<PAGE>
[graphic omitted]
- --------------------------------------
COLONIAL TAX-EXEMPT FUND ANNUAL REPORT
- --------------------------------------
November 30, 1998
----------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
----------------------------
<PAGE>
COLONIAL TAX-EXEMPT FUND HIGHLIGHTS
DECEMBER 1, 1997 - NOVEMBER 30, 1998
PORTFOLIO MANAGER COMMENTARY: "During the past 12 months, interest rate
volatility, low nominal rates and a near-record level of supply created
challenging conditions for investors in the tax-exempt bond market. Despite
these hurdles, the Fund was nicely positioned to take advantage of declining
interest rates, and generated performance in the top 25% of its Lipper
competitive peer group."(1) - William Loring and Brian Hartford
COLONIAL TAX-EXEMPT FUND PERFORMANCE
CLASS A CLASS B CLASS C
- ----------------------------------------------------------------------------
Inception dates 11/21/78 5/5/92 8/1/97
- ----------------------------------------------------------------------------
12-month distributions declared per share(2) $0.744 $0.636 $0.658
- ----------------------------------------------------------------------------
SEC yields on 11/30/98(3) 4.12% 3.57% 3.70%
- ----------------------------------------------------------------------------
Taxable-equivalent SEC yields(4) 6.82% 5.91% 6.13%
- ----------------------------------------------------------------------------
12-month total returns, assuming 8.22% 7.40% 7.56%(5)
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
- ----------------------------------------------------------------------------
Net asset value per share on 11/30/98 $14.11 $14.11 $14.11
- ----------------------------------------------------------------------------
QUALITY BREAKDOWN(6)(AS OF 11/30/98) MATURITY BREAKDOWN(6)(AS OF 11/30/98)
- --------------------------------------------------------------------------------
AAA ....................... 63.2% 0-1 year ..... 0.2% 10-15 years .. 21.3%
AA ........................ 10.1% 1-3 years .... 2.9% 15-20 years .. 25.8%
A ......................... 5.5% 3-5 years .... 2.7% 20-25 years .. 27.4%
BBB ....................... 5.8% 5-7 years .... 1.6% 25+ years .... 15.2%
BB ........................ 0.4% 7-10 years ... 2.2% Cash
B ......................... 0.3% equivalents .. 0.7%
Non-rated ................. 14.0%
Cash equivalents .......... 0.7%
(1) Please see page 5 for complete Lipper rankings.
(2) A portion of the Fund's income may be subject to the alternative minimum
tax.
(3) The 30-day SEC yields on 11/30/98 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 Distributor had not waived
certain Fund expenses, the SEC yield for Class C shares would have been
3.54%.
(4) Taxable-equivalent SEC yields are based on the maximum federal income tax
rate of 39.6%. The Fund may at times purchase tax-exempt securities at a
discount. Some or all of this discount may be included in the Fund's
ordinary income, and is taxable when distributed.
(5) Performance results reflect any voluntary waiver of Fund expenses by the
Distributor. Absent this waiver, 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.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Stephen E. Gibson]
I am pleased to present the annual report for Colonial Tax-Exempt Fund for the
12-month period ended November 30, 1998.
Conditions for fixed-income investments varied considerably during the period.
While the environment for bonds was positive overall, a variety of domestic and
international factors created a volatile climate for bond fund investors. In the
U.S., the periodic fears of inflation that existed early in the period all but
vanished during the second half, as an increasing number of signs pointed toward
a gradually slowing U.S. economy. This environment set the stage for a series of
interest rate cuts by the Federal Reserve Board in the fall of 1998, helping
bond values end the period on a positive note.
Flight to quality was a theme that repeated itself at various times during the
period. Abroad, the economic and financial turmoil that began in Asia in the
fall of 1997 gradually spread to other less-developed markets. As a result,
investors worldwide were drawn to the relative safety and stability of U.S.
Treasury bonds. While returns on fixed-income investments, including municipals
were positive, investor demand for quality and stability made U.S. Treasury
bonds the biggest winners.
The disciplined bond fund management style for which Colonial is known served
investors well, enabling the Fund to outperform the majority of its peers over
the past 12 months.(1) For investors seeking competitive levels of tax-free
income and the potential for long-term price appreciation, Colonial Tax-Exempt
Fund remains a viable option for their investment portfolios.
The following report will provide you with more specific information on your
Fund's performance and the market in which the Fund invests. Thank you for
choosing Colonial Tax-Exempt Fund and for giving us the opportunity to serve
your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
January 13, 1999
(1) Please see page 5 for complete Lipper rankings. Because market and economic
conditions change frequently, there can be no assurance that the trends
discussed above or on the following pages will continue.
<PAGE>
PORTFOLIO MANAGEMENT REPORT
WILLIAM LORING and BRIAN HARTFORD are portfolio co-managers of Colonial
Tax-Exempt Fund and are vice presidents of Colonial Management Associates, Inc.
TAX-EXEMPT MARKET GENERATED GAINS DESPITE CHALLENGING CONDITIONS
The market value of municipal bonds appreciated approximately 3% during the past
12 months, according to the Bond Buyer 40 Index, a widely used measure of
tax-exempt market performance. This gain was generated under challenging
investment conditions. Interest rates were volatile during the period, as
investors remained preoccupied with events that had the potential to affect the
U.S. economy's growth rate. During the first half of the period, these events
included economic weakness in Southeast Asia that investors thought would have a
negative impact on the level of U.S. business activity. When a slowdown failed
to materialize and the U.S. economy continued to generate stable economic
growth, investors feared that the Federal Reserve Board might raise interest
rates, and bond prices declined. In the tax-exempt market, the environment was
further complicated by a near-record level of new issue supply, as issuers
rushed to take advantage of lower interest rates to refinance existing debt as
well as to finance new projects. At times, the market found it difficult to
absorb this supply, and tax-exempt prices suffered.
During the second half of the period, a financial and political crisis emerged
in Russia that increased market volatility in the U.S. and abroad. In response,
investors sought relatively stable investments, such as U.S. Treasury
securities. This flight to quality increased demand for U.S. Treasurys, helping
to push yields down to their lowest level in 30 years. As a result, U.S.
Treasurys outperformed all other sectors of the fixed-income market, including
municipal bonds.
MUNICIPAL MARKET GAINS DICTATED BY STRUCTURAL CHARACTERISTICS
During the past 12 months, municipal bond market gains were led by the
performance of certain types of bonds, rather than by the performance of bonds
of specific issuers or industry sectors. Bonds with a greater-than-average
sensitivity to changes in interest rates performed well, as those bonds have a
tendency to generate relatively large price gains when interest rates are
declining, as they were during much of the period. However, during periods of
rising interest rates, these bonds generally decline in value more than other
bonds. Bonds with higher interest rate sensitivity include the following types:
o Non-callable bonds. A non-callable bond cannot be redeemed by its issuer
and refinanced at lower interest rates, resulting in a longer life-span for
the bond. Because a longer life-span increases a bond's sensitivity to
changes in interest rates, non-callable bond prices often produce
attractive gains when interest rates decline.
o Longer-duration bonds. A bond's duration increases as the factors that
contribute to it, including maturity, combine to produce a longer time
until the bond's redemption. As a result, a bond with a relatively long
duration is more sensitive to interest rate movements and has the potential
to outperform shorter-maturity bonds when interest rates are falling.
Because bond structure played such a large role in the market's movement during
the period, it was difficult to add value through specific credit- or
sector-driven investments. However, even though market conditions did not always
support our efforts to find relative value outside of bond type, we did look for
opportunities in the Southeastern region of the U.S. in order to capitalize on
its strong demographics and economic growth potential. We avoided investments in
housing bonds because falling interest rates increase the risk that
mortgage-holders might prepay their loans. When that happens, bonds are often
called early, reducing their life-span and causing them to underperform the
broader market. We also avoided cyclical issuers, such as steel and paper, that
have been negatively impacted by decreased demand overseas, particularly by
countries in Southeast Asia and Latin America.
FUND'S OUTPERFORMANCE REFLECTS INVESTMENT STRATEGY
For the 12-month period, the Fund generated a total return of 8.22% for Class A
shares, based on net asset value. This compares favorably with the performance
of the Fund's Lipper competitive peer group, which averaged 6.82% for the same
period.(1)
We attribute this outperformance to the Fund's investment strategy. Based on our
expectation for low inflation and modest economic growth, we structured the
portfolio with a larger-than-average proportion of bonds that tend to perform
well during periods of declining interest rates, such as bonds with good call
protection. In addition, we consistently maintained a longer-than-average
duration in the Fund. As rates fell, the portfolio's structure enabled the Fund
to generate attractive price gains.
OUTLOOK FOR A POSITIVE ECONOMIC AND MARKET ENVIRONMENT
We have a positive economic outlook and do not anticipate changing our long-term
investment strategy. We expect global economic conditions will continue to have
a dampening effect on the U.S. economy and the level of inflation - conditions
that are positive for bond prices. While we believe that interest rates may
still fall further, we will continue to monitor the economy and the market
carefully in the months ahead. We will adjust our strategy if we begin to see
signs of significant inflation, accelerating economic growth or rising interest
rates.
(1) Source: Lipper, Inc. Lipper rankings are based on the Lipper General
Municipal Debt Funds universe. The Fund (Class A shares) ranked in the
first quartile for 1 year (rated 7 out of 240 funds), in the second
quartile for 5 years (rated 47 out of 141 funds) and in the third quartile
for 10 years (rated 53 out of 74 funds). Past performance cannot predict
future results.
<PAGE>
COLONIAL TAX-EXEMPT FUND'S INVESTMENT PERFORMANCE VS.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
Change in Value of $10,000 from 11/30/88 - 11/30/98
Based on NAV and POP for Class A shares
NAV POP LEHMAN
- -----------------------------------------
Nov 30, 88 $10,000 $10,000 $10,000
Feb 28, 89 10,192 9,708 10,193
May 31, 89 10,501 10,002 10,627
Aug 31, 89 10,636 10,131 10,811
Nov 30, 89 10,833 10,318 11,101
Feb 28, 90 10,975 10,453 11,239
May 31, 90 11,111 10,584 11,404
Aug 31, 90 11,248 10,714 11,505
Nov 30, 90 11,585 11,035 11,956
Feb 28, 91 11,866 11,302 12,275
May 31, 91 12,161 11,584 12,554
Aug 31, 91 12,472 11,879 12,861
Nov 30, 91 12,758 12,152 13,183
Feb 29, 92 13,044 12,424 13,501
May 31, 92 13,307 12,675 13,787
Aug 31, 92 13,763 13,109 14,297
Nov 30, 92 13,943 13,281 14,505
Feb 28, 93 14,649 13,953 15,359
May 31, 93 14,710 14,012 15,436
Aug 31, 93 15,246 14,522 16,042
Nov 30, 93 15,309 14,582 16,113
Feb 28, 94 15,371 14,641 16,210
May 31, 94 14,903 14,196 15,817
Aug 31, 94 15,095 14,378 16,064
Nov 30, 94 14,225 13,549 15,266
Feb 28, 95 15,577 14,837 16,515
May 31, 95 16,223 15,452 17,258
Aug 31, 95 16,202 15,432 17,488
Nov 30, 95 16,976 16,170 18,151
Feb 29, 96 17,076 16,265 18,339
May 31, 96 16,734 15,939 18,047
Aug 31, 96 17,002 16,195 18,405
Nov 30, 96 17,736 16,893 19,218
Feb 28, 97 17,803 16,958 19,349
May 31, 97 17,944 17,092 19,541
Aug 31, 97 18,526 17,646 20,106
Nov 30, 97 19,006 18,103 20,596
Feb 28, 98 19,514 18,588 21,118
May 31, 98 19,768 18,829 21,375
Aug 31, 98 20,037 19,085 21,845
Nov 30, 98 20,569 19,592 22,194
GROWTH OF A $10,000 INVESTMENT MADE ON 11/30/88
As of 11/30/98
- ---------------------------------------------------------------------------
CLASS A CLASS B CLASS C
NAV POP NAV W/CDSC NAV W/CDSC
- ---------------------------------------------------------------------------
$20,569 $19,592 $19,591 $19,591 $20,402 $20,402
Average Annual Total Returns
As of 11/30/98
- ---------------------------------------------------------------------------
CLASS A CLASS B CLASS C
INCEPTION 11/21/78 5/5/92 8/1/97
NAV POP NAV W/CDSC NAV W/CDSC
- ---------------------------------------------------------------------------
1 YEAR 8.22% 3.08% 7.40% 2.40% 7.56% 6.56%
- ---------------------------------------------------------------------------
5 YEARS 6.08 5.06 5.29 4.96 5.91 5.91
- ---------------------------------------------------------------------------
10 YEARS 7.48 6.96 6.96 6.96 7.39 7.39
- ---------------------------------------------------------------------------
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. 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 4.75%. The CDSC
returns reflect the maximum charges of 5% for one year and 2% for five years 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 B and Class C share (newer class shares) performance information includes
returns of the Fund's Class A shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. These Class A share
returns are not restated to reflect any expense differential (e.g., Rule 12b-1
fees) between Class A shares and the newer class shares. Had the expense
differential been reflected, the returns for periods prior to the inception of
the newer class shares would have been lower.
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indices are not investments and do not incur fees or expenses. It is not
possible to invest in an index.
<PAGE>
INVESTMENT PORTFOLIO
NOVEMBER 30, 1998 (IN THOUSANDS)
MUNICIPAL BONDS - 98.4% PAR VALUE
- ------------------------------------------------------------------------------
EDUCATION - 2.2%
EDUCATION - 2.1%
AL Alabama Agricultural & Mechanical University,
Series 1988,
5.375% 11/01/21 $ 10,370 $ 10,760
AL State University Revenue,
Auburn University,
7.000% 06/01/11 1,000 1,094
AZ University of Arizona,
Series 1998:
5.250% 06/01/13 1,500 1,572
5.250% 06/01/14 2,000 2,085
IL Lake County School District No. 56,
9.000% 01/01/17 10,440 15,650
IL State Educational Facilities Authority,
Midwestern University,
Series 1998 B,
5.250% 05/15/13 4,615 4,750
IN Purdue University,
Series N,
5.500% 07/01/12 1,000 1,092
MA Health and Educational Facilities Authority,
Amherst College,
Series E,
6.750% 11/01/15 1,000 1,102
MA State Industrial Finance Agency,
Tabor Academy,
Series 1998,
5.400% 12/01/28 1,535 1,550
NY State Dormitory Authority,
New York University
Series 1998 A,
5.750% 07/01/27 6,290 7,160
OR State Health, Housing, Educational
& Cultural Facilities Authority,
Linfield College,
Series 1998 A,
5.500% 10/01/18 3,500 3,564
PA State Public School Building Authority,
Community College Project,
Series Q,
5.250% 10/15/13 1,270 1,340
TN Metropolitan Government,
Nashville & Davidson County,
Vanderbilt University,
Series 1998 B,
5.000% 10/01/28 3,000 2,967
WI State Health & Educational Facilities Authority,
Marquette University,
Series 1998,
5.250% 06/01/13 5,720 6,018
------------
60,704
------------
STUDENT LOAN - 0.1%
LA State Public Facility Authority,
Series A,
6.750% 09/01/06 1,545 1,623
VT State Student Assistance Financing Program,
Series B,
6.700% 12/15/12 2,000 2,182
------------
3,805
------------
- ------------------------------------------------------------------------------
HEALTHCARE - 11.2%
HOSPITALS - 5.1%
AL Alabama Special Care Facilities Authority,
Montgomery Healthcare,
Series 1989,
11.000% 10/01/19 15,355 15,585
FL Cape Canaveral Hospital District,
Series 1998,
5.250% 01/01/28 1,000 983
GA Clayton Hospital Authority,
The Woodlands Foundation, Inc.,
Series 1991 A,
9.750% 05/01/21 (a) 6,680 4,342
GA Forsyth County Hospital Authority,
Georgia Baptist Healthcare System,
Series 1998,
6.000% 10/01/08 1,000 996
IL Health Facility Authority,
Series 1992 B, IFRN (variable rate),
9.872% 05/01/21 4,800 5,652
IN State Health Facilities Financing Authority,
Sisters of St. Francis Health,
Series A,
5.750% 11/01/12 10,080 11,093
MI Tawas City Finance Authority,
St. Joseph Health System,
Series 1998 A,
5.600% 02/15/13 2,250 2,405
MN Monticello-Big Lake Community Hospital District,
5.750% 12/01/19 2,000 2,126
MN Rochester,
Mayo Medical Center,
Series F,
6.250% 11/15/21 5,900 6,414
MS Hospital Equipment & Facilities Authority,
Pooled Loan Program,
7.500% 08/01/16 18,900 19,893
MS Medical Center Building Corp.,
University of Mississippi Medical Center,
Series 1998,
5.500% 12/01/23 6,570 7,095
MT State Health Facility Authority,
Hospital Facilities,
Series 1994, IFRN (variable rate),
6.851% 02/15/25 6,000 6,360
NC Charlotte-Mecklenburg Hospital Authority,
Carolinas Healthcare Systems,
6.250% 01/01/20 845 911
NH State Higher Educational & Health Facilities
Authority, Littleton Hospital Association,
Series 1998 B,
5.800% 05/01/18 1,470 1,459
NJ Health Care Facilities Financing Authority,
Raritan Bay Medical Center,
7.250% 07/01/14 4,000 4,240
NJ State Health Care Facilities Financing Authority,
Kimball Medical Center,
Series 1998,
5.250% 07/01/13 4,000 4,161
OH Belmont County,
East Ohio Regional Hospital,
Series 1998,
5.700% 01/01/13 1,825 1,802
OK Oklahoma City Industrial & Cultural Facilities
Trust, Hillcrest Health Center,
6.400% 08/01/14 4,320 5,054
TN Chattanooga Health, Educational
& Housing Facilities Authority,
Siskin Hospital for Physical Rehabilitation,
5.250% 06/01/28 500 494
TX Bexar County Health Facilities Development Corp.,
Baptist Health System:
6.000% 11/15/11 1,780 2,021
6.000% 11/15/12 1,065 1,210
TX Lufkin Health Facilities Development Corp.,
Memorial Health Systems of East Texas,
Series 1998,
5.700% 02/15/28 2,500 2,534
UT State Board of Regents,
University of Utah Hospital,
Series 1998,
5.375% 08/01/13 4,165 4,365
VA Danville Industrial Development Authority,
Danville Regional Medical Center,
Series 1998,
5.250% 10/01/28 7,500 7,872
VA Fairfax Industrial Development Authority,
Inova Health System,
Series 1993 A,
5.000% 08/15/23 13,105 13,328
VA Henrico County Industrial Development Authority,
Bon Secours Health,
6.000% 08/15/16 5,000 5,703
VA Norfolk Industrial Development Authority,
Sentara Hospital,
Series A,
6.500% 11/01/13 2,500 2,824
VT State Educational & Health Buildings Authority,
Springfield Hospital,
Series A,
7.750% 01/01/13 1,890 2,131
------------
143,053
------------
INTERMEDIATE CARE FACILITIES - 0.4%
IL Champaign,
Hoosier Care, Inc.,
Series 1989 A,
9.750% 08/01/19 1,425 1,492
IN Wabash First Mortgage,
Hoosier Care, Inc.,
Series 1989 A,
9.750% 08/01/19 5,680 5,950
MA State Health & Educational Facilities Authority,
Corp. for Independent Living,
8.100% 07/01/18 1,270 1,421
PA State Economic Development Financing Authority,
Northwestern Human Services, Inc.,
Series 1998 A,
5.250% 06/01/14 2,000 1,958
------------
10,821
------------
LIFECARE - 0.1%
NH State Higher Educational & Health Facilities
Authority, Rivermead at Peterborough,
Series 1998,
5.500% 07/01/13 2,640 2,604
------------
NURSING HOMES - 5.6%
CA San Diego Industrial Development Authority,
Carmel Health,
8.750% 12/01/16 5,100 5,814
CO State Health Facilities Authority,
American Housing Foundation, Inc.,
Series 1990 A,
10.250% 12/01/20 2,500 2,500
DE State Economic Development Authority,
Churchman Village Project,
Series A,
10.000% 03/01/21 7,090 8,925
DE Sussex County,
Healthcare Ficility, Delaware Health Corp.,
Series 1994 A,
7.600% 01/01/24 14,230 15,066
FL Collier County Industrial Development Authority,
Beverly Enterprises, Inc.,
Series 1991,
10.750% 03/01/03 905 1,017
FL Gadsden County Industrial Development Authority,
Florida Properties, Inc., Series 1988 A,
10.450% 10/01/18 5,895 5,999
FL Palm Beach County,
Beverly Enterprises-Florida, Inc.,
Series 1984,
10.000% 06/01/11 2,525 2,740
IA Marion,
Kentucky Iowa Corp. Project,
Series 1990,
10.250% 01/01/20 965 1,006
IA State Finance Authority,
Care Initiatives, Series 1998 B:
5.500% 07/01/08 1,500 1,519
5.750% 07/01/28 4,500 4,461
IN Gary Industrial Economic Development,
West Side Health Care Center,
Series 1987 A,
11.500% 10/01/17 1,920 1,984
KS Washington County Industrial Development
Authority, Central States, Series 1989,
10.250% 11/01/19 3,355 3,422
MA Boston,
St. Joseph Nursing Care Center, Inc.
Series 1990,
10.000% 01/01/20 (b) 300 323
MA State Industrial Finance Agency:
American Health Foundation, Inc.,
Series 1989,
10.125% 03/01/19 (a) 3,135 2,351
GF/Massachusetts, Inc.,
Series 1994,
8.300% 07/01/23 12,575 14,115
MA State Industrial Finance Agency,
Belmont Home Care Project:
Seacoast Nursing Home, Series 1991,
9.625% 12/01/21 4,945 5,625
Series A,
7.970% 01/01/99 100 100
Series 1995 A,
9.270% 01/01/25 10,405 12,096
MN Minneapolis,
Walker Methodist Senior Services Group,
Series 1998 A,
5.875% 11/15/18 (c) 1,800 1,791
MO St. Louis County Industrial Development
Authority, Nursing Home, Cardinal Carberry
Health Center, Series 1991,
7.125% 03/20/23 2,000 2,163
NM Albuquerque Industrial Development Authority,
Manor Nursing Home,
12.000% 05/15/14 3,033 3,202
NM State Hospital Equipment Loan Council,
Memorial Medical Center, Series 1998,
5.500% 06/01/28 6,000 5,876
OH Ashtabula County First Mortgage,
Village Square Nursing Center, Inc.,
Series 1985,
12.000% 12/01/15 1,235 1,290
OH Montgomery County,
Grafton Oaks Limited Partners,
Series 1986,
9.750% 12/01/16 695 660
PA Cambria County Industrial Development Authority,
Beverly Enterprises,
10.000% 06/18/12 1,700 2,225
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19 (a) 10,337 9,510
PA Delaware County Authority,
Main Line and Haverford Nursing,
Series 1992,
9.000% 08/01/22 9,320 10,741
PA Lackawanna County Industrial Authority,
Greenridge Nursing Center,
10.500% 12/01/10 1,755 1,952
PA Luzerne County Industrial Development Authority:
Beverly Enterprises, Pennsylvania, Series 1983,
10.125% 11/01/08 760 810
Millville Nursing Center,
10.500% 12/01/12 3,570 3,891
PA Montgomery County Higher
Education & Health Authority,
Roslyn-Hatboro, Inc. Project,
9.000% 11/15/22 12,060 9,648
PA Wilkins Area Industrial Development Authority,
Oakmont Nursing Center, Series 1984,
10.000% 07/01/11 1,000 1,119
TN Metropolitan Government,
Nashville & Davidson Counties Health & Education
Facilities, Central States, Series 1989,
10.250% 11/01/19 755 770
TX Whitehouse Health Facilities Development Corp.,
Oak Brook Health Care Center, Series 1989,
10.000% 12/01/19 1,750 1,865
WA Kitsap County Housing Authority,
Martha & Mary Nursing Home,
7.100% 02/20/36 10,000 11,884
------------
158,460
------------
- ------------------------------------------------------------------------------
HOUSING - 11.3%
ASSISTED LIVING/SENIOR - 1.0%
IL State Development Finance Authority,
Care Institute, Inc.,
8.250% 06/01/25 10,000 11,250
MN Roseville,
Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 2,935 2,964
MS Lamar County Wesley Manor II:
8.750% 08/01/20 1,000 1,023
8.750% 02/01/29 1,610 1,646
PA Montgomery County Industrial Development
Authority, Assisted Living Facility,
Series 1993-A,
8.250% 05/01/23 1,435 1,591
TX Bell County Health Facilities Development Corp.,
Care Institutions, Inc.,
9.000% 11/01/24 7,585 8,694
------------
27,168
------------
MULTI-FAMILY - 5.0%
AZ Mohave County Industrial Development Authority,
Multifamily, Kingman Station Apartments,
8.125% 10/01/26 2,800 2,989
AZ Phoenix Industrial Development Authority,
Chris Ridge Village Project,
Series 1992:
6.750% 11/01/12 650 693
6.800% 11/01/25 4,250 4,506
CO State Health Facilities Authority,
Birchwood Manor,
Series 1991 A,
7.625% 04/01/26 1,835 1,908
DE Quaker Hill Housing Corp.,
Multifamily Housing, Quaker Hill Apartments,
Series A,
7.550% 08/01/21 6,225 6,727
FL State Housing Finance Agency,
Windsong Apartments,
Series 1993 C,
9.250% 01/01/19 1,230 1,107
GA Augusta Housing Authority,
Mountain Ridge Holdings II Project,
Series A,
8.960% 09/01/24 (a) 3,620 2,041
GA Savannah Housing Authority,
Multifamily Housing, Plantation Oaks Apartments
Project,
Series 1986,
9.625% 02/01/27 2,870 3,039
IL Carbondale,
Mill Street Apartments,
Series 1979,
7.375% 09/01/20 814 830
IL Charleston Non-Profit Corp.,
Cougills Manor Project,
6.875% 07/01/20 1,712 1,728
IL East Moline Housing Finance Corp.,
Deerfield Woods Apartments,
7.500% 08/01/21 (d) 2,312 2,381
IL State Housing Development Authority,
Series 1990 A,
8.000% 06/01/26 680 715
LA Jefferson Housing Development,
Corp. Multiple Family, Concordia Project,
Series A,
7.700% 08/01/22 2,570 2,795
LA New Orleans Housing Development Corp.,
Multifamily Housing Mortgage, Southwood Patio,
Series 1990 A,
7.700% 02/01/22 2,375 2,588
MN Washington County Housing & Redevelopment
Authority, Cottages of Aspen,
Series 1992,
9.250% 06/01/22 1,900 2,097
MN White Bear Lake,
Birch Lake Townhomes Project:
Series 1989 A,
9.750% 07/15/19 2,185 2,218
Series 1989 B,
(f) 07/15/19 (e) 283 85
MO St. Louis Area Housing Finance Corp.,
Wellington Arms III,
Series 1979,
7.500% 01/01/21 1,981 1,998
MS Biloxi Urban Renewal,
Biloxi Apartments Project,
Series 1985:
9.500% 12/01/05 1,000 1,045
9.500% 12/01/10 1,235 1,290
9.500% 12/01/15 1,970 2,059
NC Eastern Carolina Regional Housing Authority,
New River Apartments-Jacksonville, Series 1994,
8.250% 09/01/14 2,695 2,914
NE Omaha Housing Development Corp.,
Mortgage Notes, North Omaha Homes,
7.375% 03/01/21 1,346 1,373
NJ State Housing & Mortgage Finance Agency,
6.950% 11/01/13 3,500 3,772
NY Nyack Housing Assistance Corp.,
Nyack Plaza Apartments,
7.375% 06/01/21 (d) 2,727 2,734
PA Warren County Housing Finance Corp.,
Allegheny Manor,
7.500% 02/01/21 1,300 1,339
Resolution Trust Corp., Pass Through Certificates,
Series 1993 A,
8.500% 12/01/16 (d) 61,712 63,641
TN Franklin Industrial Board,
Landings Apartment Project,
Series 1996 B,
8.750% 04/01/27 3,550 3,630
TN Knoxville Community Development,
Corp. Multiple Family Housing,
Maple Oak Apartment Project,
Series 1992,
6.375% 10/15/08 2,510 2,644
TX Galveston Pass Health Facilities Center,
Pass Through Certificates,
8.000% 08/01/23 1,850 1,986
TX Laredo Housing Development Corp., No. 1,
7.375% 03/05/21 (d) 2,015 2,017
VA Alexandria Redevelopment & Housing Authority,
Courthouse Commons Apartments:
Series 1990 A,
10.000% 01/01/21 760 775
Series 1990 B,
(f) 01/01/21 952 874
VA Fairfax County Redevelopment & Housing Authority,
Mt. Vernon Apartments, Series A,
6.625% 09/20/20 1,500 1,633
VA Norfolk Redevelopment & Housing Authority,
Multifamily Housing, Dockside,
Series 1991-A:
7.300% 12/01/16 1,315 1,398
7.375% 12/01/28 1,940 2,062
WA Washington Housing Development Corp.,
Parkview Apartments Project,
7.500% 04/01/21 1,626 1,658
WI Milwaukee Housing Authority Mortgage,
Windsor Court Project, Series 1986,
8.700% 08/21/21 1,985 2,013
WY Rock Springs Housing Finance Corp.,
Bicentennial Association II,
7.500% 05/01/20 1,103 1,130
------------
142,432
------------
SINGLE FAMILY - 5.3%
AK State Housing Finance Corp.,
Series A-2,
5.750% 06/01/24 3,500 3,660
AL State Housing Finance Authority,
Series 1990 C,
7.550% 04/01/16 500 529
CA State Housing Finance Authority,
Series 1984 B,
(g) 08/01/16 325 46
CO El Paso County Home Mortgage:
Series 1987 C,
8.300% 09/20/18 1,063 1,205
Series 1987 D,
8.150% 09/20/14 484 544
Series 1988 A,
8.375% 03/25/19 1,266 1,454
CO Housing Finance Authority,
Single Family Housing,
Series A,
7.150% 11/01/14 805 837
CO State Housing Finance Authority:
Series 1991 A,
7.500% 05/01/29 4,745 5,045
Series 1996 B-1,
7.650% 11/01/26 2,515 2,889
Series 1997 A-2,
7.250% 05/01/27 3,200 3,646
FL Brevard County Housing Finance Authority,
Single Family Mortgage,
Series 1985,
(g) 04/01/17 3,045 496
FL Lee County Housing Finance Authority,
Series 1996 A-1,
7.350% 03/01/27 6,145 6,997
IA Finance Authority Single Family,
Series 1992 B,
6.950% 07/01/24 9,915 10,553
ID State Housing Agency,
Senior Series,
6.700% 07/01/27 5,940 6,396
IL Chicago:
Series 1996 B,
7.625% 09/01/27 3,730 4,288
Series 1997 A,
7.250% 09/01/28 3,805 4,342
Series 1998 A-1,
6.450% 09/01/29 3,500 3,889
IL State Housing Development Authority:
Series B,
7.250% 08/01/17 1,290 1,365
Series C,
7.500% 08/01/17 110 115
MA State Housing Finance Agency:
Series 21,
7.125% 06/01/25 6,000 6,430
Series 1988 B,
8.100% 08/01/23 355 367
MD State Community Development Administration,
Department of Housing and Community Development,
Single Family Program:
1st Series,
7.300% 04/01/17 450 475
3rd Series,
7.250% 04/01/27 960 1,012
MN State Housing Finance Agency:
Single Family Mortgage,
Series C,
7.100% 07/01/11 665 704
Series 1988 D,
8.250% 08/01/20 1,950 1,996
MO State Housing Development Commission:
Homeownership Loan Program,
Series 1996 A,
7.200% 09/01/26 7,185 8,153
Series C:
6.900% 07/01/18 780 829
7.250% 09/01/26 4,480 5,070
Series 1996 B,
7.550% 09/01/27 8,215 9,454
Series 1998 B-2,
6.400% 03/01/29 2,000 2,227
NE Investment Finance Authority,
Single Family Mortgage,
Series 1990-2, IFRN (variable rate),
11.632% 09/10/30 2,500 2,775
NH State Housing Finance Authority,
Single Family Resources Mortgage,
Series 1989-B,
7.700% 07/01/29 1,895 1,974
NY State Mortgage Agency,
Home Owner Mortgage,
Series HH-2,
7.850% 04/01/22 1,500 1,560
OH Housing Finance Agency:
Series A2, IFRN (variable rate),
9.796% 03/24/31 5,000 5,594
Series 1988 C,
8.125% 03/01/20 575 595
TX Bexar County Housing Finance Corp.,
GNMA Collateralized Mortgage,
Series 1989 A,
8.200% 04/01/22 2,810 2,916
TX Harris County Housing Finance,
Corp. Single Family,
Series 1987,
8.875% 12/01/17 1,290 1,317
TX Lubbock Housing Finance Corp.,
Single Family Series:
Series 1988 C,
8.375% 12/01/20 3,710 3,717
Series 1988 D,
8.375% 12/01/20 690 691
TX State Department Housing & Community Affairs,
Collateralized Home Mortgage,
Series 1992-B2, IFRN (variable rate),
9.815% 06/18/23 9,000 10,260
TX State Housing Agency Mortgage,
Single Family,
Series A,
7.150% 09/01/12 570 611
UT State Housing Finance Agency,
Single Family Mortgage:
Senior Issue B-1,
7.500% 07/01/16 65 68
Senior Issue B-2,
7.700% 07/01/15 10 10
Senior Series F-1,
7.400% 07/01/09 170 175
Series 1990-C2,
7.950% 07/01/10 105 108
UT State Housing Finance Agency,
Single Family:
Senior A-1,
6.900% 07/01/12 490 521
Senior Issue B-2,
7.000% 07/01/16 225 238
Senior Issue D-2,
7.250% 07/01/11 220 233
Series E-1,
6.950% 07/01/11 835 882
VA State Housing Authority Commonwealth Mortgage,
Series A,
7.100% 01/01/17 1,000 1,044
VT State Housing Finance Agency,
Series 1989 A,
7.850% 12/01/29 3,920 4,047
WI State Housing & Economic Development Authority,
Series A,
7.000% 09/01/09 985 1,052
WV State Housing Development Fund,
Series 1992-B,
7.200% 11/01/20 9,450 9,858
WY Community Development Authority,
Single Family Mortgage, Series 1988-G,
7.250% 06/01/21 4,500 4,821
------------
150,080
------------
- ------------------------------------------------------------------------------
OTHER - 14.8%
OTHER - 0.3%
IN Indianapolis Local Public Improvement,
Series 1992 D,
6.750% 02/01/14 5,000 6,015
MD Baltimore,
Park Charles Project, Series 1986,
8.000% 01/01/10 1,430 1,539
------------
7,554
------------
POOL/BOND BANK - 0.8%
CA San Diego County,
Series 1993,
5.625% 09/01/12 13,000 14,416
IN Indianapolis Local Public Improvement Bond Bank,
Series A,
6.500% 01/01/13 6,700 7,993
------------
22,409
------------
REFUNDED/ESCROWED (H) - 13.7%
AK State Housing Financing Corp.,
Series 1992 A,
6.600% 12/01/23 11,750 13,149
AZ Maricopa County Industrial Development Authority,
Advantage Point, Series 1996 A,
6.625% 07/01/26 2,750 3,245
AZ Pima County Industrial Development Authority,
8.200% 09/01/21 12,370 17,134
AZ Salt River Project,
Agricultural Improvement & Power District Electric
System,
Series A,
6.625% 01/01/12 1,500 1,618
CA Eden Township Hospital District,
Eden Township Hospital,
Series 1989,
7.400% 11/01/19 5,000 5,293
CA Palmdale Community Redevelopment Agency:
Series D,
8.000% 04/01/16 7,000 9,535
Series 1986 A,
8.000% 03/01/16 3,000 4,061
CA Perris Community Facilities District,
Series 2-90,
8.750% 10/01/21 6,165 9,239
CA Pomona,
Series A,
7.600% 05/01/23 10,000 13,299
CA Riverside County,
8.300% 11/01/12 10,000 13,652
CO Denver City and County Airport:
Series A:
8.500% 11/15/23 430 478
8.750% 11/15/23 1,455 1,685
Series B:
7.250% 11/15/23 1,125 1,288
7.250% 11/15/23 1,300 1,486
CO Mesa County,
(g) 12/01/11 5,905 3,269
CT State Health & Educational Facilities Authority,
New Britain Hospital, Series 1991 A,
7.750% 07/01/22 905 1,042
DC District Columbia Hospital,
Washington Hospital Center Corp.,
Series 1990 A:
8.750% 01/01/15 10,000 11,194
9.000% 01/01/08 1,595 1,772
DE State Economic Development Authority,
Riverside Hospital,
Series 1992 A,
9.500% 01/01/22 1,130 1,433
FL Clearwater Housing Authority,
Hampton Apartments,
Series 1994,
8.250% 05/01/24 3,475 4,283
FL St. Petersburg Health Facilities Authority,
Allegheny Health System,
St. Joseph's Hospital, Inc.,
Series 1985-A,
7.000% 12/01/15 2,000 2,224
FL State Mid-Bay Bridge Authority,
Series A,
6.875% 10/01/22 2,000 2,503
GA Burke County Development Authority,
Oglethorpe Power Corp.,
Series 1992,
8.000% 01/01/22 11,000 13,002
IL Chicago Public Building Commission,
Series 1990 A,
7.125% 01/01/15 4,010 4,274
IL Health Facility Authority,
United Medical Center,
Series 1991:
8.125% 07/01/06 2,555 2,881
8.375% 07/01/12 1,500 1,779
IL State Health Facilities Authority,
Edgewater Medical Center,
Series A,
9.250% 07/01/24 8,290 10,533
IL State Sales Tax,
Series N,
6.900% 06/15/09 1,000 1,097
IN Purdue University,
Student Fee, Series B,
6.700% 07/01/15 1,100 1,283
IN St. Joseph County Hospital Authority,
South Bend Memorial Hospital,
9.400% 06/01/10 2,955 3,839
KY Trimble County,
Louisville Gas & Electric Co.,
Series B,
6.550% 11/01/20 130 145
MA Bay Transportation Authority,
General Transportation System,
Series A,
7.000% 03/01/11 1,000 1,091
MA Boston,
Series 1992 A,
6.500% 07/01/12 4,400 4,884
MA General Obligation Bonds,
Series 1991 A,
7.625% 06/01/08 5,000 5,564
MA Holyoke,
School Project Loan,
7.650% 08/01/09 1,250 1,397
MA State Health & Educational Facilities Authority,
Lowell General Hospital,
Series 1991 A,
8.400% 06/01/11 2,500 2,822
MA State Turnpike Authority:
Series A,
5.000% 01/01/20 12,665 12,830
Series 1993 A,
5.125% 01/01/23 3,600 3,706
MA State,
Series 1991 C:
6.750% 08/01/09 1,000 1,097
6.750% 08/01/09 1,835 2,013
MN Mille Lacs Capital Improvement Authority,
Mille Lacs Band of Chippewa,
Series 1992 A,
9.250% 11/01/12 1,350 1,650
MO Hannibal Industrial Development Authority,
Regional Healthcare Systems,
Series 1992,
9.500% 03/01/22 4,250 5,035
NC Lincoln County,
Lincoln County Hospital,
9.000% 05/01/07 440 532
NV Reno Hospital,
St. Mary's Regional Medical Center,
Series 1991-A,
6.700% 07/01/21 1,700 1,858
NY New York City General Obligation,
Series 1991-D,
8.000% 08/01/18 5,085 5,714
NY Triborough Bridge & Tunnel Authority,
Series T,
7.000% 01/01/11 750 815
PA Convention Center Authority,
Series 1989-A,
6.000% 09/01/19 11,650 13,358
PA Erie-Western Port Authority,
Series 1990,
8.625% 06/15/10 1,850 2,028
PA Philadelphia Hospitals & Higher
Educational Facilities Authority,
Presbyterian Medical Center,
Series 1993,
6.500% 12/01/11 5,155 6,000
PA State Industrial Development
Authority, Economic Development,
Series A,
7.000% 01/01/11 5,595 6,158
PA Westmoreland County Municipal Authority,
Special Obligation,
Series 1985,
9.125% 07/01/10 3,910 4,653
SC Piedmont Municipal Power Agency:
Series 1988,
(g) 01/01/13 18,570 9,559
Series 1993,
5.375% 01/01/25 3,960 4,224
TN Chattanooga Health Education & Housing
Facilities Board, North Park Hospital Project,
Series 1993,
8.500% 02/01/23 41,430 49,170
TN Shelby County, Health, Education,
& Housing Facilities Board,
Open Arms Development Center:
Series 1992-A,
9.750% 08/01/19 4,125 5,847
Series 1992-C,
9.750% 08/01/19 4,120 5,840
TN Shelby County, Public Improvement,
Series 1992-A:
(g) 05/01/10 15,750 9,036
(g) 05/01/12 15,130 7,597
TX Austin Utilities System Revenue,
6.750% 05/15/12 3,500 3,814
TX Hidalgo County Health Services,
Mission Hospital, Inc.,
Series A,
10.250% 02/01/25 4,785 5,424
TX State Research Laboratory Commission Finance
Authority, Superconducting Super Collider,
Series 1991,
6.950% 12/01/12 10,000 12,048
UT Uintah County Pollution Control,
Series 1984 F2,
10.500% 06/15/14 6,900 8,030
WA State Health Care Facilities Authority,
Grays Harbor Community Hospital,
Series 1993:
7.200% 07/01/03 730 780
8.025% 07/01/20 6,380 7,050
WA Tacoma Electric System,
Series 1991 C, IFRN (variable rate),
9.043% 01/02/15 10,000 11,438
WI State Health & Educational Facilities Authority,
St. Luke's Medical Center Project,
Series 1991,
7.100% 08/15/19 2,550 2,820
------------
387,597
------------
- ------------------------------------------------------------------------------
OTHER REVENUE - 3.7%
CHEMICALS - 0.5%
IL Southwestern Illinois Development Authority,
Sewer Facilities, Monsanto Co.,
Series 1991,
7.300% 07/15/15 3,000 3,405
TN Humphreys County Industrial Development Board,
E.I. DuPont de Nemours & Co.,
Series 1994,
6.700% 05/01/24 9,000 10,038
------------
13,443
------------
INDUSTRIAL - 1.1%
CO Mesa County Industrial Development Revenue,
Joy Technologies, Inc. Project,
Series 1992,
8.500% 09/15/06 1,000 1,114
CT State Development Authority,
Pfizer, Inc. Project,
Series 1994,
7.000% 07/01/25 3,000 3,506
FL Hendry County Industrial Development Authority,
Savannah Foods & Industries,
Series 1992,
6.400% 03/01/17 1,000 1,000
GA Wayne County Development Authority,
Solid Waste Disposal, ITT Royonier, Inc.,
Series 1990,
8.000% 07/01/15 2,500 2,664
IL Rockford,
9.250% 02/01/00 520 524
IL Will-Kankakee Regional Development Authority,
Flanders Corp./Precisionaire Project,
Series 1997,
6.500% 12/15/17 2,925 3,093
MI State Strategic Fund,
Michigan Sugar Co.:
Carollton Project:
Series 1998 B,
6.450% 11/01/25 2,800 2,804
Series 1998 C,
6.550% 11/01/25 3,200 3,204
Sebewaing Project, Series 1998 A,
6.250% 11/01/15 2,250 2,241
MN Brooklyn Park,
TL Systems Corp.,
Series 1991,
10.000% 09/01/16 310 378
MN Buffalo,
Von Ruden Manufacturing, Inc.,
Series 1989,
10.500% 09/01/14 1,340 1,423
NV Henderson Public Improvement Trust,
Dongsung America Co., Inc.,
Series 1998,
7.000% 11/01/10 4,500 4,511
OH Cuyahoga County,
Joy Technologies, Inc.,
Series 1992,
8.750% 09/15/07 1,340 1,502
PA Bucks County Industrial Development Revenue,
Jorgensen Steel,
9.000% 06/01/05 3,500 3,551
------------
31,515
------------
OIL & GAS - 1.2%
CA Los Angeles Regional Airport Improvement Corp.,
Los Angeles International Airport,
6.800% 01/01/27 1,400 1,499
PA State Economic Development Financing Authority,
Sun Co., Inc., Series 1994 A,
7.600% 12/01/24 27,500 31,928
------------
33,427
------------
PAPER PRODUCTS - 0.1%
IA Cedar Rapids,
Weyerhaeuser Co. Project,
9.000% 08/01/14 1,000 1,395
LA De Soto Parish,
International Paper Co.,
Series A,
7.700% 11/01/18 1,250 1,448
------------
2,843
------------
RECREATION - 0.3%
AK Anchorage,
Ice Rink Revenue,
Series 1998,
6.250% 01/01/12 2,185 2,166
WI Southeast Professional Basketball
Park District Sales Tax Revenue,
Series 1998 A,
5.500% 12/15/21 5,000 5,433
------------
7,599
------------
RETAIL - 0.5%
DE Sussex County,
Economic Development,
Rehoboth Mall Project,
7.250% 10/15/12 4,735 4,480
NJ State Economic Development Authority,
Glimcher Properties L.P. Project,
6.000% 11/01/28 3,400 3,404
PA Bucks County Industrial Development Revenue,
Hechinger Co., Series 1984,
11.375% 11/15/04 2,065 2,147
PA Philadelphia Authority for Industrial Development
Revenue, Hechinger Co., Series 1983,
11.375% 12/01/04 3,255 3,288
------------
13,319
------------
- ------------------------------------------------------------------------------
RESOURCE RECOVERY - 0.2%
DISPOSAL - 0.0%
MA Boston Industrial Development Finance Authority,
Jet-A-Way, Inc.,
10.500% 01/01/11 1,500 1,671
------------
RESOURCE RECOVERY - 0.2%
MA State Industrial Finance Agency,
Ogden Hill Project,
Series 1998 A,
5.400% 12/01/11 3,300 3,348
VA Fairfax County Economic Development,
Ogden Martin Systems,
Series 1987 A,
7.750% 02/01/11 1,000 1,037
------------
4,385
------------
- ------------------------------------------------------------------------------
TAX-BACKED - 24.6%
LOCAL APPROPRIATED - 4.1%
CA Sacramento City Financing Authority,
Series A,
5.375% 11/01/14 5,000 5,398
CA San Bernardino County,
Medical Center Financing Project,
5.500% 08/01/17 2,500 2,717
FL Miami-Dade County School Board,
Series 1998 A,
5.250% 08/01/13 2,160 2,260
IL Chicago Board of Education,
General Obligation Leases Certificates,
Series 1992-A:
6.000% 01/01/20 4,000 4,586
6.250% 01/01/15 4,400 5,131
IN Beech Grove School Building Corp.,
6.250% 07/05/16 (i) 2,265 2,640
NJ Hudson County,
Series, 1992,
6.600% 12/01/21 16,665 18,171
NY State Dormitory Authority,
Judicial Facilities,
Series 1991 A,
9.500% 04/15/14 9,000 10,507
PA Philadelphia Municipal Authority,
Series B,
6.400% 11/15/16 39,565 43,880
SC Charleston County,
Charleston Public Facilities Corp.,
Series 1995:
6.000% 12/01/07 1,000 1,131
6.000% 12/01/09 3,495 3,995
6.000% 12/01/10 3,710 4,270
TX Houston Independent School District Public
Facilities Corp.:
Series 1998 A,
(g) 09/15/14 3,885 1,795
Series 1998 B:
(g) 09/15/14 6,790 3,137
(g) 09/15/15 2,000 873
VA Chesapeake Industrial Development Authority,
5.250% 06/01/17 2,445 2,505
WA King County,
King Street Center Project,
5.125% 06/01/17 3,000 3,048
------------
116,044
------------
LOCAL GENERAL OBLIGATIONS - 7.5%
AK North Slope Borough:
Series A,
(g) 06/30/08 45,000 31,154
Series 1996 B,
(g) 06/30/07 11,400 7,498
Series 1998 A,
(g) 06/30/09 6,500 4,050
AZ Apache County School District,
Number 010, Round Valley Project of 1987,
Series 1990-C,
10.800% 07/01/99 1,000 1,036
AZ Tucson,
Series 1998,
5.375% 07/01/21 4,325 4,640
CA Murrieta Valley Unified School District,
Series 1998 A,
(g) 09/01/11 2,195 1,223
CA Redwood City Elementary School District,
(g) 08/01/17 4,540 1,793
CO Douglas County School District,
No. RE-1, Series 1996,
7.000% 12/15/12 6,000 7,541
CO El Paso County School District No. 11:
7.125% 12/01/20 7,350 9,596
Series 1996,
7.100% 12/01/16 2,105 2,699
CO Jefferson County School District,
No. R-001, Series 1998 A,
5.500% 12/15/13 10,000 10,812
CO Larimer, Weld & Boulder Counties School District,
Series 1996,
(g) 12/15/10 4,000 2,327
CT Bridgeport,
Series 1996 A,
6.500% 09/01/08 1,435 1,692
FL Miami-Dade County School District,
Series 1998,
5.375% 08/01/14 3,130 3,380
GA Fulton County School District,
Series 1998,
5.375% 01/01/16 3,845 4,119
IL Chicago Board of Education:
Series 1996:
6.250% 12/01/11 3,330 3,895
6.250% 12/01/12 1,500 1,757
Series 1998 B-1:
(g) 12/01/10 3,905 2,246
(g) 12/01/13 13,400 6,425
IL Chicago,
Series A,
5.375% 01/01/13 5,000 5,371
IL Kane County School District No. 129,
Series 1997,
5.500% 02/01/12 2,000 2,138
IL Lake & McHenry Counties United School District,
Number 118, Series 1998:
(g) 02/01/09 2,355 1,492
(g) 02/01/10 2,060 1,237
IL Lake, Cook, Kane & McHenry Counties
United School District, Number 220,
Series 1998:
5.375% 12/01/10 4,020 4,351
5.375% 12/01/11 4,240 4,561
LA New Orleans:
4.750% 12/01/26 (c) 3,000 2,862
5.500% 12/01/21 (c) 8,000 8,693
Series 1998,
5.500% 12/01/10 (c) 2,000 2,194
MA Boston,
Series 1998 C,
4.250% 11/01/18 5,290 4,856
MA Lowell:
8.000% 01/15/00 550 576
8.400% 01/15/09 1,000 1,116
MA Springfield,
Series 1998,
5.250% 11/15/13 (c) 3,545 3,702
MI Detroit,
Series 1990-B,
8.250% 04/01/10 5,000 5,348
MI Rochester Community School District,
5.000% 05/01/19 4,500 4,593
NV Clark County School District,
Series B,
5.625% 06/15/13 10,215 11,092
NY New York City General Obligation,
Series 1997 A,
7.000% 08/01/06 5,000 5,838
OH Cleveland,
5.750% 08/01/12 2,485 2,794
PA Erie School District,
Series 1998:
(g) 09/01/12 5,780 3,031
(g) 09/01/13 3,000 1,479
(g) 09/01/15 1,500 661
PR Commonwealth of Puerto Rico Municipal Finance
Agency,
Series A:
5.000% 07/01/09 3,000 3,193
5.250% 07/01/10 8,420 9,058
TX Austin Independent School District,
Series 1998,
(g) 08/01/14 4,000 1,873
TX Harris County,
5.750% 10/01/14 2,600 2,905
TX Hurst Euless Bedford Independent School District,
Series 1994,
6.500% 08/15/24 6,355 7,090
WA King & Snohomish Counties
School District No. 417,
Series 1998 B:
(g) 06/15/14 1,800 842
(g) 06/15/16 3,315 1,380
------------
212,209
------------
SPECIAL NON-PROPERTY TAX - 3.9%
FL Palm Beach County Criminal Justice Facilities,
5.750% 06/01/13 5,000 5,615
IL Metropolitan Pier and Exposition Authority,
McCormick Place Expansion Project,
(g) 06/15/14 4,330 2,019
IL State Development Finance Authority,
City of Marion Project,
Series 1991,
9.625% 09/15/21 5,585 4,189
MN Red Lake Band of Chippewa Indians,
Series 1998,
6.250% 08/01/13 2,100 2,092
NC State Centennial Authority,
Arena Project, Series 1997,
5.000% 09/01/11 2,115 2,195
NJ State Transportation Trust Fund Authority,
Series B,
7.000% 06/15/12 27,000 33,757
NV Clark County,
Series 1998:
4.500% 11/01/17 10,905 10,384
5.250% 11/01/13 7,010 7,354
NY Metropolitan Transportation Authority,
Series 1998 A,
4.500% 04/01/18 4,000 3,796
NY New York City Transitional Finance Authority:
Series 1998 A,
5.250% 11/15/13 2,000 2,099
Series 1998 C,
4.750% 05/01/23 13,000 12,509
NY State Local Government Assistance Corp.:
5.000% 04/01/13 3,500 3,604
Series E,
5.250% 04/01/16 15,060 15,905
PA Convention Center Authority,
Series A,
6.750% 09/01/19 5,000 5,724
------------
111,242
------------
SPECIAL PROPERTY TAX - 0.5%
CA Corona Community Facility District,
No. 90-1-A, Series 1998,
5.500% 09/01/15 9,240 10,112
CA Riverside County Public Financing Authority,
Redevelopment Projects, Series A,
5.500% 10/01/22 3,000 3,062
------------
13,174
------------
STATE APPROPRIATED - 6.7%
CA State Public Works Board:
State Prisons, Series 1993 A,
5.000% 12/01/19 11,065 11,356
Various State Prisons Projects, Series 1993 A,
5.250% 12/01/13 6,400 6,883
NY State Dormitory Authority:
City University, Series A,
5.750% 07/01/13 8,565 9,613
State University Facilities, Series A,
5.875% 05/15/17 33,240 37,538
NY State Dormitory Authority:
State University of New York,
4.500% 05/15/20 24,010 22,291
University Athletic,
5.250% 07/01/13 3,000 3,159
NY State Dormitory Authority,
City University:
Series 1990-C:
7.000% 07/01/14 2,050 2,189
7.500% 07/01/10 19,875 24,363
Series 1993 A:
6.000% 07/01/20 6,140 7,105
6.000% 07/01/20 13,350 15,196
NY State Dormitory Authority,
State University of New York,
Series 1990-A,
7.500% 05/15/13 8,000 10,302
NY State Thruway Highway & Building,
5.250% 04/01/12 6,000 6,332
NY State Urban Development Corp.:
Correctional Facility, Series A,
6.500% 01/01/11 8,500 10,089
University Facilities Grants,
5.500% 01/01/15 5,265 5,614
TX State Public Finance Authority,
General Services Commission Projects,
Series A,
5.500% 02/01/11 6,905 7,497
WV State Building Commission,
Series 1998 A:
5.375% 07/01/18 6,900 7,345
5.375% 07/01/21 3,215 3,422
------------
190,294
------------
STATE GENERAL OBLIGATIONS - 1.9%
MA Massachusetts Bay Transportation Authority:
5.250% 03/01/20 5,000 5,088
Series D:
5.750% 03/01/13 4,215 4,610
5.750% 03/01/14 6,575 7,172
MA State College Building Authority Project,
Series A,
7.500% 05/01/11 1,500 1,933
MA State,
Series 1991 C:
5.250% 08/01/16 4,000 4,145
6.750% 08/01/09 1,030 1,126
NV State,
Series A,
6.800% 07/01/12 60 66
OH State,
Series 1998 B,
5.250% 02/01/12 5,225 5,547
PA Pittsburgh,
Series 1998 D,
5.250% 09/01/11 8,985 9,497
PR Commonwealth of Puerto Rico,
Series B,
6.500% 07/01/15 3,000 3,640
TX State Public Finance Authority,
Series 1997,
(g) 10/01/13 4,000 1,988
WA State,
Series 1992 A,
6.250% 02/01/11 7,355 8,558
------------
53,370
------------
- ------------------------------------------------------------------------------
TRANSPORTATION - 8.4%
AIRPORTS - 4.7%
CA San Francisco City & County Airport Commission,
Series 1998,
4.500% 05/01/26 8,000 7,497
CO Denver City & County Airport,
Series A:
8.500% 11/15/23 4,570 4,998
8.750% 11/15/23 4,030 4,565
Series B:
7.250% 11/15/23 4,375 4,855
7.250% 11/15/23 5,075 5,720
Series C,
6.500% 11/15/12 (i) 10,625 12,724
Series E,
6.000% 11/15/11 3,000 3,441
FL Broward County,
Airport System Revenue,
Series 1998 E,
5.375% 10/01/13 7,000 7,401
HI State,
Airport System Revenue:
Series 2,
7.000% 07/01/18 14,770 15,902
Series 1991,
6.900% 07/01/12 4,250 5,115
IL Chicago,
O'Hare International Airport:
Series A,
5.000% 01/01/16 14,500 14,525
Series 1994 A,
6.375% 01/01/12 4,980 5,562
MA State Port Authority,
Series 1998 A,
5.500% 07/01/15 2,670 2,846
MN Minneapolis-St. Paul Metropolitan Airports
Commission,
Series 1998 A,
5.000% 01/01/22 2,250 2,252
PA Allegheny County Airport,
Pittsburgh International Airport,
5.750% 01/01/14 (i) 4,500 5,027
PA Philadelphia Authority for Industrial Development,
Philadelphia Airport System,
Series 1998 A,
5.000% 07/01/15 4,000 4,010
TX Dallas-Fort Worth Regional Airport,
Series A,
7.375% 11/01/11 6,000 7,026
VA Capital Region Airport Commission,
Series B,
8.125% 07/01/14 (i) 17,200 20,917
------------
134,383
------------
TOLL FACILITIES - 3.4%
CA San Joaquin Hills Transportation Corridor Agency,
Series A,
(g) 01/15/14 14,450 6,959
CO State Public Highway Authority,
Arapahoe Co., E-470, Series B,
(g) 09/01/11 (i) 17,685 9,840
MA State Turnpike Authority,
Series C,
(g) 01/01/20 15,000 5,219
NJ State Turnpike Authority:
Series C,
6.500% 01/01/16 8,500 10,227
Series 1991 C,
6.500% 01/01/16 16,000 19,251
NY Triborough Bridge & Tunnel Authority:
6.125% 01/01/21 5,000 5,873
Series Y,
5.500% 01/01/17 12,500 13,597
Series 1998 A,
5.125% 01/01/11 3,000 3,172
OH State Turnpike Commission,
Series 1998 B,
4.500% 02/15/24 15,000 13,992
TX Eagle Pass International Bridge,
Series 1998,
5.250% 02/15/14 3,720 3,915
VA Richmond Metropolitan Authority,
Series 1998,
5.250% 07/15/17 3,150 3,331
------------
95,376
------------
TRANSPORTATION - 0.3%
MN Blaine,
Consolidated Freightways, Inc.,
Series 1998,
5.150% 01/01/04 1,000 1,005
SC State Ports Authority,
Series 1991,
6.750% 07/01/21 2,050 2,215
VA Northern Virginia Transportation Commission,
Railway Express Project, Series 1998:
5.375% 07/01/13 2,000 2,129
5.375% 07/01/14 1,750 1,853
------------
7,202
------------
- ------------------------------------------------------------------------------
UTILITY - 22.0%
INDIVIDUAL POWER PRODUCER - 1.0%
FL Martin County Industrial Development Authority,
Indiantown Cogeneration Project, Series 1994 A,
7.875% 12/15/25 7,500 8,645
NY Port Authority of New York & New Jersey,
KIAC Partners, Series 1996 IV:
6.750% 10/01/11 1,500 1,682
6.750% 10/01/19 7,000 7,822
PA Economic Development Finance Authority,
Colver Project,
Series D,
7.150% 12/01/18 10,000 11,131
------------
29,280
------------
INVESTOR OWNED - 7.0%
AZ Pima County Industrial Development Authority,
Tucson Electric Power Co.,
Series 1988 A:
6.100% 09/01/25 2,000 2,017
7.250% 07/15/10 10,845 12,095
CT State Development Authority,
Connecticut Light & Power Co.,
Series 1993 A,
5.850% 09/01/28 3,875 3,885
FL Pinellas County,
Florida Power Corp.,
7.200% 12/01/14 1,000 1,094
HI State Department Budget and Finance:
Hawaiian Electric Co., Series 1990 C,
7.375% 12/01/20 5,965 6,461
Series 1993 B, IFRN (variable rate),
7.040% 12/15/23 10,000 10,612
IL Development Financial Authority,
Pollution Control, Series 1991,
7.250% 06/01/11 5,625 6,044
IL State Development Finance Authority,
Commonwealth Edison Co. Project,
Series D,
6.750% 03/01/15 3,400 3,864
IN Mt. Vernon,
Southern Indiana Gas & Electric Co.,
Series 1984 A,
7.250% 03/01/14 4,500 4,809
IN Petersburg,
Indiana Power & Light Co.,
Series B,
5.400% 08/01/17 5,000 5,322
LA De Soto Parish,
Southwestern Electric Power Co.,
Series 1992,
7.600% 01/01/19 6,000 6,811
MI St. Clair County Economic Development Corp.,
Detroit Edison Co.,
Series 1933 AA,
6.400% 08/01/24 7,000 7,970
MS State Business Finance Corp.,
Systems Energy Resources Project,
Series 1998,
5.875% 04/01/22 12,000 11,955
NJ Cape May County Industrial Pollution Control
Financing Authority, Atlantic City Electric Co.,
Series 1994 A,
7.200% 11/01/29 5,000 5,786
NM Farmington,
Southern California Edison Co.,
Series A,
7.200% 04/01/21 3,000 3,248
NV Clark County Industrial Development,
Nevada Power Co.:
Series 1990,
7.800% 06/01/20 4,250 4,565
Series 1992 A,
6.700% 06/01/22 (i) 25,895 28,342
NV Humboldt County Pollution Control Revenue,
Idaho Power Co. Project,
8.300% 12/01/14 1,875 2,222
NY State Energy Research & Development Authority,
Long Island Lighting Co.,
7.150% 12/01/20 11,075 12,072
NY State Energy Research & Development Authority,
Brooklyn Union Gas Co.,
Series 1993 B, IFRN (variable rate),
9.212% 04/01/20 13,000 16,949
NY State Energy Research & Development Authority,
Consolidated Edison Co.,
Series 1994 A,
7.125% 12/01/29 5,000 5,760
OH Air Quality Development Authority,
JMG Funding Project,
5.625% 01/01/23 4,315 4,506
OH State Air Quality Development Authority,
The Cleveland Electric Illuminating Co.,
Series 1992,
8.000% 12/01/13 6,545 7,540
TX Brazos River Authority,
Houston Light & Power Co.,
Series A:
6.700% 03/01/17 (i) 13,015 14,263
7.625% 05/01/19 900 936
TX Matagorda County,
Houston Light & Power Co.,
6.700% 03/01/27 7,200 7,890
WV Mason County Pollution Control,
Appalachian Power Co.,
Series G,
7.400% 01/01/14 400 418
------------
197,436
------------
JOINT POWER AUTHORITY - 4.7%
GA Municipal Electric Authority Power:
Series Z,
5.500% 01/01/20 26,100 27,865
Series 1993 C,
5.700% 01/01/19 20,000 22,003
GA State Municipal Electric Authority:
Series C,
5.700% 01/01/19 6,000 6,480
Series Z,
5.500% 01/01/20 5,375 5,672
MA State Municipal Wholesale Electric Co.,
Series 1994 A, IFRN (variable rate),
6.302% 07/01/16 22,900 23,415
MN Southern Minnesota Municipal Power Agency:
Series A,
5.000% 01/01/16 6,000 6,000
Series 1998 A,
5.000% 01/01/13 2,215 2,276
NC State Municipal Power Agency,
Catawba Electric No. 1,
Series 1998 A,
5.500% 01/01/15 4,500 4,882
SC Piedmont Municipal Power Agency:
Series 1988,
(g) 01/01/13 25,885 13,017
Series 1993,
5.375% 01/01/25 11,805 12,607
TX State Municipal Power Agency,
(g) 09/01/08 4,500 2,952
WI Public Power, Inc.,
Series 1993 B,
5.440% 07/01/14 5,400 5,602
------------
132,771
------------
MUNICIPAL ELECTRIC - 4.5%
CA Sacramento Municipal Utilities District,
Series K:
5.750% 07/01/18 7,670 8,567
5.800% 07/01/19 6,000 6,745
FL Orlando Utilities Commission,
Series 1993-B, IFRN (variable rate),
7.140% 10/06/13 5,000 5,719
LA De Soto Parish,
Southwestern Electric Power Co.,
7.600% 01/01/19 5,000 5,696
NC University of North Carolina at Chapel Hill,
(g) 08/01/14 3,000 1,427
NE Public Power District,
Series 1998 A,
5.250% 01/01/11 9,000 9,545
NY Long Island Power Authority,
Series 1998,
5.125% 04/01/12 6,000 6,248
PR Puerto Rico Electric Power Authority:
Series AA:
5.250% 07/01/16 3,500 3,647
6.000% 07/01/11 4,195 4,851
6.000% 07/01/12 6,680 7,727
6.250% 07/01/10 6,000 7,065
Series 1998 EE,
4.500% 07/01/18 5,000 4,762
SD Heartland Consumers Power District,
Series 1992,
6.000% 01/01/12 3,650 4,171
TN Metropolitan Government,
Nashville & Davidson Counties:
Lifecare & Retirement Centers,
Series 1998,
5.200% 05/15/23 8,100 8,247
Series 1996 A,
(g) 05/15/09 5,250 3,334
TX Austin,
Series 1998,
5.250% 05/15/25 11,500 12,146
TX San Antonio,
Series 1989 B,
5.000% 02/01/16 10,000 10,002
TX San Antonio Electric & Gas,
Series 1998 A,
4.500% 02/01/21 (c) 5,700 5,320
WA Chelan County Public Utilities,
District Number 001 Consolidate,
Series 1989-A Division I,
7.750% 07/01/21 4,500 4,873
WA Chelan County Public Utilities District No. 1,
Columbia River Rock Hydroelectric:
(g) 06/01/09 5,000 3,127
(g) 06/01/11 5,000 2,797
------------
126,016
------------
WATER & SEWER - 4.8%
CA San Diego,
Series 1998:
5.375% 08/01/13 1,000 1,066
5.375% 08/01/14 2,000 2,120
FL Village Center Community Development District,
Series 1998 A,
5.250% 10/01/15 1,000 1,047
ID State Water Resource Board,
Boise Water Corp., Series 1991,
7.250% 12/01/21 6,000 6,567
LA Public Facility Belmont Water Authority,
9.000% 03/15/24 (d) 1,350 1,215
MA State Water Resources Authority:
Series B,
5.000% 03/01/22 18,600 18,322
Series C,
5.250% 12/01/15 10,450 11,080
MD Baltimore,
Water Projects,
Series 1998 A,
5.375% 07/01/15 2,765 2,923
MI Detroit Water Supply System,
Series A:
5.750% 07/01/12 5,500 6,116
6.000% 07/01/14 3,020 3,436
6.000% 07/01/15 3,000 3,416
MS Five Lakes Utility District,
8.250% 07/15/24 760 608
NJ State Economic Development Authority,
American Water Co., Inc.:
6.500% 04/01/22 4,900 5,340
Series 1994 A,
6.875% 11/01/34 10,590 12,076
NV Henderson,
Series 1998 A,
5.375% 09/01/12 5,350 5,685
OH State Water Development Authority,
Water Control Loan Fund:
5.500% 12/01/11 3,940 4,286
5.500% 06/01/13 2,250 2,422
PA Philadelphia,
Water & Waste Water Revenue,
Series 1993,
5.000% 06/15/16 11,550 11,573
TN Jackson Water and Sewer Revenue,
Series 1984,
10.375% 07/01/12 1,090 1,156
TX Houston Water & Sewer System Revenue:
5.000% 12/01/18 24,755 24,755
Series 1998 A,
(g) 12/01/19 20,000 6,945
TX State Coastal Industrial Water Authority,
Bayport Water System,
Series 1978,
7.000% 12/15/03 1,765 1,769
VA Fairfax County Water Authority,
5.000% 04/01/21 1,500 1,532
------------
135,455
------------
TOTAL MUNICIPAL BONDS (cost of $2,592,777)(j) 2,779,141
------------
SHORT-TERM OBLIGATIONS - 0.7%
- ------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (k)
CA Irvine Improvement Bond Act of 1915:
Series 1997,
3.250% 09/02/22 3,168 3,168
Series 1998,
3.250% 09/02/23 3,700 3,700
CA Newport Beach,
Hoag Memorial Presbyterian Hospital,
Series 1996 A,
3.250% 10/01/26 800 800
CA State Health Facilities Financing Authority,
Sutter Health, Series A,
3.250% 03/01/20 600 600
FL Pinellas County Health Facilities Authority,
Series 1985,
3.150% 12/01/15 1,500 1,500
ID State Health Facilities Authority,
St. Lukes Regional Medical Facility, Series 1995,
3.300% 05/01/22 700 700
IL Health Facilities Authority,
Central Dupage Hospital,
3.400% 11/01/20 100 100
IL State Development Finance Authority,
Council for Jewish Elderly,
Series 1995,
3.300% 03/01/15 100 100
IL State Health Facilities Authority,
Palos Community Hospital,
Series 1985 B,
3.350% 12/01/15 600 600
IN Portage Economic Development Revision,
Pedcor Investments:
Series A,
3.500% 08/01/30 249 249
Series B,
3.500% 08/01/30 350 350
IN State Health Facilities Financing Authority,
Series 1990,
3.200% 12/01/10 200 200
IN State Housing Finance Authority,
Pedcor Investments,
Series 1997 M-A,
3.500% 01/01/29 3,000 3,000
LA State Offshore Terminal Authority,
Loop, Inc.,
3.250% 09/01/06 1,200 1,200
MI Farmington Hills Hospital Finance Authority,
Botsford General Hospital,
Series 1991 B,
3.300% 02/15/16 200 200
MI Flint Hospital Building Authority,
Hurley Medical Center,
Series 1995 B,
3.400% 07/01/15 300 300
MS Perry County,
Leaf River Forest Project,
3.250% 03/01/02 100 100
NC Craven County Industrial Facilities & Pollution
Control Financing Authority, John Hancock
Resource Recovery, Inc., Series C,
3.450% 05/01/11 200 200
NM Farmington,
Arizona Public Service Co.,
Four Corners Project,
Series 1994 B,
3.250% 09/01/24 400 400
NY New York City Municipal Water Finance Authority,
Series 1995 A,
3.750% 06/15/25 250 250
NY New York City General Obligation,
Series B,
3.500% 10/01/22 100 100
NY State Energy Research & Development Authority,
Niagara Mohawk Power Corp.,
Series B,
3.800% 07/01/27 950 950
VA Campbell County Industrial Development Authority,
Hadson Power No. 12,
3.450% 04/01/15 1,800 1,800
WY Green River,
Rhone-Poulenc, Inc.,
Series 1992,
3.500% 06/01/99 400 400
------------
TOTAL SHORT-TERM OBLIGATIONS 20,967
------------
OTHER ASSETS & LIABILITIES, NET - 0.9% 25,568
- ------------------------------------------------------------------------------
NET ASSETS - 100% $ 2,825,676
------------
NOTES TO INVESTMENT PORTFOLIO:
- ------------------------------------------------------------------------------
(a) This issuer is in default of certain debt covenants. Income is not being
accrued.
(b) This is a restricted security which was acquired on April 2, 1990 at a cost
of $320. This security represents 0.0% of the Fund's net assets at November
30, 1998.
(c) This security has been purchased on a delayed delivery basis for settlement
at future date beyond the customary settlement date.
(d) Securities exempt from registration under Rule 144A of the Securities Act of
133. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At November 30,
1998, the value of these securities amounted to $71,988 or 2.5% of net
assets.
(e) The value of this security represents fair value as determined under
procedures approved by the Trustees.
(f) Accrued interest accumulates in the value of the security and is payable at
redemption.
(g) Zero coupon bond.
(h) The Fund has been informed that each issuer has placed direct obligations of
the U.S. Government in an irrevocable trust, solely for the payment of the
principal and interest.
(i) These securities, or a portion thereof, with a total market value of
$93,753, are being used to collateralize the delayed delivery purchases
indicated in note (c) above and open futures contracts.
(j) Cost for federal income tax purposes is $2,593,161.
(k) 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 agreemens from banks. The rates listed are as of November 30, 1998.
Short futures contracts open at November 30, 1998:
Par value Unrealized
covered by Expiration depreciation
Type contracts month at 11/30/98
- -------------------------------------------------------------------------------
Treasury Bond $ 40,000 March $ 911
Acronym Name
------- ----
IFRN Inverse Floating Rate Note
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1998
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $2,592,777) $ 2,779,141
Short-term obligations 20,967
-----------
2,800,108
Receivable for:
Interest $ 50,639
Investments sold 9,008
Fund shares sold 396
Other 285 60,328
-------- -----------
Total Assets 2,860,436
LIABILITIES
Payable for:
Investments purchased 27,404
Distributions 3,886
Fund shares repurchased 2,596
Variation margin on futures 500
Payable due to custodian bank 183
Accrued:
Deferred Trustees fees 44
Other 147
--------
Total Liabilities 34,760
-----------
NET ASSETS $ 2,825,676
-----------
Net asset value & redemption price per share -
Class A ($2,470,396/175,131) $ 14.11(a)
-----------
Maximum offering price per share - Class A
($14.11/0.9525) $ 14.81(b)
-----------
Net asset value & offering price per share -
Class B ($353,782/25,080) $ 14.11(a)
-----------
Net asset value & offering price per share -
Class C ($1,498/106) $ 14.11(a)
-----------
COMPOSITION OF NET ASSETS
Capital paid in $ 2,607,861
Overdistributed net investment income (2,771)
Accumulated net realized gain 35,133
Net unrealized appreciation (depreciation) on:
Investments 186,364
Open futures contracts (911)
-----------
$ 2,825,676
-----------
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1998
(in thousands)
INVESTMENT INCOME
Interest $ 173,177
EXPENSES
Management fee $ 14,521
Service fee 7,177
Distribution fee - Class B 2,752
Distribution fee - Class C 6
Transfer agent 4,222
Bookkeeping fee 740
Registration fee 40
Custodian fee 10
Audit fee 60
Trustees fee 86
Reports to shareholders 46
Legal fee 305
Other 215
--------
30,180
Interest expense 1
--------
Total expenses 30,181
Fees waived by the Distributor - Class C (1) 30,180
-------- ---------
Net Investment Income 142,997
---------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 56,628
Closed futures contracts 12,354
--------
Net Realized Gain 68,982
Net change in unrealized appreciation (depreciation)
during the period on:
Investments 14,329
Open futures contracts (1,070)
--------
Net Change in Unrealized Appreciation 13,259
---------
Net Gain 82,241
---------
Increase in Net Assets from Operations $ 225,238
---------
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended November 30
---------------------------
INCREASE (DECREASE) IN NET ASSETS 1998 1997 (a)
Operations:
Net investment income $ 142,997 $ 162,223
Net realized gain 68,982 20,827
Net unrealized appreciation 13,259 18,398
---------- ----------
Net Increase from Operations 225,238 201,448
Distributions:
From net investment income - Class A (130,227) (144,382)
In excess of net investment income - Class A (3,173) --
From net investment income - Class B (16,342) (18,821)
In excess of net investment income - Class B (398) --
From net investment income - Class C (36) (3)
In excess of net investment income - Class C (1) --
---------- ----------
75,061 38,242
---------- ----------
Fund Share Transactions :
Receipts for shares sold - Class A 348,851 362,985
Value of distributions reinvested - Class A 77,460 80,285
Cost of shares repurchased - Class A (572,684) (743,604)
---------- ----------
(146,373) (300,334)
---------- ----------
Receipts for shares sold - Class B 14,954 13,695
Value of distributions reinvested - Class B 9,572 10,327
Cost of shares repurchased - Class B (59,859) (76,626)
---------- ----------
(35,333) (52,604)
---------- ----------
Receipts for shares sold - Class C 1,478 250
Value of distributions reinvested - Class C 29 2
Cost of shares repurchased - Class C (240) (42)
---------- ----------
1,267 210
---------- ----------
Net Decrease from
Fund Share Transactions (180,439) (352,728)
---------- ----------
Total Decrease (105,378) (314,486)
NET ASSETS
Beginning of period 2,931,054 3,245,540
---------- ----------
End of period (net of overdistributed and
including undistributed net investment
income of $2,771 and $3,608, respectively) $2,825,676 $2,931,054
---------- ----------
(a) Class C shares were initially offered on August 1, 1997.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(continued)
(in thousands) Year ended November 30
--------------------------
NUMBER OF FUND SHARES: 1998 1997 (a)
Sold - Class A 25,013 26,948
Issued for distributions reinvested - Class A 5,556 5,962
Repurchased - Class A (41,047) (55,224)
--------- ---------
(10,478) (22,314)
--------- ---------
Sold - Class B 1,070 1,017
Issued for distributions reinvested - Class B 687 767
Repurchased - Class B (4,291) (5,691)
--------- ---------
(2,534) (3,907)
--------- ---------
Sold - Class C 106 18
Issued for distributions reinvested - Class C 2 (b)
Repurchased - Class C (17) (3)
--------- ---------
91 15
--------- ---------
(a) Class C shares were initially offered on August 1, 1997.
(b) Rounds to less than one.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
NOTE 1. ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
ORGANIZATION: Colonial Tax-Exempt Fund (the Fund), a series of Colonial Trust
IV, is a diversified portfolio of a Massachusetts business trust, registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund's investment objective is to seek as high a level
of after-tax total return as is consistent with prudent risk, by pursuing
current income exempt from federal income tax and opportunities for long-term
appreciation from a portfolio primarily invested in investment-grade municipal
bonds. The Fund may issue an unlimited number of shares. The Fund offers 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 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 (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 fees for 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 and tax-exempt
income, no federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; market
discount is not accreted. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records distributions daily
and pays monthly.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
NOTE 2. 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 based on each Fund's pro-
rata portion of the combined average net assets of the Fund, Colonial Tax-
Exempt Insured Fund and Colonial High Yield Municipal Fund as follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $1 billion 0.60%
Next $2 billion 0.55%
Next $1 billion 0.50%
Over $4 billion 0.45%
The management fee applicable to the Fund was reduced by 0.05% annually of the
average net assets of the Fund between $2 billion and $3 billion.
In addition, a further reduction was made based on the following schedule:
Cumulative Annualized
Effective Date Reduction
------------------- ---------------------
January 1, 1996 0.01%
April 1, 1996 0.02%
July 1, 1996 0.03%
October 1, 1996 0.04%
BOOKKEEPING FEE: The Advisor provides bookkeeping and pricing services for
$27,000 per year plus a percentage of the Fund's average net assets as follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
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%
TRANSFER AGENT: Liberty Funds Services, Inc., formerly Colonial Investors
Service Center, 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.
Effective January 1, 1997, and continuing through calendar year 1997, the
Transfer Agent fee was reduced 0.01% in cumulative monthly increments, resulting
in a decrease in the fee from 0.14% to 0.13% annually.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds
Distributor, Inc., formerly Liberty Financial Investments, Inc., (the
Distributor), a subsidiary of the Advisor, is the Fund's principal underwriter.
For the year ended November 30, 1998, the Fund has been advised that the
Distributor retained net underwriting discounts of $1,051,608 on sales of the
Fund's Class A shares and received contingent deferred sales charges (CDSC) of
none, $595,892, and $1,908, on Class A, 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 fee to the
Distributor equal to 0.75% 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 will not exceed 0.60%
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.
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 3. PORTFOLIO INFORMATION
- -------------------------------------------------------------------------------
INVESTMENT ACTIVITY: For the year ended November 30, 1998, purchases and sales
of investments, other than short-term obligations, were $144,227,253 and
$65,877,050, respectively.
Unrealized appreciation (depreciation) at November 30, 1998, based on cost of
investments for federal income tax purposes was approximately:
Gross unrealized appreciation $199,246,000
Gross unrealized depreciation (13,266,000)
------------
Net unrealized appreciation $185,980,000
------------
OTHER: The Fund has greater than 10% of its net assets at November 30, 1998
invested in New York.
There are certain risks arising from geographic concentration in any state.
Certain revenue or tax related events in a state may impair the ability of
certain issuers of municipal securities to pay principal and interest on their
obligations.
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 positions due to
different trading hours or the temporary absence of a liquid market for either
the instrument or the underlying securities or (3) an inaccurate prediction by
the Advisor of the future direction of interest rates. Any of these risks may
involve amounts exceeding the amount recognized in the Fund's Statement of
Assets and Liabilities at any given time.
NOTE 4. LINE OF CREDIT
- -------------------------------------------------------------------------------
The Fund may borrow up to 33 1/3% 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 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, 1998, was
$13,699, at a weighted average interest rate of 8.50%. The maximum loan
outstanding during the period was $5,000,000.
NOTE 5. RESULTS OF SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
- -------------------------------------------------------------------------------
On October 30, 1998, a Special Meeting of Shareholders of the Fund was held to
approve the following items, all as described in the Proxy Statement of the
Meeting. On August 21, 1998, the record date for the Meeting, the Fund had
outstanding 202,341,146 shares of beneficial interest. The votes cast at the
Meeting were as follows:
AUTHORITY
FOR WITHHELD
--- --------
To elect a Board of Trustees:
Robert J. Birnbaum 111,241,824 3,704,276
Tom Bleasdale 111,302,147 3,643,953
John Carberry 111,296,918 3,649,182
Lora S. Collins 111,240,268 3,705,832
James E. Grinnell 111,284,061 3,662,039
Richard W. Lowry 111,316,176 3,629,924
Salvatore Macera 111,240,966 3,705,134
William E. Mayer 111,291,075 3,655,025
James L. Moody, Jr. 111,310,368 3,635,732
John J. Neuhauser 111,275,215 3,670,885
Thomas E. Stitzel 111,252,885 3,693,215
Robert L. Sullivan 111,291,753 3,654,347
Anne-Lee Verville 111,286,511 3,659,589
To amend fundamental investment policies regarding borrowing and lending:
FOR AGAINST ABSTAIN
--- ------- -------
89,884,435 3,905,124 6,678,946
To reclassify the fundamental investment policies regarding borrowing and
lending:
FOR AGAINST ABSTAIN
--- ------- -------
87,708,683 5,519,864 7,239,958
To approve policies for a master fund/feeder fund structure:
FOR AGAINST ABSTAIN
--- ------- -------
88,944,069 3,783,547 7,740,890
<PAGE>
FINANCIAL HIGHLIGHTS
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 $ 13.750 $ 13.750 $ 13.750
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.713 0.605 0.627(b)
Net realized and
unrealized gain (loss) 0.391 0.391 0.391
-------- -------- --------
Total from Investment
Operations 1.104 0.996 1.018
-------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.726) (0.621) (0.642)
In excess of net
investment income (0.018) (0.015) (0.016)
-------- -------- --------
Total Distributions
Declared to Shareholders (0.744) (0.636) (0.658)
-------- -------- --------
Net asset value -
End of period $ 14.110 $ 14.110 $ 14.110
-------- -------- --------
Total return (d) 8.22% 7.40% 7.56%(j)
-------- -------- --------
RATIOS TO AVERAGE NET ASSETS
Operating expenses (f) 0.95% 1.70% 1.55%(b)
Interest expense (h) (h) (h)
Total expenses (f) 0.95% 1.70% 1.55%(b)
Net investment income (f) 5.08% 4.33% 4.48%(b)
Portfolio turnover 26% 26% 26%
Net assets at end
of period (in millions) $ 2,470 $ 354 $ 1
(a) Class C shares were initially offered on August 1, 1997. Per share amounts
reflect activity from that date.
(b) Net of fees waived by the Distributor which amounted to $0.021 per share and
0.15%.
(c) The amount shown for a share outstanding does not correspond with the
aggregate net gain on investments for the period due to the timing of sales
and repurchases of Fund shares in relation to fluctuating market values of
the investments of the Fund.
(d) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(g) Annualized.
(h) Rounds to less than 0.00%.
<PAGE>
FINANCIAL HIGHLIGHTS- CONT.
Year ended November 30
---------------------------------------
1997
Class A Class B Class C (a)
----------- ------------ ---------------
$ 13.550 $ 13.550 $ 13.860
-------- -------- --------
0.743 0.642 0.218
0.194 0.194 (0.114)(c)
-------- -------- --------
0.937 0.836 0.104
-------- -------- --------
(0.737) (0.636) (0.214)
-- -- --
-------- -------- --------
(0.737) (0.636) (0.214)
-------- -------- --------
$ 13.750 $ 13.750 $ 13.750
-------- -------- --------
7.16% 6.37% 0.77% (e)
-------- -------- --------
0.98% 1.73% 1.59% (g)
-- -- --
0.98% 1.73% 1.59% (g)
5.45% 4.70% 4.76% (g)
39% 39% 39%
$ 2,551 $ 380 $ (i)
(i) Rounds to less than one million.
(j) Had the Distributor not waived a portion of expenses, total return
would have been reduced.
- -------------------------------------------------------------------
Federal Income Tax Information (unaudited)
Approximately 99.9% of the income distributions will be treated as
exempt income for federal income tax purposes.
For the fiscal year ended November 30, 1998 the Fund earned long
term capital gains of which none and $45,956,160 are 28% and 20%
rate gains, respectively.
- -------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each
period are as follows:
Year ended November 30
--------------------------------------------------
1996 1995
Class A Class B Class A Class B
---------- ----------- ---------- ----------
Net asset value -
Beginning of period $ 13.720 $ 13.720 $ 12.180 $12.180
-------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.756 0.656 0.771 0.673
Net realized and
unrealized gain (loss) (0.171) (0.171) 1.535 1.535
-------- -------- -------- -------
Total from Investment
Operations 0.585 0.485 2.306 2.208
-------- -------- -------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.755) (0.655) (0.766) (0.668)
-------- -------- -------- -------
Net asset value -
End of period $ 13.550 $ 13.550 $ 13.720 $13.720
-------- -------- -------- -------
Total return (a) 4.47% 3.70% 19.35% 18.47%
-------- -------- -------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.99%(b) 1.74%(b) 1.01%(b) 1.76%(b)
Net investment income 5.61%(b) 4.86%(b) 5.82%(b) 5.07%(b)
Portfolio turnover 40% 40% 41% 41%
Net assets at end
of period (in millions) $ 2,818 $ 427 $ 3,111 $ 469
(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.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended November 30
----------------------
1994
Class A Class B
-------- -------
$ 13.920 $ 13.920
-------- --------
0.795 0.695
(1.744) (1.744)
-------- --------
(0.949) (1.049)
-------- --------
(0.791) (0.691)
-------- --------
$ 12.180 $ 12.180
-------- --------
(7.08)% (7.78)%
-------- --------
1.01% 1.76%
6.00% 5.25%
56% 56%
$ 2,858 $ 440
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST IV AND THE SHAREHOLDERS OF
COLONIAL TAX-EXEMPT FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations, changes in
net assets and the financial highlights present fairly, in all material
respects, the financial position of Colonial Tax-Exempt Fund, (the "Fund") (a
series of Colonial Trust IV) at November 30, 1998, 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, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 13, 1999
<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 Liberty Funds Services, Inc. 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 Funds Distributor, 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 Funds Distributor 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 Funds Distributor. 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.
<PAGE>
HOW TO REACH US
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.
LIBERTY 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 Funds Distributor,
Inc., call Monday to Friday, 8:30 a.m. to 6:30 p.m. ET.
BY MAIL
LIBERTY FUNDS SERVICES, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Tax-Exempt Fund is:
Liberty Funds Services, Inc.*
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Tax-Exempt Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call 1-800-426-3750 and
additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Tax-Exempt Fund. This
report may also be used as sales literature when preceded or accompanied by the
current prospectus which provides details of sales charges, investment
objectives and operating policies of the Fund and the most recent copy of the
Liberty Funds Distributor, Inc. Performance Update.
* Effective October 1, 1998, Colonial Investor 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)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
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)
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 and Chief Executive Officer, 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 Peat Marwick 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
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
TE-02/360G-1198 (1/99) 98/1437
