<PAGE>
- --------------------------------------------------
COLONIAL TAX-EXEMPT INSURED FUND SEMIANNUAL REPORT
- --------------------------------------------------
May 31, 1999
-------------------------------
NOT FDIC May Lose Value
Insured No Bank Guarantee
-------------------------------
<PAGE>
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COLONIAL TAX-EXEMPT INSURED FUND HIGHLIGHTS
DECEMBER 1, 1998 - MAY 31, 1999
PORTFOLIO MANAGER COMMENTARY: "Rising interest rates and declining bond prices
challenged bond market investors over the past six months. To help manage
volatility, we employed a variety of short-term strategies in order to provide
some cushion to declining bond prices. At the same time, we positioned the Fund
for a longer-term scenario of steady economic growth with low to moderate
inflation and declining long-term interest rates."
-- Gary Swayze
COLONIAL TAX-EXEMPT INSURED FUND PERFORMANCE
Class A Class B Class C
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Inception dates 11/20/85 5/5/92 8/1/97
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Six-month distributions declared per share(1) $0.276 $0.244 $0.257
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SEC yields on 5/31/99(2) 3.45% 2.86% 3.17%
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Taxable-equivalent SEC yields(3) 5.71% 4.74% 5.25%
- --------------------------------------------------------------------------------
Six-month total returns, assuming (0.18)% (0.56)% (0.41)%
reinvestment of all distributions and no
sales charge or contingent deferred
sales charge (CDSC)(4)
- --------------------------------------------------------------------------------
Net asset value per share on 5/31/99 $ 8.33 $ 8.33 $ 8.33
- --------------------------------------------------------------------------------
Maturity Breakdown(5) (as of 5/31/99)
- --------------------------------------------------------------------------------
0 - 3 years ................ 6.8% 15 - 20 years .............. 28.3%
3 - 5 years ................ 0.6% 20 - 25 years .............. 18.7%
5 - 7 years ................ 1.4% 25+ years .................. 5.4%
7 - 10 years ............... 7.6% Cash equivalents ........... 3.0%
10 - 15 years .............. 28.2%
(1) A portion of the Fund's income may be subject to the alternative minimum
tax. The Fund may at times purchase tax-exempt securities at a discount.
Some or all of this discount may be included in the Fund's ordinary income,
and is taxable when distributed.
(2) The 30-day SEC yields reflect the portfolio's earning power, net of
expenses, and expressed as an annualized percentage of the public offering
price at the end of the period. If the Advisor or its affiliates had not
waived or borne certain Fund expenses, the SEC yield would have been 2.86%
for Class C shares.
(3) Taxable-equivalent SEC yields are based on the maximum federal income tax
rate of 39.6%. This tax rate does not reflect the phase out of exemptions or
the reduction of otherwise allowable deductions which occurs when Adjusted
Gross Income exceeds certain levels.
(4) Performance results reflect any voluntary waivers of Fund expenses by the
Advisor or its affiliates. Absent these waivers, performance results would
have been lower.
(5) Maturity breakdown is 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 maturity breakdowns in the future.
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<PAGE>
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PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
----------------------------
[Photo of Stephen E. Gibson]
----------------------------
During the six-months ended May 31, 1999, the bond market experienced
considerable volatility. In early December 1998, continued fears of a global
recession resulted in a flight to quality that benefited bond performance.
Treasury securities, considered the safest bond investments, were the top
performers, but municipal bonds also posted solid returns. By the end of May
1999, several events reversed this trend. Global economies stabilized, and
strong U.S. economic growth in the last quarter of 1998 and the first quarter of
1999 renewed investors' inflation fears. Bond prices declined, driving interest
rates up across the board. Fortunately, municipal bonds were not hit as hard as
Treasurys on the way down.
This difficult environment affected the Fund's short-term performance, which
generally reflected the volatility experienced by the overall municipal bond
market. In addition, while past performance cannot predict future trends, it is
important to keep a long-term perspective and remember that the Fund has
provided above-average returns for one, three and five years.(1)
The following report will provide you with more specific information about your
Fund's performance and the strategies employed during the period. As always, we
thank you for choosing Colonial Tax-Exempt Insured Fund and for giving us the
opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
July 15, 1999
(1) Source: Lipper, Inc. Lipper rankings are based on the Lipper Insured
Municipal Debt Funds universe. The Fund's Class A shares ranked in the third
quartile for six months (rated 32 out of 48 funds), in the second quartile
for 1 year (rated 23 out of 48 funds), in the first quartile for three years
(rated 10 out of 44 funds), in the second quartile for five years (rated 16
out of 32 funds) and in the third quartile for ten years (rated 10 out of 17
funds). Rankings do not include sales charges. Performance for different
share classes will vary with fees associated with each class. Past
performance cannot predict future results.
Because economic and market conditions change frequently, there can be no
assurance that the trends discussed above or on the following pages will
continue or come to pass.
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<PAGE>
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PORTFOLIO MANAGER'S REPORT
GARY SWAYZE is portfolio manager of Colonial Tax-Exempt Insured Fund and is
senior vice president of Colonial Management Associates, Inc.
STRENGTH IN GLOBAL ECONOMIES REVERSES FLIGHT TO QUALITY
During the latter part of 1998, weak global economies and volatile stock markets
created strong demand for U.S. Treasurys. During the flight to quality,
municipal bonds failed to keep pace with Treasurys, but provided investors with
positive total returns. However, during the first quarter of 1999, the
anticipated global economic slowdown failed to materialize, and the flight to
quality was reversed. Demand for Treasurys declined sharply and interest rates
began to rise. Due to low supply and high demand for municipal bonds, prices
declined to a much lesser degree than Treasurys, enabling municipal bonds to
outperform Treasurys during the period.
The Fund's Class A shares generated a six-month total return of negative 0.18%
based on net asset value.
INTEREST RATE VOLATILITY CHALLENGED THE FUND'S LONG-TERM STRATEGY
Early in the period, we structured the Fund to take advantage of declining
interest rates and also to maintain the Fund's income level. Since we were
presented with a rising rate environment instead, we pursued some short-term
strategies aimed at reducing the impact of rising rates on the Fund.
SHORT-TERM STRATEGIES DESIGNED TO CUSHION THE EFFECTS OF RISING RATES
To offset rising interest rates, we took some temporary steps in an effort to
cushion the Fund's share price. In addition to committing investable assets to
longer-term bonds, we took a somewhat larger position in short-term municipal
notes than the previous period. Because of their short life span, municipal
notes are the least susceptible to changes in price due to changes in interest
rates, so they can serve as a strategic interim holding when prices are
declining. We also used some defensive instruments during the period, adding
measures of protection designed to reduce the impact of a potential price
decline if rates continued to rise.
MUNICIPAL INSURANCE INDUSTRY RESUMES CONSERVATIVE STANCE
The municipal bond insurance industry has gone through an interesting adjustment
over the past year. Municipal insurance companies have become more conservative
in their underwriting approach, insuring slightly fewer municipal issues while
continuing to avoid unnecessary risks. Previously, companies sought to boost
earnings through higher market share generated through increased premium
competition. The movement back to more conservative underwriting practices
within the insured market was triggered during the fall of 1998 when Allegheny
Health Education and Research Foundation (AHERF) defaulted on $500 million in
tax-exempt bonds, some of which were insured. As a result, insurers appear to
have increased their effort to underwrite more profitable business, focusing
less on lower-investment grade issues, and charging higher premiums -- a
positive trend overall for the municipal insurance industry. This trend, if
continued, should ultimately enhance the quality of the municipal bond insurers.
Consistent with our views, the rating agencies have recently confirmed the AAA
ratings assigned to the four major bond insurers.
LONG-TERM MARKET OUTLOOK REMAINS POSITIVE
We continue to look for moderate economic growth and low inflation, a positive
environment for bonds. Over the short term, we anticipate continued interest
rate volatility and some increase in rates over the next several months.
However, apart from rising oil prices and wage pressure, thus far there has been
little indication that inflation will rise significantly. In fact, the price of
gold, historically an indication of whether inflation will pick up, is currently
at a historic low. If inflation does pick up, the Federal Reserve Board (Fed)
has indicated it will act quickly to keep things under control by raising
short-term rates. If the Fed does raise short-term rates, we feel the Fed is
being preemptive in order to prevent any potential rise in inflation. Although
the bond market's initial reaction has been negative to this type of Fed action,
we believe the Fed's proactive approach to keeping the economy growing with low
inflation continues to create a favorable long-term scenario.
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<PAGE>
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AVERAGE ANNUAL TOTAL RETURNS
As of 5/31/99
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
INCEPTION 11/20/85 5/5/92 8/1/97
NAV POP NAV w/CDSC NAV w/CDSC
- --------------------------------------------------------------------------------
1 year 3.29% (1.61)% 2.50% (2.38)% 2.82% 1.84%
- --------------------------------------------------------------------------------
5 years 6.27 5.24 5.48 5.15 6.10 6.10
- --------------------------------------------------------------------------------
10 years 6.74 6.22 6.18 6.18 6.65 6.65
- --------------------------------------------------------------------------------
Past performance cannot predict future investment 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% for Class
A shares. CDSC returns reflect 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.
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<PAGE>
INVESTMENT PORTFOLIO
MAY 31, 1999 (UNAUDITED, IN THOUSANDS)
MUNICIPAL BONDS - 95.4% PAR VALUE
- ------------------------------------------------------------------------------
EDUCATION - 5.4%
EDUCATION - 3.6%
IN Purdue University,
Series 1998-P,
5.250% 07/01/12 $ 1,000 $ 1,029
MA Health and Educational Facilities Authority:
Harvard University, Series N,
6.250% 04/01/20 3,000 3,448
Northeastern University, Series E,
6.550% 10/01/22 1,500 1,638
UT State Municipal Finance Co-Operative
Local Government, Pooled Capital
Improvement,
6.800% 05/01/12 1,000 1,098
---------
7,213
---------
STUDENT LOAN - 1.8%
AL State Higher Education Loan Corp.,
Series 1994-C,
5.850% 09/01/04 1,000 1,059
NM State Educational Assistance
Foundation, Series A,
6.700% 04/01/02 200 212
PA State Higher Education Assistance
Student Loan, IFRN (variable rate),
Series 1990-B,
11.463% 03/01/20 2,000 2,205
---------
3,476
---------
..............................................................................
HEALTHCARE - 7.2%
HOSPITAL
IL Health Facilities Authority,
Series 1992-B, IFRN (variable rate),
10.176% 05/01/21 500 573
MA Health and Educational Facilities Authority:
McLean Hospital,
Series C,
6.625% 07/01/15 500 548
Valley Regional Health System,
Series C,
7.000% 07/01/08 1,585 1,846
MS State Hospital Equipment and
Facilities Authority,
Rush Medical Foundation Project,
6.700% 01/01/18 250 269
OK State Industrial Authority,
Baptist Medical Center,
Series C,
7.000% 08/15/04 1,500 1,685
SC Charleston County,
Carealliance Healthcare,
Series 1999-A,
5.125% 08/15/16 1,000 997
TN Knox City Health Education and
Housing Facilities,
5.250% 01/01/15 5,000 5,112
WA Health Care Multicare Health,
Series 1998,
5.000% 08/15/22 1,000 951
WI State Health & Educational
Facilities Authority:
Bellin Memorial Hospital,
6.625% 02/15/08 1,000 1,130
Waukesha Memorial Hospital,
7.250% 08/15/19 60 64
Milwaukee Regional Medical Center,
Series 1990,
7.500% 08/01/11 1,000 1,051
---------
14,226
---------
..............................................................................
HOUSING - 4.6%
MULTI-FAMILY - 2.4%
IL Onterie Center Housing Finance Corp.,
Onterie Center Project,
Series 1992-A,
7.050% 07/01/27 2,000 2,131
MA State Housing Finance Agency,
Series A,
6.400% 01/01/09 1,910 2,050
MD Howard County Medical Mortgage,
Heartlands Elderly Apartments,
Series 1985,
8.875% 12/01/10 490 521
---------
4,702
---------
SINGLE-FAMILY - 2.2%
AK State Housing Finance Corp.
Series 1990-A2,
7.000% 12/01/11 5 5
FL Brevard County Housing Finance Authority,
Series C,
7.000% 09/01/23 40 42
MA State Housing Finance Agency,
Series 21,
7.125% 06/01/25 1,290 1,371
MS Housing Finance Corp.,
8.250% 10/15/18 1,760 1,811
WV State Housing Development Fund,
Series C,
5.800% 05/01/17 1,000 1,056
---------
4,285
---------
..............................................................................
OTHER - 10.5%
POOL/BOND BANK - 0.8%
MI Municipal Bond Authority, Local
Government Loan Program,
Series 1991-C,
(a) 06/15/15 3,380 1,481
---------
REFUNDED/ESCROWED (B) - 9.7%
FL Dunedin, Mease Health Care Center,
Series 1991,
6.750% 11/15/11 100 109
FL Hollywood Water & Sewer Revenue,
6.750% 10/01/11 50 54
GA Fulton County,
Series 1992,
6.375% 01/01/14 5,810 6,673
IL Chicago, Central Public Library Project,
Series 1988-C,
6.850% 01/01/17 1,000 1,100
IL Decatur,
6.900% 10/01/14 250 267
IL State Health Facilities Authority,
Rockford Memorial Hospital,
Series B,
6.750% 08/15/18 50 54
IN Whitko Middle School Building
Corporation First Mortgage, Series 1991,
6.750% 07/15/12 1,000 1,071
MA Health and Educational Facilities Authority,
New England Deaconess Hospital,
Series D,
6.875% 04/01/22 2,500 2,744
MA State Port Authority,
Series 1990-A,
7.500% 07/01/20 235 250
NV Reno Hospital, St. Mary's Regional
Medical Center, Series 1991-A,
6.700% 07/01/21 1,000 1,077
OR Portland International Airport,
Series 1991 7-B,
7.100% 07/01/21 970 1,169
PA Pottstown Borough Authority Sewer,
Guaranteed Sewer Revenue, Series 1991,
(a) 11/01/16 1,000 412
SC Charleston County Certificate
of Participation, Series 1991,
7.100% 06/01/11 2,000 2,166
SC Piedmont Municipal Power Agency,
Series 1991-A,
6.125% 01/01/07 75 83
TN Chattanooga-Hamilton County,
Series 1991-B, IFRN (variable rate),
10.240% 05/25/21 1,000 1,144
TX Colorado River Municipal Water
District, Water Transmission Facilities,
Series 1991-A,
6.625% 01/01/21 250 261
TX Harris County Health Facilities
Development Corp.,
Texas Children's Hospital, Series A,
7.000% 10/01/19 50 52
WA Clark County Public Utilities
District Number 001 Electric System,
6.500% 01/01/11 200 212
WA State Public Power Supply System,
Nuclear Project No. 2,
Series A,
6.500% 07/01/05 200 214
WV School Building Authority, Capital
Import Revenue Bonds, Series 1990-B,
6.750% 07/01/17 75 79
---------
19,191
---------
..............................................................................
OTHER REVENUE - 0.7%
RECREATION
CA State Fairs Financing Authority,
Series 1991,
6.500% 07/01/11 1,300 1,399
---------
..............................................................................
RESOURCE RECOVERY - 0.8%
RESOURCE RECOVERY
SC Charleston County Solid Waste User Fee,
6.500% 01/01/09 1,405 1,568
---------
..............................................................................
TAX-BACKED - 34.5%
LOCAL APPROPRIATED - 4.7%
IL Chicago Board of Education,
Series 1992-A,
6.250% 01/01/15 6,000 6,798
OH Butler County Transportation Improvement
District, Series A,
6.000% 04/01/12 2,250 2,479
---------
9,277
---------
LOCAL GENERAL OBLIGATIONS - 14.7%
AZ Maricopa County School District,
Number 8 Osborn,
7.500% 07/01/08 1,235 1,499
AZ Mohave County Unified High School
District, Series B,
8.500% 07/01/06 250 311
AZ Tucson,
Series 1994-G,
7.625% 07/01/14 3,140 4,043
CO El Paso County School District No. 11,
Series 1996,
7.100% 12/01/18 4,420 5,473
CO Highlands Ranch Metropolitan
District No. 2,
Series 1996,
6.500% 06/15/12 1,000 1,160
GA Columbia County School District,
Series A,
6.750% 04/01/08 1,695 1,964
IL Chicago,
Series 1995 A-2,
6.250% 01/01/14 4,000 4,531
LA New Orleans,
Series 1998,
5.500% 12/01/15 1,060 1,123
MD Baltimore:
7.000% 10/15/08 300 356
7.000% 10/15/09 1,055 1,263
NV Clark County,
Series A,
7.500% 06/01/07 350 419
NV Las Vegas-Clark County Library District,
7.500% 02/01/02 1,000 1,089
OH Greater Cleveland Regional
Transportation Authority:
Series 1996,
5.600% 12/01/11 2,000 2,121
Series 1998,
5.375% 12/01/14 1,040 1,073
PA Allegheny County Institution District,
Series 18,
(a) 04/01/10 2,000 1,180
TX Deer Park Independent School District,
Series 1998,
4.250% 02/15/18 1,500 1,316
---------
28,921
---------
SPECIAL NON-PROPERTY TAX - 5.4%
IL Metropolitan Pier & Exposition
Authority, McCormick Place Expansion
Project, Series A,
(a) 06/15/16 3,750 1,530
IL State Dedicated Tax,
Civic Center, Series A
7.000% 12/15/13 200 213
NV Clark County,
Series 1998,
5.250% 11/01/13 2,000 2,040
NY State Local Government Assistance Corp.,
Series 1993-E,
5.000% 04/01/21 3,175 3,088
NY Triborough Bridge & Tunnel Authority,
Series A,
6.625% 01/01/17 250 265
PR Commonwealth of Puerto Rico Highway
& Transportation Authority,
Series 1996-Y,
6.250% 07/01/12 3,000 3,441
---------
10,577
---------
STATE APPROPRIATED - 5.1%
IN State Office Building Commission,
Women's Prison, Series B,
6.250% 07/01/16 8,000 9,090
WV State Building Commission,
Series 1998-A,
5.375% 07/01/18 1,000 1,029
---------
10,119
---------
STATE GENERAL OBLIGATIONS - 4 6%
CA State,
Series 1995,
10.000% 10/01/06 1,000 1,357
DC District Columbia,
General Obligation, Series 1993-B1,
5.500% 06/01/09 1,000 1,057
FL State Board of Education,
Series 1999-A,
4.500% 06/01/23 1,500 1,340
MA State,
Series B,
5.500% 06/01/11 5,000 5,248
---------
9,002
---------
..............................................................................
TRANSPORTATION - 8.1%
AIR TRANSPORTATION - 0.6%
NY Port Authority of New York & New Jersey,
JFK International Air Terminal, Series 6,
6.250% 12/01/08 1,000 1,119
---------
AIRPORT - 1.6%
HI State, Airport System Revenue,
Series 2,
6.750% 07/01/21 250 267
IL Chicago O'Hare International Airport
Special Facility, International Terminal,
6.750% 01/01/12 300 322
MA State Port Authority,
Series 1990-A,
7.500% 07/01/20 765 809
OR Portland,
Portland International Airport,
Series 1991-B,
7.100% 07/01/21 30 32
TX Dallas-Fort Worth Regional Airport,
Series A,
7.375% 11/01/11 1,380 1,581
TX Houston Airport System Revenue,
Series A,
6.750% 07/01/21 200 214
---------
3,225
---------
TOLL FACILITIES - 0.8%
NY State Thruway Authority,
Series 1997-D,
5.375% 01/01/27 1,395 1,402
TX Harris County,
Toll Road Revenue,
6.500% 08/15/11 120 130
---------
1,532
---------
TRANSPORTATION - 5.1%
IL Regional Transportation Authority,
Series C,
7.750% 06/01/20 5,000 6,649
SC State Ports Authority,
Series 1991:
6.500% 07/01/06 250 266
6.750% 07/01/21 3,000 3,221
---------
10,136
---------
..............................................................................
UTILITY - 23.6%
INVESTOR OWNED - 6.4%
DE State Economic Development Authority,
New Castle County Gas System,
Series 1991-C,
7.150% 07/01/21 1,000 1,078
HI State Department of Budget & Finance,
Hawaiian Electric Co.,
Series A,
6.600% 01/01/25 4,000 4,390
MI St. Clair County Economic
Development Corp.,
Detroit Edison Co., Series 1933-AA,
6.400% 08/01/24 1,000 1,116
NV Clark County Pollution Control
Nevada Power Company, Series 1992-B,
6.600% 06/01/19 3,500 3,793
NY New York Energy Research & Development
Adjusted Gas Facilities,
Brooklyn Union Gas Company, Series 1989-B
6.750% 02/01/24 2,000 2,165
---------
12,542
---------
JOINT POWER AUTHORITY - 10.5%
CA Southern California Power Authority,
Palo Vero Project,
Series 1989-A,
5.000% 07/01/15 2,750 2,744
GA Municipal Electric Authority Power,
Series 1997-Y,
6.400% 01/01/13 $ 1,000 $ 1,150
SC Piedmont Municipal Power Agency,
Series 1991-A,
6.125% 01/01/07 425 467
SC State Public Service Authority,
Series A,
6.250% 01/01/22 3,500 3,831
TX State Municipal Power Agency:
(a) 09/01/10 5,000 2,890
(a) 09/01/11 7,900 4,307
(a) 09/01/12 3,000 1,543
(a) 09/01/15 8,975 3,877
---------
20,809
---------
MUNICIPAL ELECTRIC - 3.7%
AK Anchorage:
Series 1993,
8.000% 12/01/09 1,000 1,277
Series 1996,
6.500% 12/01/10 3,075 3,560
SD Heartland Consumers Power District,
6.000% 01/01/09 300 331
TX San Antonio,
Series 1998-A,
4.500% 02/01/21 1,000 899
WA State Public Power Supply System,
Nuclear Project No. 2,
Series 1992-A,
(a) 07/01/11 2,315 1,300
---------
7,367
---------
WATER & SEWER - 3.0%
FL Saint John's County Water and Sewer,
Saint Augustine Shores System, Series
1991-A:
(a) 06/01/13 2,600 1,288
(a) 06/01/14 1,500 701
GA Fulton County Water and Sewer,
Series 1992,
6.375% 01/01/14 190 217
IL Kankakee Sewer,
Series 1991,
7.000% 05/01/16 1,000 1,126
MD Baltimore,
Wastewater Project,
Series 1998-B,
5.375% 07/01/15 1,540 1,589
VA Loudoun County Sanitation Authority,
Series 1992,
6.250% 01/01/16 1,000 1,083
---------
6,004
---------
TOTAL MUNICIPAL BONDS (cost of $171,657) 188,171
---------
OPTIONS - 0.1% CONTRACTS
- ------------------------------------------------------------------------------
September 1999 Treasury Bond Puts:
Strike Price 116, expiration09/20/99 53 69
Strike Price 118, expiration09/20/99 48 106
---------
TOTAL OPTIONS (cost of $148) 175
---------
TOTAL INVESTMENTS - 95.5% (cost of $171,805)(c) 188,346
---------
SHORT-TERM OBLIGATIONS - 2.9% PAR
- ------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (d)
CA Irvine Improvement Bond Act of 1915,
Series 1998,
3.250% 09/02/23 400 400
FL Pinellas County Health Facilities
Authority, Series 1985,
3.400% 12/01/15 100 100
IL Health Facilities Authority,
Central Dupage Hospital Daily,
3.350% 11/01/20 100 100
IL State Development Finance Authority,
Council for Jewish Elderly,
Series 1995,
3.250% 03/01/15 150 150
IN Purdue University,
Series 1998,
3.250% 07/01/19 100 100
IN State Hospital Equipment Finance
Authority, Series A,
3.300% 12/01/15 200 200
LA State Offshore Terminal Authority,
Loop, Inc.,
3.300% 09/01/06 200 200
NY Long Island Power Authority,
Sub-Series 1998-5,
3.300% 05/01/33 400 400
WA State Health Care Facilities Authority,
Fred Hutchinson Cancer Research Center,
Series 1996,
3.500% 01/01/23 4,150 4,150
---------
TOTAL SHORT-TERM OBLIGATIONS 5,800
---------
OTHER ASSETS & LIABILITIES, NET - 1.6% 3,098
- ------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 197,244
---------
NOTES TO INVESTMENT PORTFOLIO:
- -----------------------------------------------------------------------------
(a) Zero coupon bond.
(b) The Fund has been informed that the issuer has placed direct obligations of
the U.S. Government in an irrevocable trust, solely for the payment of the
interest and principal.
(c) Cost for federal income tax purposes is the same.
(d) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of May 31, 1999.
Acronym Name
------- ----
IFRN Inverse Floating Rate Note
SUMMARY OF SECURITIES BY INSURER
% of
Insurer Net Assets
- ------- ----------
Municipal Bond Insurance Agency 28.9
AMBAC Indemnity Corporation 25.8
Financial Guarantee Insurance Company 24.9
Uninsured Securities 14.2
Financial Security Assurance 4.5
Connie Lee Insurance Company 1.1
Capital Guarantee Insurance Company 0.6
---------
100.0
---------
Short futures contract open on May 31, 1999,
Par Value Unrealized
covered by Expiration appreciation
Type contracts month at 05/31/99
- ------------------------------------------------------------------------------
Treasury Bond 1,900 June $ 24
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
MAY 31, 1999 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $171,805) $188,346
Short-term obligations 5,800
--------
194,146
Receivable for:
Interest $ 3,626
Fund shares sold 144
Investments sold 60
Other 85 3,915
------- --------
Total Assets 198,061
LIABILITIES
Payable for:
Fund shares repurchased 556
Distributions 250
Accrued:
Deferred Trustees fees 6
Other 5
------
Total Liabilities 817
--------
NET ASSETS $197,244
========
Net asset value & redemption price per share -
Class A ($158,280/19,002) $ 8.33(a)
========
Maximum offering price per share - Class A
($8.33/0.9525) $ 8.75(b)
========
Net asset value & offering price per share -
Class B ($38,038/4,567) $ 8.33(a)
========
Net asset value & offering price per share -
Class C ($926/111) $ 8.33(a)
========
COMPOSITION OF NET ASSETS
Capital paid in $181,977
Overdistributed net investment income (257)
Accumulated net realized loss (1,041)
Net unrealized appreciation on:
Investments 16,541
Open futures contracts 24
--------
$197,244
========
(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 SIX MONTHS ENDED MAY 31, 1999
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Interest $ 5,556
EXPENSES
Management fee $ 573
Service fee 253
Distribution fee - Class B 143
Distribution fee - Class C 3
Transfer agent fee 156
Bookkeeping fee 40
Trustees fee 8
Audit fee 16
Legal fee 3
Custodian fee 1
Registration fee 14
Reports to shareholders 4
Other 32
------
Total expenses 1,246
Fees waived by the Distributor - Class C (1) 1,245
------ -------
Net Investment Income 4,311
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 1,166
Closed futures contracts 165
------
Net Realized Gain 1,331
Change in net unrealized depreciation
during the period on:
Investments (6,051)
Open futures contracts (100)
------
Net Unrealized Depreciation (6,151)
-------
Net Loss (4,820)
-------
Decrease in Net Assets from Operations $ (509)
=======
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six months
ended Year ended
(in thousands) May 31 November 30
---------- -----------
INCREASE (DECREASE) IN NET ASSETS 1999 1998
Operations:
Net investment income $ 4,311 $ 9,367
Net realized gain 1,331 2,090
Net unrealized appreciation (depreciation) (6,151) 3,567
-------- --------
Net Increase (Decrease) from Operations (509) 15,024
Distributions:
From net investment income - Class A (3,601) (8,073)
In excess of net investment income - Class A -- (220)
From net realized gains - Class A (1,764) (1,079)
From net investment income - Class B (689) (1,451)
In excess of net investment income - Class B -- (39)
From net realized gains - Class B (397) (230)
From net investment income - Class C (18) (12)
In excess of net investment income - Class C -- (b)
From net realized gains - Class C (9) (1)
-------- --------
(6,987) 3,919
-------- --------
Fund Share Transactions
Receipts for shares sold - Class A 2,557 5,722
Value of distributions reinvested - Class A 3,445 5,974
Cost of shares repurchased - Class A (13,896) (24,642)
-------- --------
(7,894) (12,946)
-------- --------
Receipts for shares sold - Class B 3,725 4,704
Value of distributions reinvested - Class B 728 1,102
Cost of shares repurchased - Class B (2,814) (7,365)
-------- --------
1,639 (1,559)
-------- --------
Receipts for shares sold - Class C 440 680
Value of distributions reinvested - Class C 22 9
Cost of shares repurchased - Class C (209) (93)
-------- --------
253 596
-------- --------
Net Decrease from Fund Share Transactions (6,002) (13,909)
-------- --------
Total Decrease (12,989) (9,990)
NET ASSETS
Beginning of period 210,233 220,223
-------- --------
End of period (net of overdistributed
net investment income of $257
and $260, respectively) $197,244 $210,233
======== ========
(b) Rounds to less than one.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
(Unaudited)
Six months
ended Year ended
May 31 November 30
---------- -----------
1999 1998
NUMBER OF FUND SHARES
Sold - Class A 302 672
Issued for distributions reinvested - Class A 405 700
Repurchased - Class A (1,631) (2,886)
-------- --------
(924) (1,514)
-------- --------
Sold - Class B 438 551
Issued for distributions reinvested - Class B 86 129
Repurchased - Class B (331) (862)
-------- --------
193 (182)
-------- --------
Sold - Class C 51 80
Issued for distributions reinvested - Class C 3 1
Repurchased - Class C (25) (11)
-------- --------
29 70
-------- --------
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
..............................................................................
In the opinion of management of Colonial Tax-Exempt Insured Fund (the Fund), a
series of Liberty Trust IV, formerly Colonial Trust IV, the accompanying
financial statements contain all normal and recurring adjustments necessary for
the fair presentation of the financial position of the Fund at May 31, 1999, and
the results of its operations, the changes in its net assets and the financial
highlights for the six months then ended.
NOTE 2. ACCOUNTING POLICIES
..............................................................................
ORGANIZATION: The Fund is a diversified portfolio of a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund's investment objective is to
seek as high a level of after-tax total return, as is consistent with prudent
risk, by pursuing current income exempt from federal income tax and
opportunities for long-term appreciation from a portfolio primarily invested in
insured 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 and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B and Class C distribution fees), and realized
and unrealized gains (losses), are allocated to each class proportionately on a
daily basis for purposes of determining the net asset value of each class.
Class B and Class C per share data and ratios are calculated by adjusting the
expense and net investment income per share data and ratios for the Fund for the
entire period by the distribution fee applicable to Class B and Class C shares
only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; market
discount is not accreted. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records distributions daily
and pays monthly.
The 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 3. FEES AND COMPENSATION PAID TO AFFILIATES
..............................................................................
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Advisor)
is the investment Advisor of the Fund and furnishes accounting and other
services and office facilities for a monthly fee based on each fund's pro rata
portion of the combined average net assets of the Fund, Colonial Tax-Exempt
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%
BOOKKEEPING FEE: The Advisor provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT FEE: Liberty Funds Services, Inc. (the Transfer Agent),
an affiliate of the Advisor, provides shareholder services for
a monthly fee equal to 0.13% annually of the Fund's average net assets and
receives reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds
Distributor, Inc. (the Distributor), a subsidiary of the Advisor, is the Fund's
principal underwriter. For the six months ended May 31, 1999, the Fund has been
advised that the Distributor retained net underwriting discounts of $9,558 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of none, $36,012 and $1,221 on Class A, Class B and Class C
shares, respectively.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee 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% 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 0.45% 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 4. PORTFOLIO INFORMATION
...............................................................................
INVESTMENT ACTIVITY: During the six months ended May 31, 1999, purchases and
sales of investments, other than short-term obligations were $2,366,340 and
$14,817,745, respectively.
Unrealized appreciation at May 31, 1999, based on cost of investments for both
financial statement and federal income tax purposes was approximately:
Gross unrealized appreciation $16,788,000
Gross unrealized depreciation (247,000)
-----------
Net unrealized appreciation $16,541,000
===========
OTHER: The Fund has greater than 10% of its net assets at May 31, 1999
invested in Illinois.
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 a position due to
different trading hours, or the temporary absence of a liquid market for either
the instrument or the underlying securities or (3) an inaccurate prediction by
the Advisor of the future direction of interest rates. Any of these risks may
involve amounts exceeding the variation margin recorded in the Fund's Statement
of Assets and Liabilities at any given time.
NOTE 5. LINE OF CREDIT
................................................................................
The Fund may borrow up to 3301/3% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus01/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus01/2 of 1%. There were no borrowings under the line of credit during
the six months ended May 31, 1999.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six months ended May 31
--------------------------------------------
1999
Class A Class B Class C
-------- -------- --------
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 8.620 $ 8.620 $ 8.620
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.186 0.154 0.167 (a)
Net realized and
unrealized gain (loss) (0.200) (0.200) (0.200)
-------- -------- --------
Total from Investment
Operations (0.014) (0.046) (0.033)
-------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.186) (0.154) (0.167)
In excess of net investment income -- -- --
From net realized gains (0.090) (0.090) (0.090)
-------- -------- --------
Total Distributions
Declared to Shareholders (0.276) (0.244) (0.257)
-------- -------- --------
Net asset value -
End of period $ 8.330 $ 8.330 $ 8.330
======== ======== ========
Total return (c) (0.18)%(d) (0.56)%(d) (0.41)%(d)(e)
======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses (f) 1.08%(g) 1.83%(g) 1.53%(a)(g)
Net investment income (f) 4.38%(g) 3.63%(g) 3.93%(a)(g)
Portfolio turnover 1%(d) 1%(d) 1%(d)
Net assets at end
of period (000) $158,280 $ 38,038 $ 926
(a) Net of fees waived by the Distributor which amounted to $0.013 per share and 0.30%.
(b) Net of fees waived by the Distributor which amounted to $0.026 per share and 0.30%.
(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) Had the Distributor not waived a portion of expenses, total return would have been
reduced.
(f) The benefits derived from custody credits and direct brokerage arrangements had no
impact.
(g) Annualized.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended November 30
-----------------------------------------------
1998
Class A Class B Class C
-------- -------- --------
$ 8.470 $ 8.470 $ 8.470
-------- -------- --------
0.384 0.318 0.345 (b)
0.218 0.218 0.218
-------- -------- --------
0.602 0.536 0.563
-------- -------- --------
(0.390) (0.326) (0.352)
(0.011) (0.009) (0.010)
(0.051) (0.051) (0.051)
-------- -------- --------
(0.452) (0.386) (0.413)
-------- -------- --------
$ 8.620 $ 8.620 $ 8.620
======== ======== ========
7.29% 6.47% 6.80%(e)
======== ======== ========
1.06% 1.81% 1.51%(b)
4.49% 3.74% 4.04%(b)
12% 12% 12%
$171,812 $ 37,716 $ 705
<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
--------------------------------------------
1997
Class A Class B Class C (a)
-------- -------- --------
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 8.330 $ 8.330 $ 8.530
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.398 0.336 0.118
Net realized and
unrealized gain (loss) 0.136 0.136 (0.061)(b)
-------- -------- --------
Total from Investment
Operations 0.534 0.472 0.057
-------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.394) (0.332) (0.117)
-------- -------- --------
Net asset value -
End of period $ 8.470 $ 8.470 $ 8.470
======== ======== ========
Total return (c) 6.63% 5.83% 0.68%(d)
======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses (e) 1.07% 1.82% 1.51%(f)
Net investment income (e) 4.76% 4.01% 4.22%(f)
Portfolio turnover 26% 26% 26%
Net assets at end
of period (000) $181,543 $ 38,580 $ 100
(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.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each
period are as follows:
<CAPTION>
Year ended November 30
------------------------------------------------------------
1996 1995
Class A Class B Class A Class B
-------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 8.380 $ 8.380 $ 7.450 $ 7.450
-------- -------- -------- --------
0.403 0.342 0.418 0.359
(0.045) (0.045) 0.935 0.935
-------- -------- -------- --------
0.358 0.297 1.353 1.294
-------- -------- -------- --------
(0.408) (0.347) (0.423) (0.364)
-------- -------- -------- --------
$ 8.330 $ 8.330 $ 8.380 $ 8.380
======== ======== ======== ========
4.48% 3.70% 18.55% 17.68%
======== ======== ======== ========
1.05% 1.80% 1.05% 1.80%
4.92% 4.17% 5.20% 4.45%
25% 25% 31% 31%
$206,713 $ 44,621 $240,894 $ 50,016
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of
benefits received, if any.
(f) Annualized.
</TABLE>
<PAGE>
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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 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>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Tax-Exempt Insured Fund is:
Liberty Funds Services, Inc.*
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Tax-Exempt Insured 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 Insured
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 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>
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TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN V. CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
[Logo] L I B E R T Y
ALL-STAR o COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. (C)1999
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
TI-03/284H-0699 (7/99) 98/813
- --------------------------------------------------------------------------------
