<PAGE>
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COLONIAL INTERMEDIATE TAX-EXEMPT FUND SEMIANNUAL REPORT
- -------------------------------------------------------
May 31,1999
-------------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
-------------------------------
<PAGE>
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COLONIAL INTERMEDIATE TAX-EXEMPT FUND
DECEMBER 1, 1998 - MAY 31, 1999
PORTFOLIO MANAGER COMMENTARY: "Rising interest rates and declining prices
challenged bond market investors over the past six months. Anticipating strong
economic growth for the fourth quarter of 1998 and the first quarter of 1999, we
reduced the Fund's sensitivity to interest rate changes. This strategy helped
the Fund counterbalance declining bond prices to some degree, while enabling the
Fund to achieve returns that placed it in the top quartile of its Lipper peer
group."(1)
-William Loring
COLONIAL INTERMEDIATE TAX-EXEMPT FUND PERFORMANCE
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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(2) $0.171 $0.145 $0.163
- --------------------------------------------------------------------------------
SEC yields on 5/31/993 3.52% 2.98% 3.44%
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Taxable-equivalent SEC yields(4) 5.83% 4.93% 5.70%
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Six-month total returns, assuming 0.87% 0.54% 0.77%
reinvestment of all distributions and
no sales charge or contingent
deferred sales charge (CDSC)(5)
Net asset value per share on 5/31/99 $ 8.03 $ 8.03 $ 8.03
- --------------------------------------------------------------------------------
Quality Breakdown(6) (as of 5/31/99) Maturity Breakdown(6) (as of 5/31/99)
- ------------------------------------ ------------------------------------
AAA ........................ 52.3% 0-3 years .................. 7.0%
AA ......................... 19.4% 3-5 years .................. 10.8%
A .......................... 8.6% 5-7 years .................. 21.8%
BBB ........................ 17.0% 7-10 years ................. 27.9%
BB ......................... 0.4% 10-15 years ................ 25.1%
Non-rated .................. 1.9% 15-20 years ................ 7.0%
Cash equivalents ........... 0.4% Cash equivalents ........... 0.4%
(1) Please see page 3 for complete Lipper rankings.
(2) A portion of the Fund's income may be subject to the alternative minimum
tax. 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.
(3) The 30-day SEC yields on 5/31/99 reflect the portfolio's earning power, net
of expenses, and expressed as an annualized percentage of the public
offering price at the end of the period. If the Advisor or its affiliates
had not waived or borne certain Fund expenses, SEC yields would have been
2.94% for Class A shares, 2.38% for Class B shares and 2.38% for Class C
shares.
(4) Taxable-equivalent SEC yields are based on the maximum federal income tax
rate of 39.6%. This tax rate does not reflect the phase out of exemptions or
the reduction of otherwise allowable deductions which occurs when Adjusted
Gross Income exceeds certain levels.
(5) Performance results reflect any voluntary waivers of Fund expenses by the
Advisor or its affiliates. Absent these waivers, performance results would
have been lower.
(6) 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
continue to maintain these quality and maturity breakdowns in the future.
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<PAGE>
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PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
----------------------------
[Photo of Stephen E. Gibson]
----------------------------
During the period, the bond market experienced considerable volatility. In early
December 1998, continued fears of a global recession resulted in a flight to
quality that benefited bond performance. Treasury securities, considered the
safest bond investments, were the top performers, but municipal bonds also
posted solid returns. By the end of May 1999, several events had reversed this
trend. Global economies stabilized, and strong U.S. economic growth in the last
quarter of 1998 and the first quarter of 1999 renewed investors' inflation
fears. Bond prices declined, driving interest rates up across the board.
Fortunately, municipal bonds were not hit as hard as Treasurys on the way down.
Although the past six months presented a difficult environment for the bond
market, the Fund outperformed its Lipper peer group average for the six months,
as well as the one-, three- and five-year periods.(1) While past performance
cannot predict future results, it is important to keep a long-term perspective
when making investment decisions.
The following report will provide you with more specific information about your
Fund's performance and the strategies employed during the period. As always, we
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 15, 1999
(1) Source: Lipper, Inc. Lipper rankings are based on the Lipper Intermediate
Municipal Debt Funds universe. The Fund's Class A shares ranked in the first
quartile for six months (rated 23 out of 135 funds), in the first quartile
for one year (rated 10 out of 134 funds), in the first quartile for three
years (rated 15 out of 114 funds) and in the first quartile for five years
(rated 18 out of 88 funds). Rankings do not include sales charges.
Performance for different share classes will vary with fees associated with
each class. Past performance cannot predict future results. Because market
and economic conditions change frequently, there can be no assurance that
the trends discussed above or on the following pages will continue.
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<PAGE>
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PORTFOLIO MANAGER'S REPORT
WILLIAM LORING is portfolio manager of Colonial Intermediate Tax-Exempt Fund and
is senior vice president of Colonial Management Associates, Inc.
STRENGTH IN GLOBAL ECONOMIES REVERSED FLIGHT TO QUALITY
During the latter part of 1998, weak global economies and volatile stock markets
created strong demand for U.S. Treasurys. During the flight to quality,
municipal bonds failed to keep pace with Treasurys, and underperformed. However,
during the first quarter of 1999, the anticipated global economic slowdown
failed to materialize, and the flight to quality was reversed. Demand for
Treasurys declined sharply, and interest rates began to rise. Rising rates
helped slow the number of municipal refundings during the period, which reduced
the volume of new issues. The smaller supply of new issues helped cushion the
blow from rising interest rates. As a result, municipal bond prices declined
much less than Treasurys, enabling municipal bonds to outperform Treasurys
during the period.
FUND'S PERFORMANCE REFLECTED STRATEGY
The Fund generated a six-month total return of 0.87% for Class A shares, based
on net asset value. The Fund outperformed its Lipper peer group average of 0.50%
for the period, and also ranked in the first quartile for the one-, three- and
five-year periods.
We attribute this outperformance to the Fund's active management and investment
strategy. During the period, we reduced the portfolio's sensitivity to changes
in interest rates in response to numerous reports illustrating the economy's
strength. Since those reports raised concerns about inflation and potentially
higher interest rates - both negative conditions for fixed-income investments -
we structured the Fund to be less sensitive to interest rate changes in either
direction. Additionally, we took advantage of wider credit spreads, the higher
yields investors demand for purchasing lower-quality bonds that offer less
financial security. We invested selectively in fundamentally sound, higher
yielding bonds that provided the Fund with attractive current income and price
appreciation potential.
FUND POSITIONED TO BENEFIT FROM RISING INTEREST RATES
Because we reduced the portfolio's sensitivity to interest rate changes, rising
rates did not affect performance significantly during the period. Other factors
also contributed to the Fund's performance. First, the portfolio's holdings of
higher-coupon, lower-rated bonds performed well. Such bonds are less sensitive
to interest rate movements because a larger proportion of their total return
comes from coupon income than from price appreciation. As a result, their prices
do not decline as much when interest rates rise. Second, a number of issues in
specific sectors also performed well. Single- and multi-family housing bonds are
good examples of sectors which typically perform best in weak fixed-income
environments. Housing bonds do well because real estate owners are less likely
to refinance or prepay their mortgages. In addition, many of these issues
benefited from strong regional real estate markets - healthy demand and high
occupancy levels supported higher rents and increased cash flows for project
owners. In the same vein, individuals with student loans outstanding are also
far less likely to refinance or prepay their loans when interest rates are
rising.
INVESTMENT ACTIVITY FOCUSED ON OPPORTUNISTIC PURCHASES
We took advantage of widening credit spreads to invest selectively in
well-managed, high-yield securities. We looked for companies with good growth
prospects that generate strong cash flows and operate in attractive markets or
service areas. These investments included industrial revenue bonds, where
repayment is backed by the operations of a U.S. corporation. In addition, we
took advantage of weak pricing for bonds that have the potential to outperform
when interest rates fall, including non-callable bonds and zero-coupon bonds.
While opportunities to take advantage of creditor sector-driven investments were
limited, the Fund was able to benefit from ongoing credit research conducted by
our analysts.
LONG-TERM MARKET OUTLOOK REMAINS POSITIVE
We have a favorable long-term market outlook. Although we expect continued
interest rate volatility over the next several months as additional economic
reports are released, we regard the Federal Reserve Board's bias towards raising
short-term rates favorably. Although the market's initial reaction has been
negative, we believe that over a longer period, the Fed's proactive move will
reduce the economy's growth rate and keep inflation in check, creating a more
positive investment environment for fixed-income securities.
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<PAGE>
Average Annual Total Returns
As of 5/31/99
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
INCEPTION 2/1/93 2/1/93 8/1/97
NAV POP NAV w/CDSC NAV w/CDSC
- --------------------------------------------------------------------------------
1 YEAR 4.48% 1.08% 3.79% (0.21)% 4.26% 3.26%
- --------------------------------------------------------------------------------
5 YEARS 6.24 5.54 5.55 5.55 5.72 5.72
- --------------------------------------------------------------------------------
LIFE 6.03 5.48 5.34 5.34 5.48 5.48
- --------------------------------------------------------------------------------
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%. CDSC
returns reflect charges 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 advisor and its affiliates. 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 similar 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 shares and C shares.
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<PAGE>
INVESTMENT PORTFOLIO
MAY 31, 1999 (UNAUDITED, IN THOUSANDS)
MUNICIPAL BONDS - 98.0% PAR VALUE
- --------------------------------------------------------------------------
EDUCATION - 4.6%
EDUCATION - 1.4%
IL State Development Finance Authority,
Latin School of Chicago,
Series 1998,
5.200% 08/01/11 $ 250 $ 247
VT State Educational & Health Buildings
Finance Agency,
Norwich University, Series 1998,
5.750% 07/01/13 100 102
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349
-------
STUDENT LOANS - 3.2%
NM State Educational Assistance Foundation,
Series 1-A,
6.200% 12/01/01 400 419
SC State Education Assistance Authority,
Student Loan Revenue Bonds, Series 1991,
6.200% 09/01/99 50 50
TX Brazos Higher Educational
Facilities Authority, Series 1992-A,
6.600% 03/01/00 325 332
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801
-------
..........................................................................
HEALTHCARE - 5.8%
HOSPITAL - 5.4%
AL East Health Care Authority,
Health Care Facilities and Tax Anticipation,
Series 1993,
5.625% 09/01/04 (a) 50 53
AR Baxter County,
Baxter County Regional Hospital,
Series 1999-B,
5.380% 09/01/14 (b) 200 197
MI Dickinson County,
Memorial Hospital System,
7.625% 11/01/05 250 280
NY State Dormitory Authority,
St. Clare's Hospital,
Series 1998-B,
4.900% 02/15/09 250 251
OH Green Springs,
St. Francis Health Care Center,
Series 1994-A,
7.000% 05/15/04 100 106
OH Knox County,
Knox Community Hospital,
Series 1998,
5.000% 06/01/12 200 199
PA Philadelphia Hospitals and Higher
Educational Facilities, Temple
University Hospital, Series 1993,
5.750% 11/15/99 100 101
TX Health Facilities Development
Corporation Hospital, All Saints
Episcopal Hospitals, Series 1993-A,
5.800% 08/15/04 (a) 80 86
TX Tarrant County Health Facilities
Development Corporation Hospital, Fort
Worth Osteopathic Hospital, Series 1993,
5.800% 05/15/04 (a) 50 53
-------
1,326
-------
NURSING HOME - 0.4%
KY Jefferson County Health Facilities,
Beverly Enterprises, Inc., Series 1985-B,
9.750% 08/01/07 85 88
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..........................................................................
HOUSING - 5.7%
MULTI-FAMILY - 1.2%
MA State Housing Finance Agency,
Series 1992-C,
6.350% 05/15/03 200 212
NJ State Housing and Mortgage Finance
Agency,
6.500% 05/01/03 85 90
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302
-------
SINGLE-FAMILY - 4.5%
MD Montgomery County Housing Commission,
Series A,
5.750% 07/01/13 250 265
NE State Investment Authority,
Series C,
5.650% 09/01/07 495 521
RI Housing and Mortgage Finance Corp.,
Homeownership Opportunity, Series 6-B:
6.500% 04/01/03 100 105
6.500% 10/01/03 200 210
-------
1,101
-------
..........................................................................
INDUSTRIAL - 0.4%
MANUFACTURING
SC State Economic Development Authority,
Caterpillar, Inc.,
Series 1998,
5.050% 06/01/08 100 99
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..........................................................................
OTHER - 11.2%
POOL/BOND BANK - 1.1%
MI State Municipal Bond Authority,
Clean Water Revolving Fund,
Series 1998,
5.250% 10/01/12 250 257
-------
Refunded/Escrowed - 10.1% (c)
CA Sacramento Cogeneration Authority,
Procter & Gamble Project,
6.500% 07/01/14 500 568
HI Honolulu City & County,
Series 1995,
6.000% 11/01/10 135 152
IL State Health Facilities Authority,
Edgewater Medical Center,
Series A,
9.250% 07/01/24 95 119
OH Cuyahoga County,
Meridia Health System,
6.300% 08/15/06 890 1,005
OH Olmstead Falls Local School District,
6.850% 12/15/11 550 634
-------
2,478
-------
..........................................................................
OTHER REVENUE - 1.1%
RECREATION - 0.4%
NY Hamilton Industrial Development Agency,
Adirondack Historical Association,
4.700% 11/01/08 100 98
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RETAIL - 0.7%
IA State Finance Authority,
Mason City Shopping Center,
8.500% 12/01/04 50 52
OH Lake County,
North Madison Properties,
Series 1993,
8.069% 09/01/01 45 47
VA Virginia Beach Development Authority,
SC Diamond Associates, Inc.,
8.000% 12/01/10 75 83
-------
182
-------
..........................................................................
RESOURCE RECOVERY - 4.5%
DISPOSAL - 1.4%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 85 93
IL Development Finance Authority,
Waste Management, Inc.,
Series 1997,
5.050% 01/01/10 250 248
-------
341
-------
RESOURCE RECOVERY - 3.1%
FL Lake County Resources Industrial
Development, NRG / Recovery Group,
Series 1993-A,
5.400% 10/01/03 500 514
MA State Industrial Finance Agency,
Ogden Hill Project,
Series 1998-A,
5.450% 12/01/12 250 251
-------
765
-------
..........................................................................
TAX-BACKED - 41.4%
LOCAL APPROPRIATED - 2.3%
AZ Phoenix Civic Improvement Corporation,
Waste Water Lease, Series 1993,
5.750% 07/01/04 50 54
NC Greenville,
Series 1998,
5.000% 06/01/06 500 517
-------
571
-------
LOCAL GENERAL OBLIGATIONS - 19.8%
AZ Maricopa County Unified School
District N0. 69, Paradise Valley,
Series 1995,
6.350% 07/01/10 500 569
AZ Phoenix General Obligation,
6.125% 07/01/03 250 270
CA Natomas Unified School District,
Series 1999,
5.850% 03/01/15 250 276
HI Honolulu City & County,
Series 1995,
6.000% 11/01/10 365 405
ID Kootenai County School District No. 271,
6.000% 07/30/09 250 279
IL Chicago,
6.300% 01/01/05 (a) 250 274
MI Berkley,
City School District,
7.000% 01/01/09 500 592
MN West St. Paul,
Independent School District No. 197,
(d) 02/01/04 (e) 500 411
NY New York City,
Series 1997-A,
7.000% 08/01/06 850 976
OH Oak Hills Local School District,
5.650% 12/01/07 250 271
OH Strongsville, Public Improvement,
6.000% 12/01/06 500 549
-------
4,872
-------
SPECIAL NON-PROPERTY TAX - 0.9%
LA Sulphur Public Import Sales and Use
Tax, Series 1993-ST,
5.650% 04/01/04 (e) 50 53
NY State Local Government Assistance Corp.,
Series C,
6.000% 04/01/12 150 166
-------
219
-------
SPECIAL PROPERTY TAX - 1.2%
MI Detroit Downtown Development Authority,
Area No. 1 Projects,
Series 1998-A,
5.250% 07/01/12 300 304
-------
STATE APPROPRIATED - 9.6%
KS State Development Authority,
Lease Juvenile Detention Facility
Project, Series 1992-H,
5.750% 06/01/02 (e) 60 63
KY State Turnpike Authority Economic,
Development Revitalization Projects,
Series 1992,
5.500% 01/01/01 50 51
NY New York Dorm Authority:
New York City University, Series A,
5.625% 07/01/16 (e) 500 537
State University of New York,
Series 1989-B,
7.100% 05/15/01 100 105
NY State Urban Development Corp.:
5.750% 04/01/11 500 536
6.250% 04/01/02 500 528
OH State Higher Education Commission,
Series II-B,
5.750% 11/01/04 (a) 500 539
-------
2,359
-------
STATE GENERAL OBLIGATIONS - 7.6%
CT State,
Series 1997-A,
5.125% 03/01/10 250 260
MA State,
Series 1998-C,
5.250% 08/01/12 500 515
NJ State, General Obligation,
Series D,
(d) 02/15/04 90 74
PR Commonwealth of Puerto Rico,
Series 1999,
5.000% 07/01/07 250 258
TX State,
Series A,
5.800% 10/01/04 500 540
WA State,
Series B,
6.000% 06/01/05 200 218
-------
1,865
-------
..........................................................................
TRANSPORTATION - 8.8%
AIRPORT - 0.2%
CO Denver City & County Airport
Airport System Series 1992-C,
6.25% 11/15/00 50 52
-------
TOLL FACILITIES - 6.4%
CA Foothill Eastern Transportation Corridor,
Corridor Agency, State Toll Road,
Senior Lien, Series A,
(d) 01/01/04 500 412
IN State Transportation Finance Authority,
Series 1993-A,
5.250% 06/01/09 (e) 600 628
OH State Turnpike Commission,
Series 1996-A,
6.000% 02/15/06 500 547
-------
1,587
-------
TRANSPORTATION - 2.2%
DC Metropolitan Area Transit Authority,
6.000% 07/01/07 250 276
WA Port of Seattle,
Series A,
6.000% 10/01/08 250 276
-------
552
-------
UTILITY - 14.5%
INVESTOR OWNED - 0.5%
MN Anoka County,
Northern States Power Co.,
Series 1998,
4.600% 12/01/08 (b) 125 122
-------
JOINT POWER AUTHORITY - 1.7%
NC State Municipal Power Agency,
Catawba Electric No. 1,
Series 1998-A,
5.000% 01/01/08 305 314
TX State Municipal Power Agency,
(c) 09/01/15 250 108
-------
422
-------
MUNICIPAL ELECTRIC - 3.5%
AZ Salt River Project, Agricultural
Improvement & Power District, Series A:
5.750% 01/01/07 250 271
6.000% 01/01/05 500 544
WA Grant County Public Utilities,
District Number 002
Electric System Series 1993-E,
5.300% 01/01/03 50 52
-------
867
-------
WATER & SEWER - 8.8%
AZ State Central Water Conservation District,
Central Arizona Project, Series A,
5.500% 11/01/08 250 269
GA Atlanta,
Series 1999-A,
5.000% 11/01/08 1,000 1,036
TX Houston Water & Sewer System,
Series C,
5.900% 12/01/05 (a) 800 873
-------
2,178
-------
TOTAL MUNICIPAL BONDS (cost of $23,109)(f) 24,157
-------
OPTIONS - 0.1% CONTRACTS
- --------------------------------------------------------------------------
September 1999 Treasury Bond Futures:
Strike Price 116, expiration 09/20/99 1,400 18
Strike Price 124, expiration 09/20/99 500 1
-------
TOTAL OPTIONS (cost of $26) 19
-------
TOTAL INVESTMENTS (cost of $23,135) 24,176
-------
SHORT-TERM OBLIGATIONS - 0.4% PAR VALUE
- --------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (g)
CA Irvine Improvement Bond Act of 1915,
Series 1998,
3.250% 09/02/23 100 100
-------
OTHER ASSETS & LIABILITIES, NET - 1.5% 366
- --------------------------------------------------------------------------
NET ASSETS - 100.0% $24,642
=======
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------
(a) These securities, or a portion thereof, with a total market value of
$1,863 is being used to collateralize the delayed delivery purchase
indicated in note (b) below.
(b) These securities have been purchased on a delayed delivery basis for
settlement at a future date beyond the customary settlement time.
(c) 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.
(d) Zero coupon bond.
(e) This security, or a portion thereof, with a total market value of $215
is being used to collateralize open futures contracts.
(f) Cost for federal income tax purposes is the same.
(g) Variable rate demand notes are considered short-term obligations.
Interest rates change periodically on specified dates. These securities
are payable on demand and are secured by either letters of credit or
other credit support agreements from banks. The rates listed are as of
May 31, 1999.
Short futures contracts open on May 31, 1999,
Par Value Unrealized
covered by Expiration appreciation
Type contracts month at 05/31/99
- -------------------------------------------------------------------------------
Treasury Bond 700 September $ 4
See notes to financial statements
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
MAY 31, 1999 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $23,135) $24,176
Short-term obligations 100
-------
24,276
Receivable for:
Interest $ 406
Fund shares sold 60
Expense reimbursement due from Advisor 14
Other 52 532
------ -------
Total Assets 24,808
LIABILITIES
Payable for:
Investments purchased 125
Distributions 30
Fund shares repurchased 8
Accrued:
Deferred Trustees fees 3
------
Total Liabilities 166
-------
NET ASSETS $24,642
=======
Net asset value & redemption price per share -
Class A ($13,772/1,716) $ 8.03(a)
=======
Maximum offering price per share - Class A
($8.03/0.9675) $ 8.30(b)
=======
Net asset value & offering price per share -
Class B ($9,942/1,238) $ 8.03(a)
=======
Net asset value & offering price per share -
Class C ($928/116) $ 8.03(a)
=======
COMPOSITION OF NET ASSETS
Capital paid in $23,867
Overdistributed net investment income (15)
Accumulated net realized loss (255)
Net unrealized appreciation on:
Investments 1,041
Open futures contracts 4
-------
$24,642
=======
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $100,000 or more the offering price is reduced.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1999
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Interest $ 624
EXPENSES
Management fee $ 68
Service fee 25
Distribution fee - Class B 31
Distribution fee - Class C 3
Transfer agent 19
Bookkeeping fee 14
Trustees fee 4
Custodian fee -
Audit fee 7
Legal fee 2
Registration fee 16
Reports to shareholders 4
Other 11
-----
Total expenses 204
Fees and expenses waived or borne by
the Advisor (71)
Fees waived by
the Distributor - Class C (2) 131
----- -----
Net Investment Income 493
-----
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 11
Closed futures contracts 60
-----
Net realized gain 71
Change in net unrealized appreciation (depreciation)
during the period on:
Investments (417)
Open futures contracts 19
-----
Net Unrealized Appreciation (398)
-----
Net Loss (327)
-----
Increase in Net Assets from Operations $ 166
=====
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six months Year
ended ended
(in thousands) May 31 November 30
-------- -----------
INCREASE (DECREASE) IN NET ASSETS 1999 1998
Operations:
Net investment income $ 493 $ 908
Net realized gain 71 91
Net unrealized appreciation (depreciation) (398) 424
-------- --------
Net Increase from Operations 166 1,423
Distributions:
From net investment income - Class A (299) (547)
In excess of net investment income - Class A - (12)
From net investment income - Class B (172) (400)
In excess of net investment income - Class B - (9)
From net investment income - Class C (17) (18)
In excess of net investment income - Class C - (1)
-------- --------
(322) 436
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 2,763 5,396
Value of distributions reinvested - Class A 178 340
Cost of shares repurchased - Class A (3,041) (2,258)
-------- --------
(100) 3,478
-------- --------
Receipts for shares sold - Class B 1,221 790
Value of distributions reinvested - Class B 101 269
Cost of shares repurchased - Class B (752) (2,012)
-------- --------
570 (953)
-------- --------
Receipts for shares sold - Class C 274 864
Value of distributions reinvested - Class C 9 9
Cost of shares repurchased - Class C (211) (112)
-------- --------
72 761
-------- --------
Net Increase from
Fund Share Transactions 542 3,286
-------- --------
Total Increase 220 3,722
NET ASSETS
Beginning of period 24,422 20,700
-------- --------
End of period (net of overdistributed
net investment income of $15 and
$20, respectively) $ 24,642 $ 24,422
======== ========
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
(Unaudited)
Six months Year
ended ended
(in thousands) May 31 November 30
-------- -----------
NUMBER OF FUND SHARES 1999 1998
Sold - Class A 340 670
Issued for distributions reinvested - Class A 22 42
Repurchased - Class A (374) (279)
-------- --------
(12) 433
-------- --------
Sold - Class B 150 98
Issued for distributions reinvested - Class B 12 33
Repurchased - Class B (92) (250)
-------- --------
70 (119)
-------- --------
Sold - Class C 34 107
Issued for distributions reinvested - Class C 1 1
Repurchased - Class C (26) (14)
-------- --------
9 94
-------- --------
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
................................................................................
In the opinion of management of Colonial Intermediate Tax-Exempt Fund
(the Fund), a series of Liberty Funds Trust IV, formerly 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, 1999, 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 a
1.00% contingent deferred sales charge on redemptions made within eighteen
months on an original purchase of $1 million to $5 million. 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. 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.
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 Advisor)
is the investment Advisor 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 Advisor 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: Liberty Funds Services, Inc. (the Transfer
Agent), an affiliate of the Advisor, 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.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds
Distributor, Inc. (the Distributor), a subsidiary of the Advisor is the Fund's
principal underwriter. During the six months ended May 31, 1999 the Fund has
been advised that the Distributor retained net underwriting discounts of $7,528
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $2,344, $1,517 and none on Class A , 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 Advisor 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.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the Advisor.
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, 1999, purchases and sales
of investments, other than short-term obligations, were $2,235,103 and
$1,662,078 respectively.
Unrealized appreciation (depreciation) at May 31, 1999, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $ 1,095,045
Gross unrealized depreciation (54,346)
------------
Net unrealized appreciation $ 1,040,699
------------
CAPITAL LOSS CARRYFORWARDS: At November 30, 1998, 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 $90,000
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 Advisor of the future direction of interest rates. Any of these risks may
involve amounts exceeding the variation margin recorded in the Fund's Statement
of Assets and Liabilities at any given time.
NOTE 5. LINE OF CREDIT
................................................................................
The Fund may borrow up to 3301/3% 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 plus01/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus01/2 of 1%. There were no borrowings under the line of credit during
the six months ended May 31, 1999.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period
are as follows:
(Unaudited)
Six months ended May 31
---------------------------------
1999
Class A Class B Class C
------- ------- -------
Net asset value -
Beginning of period $ 8.130 $ 8.130 $ 8.130
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.173 0.147 0.165(b)
Net realized and unrealized loss (0.102) (0.102) (0.102)
------- ------- -------
Total from Investment Operations 0.071 0.045 0.063
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.171) (0.145) (0.163)
======= ======= =======
Net asset value -
End of period $ 8.030 $ 8.030 $ 8.030
======= ======= =======
Total return (c)(d)(e) 0.87% 0.54% 0.77%(f)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (g)(h) 0.80% 1.45% 1.00%(b)
Net investment income (g)(h) 4.25% 3.60% 4.05%(b)
Fees and expenses waived
or borne by the Advisor (g)(h) 0.57% 0.57% 0.57%
Portfolio turnover (e) 7% 7% 7%
Net assets at end
of period (000) $13,772 $ 9,942 $ 928
(a) Net of fees and expenses waived or borne by the Advisor which amounted to:
$ 0.023 $ 0.023 $ 0.023
(b) Net of fees waived by the Distributor which amounted to $0.018 per share
and 0.45%.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) Had the Distributor not waived a portion of expenses, total return would
have been reduced.
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact to the fund.
(h) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period
are as follows:
Year ended November 30
----------------------------------
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) 0.357 0.304 0.341 (c)
Net realized and unrealized gain (loss) 0.179 0.179 0.179
------- ------- -------
Total from Investment Operations 0.536 0.483 0.520
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.378) (0.326) (0.362)
In excess of net investment income (0.008) (0.007) (0.008)
------- ------- -------
Total Distributions
Declared to Shareholders (0.386) (0.333) (0.370)
------- ------- -------
Net asset value - End of period $ 8.130 $ 8.130 $ 8.130
======= ======= =======
Total return (e)(f) 6.88% 6.17% 6.66% (g)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (i) 0.74% 1.39% 0.94% (c)
Net investment income (i) 4.44% 3.79% 4.24% (c)
Fees and expenses waived
or borne by the Advisor (i) 0.58% 0.58% 0.58%
Portfolio turnover 10% 10% 10%
Net assets at end of period (000) $14,051 $ 9,504 $ $ 867
(a) Net of fees and expenses waived or borne by the Advisor which amounted to:
$ 0.047 $ 0.047 $ 0.047
(b) Class C shares were initially offered on August 1, 1997. Per share amounts
reflect activity from that date.
(c) Net of fees waived by the Distributor which amounted to $0.036 per share
and 0.45%.
(d) 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.
(e) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(f) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended November 30
- --------------------------------------------------------------------------
1997 1996
Class A Class B Class C (b) Class A Class B
- ------- ------- ------- ------- -------
$ 7.880 $ 7.880 $ 8.000 $ 7.850 $ 7.850
- ------- ------- ------- ------- -------
0.388 0.337 0.121 0.375 0.324
0.093 0.093 (0.019)(d) 0.022 0.022
- ------- ------- ------- ------- -------
0.481 0.430 0.102 0.397 0.346
- ------- ------- ------- ------- -------
(0.381) (0.330) (0.122) (0.367) (0.316)
- - - - -
- ------- ------- ------- ------- -------
(0.381) (0.330) (0.122) (0.367) (0.316)
- ------- ------- ------- ------- -------
$ 7.980 $ 7.980 $ 7.980 $ 7.880 $ 7.880
======= ======= ======= ======= =======
6.29% 5.60% 1.29% (h) 5.23% 4.55%
======= ======= ======= ======= =======
0.60% 1.25% 0.80% (j) 0.60% 1.25%
4.84% 4.19% 4.55% (j) 4.75% 4.10%
0.85% 0.85% 0.97% (j) 0.72% 0.72%
31% 31% 31% 20% 20%
$10,330 $10,269 $ 101 $12,479 $13,080
$ 0.073 $ 0.073 $ 0.073 $ 0.057 $ 0.057
(g) Had the Distributor not waived a portion of expenses, total return would
have been reduced.
(h) Not annualized.
(i) The benefits derived from custody credits and directed brokerage
arrangements had an impact of 0.01% and $0.001 per share in 1998 and 1997
only. Prior year ratios are net of benefits received, if any.
(j) Annualized.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
Year ended November 30
----------------------------------------------------
1995 1994
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.210 $ 7.210 $ 7.810 $ 7.810
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.387 0.338 0.366 0.317
Net realized and unrealized
gain (loss) 0.641 0.641 (0.596) (0.596)
------- ------- ------- -------
Total from Investment Operations 1.028 0.979 (0.230) (0.279)
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.388) (0.339) (0.370) (0.321)
------- ------- ------- -------
Net asset value -
End of period $ 7.850 $ 7.850 $ 7.210 $ 7.210
======= ======= ======= =======
Total return (b)(c) 14.56% 13.82% (3.05%) (3.68%)
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 0.36% 1.01% 0.20% 0.85%
Net investment income 5.03% 4.38% 4.85% 4.20%
Fees and expenses waived
or borne by the Advisor 0.96% 0.96% 1.07% 1.07%
Portfolio turnover 69% 69% 26% 26%
Net assets at end
of period (000) $13,317 $14,820 $16,791 $14,138
(a) Net of fees and expenses waived or borne by the Advisor which amounted to:
$ 0.074 $ 0.074 $ 0.080 $ 0.080
(b) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(c) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
</TABLE>
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Intermediate Tax-Exempt Fund is:
Liberty Funds Services, 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 the Liberty Funds Distributor, Inc. Performance Update.
*Effective October 1, 1998, Colonial Investors Service Center, Inc. - the
Transfer Agent for Colonial, Crabbe Huson, Newport and Stein Roe Advisor
funds - changed its name to Liberty Funds Services, Inc.
<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)
JOHN V. CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
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)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (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
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
[Logo] L I B E R T Y
ALL-STAR o COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. (C)1999
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
IM-03/285H-0699 (7/99) 99/810
- --------------------------------------------------------------------------------
