOUSING - 7.3%
MULTI-FAMILY - 1.4%
MA State Housing Finance Agency,
Series 1992-C,
6.350% 05/15/03 200 214
NJ State Housing and Mortgage Finance
Agency,
6.500% 05/01/03 85 91
-------
305
-------
SINGLE FAMILY - 5.9%
MD Montgomery County Housing Commission,
Series A,
5.750% 07/01/13 250 264
NE State Investment Authority,
Series C,
5.650% 09/01/07 495 522
NH State Housing Finance Authority,
Single Family Mortgage, Series 1990-A,
6.850% 07/01/98 155 155
RI Housing and Mortgage Finance
Corporation, Homeownership
Opportunity, Series 6-B:
6.500% 04/01/03 100 106
6.500% 10/01/03 200 212
-------
1,259
-------
- ----------------------------------------------------------------------------
OTHER - 8.4%
Refunded/Escrowed (a)
IL State Health Facilities Authority,
Edgewater Medical Center,
Series A,
9.250% 07/01/24 $ 100 $ 127
OH Cuyahoga County,
Meridia Health System,
6.300% 08/15/06 890 1,015
OH Olmstead Falls Local School District,
6.850% 12/15/11 550 641
-------
1,783
-------
- ----------------------------------------------------------------------------
OTHER REVENUE - 1.0%
Retail
IA State Finance Authority,
Mason City Shopping Center,
8.500% 12/01/04 50 53
OH Lake County,
North Madison Properties,
Series 1993,
8.069% 09/01/01 65 70
VA Virginia Beach Development Authority,
SC Diamond Associates, Inc.,
8.000% 12/01/10 75 84
-------
207
-------
- ----------------------------------------------------------------------------
RESOURCE RECOVERY - 2.9%
DISPOSAL - 0.5%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 90 100
-------
RESOURCE RECOVERY - 2.4%
FL Lake County Resources Industrial
Development, NRG / Recovery Group,
Series 1993-A,
5.400% 10/01/03 500 508
-------
- ----------------------------------------------------------------------------
TAX-BACKED - 40.2%
LOCAL APPROPRIATED - 0.3%
AZ Phoenix Civic Improvement Corporation,
Waste Water Lease, Series 1993,
5.750% 07/01/04 50 54
-------
Local General Obligations - 22.5%
AZ Maricopa County Unified School
District No. 69, Paradise Valley,
Series 1995,
6.350% 07/01/10 500 583
AZ Phoenix General Obligation,
6.125% 07/01/03 250 273
HI Honolulu City & County,
Series 1995,
6.000% 11/01/10 500 565
ID Kootenai County School District No. 271,
6.000% 07/30/09 250 283
IL Chicago, General Obligation,
6.300% 01/01/05 250 278
MI Berkley,
City School District,
7.000% 01/01/09 500 602
MN West St. Paul,
Independent School District No. 197,
(b) 02/01/04 500 392
NY New York City,
Series 1997 A,
7.000% 08/01/06 850 985
OH Oak Hills Local School District,
5.650% 12/01/07 250 273
OH Strongsville, Public Improvement,
6.000% 12/01/06 500 559
-------
4,793
-------
SPECIAL NON-PROPERTY TAX - 1.0%
LA Sulphur Public Import Sales and Use
Tax, Series 1993-ST,
5.650% 04/01/04 50 54
NY State Local Government Assistance Corp.,
Series C,
6.000% 04/01/12 150 169
-------
223
-------
SPECIAL PROPERTY TAX - 1.6%
MN Duluth Economic Development Authority,
Series 1998 A:
(b) 02/01/06 245 173
(b) 08/01/06 245 170
-------
343
-------
STATE APPROPRIATED - 10.9%
KS State Development Authority,
Lease Juvenile Detention Facility
Project, Series 1992-H,
5.750% 06/01/02 60 63
NY New York Dormitory Authority:
New York City University, Series A,
5.625% 07/01/16 500 541
State University of New York,
Series 1989 B,
7.100% 05/15/01 100 107
NY State Urban Development Corp.:
5.750% 04/01/11 500 538
6.250% 04/01/02 500 532
OH State Higher Education Commission,
Series II-B,
5.750% 11/01/04 500 543
-------
2,324
-------
STATE GENERAL OBLIGATIONS - 3.9%
NJ State, General Obligation,
Series D,
(b) 02/15/04 90 70
TX State,
Series A,
5.800% 10/01/04 500 544
WA State,
Series B,
6.000% 06/01/05 200 220
-------
834
-------
- ----------------------------------------------------------------------------
TRANSPORTATION - 10.5%
AIRPORT - 0.3%
CO Denver City & County
Airport System, Series 1992-C,
6.250% 11/15/00 50 52
-------
TOLL FACILITIES - 7.6%
CA Foothill Eastern Transportation
Corridor Agency, State Toll Road,
Senior Lien, Series A,
(b) 01/01/04 500 385
IN State Transportation Finance Authority,
Series 1993 A,
5.250% 06/01/09 600 637
KY State Turnpike Authority, Economic
Development Revitalization Projects,
Series 1992,
5.500% 01/01/01 50 52
OH State Turnpike Commission,
Series 1996 A,
6.000% 02/15/06 500 553
-------
1,627
-------
TRANSPORTATION - 2.6%
DC Metropolitan Area Transit Authority,
6.000% 07/01/07 250 279
WA Port of Seattle,
Series A,
6.000% 10/01/08 250 280
-------
559
-------
- ----------------------------------------------------------------------------
UTILITY - 14.0%
INDIVIDUAL POWER PRODUCER - 2.6%
CA Sacramento Cogeneration
Authority,
Procter & Gamble Project,
6.500% 07/01/14 500 549
-------
JOINT POWER AUTHORITY - 5.8%
AZ Salt River Project, Agricultural
Improvement & Power District, Series A:
5.750% 01/01/07 250 274
6.000% 01/01/05 500 548
NC State Municipal Power Agency,
Catawba Electric No. 1,
Series 1998 A,
5.000% 01/01/08 305 315
TX State Municipal Power Agency,
(b) 09/01/15 250 103
-------
1,240
-------
MUNICIPAL ELECTRIC - 0.2%
WA Grant County Public Utilities,
District Number 002,
Electric System, Series 1993-E,
5.300% 01/01/03 50 52
-------
WATER & SEWER - 5.4%
AZ State Central Water Conservation District,
Central Arizona Project, Series A,
5.500% 11/01/08 $ 250 $ 271
TX Houston Water & Sewer System,
Series C,
5.900% 12/01/05 800 878
-------
1,149
-------
TOTAL INVESTMENTS (cost of $19,649)(c) 20,890
-------
SHORT-TERM OBLIGATIONS - 0.5%
- -----------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (d)
NM Farmington Poll,
3.950% 09/01/24 100 100
-------
OTHER ASSETS & LIABILITIES, NET - 1.5% 313
- -----------------------------------------------------------------------------
NET ASSETS - 100.0% $21,303
=======
NOTES TO INVESTMENT PORTFOLIO:
- -----------------------------------------------------------------------------
(a) 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 interest and principal.
(b) Zero coupon bond.
(c) Cost for federal income tax purposes is the same.
(d) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of May 31, 1998.
See notes to financial statements
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
MAY 31, 1998 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $19,649) $ 20,890
Short-term obligations 100
--------
20,990
Cash $ 86
Receivable for:
Interest 354
Receivable due from Adviser 9
Other 2 451
----- --------
Total Assets 21,441
LIABILITIES
Payable for:
Distributions 80
Fund shares repurchased 55
Accrued:
Deferred Trustees fees 1
Other 2
-----
Total Liabilities 138
--------
NET ASSETS $ 21,303
========
Net asset value & redemption price per share -
Class A ($11,093/1,380) $ 8.04
========
Maximum offering price per share - Class A
($8.04/0.9675) $ 8.31(a)
========
Net asset value & offering price per share -
Class B ($9,897/1,231) $ 8.04(b)
========
Net asset value & offering price per share -
Class C ($313/39) $ 8.04(b)
========
COMPOSITION OF NET ASSETS
Capital paid in $ 20,469
Undistributed net investment income 28
Accumulated net realized loss (435)
Net unrealized appreciation 1,241
--------
$ 21,303
========
(a) On sales of $100,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1998
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Interest $ 554
EXPENSES
Management fee $ 58
Service fee 21
Distribution fee - Class B 33
Distribution fee - Class C (a)
Transfer agent 17
Bookkeeping fee 14
Trustees fee 5
Custodian fee 1
Audit fee 9
Legal fee 2
Registration fee 16
Reports to shareholders 3
Amortization of deferred
organization expenses 3
Other 1
----
183
Fees and expenses waived or borne by
the Adviser (69) 114
---- -----
Net Investment Income 440
-----
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 12
Closed futures contracts (29)
----
Net realized loss (17)
Net unrealized appreciation
during the period on:
Investments 212
Open futures contracts 10
----
Net unrealized appreciation 222
-----
Net Gain 205
-----
Increase in Net Assets from Operations $ 645
=====
(a) Rounds to less than one. See notes to financial statements.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six months Year ended
(in thousands) ended May 31 November 30
------------ -----------
INCREASE (DECREASE) IN NET ASSETS 1998 1997(a)
Operations:
Net investment income $ 440 $ 1,003
Net realized gain (loss) (17) 228
Net unrealized appreciation (depreciation) 222 (24)
-------- --------
Net Increase from Operations 645 1,207
Distributions:
From net investment income - Class A (254) (522)
From net investment income - Class B (212) (486)
From net investment income - Class C (6) (2)
-------- --------
173 197
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 1,549 1,767
Value of distributions reinvested - Class A 143 273
Cost of shares repurchased - Class A (1,020) (4,276)
-------- --------
672 (2,236)
-------- --------
Receipts for shares sold - Class B 278 379
Value of distributions reinvested - Class B 134 345
Cost of shares repurchased - Class B (866) (3,645)
-------- --------
(454) (2,921)
-------- --------
Receipts for shares sold - Class C 321 100
Value of distributions reinvested - Class C 3 1
Cost of shares repurchased - Class C (112) -
-------- --------
212 101
-------- --------
Net Increase (Decrease) from
Fund Share Transactions 430 (5,056)
-------- --------
Total Increase (Decrease) 603 (4,859)
NET ASSETS
Beginning of period 20,700 25,559
-------- --------
End of period (including undistributed
net investment income of $28 and
$57, respectively) $ 21,303 $ 20,700
======== ========
(a) Class C shares were initially offered on August 1, 1997.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
(Unaudited)
Six months Year ended
ended May 31 November 30
------------ -----------
(in thousands) 1998 1997(a)
NUMBER OF FUND SHARES
Sold - Class A 194 221
Issued for distributions reinvested - Class A 18 38
Repurchased - Class A (127) (548)
-------- --------
85 (289)
-------- --------
Sold - Class B 35 48
Issued for distributions reinvested - Class B 17 44
Repurchased - Class B (108) (465)
-------- --------
(56) (373)
-------- --------
Sold - Class C 40 13
Issued for distributions reinvested - Class C (b) (b)
Repurchased - Class C (14) -
-------- --------
26 13
-------- --------
(a) Class C shares were initially offered on August 1, 1997.
(b) Rounds to less than one.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
In the opinion of management of Colonial Intermediate Tax-Exempt Fund (the
Fund), a series of Colonial Trust IV, the accompanying financial statements
contain all normal and recurring adjustments necessary for the fair presentation
of the financial position of the Fund at May 31, 1998, and the results of its
operations, the changes in its net assets and the financial highlights for the
six months then ended.
NOTE 2. ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
ORGANIZATION: The Fund is a diversified portfolio of a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund's investment objective is to
seek as high a level of after-tax total return as is consistent with moderate
volatility, by pursuing current income exempt from federal income tax and
opportunities for appreciation from a portfolio primarily invested in
investment-grade, intermediate-term municipal bonds. The Fund may issue an
unlimited number of shares. The Fund offers three classes of shares: Class A,
Class B and Class C. Class A shares are sold with a front-end sales charge and
Class B shares 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. Effective August 1, 1997, the
Fund began offering Class C shares which are subject to a contingent deferred
sales charge on redemptions made within one year after purchase and an annual
distribution fee.
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 for which market quotations are not readily available are
valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B and Class C distribution fees), and realized
and unrealized gains (losses), are allocated to each class proportionately on a
daily basis for purposes of determining the net asset value of each class.
Class B and Class C 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 and Class C shares
only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses of $75,021 in
connection with its organization, initial registration with the Securities and
Exchange Commission and with various states, and the initial public offering of
its shares. These expenses were deferred and were amortized on a straight-line
basis over five years.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; market
discount is not accreted. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records distributions daily
and pays monthly.
The character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. Reclassifications are made to the Fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryforwards) under income tax regulations.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
- -------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser)
is the investment Adviser of the Fund and furnishes accounting and other
services and office facilities for a monthly fee equal to 0.55% annually of the
Fund's average net assets.
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT FEE: Colonial Investors Service Center, Inc. (the Transfer
Agent), an affiliate of the Adviser, provides shareholder services for a monthly
fee equal to 0.13% annually of the Fund's average net assets and receives
reimbursement for certain out-of-pocket expenses.
Effective January 1, 1997 and continuing through calendar year 1997, the
Transfer Agent fee was reduced by 0.01% in cumulative monthly increments,
resulting in a decrease in the fee from 0.14% to 0.13% annually.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds
Distributor, Inc., formerly Liberty Financial Investments, Inc. (the
Distributor), a subsidiary of the Adviser, is the Fund's principal underwriter.
For the six months ended May 31, 1998 the Fund has been advised that the
Distributor retained net underwriting discounts of $882 on sales of the Fund's
Class A shares and received contingent deferred sales charges (CDSC) of $1,719
and $500 on Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.20% annually of the Fund's net assets as of 20th of each
month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.65% annually of the average net assets attributable to
Class B and Class C shares. The Distributor has voluntarily agreed to waive a
portion of the Class C share distribution fee so that it does not exceed 0.20%
annually.
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.
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service and distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 0.60% annually of the Fund's average net
assets. Through December 31, 1997, the expense limit was 0.40% of the Fund's
average net assets.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
- -------------------------------------------------------------------------------
INVESTMENT ACTIVITY: For the six months ended May 31, 1998, purchases and sales
of investments, other than short-term obligations, were $998,874 and $868,081,
respectively.
Unrealized appreciation (depreciation) at May 31, 1998, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $ 1,240,994
Gross unrealized depreciation -
-----------
Net unrealized appreciation $ 1,240,994
===========
CAPITAL LOSS CARRYFORWARDS: At November 30, 1997, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
---------- ------------
2003 $239,000
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 may focus its investments in certain industries, subjecting it
to greater risk than a fund that is more diversified.
The Fund may purchase or sell municipal and Treasury bond futures contracts and
purchase and write options on futures. The Fund will invest in these instruments
to hedge against the effects of changes in the value of portfolio securities due
to anticipated changes in interest rates and/or market conditions, for duration
management, or when the transactions are economically appropriate to the
reduction of risk inherent in the management of the Fund and not for trading
purposes. The use of futures contracts and options involves certain risks which
include (1) imperfect correlation between the price movement of the instruments
and the underlying securities, (2) inability to close out a position due to
different trading hours, or the temporary absence of a liquid market for either
the instrument or the underlying securities or (3) an inaccurate prediction by
the Adviser of thefuture direction of interest rates. Any of these risks may
involve amounts exceeding the variation margin recorded in the Fund's Statement
of Assets and Liabilities at any given time.
NOTE 5. LINE OF CREDIT
- -------------------------------------------------------------------------------
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the six months ended May 31, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
(Unaudited)
Six months ended May 31
-----------------------------------
1998
Class A Class B Class C
------- ------- -------
Net asset value -
Beginning of period $7.980 $7.980 $7.980
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.180 0.154 0.172(b)
Net realized and unrealized gain 0.072 0.072 0.072
------ ------ ------
Total from Investment Operations 0.252 0.226 0.244
------ ------ ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.192) (0.166) (0.184)
------ ------
Net asset value -
End of period 8.040 $8.040 $8.040
------ ------ ------
Total return (c)(d)(e) 3.19% 2.85% 3.09%
====== ====== ======
RATIOS TO AVERAGE NET ASSETS
Expenses (f)(g) 0.77% 1.42% 0.97(b)
Fees and expenses waived
or borne by the Adviser (f)(g) 0.65% 0.65% 0.65%
Net investment income (f)(g) 4.48% 3.83% 4.28%(b)
Portfolio turnover (e) 4% 4% 4%
Net assets at end of period (000) $11,093 $9,897 $ 313
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.026 $0.026 $0.026
(b) Net of fees waived by the Distributor which amounted to $0.036 per share
and 0.45% annualized.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Adviser not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) Annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended November 30
-------------------------------------
1997
Class A Class B Class C(b)
------- ------- ----------
Net asset value -
Beginning of period $7.880 $7.880 $8.000
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.388 0.337 0.121
Net realized and unrealized gain (loss) 0.093 0.093 (0.019)(c)
------ ------ ------
Total from Investment Operations 0.481 0.430 0.102
------ ------ ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.381) (0.330) (0.122)
------ ------ ------
Net asset value -
End of period $7.980 $7.980 $7.980
====== ====== ======
Total return (d)(e) 6.29% 5.60% 1.29%(f)
====== ====== ======
RATIOS TO AVERAGE NET ASSETS
Expenses (g) 0.60% 1.25% 0.80%(h)
Fees and expenses waived
or borne by the Adviser (g) 0.85% 0.85% 0.97%(h)
Net investment income (g) 4.84% 4.19% 4.55%(h)
Portfolio turnover 31% 31% 31%
Net assets at end of period (000) $10,330 $10,269 $ 101
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.073 $ 0.073 $ 0.073
(b) Class C shares were initially offered on August 1, 1997. Per share amounts
reflect activity from that date.
(c) The amount shown for a share outstanding does not correspond with the
aggregate net gain on investments for the period due to the timing of sales
and repurchases of Fund shares in relation to fluctuating market values of
the investments of the Fund.
(d) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(e) Had the Adviser not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized
(g) The benefits derived from custody credits and directed brokerage
arrangements had an impact of 0.01% and $0.001 per share in 1997 only.
Prior year ratios are net of benefits received, if any.
(h) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended Year ended
November 30 November 30
------------------------ -------------------------
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
$ 7.850 $ 7.850 $ 7.210 $ 7.210
------- ------- ------- -------
0.375 0.324 0.387 0.338
0.022 0.022 0.641 0.641
------- ------- ------- -------
0.397 0.346 1.028 0.979
------- ------- ------- -------
(0.367) (0.316) (0.388) (0.339)
------- ------- ------- -------
$ 7.880 $ 7.880 $ 7.850 $ 7.850
======= ======= ======= =======
5.23% 4.55% 14.56% 13.82%
======= ======= ======= =======
0.60% 1.25% 0.36% 1.01%
0.72% 0.72% 0.96% 0.96%
4.75% 4.10% 5.03% 4.38%
20% 20% 69% 69%
$ 12,479 $ 13,080 $13,317 $ 14,820
$ 0.057 $ 0.057 $ 0.074 $ 0.074
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period
are as follows:
Year ended November 30
---------------------------------------
1994 1993(b)
Class A Class B Class A Class B
------- ------- ------- -------
Net asset value -
Beginning of period $7.810 $7.810 $7.500 $7.500
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.366 0.317 0.305 0.263
Net realized and
unrealized gain (loss) (0.596) (0.596) 0.302 0.302
------ ------ ------ ------
Total from Investment
Operations (0.230) (0.279) 0.607 0.565
------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.370) (0.321) (0.297) (0.255)
------ ------ ------ ------
Net asset value -
End of period $7.210 $7.210 $7.810 $7.810
====== ====== ====== ======
Total return (c)(d) (3.05)% (3.68)% 8.18%(e) 7.61%(e)
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS
Expenses 0.20% 0.85% 0.20%(f) 0.85%(f)
Fees and expenses waived
or borne by the Adviser 1.07% 1.07% 1.33%(f) 1.33%(f)
Net investment income 4.85% 4.20% 4.53%(f) 3.88%(f)
Portfolio turnover 26% 26% 5%(f) 5%(f)
Net assets at end
of period (000) $16,791 $14,138 $14,700 $9,396
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.080 $ 0.080 $ 0.090 $0.090
(b) The Fund commenced investment operations on February 1, 1993.
(c) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(d) Had the Adviser not waived or reimbursed a portion of expenses, total return
would have been reduced.
(e) Not annualized.
(f) Annualized.
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Intermediate Tax-Exempt Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Intermediate Tax-Exempt Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call
1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Intermediate
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 objective and operating policies of the Fund and with the
most recent copy of our Performance Update.
<PAGE>
- --------------------------------------------------------------------------------
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
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 & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
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, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
ROBERT L. SULLIVAN
Retired Partner, KPMG Peat Marwick LLP (formerly Management Consultant, Saatchi
and Saatchi Consulting Ltd. and Principal and International Practice Director,
Management Consulting, Peat Marwick Main & Co.)
[Logo] L I B E R T Y
COLONIAL FUNDS o STEIN ROE ADVISOR FUNDS o NEWPORT FUNDS
Liberty Funds Distributor, Inc. (C)1998
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
IM-03/371F-0598 (7/98) 98/698
- --------------------------------------------------------------------------------
