<PAGE>
Seeking new opportunities for
investors in a more
competitive utilities
environment.
- ------------------------------------------
COLONIAL UTILITIES FUND ANNUAL REPORT
- ------------------------------------------
November 30, 1998
- -------------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
- -------------------------------
<PAGE>
COLONIAL UTILITIES FUND
DECEMBER 1, 1997 - NOVEMBER 30, 1998
INVESTMENT OBJECTIVE: Colonial Utilities Fund seeks current income and
long-term growth.
PORTFOLIO MANAGEMENT COMMENTARY: "Our focus on a core portfolio of high-quality
utility stocks generated attractive gains for shareholders during a period of
worldwide market volatility. In particular, our holdings in the
telecommunications sector contributed significantly to the Fund's solid
performance."
- John Lennon, Ophelia Barsketis and Deborah Jansen
COLONIAL UTILITIES FUND PERFORMANCE
CLASS A CLASS B CLASS C
Inception dates 3/4/92(1) 5/5/92 8/1/97
- --------------------------------------------------------------------------------
Distributions declared per share $0.557 $0.406 $0.406
- --------------------------------------------------------------------------------
30-day SEC yields on 11/30/98(2) 2.03% 1.38% 1.38%
- --------------------------------------------------------------------------------
12-month total returns, assuming 20.32% 19.41% 19.41%
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
- --------------------------------------------------------------------------------
Net asset value per share on 11/30/98 $21.13 $21.13 $21.13
TOP FIVE HOLDINGS SECTOR BREAKDOWN
(as of 11/30/98) (as of 11/30/98)
- ----------------------------------- ------------------------------------
1. GTE Corp. ................ 4.35% Common & Convertible Stocks
2. BellSouth Corp. .......... 4.00% Telecommunications ......... 40.9%
3. Williams Companies, Inc. . 3.97% Electric Services .......... 39.0%
4. Bell Atlantic Corp. ...... 3.83% Gas Services ............... 6.8%
5. Ameritech Corp. .......... 3.79% Other Utility Stocks ....... 0.7%
Non-Utility Stocks ......... 3.8%
Preferred Stocks ............. 6.8%
Net Cash & Equivalents ....... 2.0%
(1) Date of adoption of the Fund's current investment policies.
(2) Reflects the portfolio's earning power, net of expenses and expressed as an
annualized percentage of the public offering price per share at the end of
the period.
Holdings and sector breakdowns are calculated as a percent of total net
assets. Because the Fund is actively managed, there can be no guarantee the Fund
will continue to hold these securities or maintain these sector weightings in
the future.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Stephen E. Gibson]
I am pleased to present the annual report for Colonial Utilities Fund. This
report reflects on the investment environment for the 12 months ended November
30, 1998.
The past year was characterized by changing investment conditions. Initially,
investors were concerned with the Asian economic crisis and its potential impact
on financial markets worldwide. During the summer, the emergence of serious
economic problems in Russia and Latin America renewed concerns of a global
economic slowdown. As a result, stock markets around the world declined.
Investors sought safe havens in strong currencies and relatively stable
investments. This flight to quality was reflected in stronger demand for U.S.
Treasury securities, causing a sharp decline in interest rates. In this
environment, investors also sought quality stocks, such as U.S. utilities, that
offered relative stability, good liquidity and low exposure to volatile foreign
economies. Utility stock prices rose in response.
During the final months of the period, the Federal Reserve Board announced three
successive interest rate cuts. These moves contributed to market rallies, as
investors generally concluded that lower rates would stimulate the economy.
Because utility stock prices generally rise in a falling interest rate
environment, the Fund also benefited from this trend. In addition, as markets
recovered, utility companies renewed their merger activity, which helped their
stock prices to advance.
Colonial Utilities Fund maintained its emphasis on a diversified portfolio of
high-quality, fundamentally strong utility stocks offering attractive levels of
income and long-term growth potential. The following report will provide you
with more specific information on your Fund's performance. Thank you for giving
us the opportunity to help you achieve your financial goals. We hope to continue
serving you in the years to come.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
January 13, 1999
Because market and economic conditions change, there can be no assurance that
the trends discussed above or on the following pages will continue.
<PAGE>
PORTFOLIO MANAGEMENT REPORT
JOHN LENNON, OPHELIA BARSKETIS AND DEBORAH JANSEN are co-managers of Colonial
Utilities Fund. Mr. Lennon is vice president of Colonial Management Associates,
Inc. Ms. Barsketis and Ms. Jansen are senior vice presidents of Stein, Roe &
Farnham Incorporated.
VOLATILE INVESTMENT ENVIRONMENT PRESENTED CHALLENGES
The past 12 months presented investors with a number of challenges. While Asian
economies continued to show weakness, economies in the U.S. and other developed
countries experienced balanced growth with few signs of inflation. The continued
rise in U.S. stock prices ended in late July when a monetary and political
crisis in Russia emerged. Investors worldwide worried that this crisis, along
with the Asian slowdown, would result in a global economic decline. A flight to
quality increased demand for U.S. government bonds, and domestic interest rates
fell sharply. As worries about the world's economies continued in the fall, the
Federal Reserve Board announced three successive interest rate cuts intended to
reduce the likelihood of a recession. A more positive economic and market
environment ensued, and there was a revival of merger and acquisition activity.
Both the broad market and the utility sector reacted positively.
REGIONAL TELEPHONE COMPANY STOCKS PERFORMED WELL DURING THE PERIOD
Our core portfolio of high-quality U.S. utility stocks included a significant
weighting in telecommunications stocks (40.9% of total net assets). Within this
sector, the Fund held a group of regional telecommunications companies that
performed well during the period. Examples include BellSouth Corp. (4.0% of
total net assets), Ameritech (3.8% of total net assets), and U.S. West (2.1% of
total net assets). These stocks had total returns for the 12-month period of
58.2%, 40.8% and 42.2%, respectively. All three companies had the market
capitalization and trading features that investors sought, and their businesses
benefited from an increasing demand for data services in the U.S.
ELECTRIC UTILITY STOCKS ALSO GENERATED GOOD PERFORMANCE
The Fund's core portfolio also included a sizable investment in basic electric
utility stocks, representing 43.4% of net assets. Like the regional phone
stocks, many electric utility stocks benefited from their large capitalization
size, good market trading characteristics and strong brand names that were
appealing to investors seeking conservative growth. While the electric utility
sector continued to be affected by deregulation issues, the resolution of
proposed regulatory changes in a number of states, notably California and
Illinois, helped the performance of electric stocks in those regions. In
addition, electric utility companies have found innovative ways to increase
their growth potential. For example, Peco Energy (1.1% of total net assets), a
Philadelphia-based electric utility, has been acquiring nuclear generating
facilities around the U.S. at bargain prices. Peco has entered into a joint
venture with British Energy, a company renowned for its nuclear plant
management, to operate these facilities. This stock has increased 28% since we
began acquiring shares in late August.
A DIFFICULT YEAR FOR NATURAL GAS STOCKS
Natural gas stocks were generally disappointing during the past year. Declines
in natural gas prices and reduced demand caused by warmer-than-usual weather in
many parts of the country had a negative effect on stock prices in this sector.
Natural gas stocks represented less than 10% of the Fund's assets. We maintained
our investment in these stocks because of their attractive income and long-term
growth potential.
FUND'S PERFORMANCE REFLECTS HIGH-QUALITY HOLDINGS
For the 12-month period, the Fund generated a total return of 20.3% for Class A
shares, based on net asset value. This compares favorably to the Standard &
Poor's Utility Index, which returned 19.8% over the same period. The Fund also
outperformed the average return of the Lipper Utility Funds category, which was
17.8% for the period.(1) The Fund's solid performance can be attributed to its
high-quality U.S. telephone holdings, successful investments in select European
telephone stocks, and minimal exposure to weak markets in Asia and Latin
America.
ECONOMIC AND MARKET OUTLOOK POSITIVE FOR UTILITY STOCKS
We anticipate that U.S. economic growth may slow down and that interest rates
may fall further during the first half of 1999. These should be positive factors
for utility stock prices, which tend to be less affected by the economy's health
than many other market sectors. We will continue to monitor the impact of U.S.
utility market deregulation, as well as merger and acquisition activities. We
expect that both types of activity may result in utility stock price gains.
Looking ahead, we will maintain our conservative focus on a broadly diversified
core portfolio of high-quality utility stocks, concentrating on stocks offering
the attractive combination of income and long-term growth potential.
(1) Source: Lipper, Inc. Lipper rankings are based on the Lipper Utilities Funds
category. The Fund's Class A share ranking is in the second quartile for the
one-year period (ranked 30th out of 101 funds); in the second quartile for
the three-year period (ranked 29th out of 81 funds); in the first quartile
for the five-year period (ranked 11th out of 52 funds); and in the third
quartile for the 10-year period (ranked 7th out of 12 funds). Rankings do
not include any sales charges. Performance for different share classes will
vary with fees associated with each class. Past performance cannot guarantee
future results.
<PAGE>
COLONIAL UTILITIES FUND INVESTMENT PERFORMANCE VS.
THE DOW JONES UTILITIES AVERAGE AND THE STANDARD & POOR'S 500 INDEX
Change in Value of $10,000 from 11/30/88-11/30/98
Based on NAV and POP for Class A Shares
DOW
JONES
NAV POP S&P 500 UTILITY
Nov 30, 88 $10,000 $10,000 $10,000 $10,000
Dec 31, 88 10,051 9,573 10,174 10,113
Jan 31, 89 10,505 10,006 10,919 10,402
Feb 28, 89 10,490 9,992 10,647 10,052
Mar 31, 89 10,684 10,178 10,895 10,195
Apr 30, 89 10,838 10,323 11,460 10,684
May 31, 89 11,028 10,504 11,922 11,235
Jun 30, 89 11,257 10,722 11,855 11,840
Jul 31, 89 11,610 11,059 12,925 12,529
Aug 31, 89 11,599 11,143 13,177 12,388
Sep 30, 89 11,796 11,236 13,123 12,412
Oct 31, 89 11,754 11,195 12,819 12,625
Nov 30, 89 11,794 11,233 13,079 13,038
Dec 31, 89 11,832 11,270 13,393 13,716
Jan 31, 90 11,488 10,942 12,494 13,093
Feb 28, 90 11,540 10,992 12,655 12,985
Mar 31, 90 11,441 10,898 12,990 12,740
Apr 30, 90 11,200 10,668 12,666 12,094
May 31, 90 11,503 10,956 13,899 12,666
Jun 30, 90 11,538 10,990 13,805 12,678
Jul 31, 90 11,545 10,997 13,761 12,722
Aug 31, 90 11,343 10,804 12,519 11,936
Sep 30, 90 11,094 10,567 11,910 12,174
Oct 31, 90 10,966 10,436 11,860 13,142
Nov 30, 90 11,234 10,701 12,625 13,140
Dec 31, 90 11,227 10,694 12,976 13,091
Jan 31, 91 11,499 10,953 13,540 12,953
Feb 28, 91 12,051 11,478 14,507 13,404
Mar 31, 91 12,385 11,797 14,858 13,766
Apr 30, 91 12,853 12,243 14,893 13,376
May 31, 91 13,021 12,403 15,534 13,562
Jun 30, 91 12,841 12,231 14,823 12,710
Jul 31, 91 13,193 12,566 15,513 13,056
Aug 31, 91 13,411 12,774 15,879 13,566
Sep 30, 91 13,551 12,907 15,613 13,973
Oct 31, 91 13,751 13,098 15,823 14,212
Nov 30, 91 13,881 13,222 15,187 14,490
Dec 31, 91 14,137 13,465 16,921 15,087
Jan 31, 92 14,585 14,892 16,606 14,062
Feb 29, 92 14,963 14,252 16,821 13,837
Mar 31, 92 15,997 14,285 16,494 13,951
Apr 30, 92 15,303 14,577 16,978 14,351
May 31, 92 15,662 14,918 17,061 14,603
Jun 30, 92 16,795 15,045 16,807 14,559
Jul 31, 92 15,523 15,834 17,493 15,582
Aug 31, 92 16,594 15,806 17,136 15,223
Sep 30, 92 16,693 15,900 17,338 15,438
Oct 31, 92 16,702 15,909 17,397 15,445
Nov 30, 92 16,686 15,893 17,988 15,431
Dec 31, 92 17,107 16,294 18,208 15,702
Jan 31, 93 17,424 16,597 18,361 16,130
Feb 28, 93 18,316 17,446 18,611 17,195
Mar 31, 93 18,456 17,580 19,003 17,400
Apr 30, 93 18,413 17,539 18,544 17,278
May 31, 93 18,384 17,510 19,039 17,304
Jun 30, 93 18,908 18,010 19,094 17,873
Jul 31, 93 19,249 18,335 19,017 18,298
Aug 31, 93 19,738 18,800 19,737 18,867
Sep 30, 93 19,561 18,632 19,586 18,482
Oct 31, 93 19,281 18,365 19,991 17,847
Nov 30, 93 18,388 17,515 19,800 16,810
Dec 31, 93 18,699 17,810 20,040 17,213
Jan 31, 94 18,395 17,522 20,720 16,994
Feb 28, 94 17,543 16,709 20,158 15,926
Mar 31, 94 17,070 16,259 19,281 14,958
Apr 30, 94 17,449 16,621 19,528 15,222
May 31, 94 16,709 15,916 19,847 14,318
Jun 30, 94 16,327 15,551 19,362 13,737
Jul 31, 94 16,932 16,128 19,997 14,481
Aug 31, 94 16,983 16,177 20,815 14,810
Sep 30, 94 16,555 15,769 20,306 14,317
Oct 31, 94 16,775 15,979 20,762 14,340
Nov 30, 94 16,726 15,931 20,007 14,312
Dec 31, 94 16,770 15,974 20,303 14,582
Jan 31, 95 17,865 17,061 20,829 15,544
Feb 28, 95 17,971 17,117 21,640 15,716
Mar 31, 95 17,828 16,981 22,278 15,311
Apr 30, 95 18,195 17,331 22,933 15,912
May 31, 95 19,016 18,112 23,848 17,004
Jun 30, 95 19,078 18,172 24,401 16,760
Jul 31, 95 19,199 18,287 25,210 16,949
Aug 31, 95 19,646 18,713 25,273 16,911
Sep 30, 95 20,732 19,748 26,339 18,017
Oct 31, 95 21,183 20,177 26,245 18,080
Nov 30, 95 21,559 20,535 27,396 18,315
Dec 31, 95 22,599 21,525 27,923 19,245
Jan 31, 96 23,034 21,940 28,873 19,756
Feb 29, 96 22,475 21,408 29,141 18,876
Mar 31, 96 22,248 21,191 29,422 18,419
Apr 30, 96 22,006 20,916 29,855 18,235
May 31, 96 22,036 20,989 30,624 18,332
Jun 30, 96 22,865 21,779 30,741 19,359
Jul 31, 96 21,972 20,928 29,383 18,070
Aug 31, 96 22,081 21,032 30,004 18,994
Sep 30, 96 22,125 21,074 31,691 19,316
Oct 31, 96 23,024 21,931 32,565 20,241
Nov 30, 96 23,772 22,643 35,024 21,154
Dec 31, 96 23,959 22,821 34,330 20,996
Jan 31, 97 24,461 23,299 36,474 21,030
Feb 28, 97 24,887 23,705 36,760 20,668
Mar 31, 97 23,957 22,819 35,253 19,984
Apr 30, 97 24,145 22,998 37,355 19,835
May 31, 97 24,972 23,785 39,639 20,473
Jun 30, 97 25,704 24,483 41,401 20,988
Jul 31, 97 26,071 24,833 44,695 21,834
Aug 31, 97 25,476 24,266 42,193 21,614
Sep 30, 97 26,809 25,536 44,502 22,302
Oct 31, 97 26,939 25,659 43,018 22,741
Nov 30, 97 29,301 27,909 45,007 24,375
Dec 31, 97 30,729 29,269 45,780 25,825
Jan 31, 98 30,695 29,237 46,286 24,936
Feb 28, 98 31,425 29,933 49,622 25,855
Mar 31, 98 33,970 32,357 52,161 27,299
Apr 30, 98 33,030 31,461 52,695 27,207
May 31, 98 32,545 30,999 51,791 27,349
Jun 30, 98 32,997 31,429 53,893 28,335
Jul 31, 98 33,958 32,345 53,323 26,917
Aug 31, 98 32,294 30,760 45,619 27,008
Sep 30, 98 32,198 30,669 48,544 29,868
Oct 31, 98 33,265 31,685 52,487 29,405
Nov 30, 98 35,255 33,581 55,667 29,734
VALUE OF A $10,000 INVESTMENT MADE ON 11/30/88
As of 11/30/98
- -------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
NAV POP NAV W/CDSC NAV W/CDSC
- -------------------------------------------------------------------------------
$35,255 $33,581 $33,590 $33,590 $34,906 $34,906
- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
As of 11/30/98
- -------------------------------------------------------------------------------
CLASS A SHARES(1) CLASS B SHARES CLASS C SHARES
INCEPTION 3/4/92 5/5/92 8/1/97
NAV POP NAV W/CDSC NAV W/CDSC
1 YEAR 20.32% 14.60% 19.41% 14.41% 19.41% 18.41%
- -------------------------------------------------------------------------------
5 YEARS 13.90 12.80 13.06 12.81 13.68 13.68
- -------------------------------------------------------------------------------
10 YEARS 13.43 12.88 12.88 12.88 13.32 13.32
- -------------------------------------------------------------------------------
(1) Change in investment policies.
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. 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 for
different share classes will vary based on differences in sales charges and fees
associated with each class.
The Dow Jones Utilities Average and the Standard & Poor's 500 Index are
unmanaged indexes that track the performance of utility stocks and U.S. stocks,
respectively. Unlike mutual funds, indexes are not investments and do not incur
fees or expenses. It is not possible to invest in an index.
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 dates 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 date
of the newer class shares would have been lower.
<PAGE>
INVESTMENT PORTFOLIO
NOVEMBER 30, 1998 (IN THOUSANDS)
COMMON STOCKS AND CONVERTIBLES - 92.7% COUNTRY SHARES VALUE
- ------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 0.6%
DEPOSITORY INSTITUTIONS
First Union Corp. 100 $ 6,075
----------
- ------------------------------------------------------------------------------
MANUFACTURING - 1.2%
COMMUNICATIONS EQUIPMENT
Lucent Technologies, Inc. 150 12,909
----------
- ------------------------------------------------------------------------------
MINING & ENERGY - 2.0%
OIL & GAS FIELD SERVICES
Enron Corp. 418 21,948
----------
- ------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 88.9%
ELECTRIC, GAS & SANITARY SERVICES - 0.7%
Sempra Energy 300 7,519
----------
ELECTRIC SERVICES - 39.0%
AES Corp. (a) 600 27,450
American Electric Power Co., Inc. 125 5,797
BEC Energy 100 4,125
Cinergy Corp. 950 32,834
Citizens Utilities Co., 5% Convertible Preferred 100 4,300
DPL, Inc. 1,600 32,000
DTE Energy Co. 500 21,812
Duke Power Co. 400 25,025
Eastern Utilities Associates 125 3,083
Edison International 1,000 27,500
FirstEnergy Corp. 200 6,187
FPL Group, Inc. 672 41,154
GPU, Inc. 700 30,669
Houston Industries, Inc. 774 24,478
Interstate Energy Corp. 285 8,657
Kansas City Power & Light Co. 400 11,875
New Century Energies, Inc. 550 26,434
Peco Energy Co. 300 12,038
Public Service Enterprise Group, Inc. 100 3,900
Sierra Pacific Resources 275 9,900
Southern Co. 600 17,700
Texas Utilities Co. 800 35,650
Unicom Corp. 200 7,538
Utilicorp United, Inc. 150 5,278
----------
425,384
----------
GAS SERVICES - 8.3%
KN Energy, Inc., 8.250% PEPS 225 9,731
MCN Energy Group, Inc. 825 15,623
MCN Energy Group, Inc., 8.750% PRIDES 35 656
MDU Resources Group, Inc. 263 6,644
UGI Corp. 400 9,750
Williams Cos., Inc. 1,500 43,219
Williams Cos., Inc., $3.50 Convertible Preferred 37 5,001
----------
90,624
----------
TELECOMMUNICATION - 40.9%
Ameritech Corp. 762 41,265
Bell Atlantic Corp. 750 41,719
BellSouth Corp. 500 43,625
Cincinnati Bell, Inc. 450 14,175
Energis PLC (a) UK 110 10,120
Frontier Corp. 550 16,569
GTE Corp. 765 47,430
Hellenic Telecommunication Organization SA Gr 346 8,629
Magyar Tavkozlesi Rt ADR Hg 250 6,828
MCI WorldCom, Inc. (a) 500 29,500
SBC Communications, Inc., Class A 750 35,953
Sonera Group Oyj Fi 1,200 17,709
Swisscom AG (a) Sz 104 35,061
Telecom Corp. of New Zealand NZ 150 5,034
Telecom Italia SPA ADR It 315 25,404
Telecomunicacoes Brasileiras SA ADR (a) Bz 50 4,741
Telefonica de Espana ADR Sp 180 25,087
Telefonos de Mexico SA Mx 300 13,969
US West Communications Group 363 22,584
----------
445,402
----------
TOTAL COMMON STOCKS & CONVERTIBLES
(cost of $683,130) 1,009,861
----------
PREFERRED STOCKS - 4.5%
- ------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 4.5%
ELECTRIC SERVICES - 3.6%
Commonwealth Edison Co., 7.240% 52 5,327
Entergy Arkansas, Inc.:
7.800% 10 1,031
7.880% 9 921
Entergy Gulf States Utilities:
7.560% 18 1,850
8.800% 12 1,163
Entergy Louisiana, Inc., 8.000% 30 860
Jersey Central Power & Light Co., 7.880%, Series E 15 1,560
Northern Indiana Public Service Co., 7.440% 9 932
Ohio Edison Co., 7.750% 240 6,090
Pennsylvania Power Co., 7.750% 15 1,774
TU Electric Capital, TOPRS, 8.250% 680 17,468
----------
38,976
----------
GAS SERVICES - 0.9%
Enron Corp., 8.000% MIPS 400 9,975
Pacific Enterprises, $4.50 4 331
----------
10,306
----------
TOTAL PREFERRED STOCKS (cost of $48,137) 49,282
----------
ADJUSTABLE RATE PREFERRED STOCKS - 0.8%
- ------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.8%
ELECTRIC SERVICES
Cleveland Electric Illuminating Co., Series L 65 6,581
Entergy Gulf States Utilities, Series A 15 1,581
Toledo Edison Co., Series A 40 1,000
----------
9,162
----------
TOTAL ADJUSTABLE RATE PREFERRED STOCKS (cost of $8,556) 9,162
----------
TOTAL INVESTMENTS - 98.0% (cost of $739,823)(b) 1,068,305
----------
SHORT-TERM OBLIGATIONS - 1.2% PAR
- ------------------------------------------------------------------------------
Repurchase agreement with ABN AMRO Chicago Corp.,
dated 11/30/98, due 12/01/98 at 5.200%, collateralized
by U.S. Treasury notes with various maturities to 2021,
market value $13,224 (repurchase proceeds $12,936) $ 12,934 12,934
----------
OTHER ASSETS & LIABILITIES, NET - 0.8% 8,758
- ------------------------------------------------------------------------------
NET ASSETS - 100% $1,089,997
----------
NOTES TO INVESTMENT PORTFOLIO:
- ------------------------------------------------------------------------------
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
Summary of Securities by
Country Country Value % of Total
---------------------------------------------------------------------
United States $ 915,723 85.7
Switzerland Sz 35,061 3.3
Italy It 25,404 2.4
Spain Sp 25,087 2.4
Finland Fi 17,709 1.7
Mexico Mx 13,969 1.3
United Kingdom UK 10,120 0.9
Greece Gr 8,629 0.8
Hungary Hg 6,828 0.6
New Zealand NZ 5,034 0.5
Brazil Bz 4,741 0.4
---------- -----
$1,068,305 100.0
---------- -----
Certain securities are listed by country of underlying exposure but may
trade predominantly on other exchanges.
Acronym Name
-------------- -------------------------------------
ADR American Depositary Receipt
MIPS Monthly Income Preferred Stock
PEPS Premium Equity Participating Security
PRIDES Preferred Redeemable Increased
Dividend Equity Security
TOPRS Trust Originated Preferred
Redeemable Securities
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1998
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $739,823) $ 1,068,305
Short-term obligations 12,934
-----------
1,081,239
Cash and foreign currency $ 1,028
Receivable for:
Investments sold 7,578
Dividends 2,872
Fund shares sold 868
Interest 2
Other 111 12,459
------- -----------
Total Assets 1,093,698
LIABILITIES
Payable for:
Fund shares repurchased 1,491
Distributions 1,096
Investments purchased 1,083
Accrued:
Deferred Trustees fee 21
Other 10
-------
Total Liabilities 3,701
-----------
NET ASSETS $ 1,089,997
-----------
Net asset value & redemption price per share -
Class A ($351,047/16,614) $ 21.13 (a)
-----------
Maximum offering price per share - Class A
($21.13/0.9525) $ 22.18 (b)
-----------
Net asset value & offering price per share -
Class B ($736,374/34,849) $ 21.13 (a)
-----------
Net asset value & offering price per share -
Class C ($2,576/122) $ 21.13 (a)
-----------
COMPOSITION OF NET ASSETS
Capital paid in $ 727,961
Overdistributed net investment income (585)
Accumulated net realized gain 34,139
Net unrealized appreciation 328,482
-----------
$ 1,089,997
-----------
(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
Dividends $ 38,767
Interest 1,461
--------
Total investment income (net of nonreclaimable
foreign taxes withheld at source which
amounted to $134) 40,228
EXPENSES
Management fee $ 6,818
Service fee 2,657
Distribution fee - Class B 5,332
Distribution fee - Class C 11
Transfer agent 2,431
Bookkeeping fee 373
Registration fee 45
Custodian fee 36
Audit fee 35
Trustees fee 44
Reports to shareholders 28
Legal fee 7
Other 63 17,880
------- --------
Net Investment Income 22,348
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 91,572
Foreign currency transactions (214)
-------
Net Realized Gain 91,358
Net change in unrealized appreciation
during the period 76,078
--------
Net Gain 167,436
--------
Increase in Net Assets from Operations $189,784
--------
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Year ended
(in thousands) November 30
-----------------------
INCREASE (DECREASE) IN NET ASSETS 1998 1997(a)
Operations:
Net investment income $ 22,348 $ 32,363
Net realized gain 91,358 52,100
Net unrealized appreciation 76,078 116,509
---------- -----------
Net Increase from Operations 189,784 200,972
Distributions:
From net investment income - Class A (9,180) (12,211)
In excess of net investment income - Class A (228) -
From net realized gains - Class A (239) -
From net investment income - Class B (13,843) (20,526)
In excess of net investment income - Class B (344) -
From net realized gains - Class B (507) -
From net investment income - Class C (28) (3)
In excess of net investment income - Class C (1) -
From net realized gains - Class C (1) -
---------- -----------
165,413 168,232
---------- -----------
Fund Share Transactions:
Receipts for shares sold - Class A 66,629 61,367
Value of distributions reinvested - Class A 7,574 9,090
Cost of shares repurchased - Class A (104,245) (145,721)
---------- -----------
(30,042) (75,264)
---------- -----------
Receipts for shares sold - Class B 48,893 16,129
Value of distributions reinvested - Class B 12,446 16,402
Cost of shares repurchased - Class B (120,361) (191,589)
---------- -----------
(59,022) (159,058)
---------- -----------
Receipts for shares sold - Class C 2,231 644
Value of distributions reinvested - Class C 28 2
Cost of shares repurchased - Class C (443) (131)
---------- -----------
1,816 515
---------- -----------
Net Decrease from Fund
Share Transactions (87,248) (233,807)
---------- -----------
Total Increase (Decrease) 78,165 (65,575)
NET ASSETS
Beginning of period 1,011,832 1,077,407
---------- -----------
End of period (net of overdistributed and
including undistributed net investment
income of $585 and $910, respectively) $1,089,997 $ 1,011,832
---------- -----------
(a) Class C shares were initially offered on August 1, 1997.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
Year ended
(in thousands) November 30
-----------------------
NUMBER OF FUND SHARES 1998 1997(a)
Sold - Class A 3,463 3,770
Issued for distributions reinvested - Class A 385 575
Repurchased - Class A (5,374) (9,114)
---------- -----------
(1,526) (4,769)
---------- -----------
Sold - Class B 2,464 1,024
Issued for distributions reinvested - Class B 634 1,038
Repurchased - Class B (6,112) (12,139)
---------- -----------
(3,014) (10,077)
---------- -----------
Sold - Class C 112 38
Issued for distributions reinvested - Class C 2 (b)
Repurchased - Class C (22) (8)
---------- -----------
92 30
---------- -----------
(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 Utilities Fund (the Fund), a series of Colonial Trust IV,
is a diversified portfolio of a Massachusetts business trust, registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund's investment objective is to seek current income
and long-term growth. The Fund may issue an unlimited number of shares. The Fund
offers three classes of shares: Class A, Class B, and Class C. Class A shares
are sold with a front-end sales charge and 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 consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities generally are valued at
the last sale price or, in the case of unlisted or listed securities for which
there were no sales during the day, at current quoted bid prices.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
Portfolio positions for which market quotations are not readily available are
valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific identifi-
cation method for both financial statement and federal income tax purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS:
All income, expenses (other than the Class B and Class C distribution fees), and
realized and unrealized gains (losses), are allocated to each class propor-
tionately on a daily basis for purposes of determining the net asset value of
each class.
Class B and Class C per share data and ratios are calculated by adjusting the
expense and net investment income per share data and ratios for the Fund for the
entire period by the distribution fee applicable to Class B and Class C shares
only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records distri- butions
daily and pays monthly.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains (losses) on
foreign currency transactions includes the fluctuation in exchange rates on
gains (losses) between trade and settlement dates on securities transactions,
gains (losses) arising from the disposition of foreign currency and currency
gains (losses) between the accrual and payment dates on dividends and interest
income and foreign withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) on investments.
FORWARD CURRENCY CONTRACTS: The Fund may enter into forward currency contracts
to purchase or sell foreign currencies at predetermined exchange rates in
connection with the settlement of purchases and sales of securities. The Fund
may also enter into forward currency contracts to hedge certain other foreign
currency denominated assets. The contracts are used to minimize the exposure to
foreign exchange rate fluctuations during the period between trade and
settlement date of the contracts. All contracts are marked-to-market daily,
resulting in unrealized gains (losses) which become realized at the time the
forward currency contracts are closed or mature. Realized and unrealized gains
(losses) arising from such transactions are included in net realized and
unrealized gains (losses) on foreign currency transactions. Forward currency
contracts do not eliminate fluctuations in the prices of the Fund's portfolio
securities. While the maximum potential loss from such contracts is the
aggregate face value in U.S. dollars at the time the contract was opened,
exposure is typically limited to the change in value of the contract (in U.S.
dollars) over the period it remains open. Risks may also arise if counterparties
fail to perform their obligations under the contracts.
OTHER: Corporate actions are recorded on the ex-date. Interest income is
recorded on the accrual basis.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the under- lying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
- -------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Advisor)
is the investment Advisor of the Fund and furnishes accounting and other
services and office facilities for a monthly fee based on the Fund's average
net assets as follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $1 billion 0.65%
Over $1 billion 0.60%
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
Services Center, Inc., (the Transfer Agent), an affiliate of the Advisor,
provides shareholder services for a monthly fee equal to 0.20% annually of the
Fund's average net assets and receives reimbursement for certain out-of-pocket
expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty 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 $33,769 on sales of the
Fund's Class A shares and received contingent deferred sales charges (CDSC) of
$19,833, $841,784 and $1,406 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 only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the 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 $226,901,905
and $317,337,982, respectively.
Unrealized appreciation (depreciation) at November 30, 1998, based on cost of
investments for both financial statement and federal income tax purposes was
approximately:
Gross unrealized appreciation $ 335,731,000
Gross unrealized depreciation (7,249,000)
-------------
Net unrealized appreciation $ 328,482,000
-------------
OTHER: The Fund concentrates its investments in utility securities, subjecting
it to greater risk than a fund that is more diversified.
There are certain additional risks involved when investing in foreign securities
that are not inherent with investments in domestic securities. These risks may
involve foreign currency exchange rate fluctuations, adverse political, and
economic developments and the possible prevention of foreign currency exchange
or the imposition of other foreign government laws or restrictions.
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%. There were no borrowings under the line of credit during
the year ended November 30, 1998.
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, the record date for the Meeting, the Fund had outstanding
52,207,140 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 27,468,636 1,036,482
Tom Bleasdale 27,488,124 1,016,994
John Carberry 27,504,090 1,001,028
Lora S. Collins 27,494,537 1,010,581
James E. Grinnell 27,481,782 1,023,336
Richard W. Lowry 27,492,338 1,012,780
Salvatore Macera 27,506,103 999,015
William Mayer 27,491,519 1,013,599
James L. Moody, Jr. 27,491,054 1,014,064
John J. Neuhauser 27,504,025 1,001,093
Thomas E. Stitzel 27,502,905 1,002,213
Robert L. Sullivan 27,485,576 1,019,542
Anne-Lee Verville 27,507,104 998,014
To amend fundamental investment policies regarding borrowing and lending:
For Against Abstain
---------- ------------- ---------
20,469,549 801,712 1,593,180
To reclassify the fundamental investment policy regarding the purchase
of illiquid securities:
For Against Abstain
---------- ------------- ---------
20,213,167 987,299 1,663,974
To approve policies for a master fund/feeder fund structure:
For Against Abstain
---------- ------------- ---------
20,284,686 783,429 1,796,324
<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 $18.060 $18.060 $18.060
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.516 0.365 0.365
Net realized and
unrealized gain 3.111 3.111 3.111
------- ------- -------
Total from Investment
Operations 3.627 3.476 3.476
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.530) (0.382) (0.382)
In excess of net investment income (0.013) (0.010) (0.010)
From net realized gain (0.014) (0.014) (0.014)
------- ------- -------
Total Distributions
Declared to Shareholders (0.557) (0.406) (0.406)
------- ------- -------
Net asset value -
End of period $21.130 $21.130 $21.130
------- ------- -------
Total return (c) 20.32% 19.41% 19.41%
------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses (e) 1.19% 1.94% 1.94%
Net investment income (e) 2.63% 1.88% 1.88%
Portfolio turnover 22% 22% 22%
Net assets at end
of period (in millions) $ 351 $ 736 $ 3
(a) Class C shares were initially offered on August 1, 1997. Per share amounts
reflect activity from that date.
(b) The amount shown for a share outstanding does not correspond with the
aggregate net gain on investments for the period due to the timing of sales
and repurchases of Fund shares in relation to fluctuating market values of
the investments of the Fund.
(c) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(d) Not annualized.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(f) Annualized.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended November 30
----------------------------------------------------------------
1997 1996
Class A Class B Class C(a) Class A Class B
------- -------- -------- -------- --------
$15.210 $ 15.210 $ 16.260 $ 14.370 $ 14.370
------- -------- -------- -------- --------
0.599 0.481 0.166 0.612 0.502
2.852 2.852 1.794 (b) 0.831 0.831
------- -------- -------- -------- --------
3.451 3.333 1.960 1.443 1.333
------- -------- -------- -------- --------
(0.601) (0.483) (0.160) (0.603) (0.493)
- - - - -
- - - - -
------- -------- -------- -------- --------
(0.601) (0.483) (0.160) (0.603) (0.493)
------- -------- -------- -------- --------
$18.060 $ 18.060 $ 18.060 $ 15.210 $ 15.210
------- -------- -------- -------- --------
23.26% 22.36% 12.12% (d) 10.27% 9.45%
------- -------- -------- -------- --------
1.22% 1.97% 1.97% (f) 1.20% 1.95%
3.76% 3.01% 2.96% (f) 4.16% 3.41%
7% 7% 7% 8% 8%
$ 327 $ 684 $ 1 $ 348 $ 729
------- -------- -------- -------- --------
- ------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
100% of the ordinary income distributed by the Fund in the year ended
November 30, 1998 qualifies for the corporate dividends received
deduction.
For the fiscal year ended November 30, 1998, the Fund earned $34,886,190
of long term capital gains of which none and $34,886,190 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:
<TABLE>
<CAPTION>
Year ended November 30
--------------------------------------------------
1995 1994
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $11.720 $11.720 $13.600 $13.600
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.640 0.544 0.681 0.587
Net realized and unrealized
gain (loss) 2.659 2.659 (1.896) (1.896)
------- ------- ------- -------
Total from Investment
Operations 3.299 3.203 (1.215) (1.309)
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.649) (0.553) (0.665) (0.571)
------- ------- ------- -------
Net asset value -
End of period $14.370 $14.370 $11.720 $11.720
------- ------- ------- -------
Total return (a) 28.90% 27.96% (9.04)% (9.73)%
------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.21% (b) 1.96% (b) 1.23% 1.98%
Net investment income 5.00% (b) 4.25% (b) 5.49% 4.74%
Portfolio turnover 7% 7% 16% 16%
Net assets at end
of period (in millions) $ 400 $ 821 $ 373 $ 744
(a) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(b) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST IV AND THE SHAREHOLDERS OF
COLONIAL UTILITIES FUND
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Utilities Fund,
( a series of Colonial Trust IV) at November 30, 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.
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>
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale or exchange, you
receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
LIBERTY FUNDS DISTRIBUTOR INVESTOR OPPORTUNITIES: Mailed with your quarterly
account statements, this newsletter highlights timely investment strategies,
portfolio manager commentary and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Utilities Fund is:
Liberty Funds Services, Inc.*
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Utilities Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call Colonial at
1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Utilities Fund. This
report may also be used as sales literature when preceded or accompanied by the
current prospectus which provides details of sales charges, investment
objectives and operating policies of the Fund and with the most recent copy of
Liberty Funds Distributor Performance Update.
*Effective October 1, 1998, Colonial Investors Service Center, Inc.- the
Transfer Agent for Colonial, Crabbe Huson, Newport and Stein Roe Advisor
Funds - changed its name to Liberty Funds Services, Inc.
<PAGE>
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG 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
UF-02/336G-1298 (1/99) 98/1460
