<PAGE>
Seeking new opportunities for
investors in a more competitive
utilities environment.
COLONIAL UTILITIES FUND Annual report
November 30, 1997
[PHOTO]
- -------------------------------------------------
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
- -------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
COLONIAL UTILITIES FUND HIGHLIGHTS
DECEMBER 1, 1996 - NOVEMBER 30, 1997
INVESTMENT OBJECTIVE: Colonial Utilities Fund seeks current income and
long-term growth.
THE FUND IS DESIGNED TO OFFER:
X Monthly income
X Long-term growth potential
X Diversification
PORTFOLIO MANAGER COMMENTARY: "Fund shareholders enjoyed attractive returns
over the past year due largely to strong performances by telephone stocks.
As deregulation of the U.S. utility industry continues and demand for utility
services around the world increases, we continue to position the Fund to take
advantage of these opportunities."
- John Lennon & Richard Petrino
COLONIAL UTILITIES FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Inception dates 3/4/92(1) 5/5/92 8/1/97
- --------------------------------------------------------------------------------
Distributions declared per share $0.601 $0.483 $0.160
- --------------------------------------------------------------------------------
30-day SEC yields on 11/30/97(2) 2.94% 2.36% 2.31%
- --------------------------------------------------------------------------------
12-month total returns, assuming 23.26% 22.36% 12.12%(3)
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
- --------------------------------------------------------------------------------
Net asset value per share on 11/30/97 $18.06 $18.06 $18.06
</TABLE>
1 Date of adoption of the Fund's current investment policies.
2 Reflects the portfolio's earning power, net of expenses, expressed as an
annualized percentage of the public offering price per share at the end of
the period.
3 Return is cumulative since inception on August 1, 1997.
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS SECTOR BREAKDOWN
(as of 11/30/97) (as of 11/30/97)
- ------------------------------------- -------------------------------------
<S> <C> <C> <C>
1. Bell Atlantic Corp..........6.88% Common & Convertible Stocks
2. SBC Communications, Inc.....5.22% Electric.......................40.5%
3. Ameritech Corp..............4.95% Telephone......................34.3%
4. BellSouth Corp..............4.92% Natural Gas....................13.4%
5. FPL Group, Inc..............4.81% Non-utility Stocks...............1.7%
Preferred Stocks.................8.0%
Net Cash & Equivalents...........2.1%
</TABLE>
Holdings and sector breakdowns are calculated as a percent of unaudited total
net assets. Because the Fund is actively managed, there can be no guarantee the
Fund will continue to hold these securities or maintain these sector weightings
in the future. Industry sectors in the following financial statements are based
upon the standard industrial classification (SIC) published by the U.S. Office
of Management and Budget. The sector classifications used on this page are based
upon Colonial's defined criteria used in the investment process.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
Long-term Treasury rates dropped from the beginning of your Fund's fiscal year
to the end. Since utility stock prices generally rise when interest rates fall,
this was good news for the Fund. Interest rates on the 30-year Treasury began at
6.35% in December and peaked at 7.17% in April, shortly after the Federal
Reserve Board raised short-term interest rates. Rates gradually declined through
the summer and fall, finishing the year at just over 6% on November 30, as
economic growth slowed and inflation remained low.
[PHOTO]
In this favorable interest rate environment during the second half of the Fund's
fiscal year, natural gas, electric and telephone stocks rose, although the
amount of the increases varied. Natural gas stocks increased modestly, while
electric and telephone stocks posted especially strong returns. Your Fund
provided an attractive total return of 23.26% on Class A shares for the year,
due to its sizeable exposure in telephone securities. It significantly
outperformed the Dow Jones Utilities Average of 15.23%, which does not include
telephone stocks, over the same period.
The Fund moved cautiously into foreign and non-utility issues during the latter
part of its fiscal year, after this increased flexibility was approved by the
Fund's Trustees. Given the volatility of U.S. and foreign stock markets late in
the fiscal year, this caution proved well-founded.
For more information about your Fund, please turn to the Portfolio Manager's
Report on the following pages. We thank you for giving us the opportunity to
help you meet your financial goals, and we hope to continue serving you in the
years to come.
Respectfully,
/S/ Harold W. Cogger
Harold W. Cogger
President
January 9, 1998
Because market conditions change frequently, there can be no assurance that the
trends described here will continue.
- --------------------------------------------------------------------------------
3
<PAGE>
PORTFOLIO MANAGEMENT REPORT
JOHN LENNON is vice president of Colonial Management Associates, Inc. and has
served as lead portfolio manager of the Fund since 1984. RICHARD PETRINO has
been associate portfolio manager of the Fund since 1995. Together, they have
more than 35 years experience in professional money management.
DIFFERENT PERFORMANCE IN DIFFERENT SECTORS
In the Fund's 1997 fiscal year, trends in the performance of the major sectors
reversed those of the prior year. A year ago, natural gas stocks were the
standout performers, while the electric and telephone sectors trailed due to
uncertainty about the deregulation of these industries. This year was quite a
different story as electric, and particularly telephone, securities demonstrated
strong performance.
A BIG YEAR FOR TELEPHONE STOCKS
Federal Communications Commission approval of two large telecommunication
mergers, together with some favorable regulatory decisions, fueled strong gains
in telephone stocks over the course of the year. These stocks provided a total
return of 38.91% over the Fund's fiscal year as measured by the Standard &
Poor's Telephone Index. Although these stocks performed well all year, their
performance was particularly impressive in November, as turbulence in overseas
markets resulted in a flight to quality U.S. investments.
REGULATORY DECISIONS CONTRIBUTE TO GAINS IN ELECTRIC STOCKS
As deregulation efforts moved forward, electric utility stocks also posted solid
gains this year, rising 16.70% as measured by the Standard & Poor's Electric
Companies Index. In several jurisdictions, electric companies appear to be
getting fairer treatment from regulators than many investors had expected. This
helped stock prices, especially of companies in high cost states like
California, Massachusetts and New York. Utilities in these states now have a
reasonable opportunity to recover stranded costs, such as investments in
generating plants that would not be cost effective in a deregulated market
environment.
NATURAL GAS SECTOR LAGS
Natural gas stocks, as measured by the Standard & Poor's Natural Gas Index,
provided a total return of 9.65% for the year. Despite this respectable
performance, the sector lagged both electric and telephone stocks, after being
the leading utilities sector in 1996. The performance of these stocks was
inhibited by unfounded concerns of potentially lower natural gas prices and
unfulfilled expectations regarding merger activity. We believe these companies
remain strong financially and represent attractive values.
OPPORTUNITIES AROUND THE WORLD
Since August, when the Trustees approved the flexibility to invest in foreign
markets, we have been deliberately cautious in our non-U.S.
- --------------------------------------------------------------------------------
4
<PAGE>
exposure. We have made some investments in European and South American telephone
utilities. Our careful entry into foreign markets benefited the Fund in light of
the current instability in overseas markets and a flight to quality into U.S.
utilities.
In August, we also gained the ability to hold some non-utility stocks
in the Fund. Again, we have moved slowly given the recent volatility in the U.S.
market and the strong performance of utilities during that time.
IN THE CURRENT UTILITIES ENVIRONMENT, EXPERIENCE COUNTS
Deregulation is changing the way all utilities are doing business, resulting in
mergers and other opportunities in newly competitive U.S. and foreign markets.
In addition to the large mergers in the telephone sector, the year also saw
several electric and natural gas utilities merge both along and across energy
lines. We expect to see more mergers and financial restructurings in the future,
as many utilities respond to the challenges of a newly competitive marketplace.
In this markedly different utilities environment, our experience and ability is
even more important when it comes to selecting companies we believe should
prosper.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
COLONIAL UTILITIES FUND INVESTMENT PERFORMANCE VS.
THE DOW JONES UTILITIES AVERAGE AND THE STANDARD & POOR'S 500 INDEX
Change in Value of $10,000 from 3/31/92 - 11/30/97
Based on NAV and POP for Class A Shares
[PERFORMANCE CHART OMITTED]
<TABLE>
<CAPTION>
3/92 11/97
<S> <C> <C> <C>
STANDARD & POOR'S 500 $10,000 $27,287
NAV $10,000 $19,538
POP $10,000 $18,610
DOW JONES UTILITIES $10,000 $17,472
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Label A B C D
- ----------------------------------------------------------------------------------------------
Label Hypothetical Inv
- ----------------------------------------------------------------------------------------------
1 S&P 500 Month Dow Jones Util NAV POP
- ----------------------------------------------------------------------------------------------
2
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3 3/31/92 10000 10000 10000 9525
- ----------------------------------------------------------------------------------------------
4 10293 10287 10204.21973 9719.519531
- ----------------------------------------------------------------------------------------------
5 10344 10467 10443.32422 9947.266602
- ----------------------------------------------------------------------------------------------
6 10190 10436 10531.8584 10031.59473
- ----------------------------------------------------------------------------------------------
7 10606 11169 11084.16309 10557.66504
- ----------------------------------------------------------------------------------------------
8 10389 10912 11064.79883 10539.2207
- ----------------------------------------------------------------------------------------------
9 10511 11066 11130.51953 10601.82031
- ----------------------------------------------------------------------------------------------
10 10547 11071 11136.96484 10607.95898
- ----------------------------------------------------------------------------------------------
11 10905 11061 11126.11816 10597.62793
- ----------------------------------------------------------------------------------------------
12 11039 11255 11406.69922 10864.88086
- ----------------------------------------------------------------------------------------------
13 11131 11562 11618.47949 11066.60156
- ----------------------------------------------------------------------------------------------
14 11283 12325 12212.87207 11632.76074
- ----------------------------------------------------------------------------------------------
15 11521 12472 12306.49414 11721.93555
- ----------------------------------------------------------------------------------------------
16 11243 12385 12277.77246 11694.57813
- ----------------------------------------------------------------------------------------------
17 11543 12403 12257.98145 11675.72754
- ----------------------------------------------------------------------------------------------
18 11576 12811 12607.62891 12008.7666
- ----------------------------------------------------------------------------------------------
19 11530 13116 12835.02637 12225.3623
- ----------------------------------------------------------------------------------------------
20 11966 13524 13160.96777 12535.82227
- ----------------------------------------------------------------------------------------------
21 11874 13247 13043.2998 12423.74316
- ----------------------------------------------------------------------------------------------
22 12120 12793 12856.20801 12245.53809
- ----------------------------------------------------------------------------------------------
23 12004 12049 12261.08984 11678.68848
- ----------------------------------------------------------------------------------------------
24 12149 12338 12468.05664 11875.82422
- ----------------------------------------------------------------------------------------------
25 12562 12181 12265.85156 11683.22363
- ----------------------------------------------------------------------------------------------
26 12221 11416 11697.21875 11141.60059
- ----------------------------------------------------------------------------------------------
27 11690 10722 11382.06641 10841.41797
- ----------------------------------------------------------------------------------------------
28 11839 10911 11635.14063 11082.47168
- ----------------------------------------------------------------------------------------------
29 12033 10263 11141.65918 10612.43066
- ----------------------------------------------------------------------------------------------
30 11738 9846 10886.61914 10369.50488
- ----------------------------------------------------------------------------------------------
31 12124 10380 11290.28223 10753.99414
- ----------------------------------------------------------------------------------------------
32 12619 10616 11324.41113 10786.50195
- ----------------------------------------------------------------------------------------------
33 12311 10262 11038.96582 10514.61523
- ----------------------------------------------------------------------------------------------
34 12587 10279 11185.84082 10654.51367
- ----------------------------------------------------------------------------------------------
35 12129 10259 11152.64648 10622.89551
- ----------------------------------------------------------------------------------------------
36 12309 10452 11182.38965 10651.22656
- ----------------------------------------------------------------------------------------------
37 12628 11142 11911.96191 11346.14355
- ----------------------------------------------------------------------------------------------
38 13120 11265 11982.83008 11413.64551
- ----------------------------------------------------------------------------------------------
39 13506 10975 11887.67285 11323.00879
- ----------------------------------------------------------------------------------------------
40 13904 11405 12132.17969 11555.90137
- ----------------------------------------------------------------------------------------------
41 14458 12188 12679.48926 12077.21387
- ----------------------------------------------------------------------------------------------
42 14794 12014 12720.91895 12116.67578
- ----------------------------------------------------------------------------------------------
43 15284 12149 12801.62109 12193.54395
- ----------------------------------------------------------------------------------------------
44 15322 12121 13099.65625 12477.42285
- ----------------------------------------------------------------------------------------------
45 15968 12915 13824.13184 13167.48535
- ----------------------------------------------------------------------------------------------
46 15911 12960 14124.40137 13453.49219
- ----------------------------------------------------------------------------------------------
47 16609 13128 14375.15918 13692.33887
- ----------------------------------------------------------------------------------------------
48 16929 13795 15068.47363 14352.7207
- ----------------------------------------------------------------------------------------------
49 17505 14161 15359.14648 14629.58691
- ----------------------------------------------------------------------------------------------
50 17667 13530 14986.22852 14274.38281
- ----------------------------------------------------------------------------------------------
51 17838 13203 14834.71681 4130.06738
- ----------------------------------------------------------------------------------------------
52 18100 13070 14673.29981 3976.31836
- ----------------------------------------------------------------------------------------------
53 18566 13140 14693.50977 13995.56836
- ----------------------------------------------------------------------------------------------
54 18637 13876 15246.09375 14521.9043
- ----------------------------------------------------------------------------------------------
55 17814 12952 14650.59571 13954.69238
- ----------------------------------------------------------------------------------------------
56 18190 13615 14723.25684 14023.90234
- ----------------------------------------------------------------------------------------------
57 19213 13845 14753.00781 14052.24023
- ----------------------------------------------------------------------------------------------
58 19743 14509 15352.45117 14623.20996
- ----------------------------------------------------------------------------------------------
59 21234 15163 15851.17969 15098.24902
- ----------------------------------------------------------------------------------------------
60 20813 15050 15975.49902 15216.66309
- ----------------------------------------------------------------------------------------------
61 22113 15074 16310.53906 15535.78809
- ----------------------------------------------------------------------------------------------
62 22287 14815 16594.38477 15806.15137
- ----------------------------------------------------------------------------------------------
63 21373 14325 15974.38965 15215.60645
- ----------------------------------------------------------------------------------------------
64 22647 14217 16099.50293 15334.77637
- ----------------------------------------------------------------------------------------------
65 24032 14675 16650.75391 15859.84277
- ----------------------------------------------------------------------------------------------
66 25100 15044 17138.89063 16324.79297
- ----------------------------------------------------------------------------------------------
67 27097 15650 17383.83984 16558.10742
- ----------------------------------------------------------------------------------------------
68 25580 15493 16987.24219 16180.34863
- ----------------------------------------------------------------------------------------------
69 26980 15986 17876.00391 17026.89453
- ----------------------------------------------------------------------------------------------
70 26080 16301 17962.69922 17109.4707
- ----------------------------------------------------------------------------------------------
71 11/30/97 27287 17472 19537.80664 18609.76172
- ----------------------------------------------------------------------------------------------
</TABLE>
A $10,000 investment in Class B shares made on May 5, 1992 (inception), at net
asset value (NAV), would have grown to $18,292 on November 30, 1997. The same
investment after deducting the applicable contingent deferred sales charge
(CDSC) would be valued at $18,192 on November 30, 1997. A $10,000 investment in
Class C shares on August 1, 1997 (inception), at NAV, would have grown to
$11,212 on November 30, 1997. The same investment after deducting the applicable
CDSC would be valued at $11,112. The Dow Jones Utilities Average and the
Standard & Poor's 500 Index are two unmanaged indexes that track the performance
of utility stocks and U.S. stocks, respectively. Unlike mutual funds, indexes
are not investments, do not incur fees or expenses and it is not possible to
invest in an index.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
As of 11/30/97
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES(1)
INCEPTION 3/4/92(2) 5/5/92 8/1/97
- --------------------------------------------------------------------------------
NAV POP NAV W/CDSC NAV W/CDSC
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR 23.26% 17.40% 22.36% 17.36% -- --
- --------------------------------------------------------------------------------
5 YEARS 11.92 10.84 11.10 10.84 -- --
- --------------------------------------------------------------------------------
10 YEARS 12.79 12.25 -- -- -- --
- --------------------------------------------------------------------------------
SINCE INCEPTION 12.40 11.46 11.43 11.32 12.12% 11.12%
- --------------------------------------------------------------------------------
</TABLE>
(1) Class C share performance shown is cumulative since inception on 8/1/97.
(2) Change in investment policies.
Past performance cannot predict future results. 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. Public offering price (POP) returns include the maximum sales charge of
4.75%. The CDSC returns reflect the maximum charges of 5% for one year, 2% for
five years and 1% since inception for Class B shares, and 1% since inception for
Class C shares.
- --------------------------------------------------------------------------------
6
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO
NOVEMBER 30, 1997 (IN THOUSANDS)
COMMON STOCKS & CONVERTIBLES - 89.9% COUNTRY SHARES VALUE
------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - 0.8%
DEPOSITORY INSTITUTIONS
First Union Corp. 175 $ 8,531
--------
....................................................................................
MANUFACTURING - 0.8%
COMMUNICATIONS EQUIPMENT - 0.6%
Harris Corp. 50 2,372
Lucent Technologies, Inc. 50 4,006
--------
6,378
--------
MACHINERY & COMPUTER EQUIPMENT - 0.2%
Timken Co. 50 1,772
--------
....................................................................................
TRANSPORTATION, COMMUNICATIONS, ELECTRIC,
GAS & SANITARY SERVICES - 88.3%
COMMUNICATIONS - 34.3%
Ameritech Corp. 650 50,091
Bell Atlantic Corp. 780 69,615
BellSouth Corp. 910 49,822
Citizens Utilities Co., 5% Convertible Preferred 100 4,787
Frontier Corp. 350 8,575
GTE Corp. 775 39,186
Hellenic Telecommunication Organization S.A. Gr 250 4,919
MATAV ADR Hg 40 810
SBC Communications, Inc. 725 52,789
Telecom Italia Spa ADR It 150 9,319
Telecomunicacoes Brasileiras S/A ADR Bz 83 8,663
Telefonica de Espana ADR Sp 110 9,515
US West Communications Group 700 31,631
Worldcom, Inc. 200 6,400
--------
347,390
--------
ELECTRIC SERVICES - 40.6%
American Electric Power Co., Inc. 150 7,434
Boston Edison Co. 150 5,250
Cinergy Corp. 950 33,844
DPL, Inc. 1400 36,750
DTE Energy Co. 700 22,969
Duke Energy Corp. 400 20,800
Eastern Utilities Associates 125 2,998
Edison International 750 20,109
Entergy Corp. 150 3,900
FirstEnergy Corp. 200 5,400
FPL Group, Inc. 870 48,666
GPU, Inc. 1000 39,500
Houston Industries, Inc. 679 16,093
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/November 30, 1997
-----------------------------------------------------------------------------------
COMMON STOCKS & CONVERTIBLES - CONT. COUNTRY SHARES VALUE
-----------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION, COMMUNICATIONS, ELECTRIC,
GAS & SANITARY SERVICES - CONT.
ELECTRIC SERVICES - CONT.
IES Industries, Inc. 250 $ 8,766
Kansas City Power & Light Co. 700 20,125
Long Island Lighting Co. 300 8,100
MidAmerican Energy Co. 100 1,994
New Century Energies, Inc. 550 24,337
PacifiCorp. 950 22,147
Public Service Enterprise Group, Inc. 100 2,919
Rochester Gas & Electric Corp. 50 1,375
Sierra Pacific Resources 275 9,316
Southern Co. 600 14,400
Texas Utilities Co. 700 28,000
Utilicorp United, Inc. 150 5,128
--------
410,320
--------
GAS SERVICES - 13.4%
Enron Corp. 418 16,180
MCN Energy Group, Inc. 875 33,414
MCN Energy Group, Inc., PRIDES, 8.75% 35 1,173
MDU Resources Group, Inc. 175 5,239
Pacific Enterprises 400 14,150
Peoples Energy Corp. 150 5,494
UGI Corp. 450 12,459
Williams Cos., Inc. 800 42,750
Williams Cos., Inc., $3.50 Convertible Preferred 37 4,635
--------
135,494
--------
TELECOMMUNICATIONS - 0.1%
Telestra Corp. Part Paid ADS Au 34 1,268
--------
TOTAL COMMON STOCKS & CONVERTIBLES
(cost of $658,142) 909,885
--------
PREFERRED STOCKS - 6.7%
-----------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATIONS, ELECTRIC,
GAS & SANITARY SERVICES
ELECTRIC SERVICES - 5.7%
Arizona Public Servic Co., $1.8125 Series W 180 4,590
Baltimore Gas & Electric Co.,
6.75%, Series 1987 27 2,824
Boston Edison Co., 7.75% 100 2,512
Commonwealth Edison Co., 7.24% 52 5,235
Detroit Edison Co., 7.74% 100 2,537
Boston Edison Co., 7.75% 100 2,512
Commonwealth Edison Co., 7.24% 52 5,235
Detroit Edison Co., 7.74% 100 2,537
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/November 30, 1997
------------------------------------------------------------------------------------
<S> <C> <C>
Entergy Arkansas, Inc.:
7.80% 10 $ 1,033
7.88% 9 904
Entergy Gulf States Utilities:
7.56% 18 1,863
8.80% 15 1,519
Entergy Louisiana, Inc., 8.00% 30 780
Jersey Central Power & Light Co.,
7.88%, Series E 15 1,545
Northern Indiana Public Service Co., 7.44% 9 909
Ohio Edison Co., 7.75% 240 6,090
Pennsylvania Power Co., 7.75% 15 1,500
PSI Energy, Inc., 7.44% 235 5,904
TU Electric Capital, TOPRS, 8.25% 680 17,510
--------
57,256
--------
GAS SERVICES - 1.0%
Enron Corp., MIPS, 8.00% 400 10,025
Pacific Enterprises, $4.50 4 307
--------
10,332
--------
TOTAL PREFERRED STOCKS (cost of $67,415) 68,760
--------
ADJUSTABLE RATE PREFERRED STOCKS - 1.3%
-----------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATIONS, ELECTRIC,
GAS & SANITARY SERVICES - 1.3%
ELECTRIC SERVICES - 0.9%
Cleveland Electric Illuminating Co., Series L, 7.00% 65 6,240
Entergy Gulf States Utilities, Series A, 7.70% 17 1,662
Toledo Edison Co., Series A, 7.00% 40 947
--------
8,849
--------
GAS SERVICES - 0.4%
Enserch Corp., Series E, 7.00% 48 4,770
--------
TOTAL ADJUSTABLE RATE PREFERRED STOCKS 13,619
(cost of $13,131) --------
TOTAL INVESTMENTS - 97.9% (cost of $738,688)(a) 991,092
--------
SHORT-TERM OBLIGATIONS - 2.1% PAR
-----------------------------------------------------------------------------------
Repurchase agreement with ABN Amro Chicago Corp., dated 11/28/97, due
12/01/97 at 5.73% collateralized by U.S. Treasury notes and bills with
various maturities to 2000,
market value $21,295 (repurchase proceeds $20,842) $ 20,832 20,832
--------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/November 30, 1997
------------------------------------------------------------------------------------
<S> <C>
OTHER ASSETS & LIABILITIES, NET - 0.0% (92)
-----------------------------------------------------------------------------------
NET ASSETS - 100.0% $1,011,832
----------
NOTES TO INVESTMENT PORTFOLIO:
----------------------------------------------------------------------------------
(a) Cost for federal income tax purposes is the same.
</TABLE>
<TABLE>
<CAPTION>
Summary of Securities by Country Country Value % of Total
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $956,598 96.5
Spain Sp 9,515 1.0
Italy It 9,319 0.9
Brazil Bz 8,663 0.9
Greece Gr 4,919 0.5
Australia Au 1,268 0.1
Hungary Hg 810 0.1
-------- -----
$991,092 100.0
-------- -----
</TABLE>
Certain securities are listed by country of underlying exposure but may
trade predominantly on other exchanges.
<TABLE>
<CAPTION>
ACRONYM NAME
------- ----
<S> <C>
TOPRS Trust Originated Preferred Redeemable Stock
MIPS Monthly Income Preferred Stock
PRIDES Preferred Redeemable Increased Dividend Equity Securities
ADR American Depositary Receipt
ADS American Depositary Shares
</TABLE>
See notes to financial statements
10
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
(in thousands except for per share amounts and footnotes)
ASSETS
<S> <C> <C>
Investments at value (cost $738,688) $ 991,092
Short-term obligations 20,832
----------
1,011,924
Receivable for:
Dividends $3,316
Investments sold 730
Fund shares sold 221
Interest 10
Other 32 4,309
------ ----------
Total Assets 1,016,233
LIABILITIES
Payable for:
Fund shares repurchased 1,825
Distributions 2,426
Accrued:
Deferred Trustees fee 13
Other 137
------
Total Liabilities 4,401
----------
NET ASSETS $1,011,832
----------
Net asset value & redemption price per share -
Class A ($327,564/18,140) $ 18.06
----------
Maximum offering price per share - Class A
($18.06/0.9525) $ 18.96(a)
----------
Net asset value & offering price per share -
Class B ($683,716/37,863) $ 18.06(b)
----------
Net asset value & offering price per share -
Class C ($552/30) $ 18.06(b)
----------
COMPOSITION OF NET ASSETS
Capital paid in $ 815,209
Undistributed net investment income 910
Accumulated net realized loss (56,691)
Net unrealized appreciation 252,404
-----------
$ 1,011,832
-----------
</TABLE>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
See notes to financial statements.
11
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
(in thousands)
INVESTMENT INCOME
Dividends $ 49,108
Interest 394
--------
49,502
EXPENSES
Management fee $ 6,459
Service fee 2,499
Distribution fee - Class B 5,047
Distribution fee - Class C 1
Transfer agent 2,463
Bookkeeping fee 356
Registration fee 53
Custodian fee 32
Audit fee 42
Trustees fee 62
Reports to shareholders 31
Legal fee 8
Other 83
-------
17,136
Interest expense 3 17,139
------- --------
Net Investment Income 32,363
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 52,105
Foreign currency transactions (5)
-------
Net Realized Gain 52,100
Change in net unrealized appreciation
during the period 116,509
--------
Net Gain 168,609
--------
Increase in Net Assets from Operations $200,972
--------
</TABLE>
See notes to financial statements.
12
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(in thousands) Year ended November 30
---------------------------------
INCREASE (DECREASE) IN NET ASSETS 1997 (a) 1996
<S> <C> <C>
Operations:
Net investment income $ 32,363 $ 42,162
Net realized gain 52,100 13,770
Net unrealized appreciation 116,509 48,040
----------- -----------
Net Increase from Operations 200,972 103,972
Distributions:
From net investment income - Class A (12,211) (15,364)
From net investment income - Class B (20,526) (26,326)
From net investment income - Class C (3) --
----------- -----------
168,232 62,282
----------- -----------
Fund Share Transactions:
Receipts for shares sold - Class A 61,367 20,947
Value of distributions reinvested - Class A 9,090 11,490
Cost of shares repurchased - Class A (145,721) (104,735)
----------- -----------
(75,264) (72,298)
----------- -----------
Receipts for shares sold - Class B 16,129 53,077
Value of distributions reinvested - Class B 16,402 20,888
Cost of shares repurchased - Class B (191,589) (207,844)
----------- -----------
(159,058) (133,879)
----------- -----------
Receipts for shares sold - Class C 644 --
Value of distributions reinvested - Class C 2 --
Cost of shares repurchased - Class C (131) --
----------- -----------
515 --
----------- -----------
Net Decrease from Fund
Share Transactions (233,807) (206,177)
----------- -----------
Total Decrease (65,575) (143,895)
NET ASSETS
Beginning of period 1,077,407 1,221,302
----------- -----------
End of period (including undistributed
net investment income of $910 and
$1,273, respectively) $ 1,011,832 $ 1,077,407
----------- -----------
</TABLE>
(a) Class C shares were initially offered on August 1, 1997.
See notes to financial statements.
13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
<TABLE>
<CAPTION>
Year ended November 30
----------------------------
<S> <C> <C>
NUMBER OF FUND SHARES 1997 (a) 1996
Sold - Class A 3,770 1,421
Issued for distributions reinvested - Class A 575 784
Repurchased - Class A (9,114) (7,147)
------- --------
(4,769) (4,942)
------- --------
Sold - Class B 1,024 3,596
Issued for distributions reinvested - Class B 1,038 1,425
Repurchased - Class B (12,139) (14,191)
------- --------
(10,077) (9,170)
------- --------
Sold - Class C 38 --
Issued for distributions reinvested - Class C (b) --
Repurchased - Class C (8) --
------- --------
30 --
------- --------
</TABLE>
(a) Class C shares were initially offered on August 1, 1997.
(b) Rounds to less than one.
See notes to financial statements.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1997
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Utilities 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 current income
and long-term growth. 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 consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities generally are valued at
the last sale price or, in the case of unlisted or listed securities for which
there were no sales during the day, at current quoted bid prices. Forward
currency contracts are valued based on the weighted value of the exchange traded
contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
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.
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
15
<PAGE>
Notes to Financial Statements/November 30, 1997
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
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.
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.
FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains (losses) on
foreign currency transactions includes the fluctuation in exchange rates on
gains (losses) between trade and settlement dates on securities transactions,
gains (losses) arising from the disposition of foreign currency and currency
gains (losses) between the accrual and payment dates on dividends and interest
income and foreign withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) on investments.
FORWARD CURRENCY CONTRACTS: The Fund may enter into forward currency contracts
to purchase or sell foreign currencies at predetermined exchange rates in
connection with the settlement of purchases and sales of securities. The Fund
may also enter into forward currency contracts to hedge certain other foreign
currency denominated assets. The contracts are used to minimize the exposure to
foreign exchange rate fluctuations during the period between trade and
settlement date of the contracts. All contracts are marked-to-market daily,
resulting in unrealized gains (losses) which become realized at the time the
forward currency contracts are closed or mature. Realized and unrealized gains
(losses) arising from such transactions are included in net realized and
unrealized gains (losses) on foreign currency transactions. Forward currency
contracts do not eliminate fluctuations in the prices of the Fund's portfolio
securities. While the maximum potential loss from such contracts is the
aggregate face value in U.S. dollars at the time the contract was opened,
exposure is typically limited to the change in value of the contract (in U.S.
dollars) over the period it remains open. Risks may also arise if counterparties
fail to perform their obligations under the contracts.
16
<PAGE>
Notes to Financial Statements/November 30, 1997
- --------------------------------------------------------------------------------
OTHER: Corporate actions are recorded on the ex-date. Interest income is
recorded on the accrual basis.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
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 the Fund's average net assets as
follows:
<TABLE>
<CAPTION>
Average Net Assets Annual Fee Rate
------------------ ---------------
<S> <C>
First $1 billion 0.65%
Over $1 billion 0.60%
</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:
<TABLE>
<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 0.20% annually of the Fund's average net assets and receives reimbursement
for certain out-of-pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Financial
Investments, Inc., formerly Colonial Investment Services, Inc. (the
Distributor), an affiliate of the Adviser, is the Fund's principal underwriter.
For the year ended November 30, 1997, the Fund has been advised that the
Distributor retained net underwriting discounts of $19,378 on sales of the
Fund's Class A shares and received contingent deferred sales charges (CDSC) of
$2,450,616 and $495 on Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires the payment of a service fee to
the Distributor equal to 0.25% annually of the Fund's net assets as of the 20th
of each month. The plan also requires the payment of a distribution
17
<PAGE>
Notes to Financial Statements/November 30, 1997
- -------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
fee to the Distributor equal to 0.75% annually of the average net assets
attributable to Class B and Class C shares only.
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.
INVESTMENT ACTIVITY: For the year ended November 30, 1997, purchases and sales
of investments, other than short-term obligations, were $72,570,580 and
$314,710,254, respectively.
Unrealized appreciation (depreciation) at November 30, 1997, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $266,550,966
Gross unrealized depreciation 14,147,457
------------
Net unrealized appreciation $252,403,509
============
</TABLE>
CAPITAL LOSS CARRYFORWARD: At November 30, 1997, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
<TABLE>
<CAPTION>
Year of Capital loss
expiration carryforward
---------- ------------
<S> <C>
2002 $35,182,000
2003 21,504,000
-----------
$56,686,000
-----------
</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 concentrates its investments in utility securities, subjecting
it to greater risk than a fund that is more diversified. There are certain
additional risks involved when investing in foreign securities that are not
inherent with investments in domestic securities. These risks may involve
foreign currency exchange rate fluctuations, adverse political and economic
developments and the possible
18
<PAGE>
Notes to Financial Statements/November 30, 1997
- --------------------------------------------------------------------------------
prevention of foreign currency exchange or the imposition of other foreign
governmental laws or restrictions.
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, 1997, was
$49,315, at a weighted average interest rate of 5.94%. The maximum loan
outstanding during the period was $4,000,000.
19
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended November 30
-------------------------------------
1997
Class A Class B Class C (a)
--------- --------- ---------
Net asset value -
<S> <C> <C> <C>
Beginning of period $ 15.210 $ 15.210 $ 16.260
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.599 0.481 0.166
Net realized and
unrealized gain 2.852 2.852 1.794(b)
--------- --------- ---------
Total from Investment
Operations 3.451 3.333 1.960
--------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.601) (0.483) (0.160)
--------- --------- ---------
Net asset value -
End of period $ 18.060 $ 18.060 $ 18.060
--------- --------- ---------
Total return (c) 23.26% 22.36% 12.12(d)
--------- --------- ---------
RATIOS TO AVERAGE NET ASSETS:
Operating expenses (e) 1.22% 1.97% 1.97(f)
Interest expense -- -- --
Total expenses (e) 1.22% 1.97% 1.97(f)
Net investment income (e) 3.76% 3.01% 2.96(f)
Portfolio turnover 7% 7% 7%
Average commission rate (g) $ 0.0442 $ 0.0442 $ 0.0442
Net assets at end
of period (in millions) $ 327 $ 684 $ 1
</TABLE>
(a) Class C shares were initially offered on August 1, 1997. Per share amounts
reflect activity from that date.
(b) 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.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Not annualized.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(f) Annualized.
(g) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which commissions are charged.
20
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended November 30
- -------------------------------------------------------
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C>
$14.370 $14.370 $11.720 $11.720
------- ------- ------- -------
0.612 0.502 0.640 0.544
0.831 0.831 2.659 2.659
------- ------- ------- -------
1.443 1.333 3.299 3.203
------- ------- ------- -------
(0.603) (0.493) (0.649) (0.553)
------- ------- ------- -------
$15.210 $15.210 $14.370 $14.370
------- ------- ------- -------
10.27% 9.45% (28.90%) (27.96%)
------- ------- ------- -------
1.20%(b) 1.95%(b) 1.21%(b) 1.96%(b)
-- -- -- --
1.20%(b) 1.95%(b) 1.21%(b) 1.96%(b)
4.16%(b) 3.41%(b) 5.00%(b) 4.25%(b)
8% 8% 7% 7%
$0.0484 $0.0484 -- --
$ 348 $ 729 $ 400 $ 821
</TABLE>
(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.
(c) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which commissions are charged.
21
<PAGE>
FINANCIAL HIGHLIGHTS - continued
Selected data for a share of each class outstanding throughout
each period are as follows:
<TABLE>
<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 $ 13.600 $ 13.600 $ 12.960 $ 12.960
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.681 0.587 0.713 0.612
Net realized and unrealized
gain (loss) (1.896) (1.896) 0.616 0.616
-------- -------- -------- --------
Total from Investment
Operations (1.215) (1.309) 1.329 1.228
-------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.665) (0.571) (0.689) (0.588)
-------- -------- -------- --------
Net asset value -
End of period $ 11.720 $ 11.720 $ 13.600 $ 13.600
-------- -------- -------- --------
Total return (a) (9.04%) (9.73%) 10.20% 9.42%
-------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS
Operating expenses 1.23% 1.98% 1.19% 1.94%
Interest expense -- -- -- --
Total expenses 1.23% 1.98% 1.19% 1.94%
Net investment income 5.49% 4.74% 4.92% 4.17%
Portfolio turnover 16% 16% 6% 6%
Net assets at end
of period (in millions) $ 373 $ 744 $ 503 $ 971
</TABLE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
100% of the ordinary income distributed by the Fund in the year ended
November 30, 1997 qualifies for the corporate dividends received deduction.
- --------------------------------------------------------------------------------
22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST IV AND THE SHAREHOLDERS OF
COLONIAL UTILITIES 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 Utilities Fund (a series
of Colonial Trust IV) at November 30, 1997, 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, 1997 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 9, 1998
23
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Your Fund has one of the most extensive selections of shareholder services
available. Your financial advisor can help you arrange for any of these
services, or you can call Colonial Investors Service Center directly at
1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50 on
most funds; $25 for an IRA account.
FREE EXCHANGES(1): Exchange all or part of your account into the same share
class of another fund distributed by Liberty Financial Investments, Inc. by
phone or mail.
EASY ACCESS TO YOUR MONEY(1): Make withdrawals from your account by phone, by
mail or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it within one year, you can reinvest in any fund distributed by
Liberty Financial Investments of the same share class without any penalty or
sales charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Fund account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual
withdrawal is 12% of account balance at time SWP is established. SWPs by
check are processed on the 10th calendar day of each month unless the 10th
falls on a non-business day or the first business day of the week. If this
occurs, the processing date will be the previous business day. Dividends and
capital gains must be reinvested.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any fund
with a balance of $5,000 into the same share class of up to four other funds
distributed by Liberty Financial Investments. Minimum for each transfer is $100.
RETIREMENT PLANS: Choose from a broad range of retirement plans, including IRAs.
(1) Redemptions and exchanges are made at the next determined net asset value
after the request is received by the Transfer Agent. Proceeds may be more or
less than your original cost. The exchange privilege may be terminated at
any time. Exchanges are not available on all funds. Investors who purchase
Class B or C shares, or $1 million or more of Class A shares, may be
subject to a contingent deferred sales charge.
24
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
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 service 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 fund distributed by Liberty Financial
Investments, 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
25
<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
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.
LIBERTY FINANCIAL INVESTMENTS INVESTOR OPPORTUNITIES: 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.)
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Utilities Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Utilities 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 Utilities 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.
27
<PAGE>
- --------------------------------------------------------------------------------
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, 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 and Chief Executive Officer, Hannaford
Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Retired Partner, Peat Marwick Main & Co. (formerly Management Consultant,
Saatchi and Saatchi Consulting Ltd. and Principal and International Practice
Director, Management Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
{LIBERTY LOGO]
LIBERTY FINANCIAL INVESTMENTS, INC. [C] 1998
Distributor for Colonial Funds, Stein Roe Advisor Funds and Newport Funds
One Financial Center, Boston, MA 02111-2621
UF-02/349E-1197 M (1/98)
- --------------------------------------------------------------------------------
