<PAGE>
[COLONIAL FLAG LOGO]
COLONIAL
GOVERNMENT
MONEY
MARKET FUND
ANNUAL REPORT
AUGUST 31, 1996
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
<PAGE>
COLONIAL GOVERNMENT MONEY MARKET FUND
HIGHLIGHTS
SEPTEMBER 1, 1995 - AUGUST 31, 1996
INVESTMENT OBJECTIVE: Colonial Government Money Market Fund seeks current
income, consistent with capital preservation and liquidity, by investing
exclusively in short-term U.S. government securities.
THE FUND IS DESIGNED TO OFFER:
- Steady monthly income
- Stable net asset value
- A high quality portfolio
PORTFOLIO MANAGER COMMENTARY: "Economic and market conditions were mixed for
money market securities due to a shifting and volatile interest rate
environment. During the first half of the period, we positioned the Fund to
avoid declining interest rates by locking in rates over a longer average time to
maturity. As market psychology shifted and interest rates began to rise in
February, we shortened the average days to maturity to capture the rate
increases. We will look to lengthen maturity should the economy begin to show
signs of weakening." -- Ann Peterson
COLONIAL GOVERNMENT MONEY MARKET FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
<S> <C> <C> <C>
Inception dates 1/30/81 6/8/92 7/1/94
Distributions declared per share $ 0.048 $ 0.038 $ 0.038
Seven-day yields on 8/31/96 4.62% 3.70% 3.72%
30-day yields on 8/31/96 4.65% 3.68% 3.68%
</TABLE>
A PORTFOLIO OF HIGH QUALITY MONEY MARKET SECURITIES*
As of 8/31/96
Your Fund's portfolio holdings represented a selection of short-term,
fixed-income U.S. government and agency securities. These holdings include notes
issued by the Federal National Mortgage Association (FNMA) and Federal Home Loan
Bank (FHLB).
[PIE CHART FOR BELOW TABLE]
<TABLE>
<S> <C>
REPURCHASE
AGREEMENTS: 42.01%
FHLB: 19.48%
FNMA: 35.93%
FHLMC: 2.58%
</TABLE>
*As a percent of total investments.
An investment in the Fund is neither insured nor guaranteed by the U.S.
government and there can be no assurance that the Fund will maintain a stable
net asset value of $1.00 per share.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
I am pleased to present your Fund's annual report for the period ended August
31, 1996. This report gives us the opportunity to share our analysis of the
investment environment over the past 12 months.
[PHOTO OF HAROLD W. COGGER]
In the bond market, after the Federal Reserve Board lowered short-term interest
rates in December and January, significantly stronger economic indicators
mid-way through the period stirred inflation fears and propelled long-term
interest rates upward. Bond market volatility will continue, based upon receipt
of conflicting economic reports and changing expectations of Federal Reserve
Board activity.
While market conditions put pressure on municipal bond prices, there was some
good news for the tax-exempt sector. Some of the significant reasons that
municipal bonds outperformed Treasury bonds were technical factors, such as low
supply and strong retail market support. Other reasons include fundamental
factors, such as the easing of fears generated by tax-reform proposals,
particularly those promoting a flat tax.
In the stock market, generally favorable conditions prevailed throughout most of
the period, with both large and small company stocks posting strong performance
until July, when a price-based correction took place. While stock indices
generally posted negative total returns for July, the equity markets rebounded
in August.
Our expectations for the remainder of 1996 include a moderating economy. We
believe that the economy will continue to grow, although at a slower pace than
was indicated earlier this year. The lack of any appreciable wage and price
pressure should put the bond market's fears of inflation to rest. Therefore, we
are optimistic that market psychology will shift and volatility will decline by
year-end.
As always, we thank you for the opportunity to help you meet your investment
goals through Colonial Mutual Funds.
Respectfully,
/s/ Harold W. Cogger
- --------------------
Harold W. Cogger
President
October 11, 1996
3
<PAGE>
INVESTMENT PORTFOLIO
AUGUST 31, 1996 (IN THOUSANDS)
<TABLE>
<CAPTION>
SHORT-TERM OBLIGATIONS - 98.3%
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES - 57.0%
- --------------------------------------------------------------------------------
ANNUALIZED
YIELD AT TIME
MATURITY OF PURCHASE PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Home Loan Bank:
09/11/96 5.300% $ 5,000 $ 4,993
09/18/96 5.310% 7,000 6,982
10/07/96 5.250% 5,000 4,974
10/10/96 5.170% 2,465 2,451
11/05/96 5.340% 4,490 4,447
11/07/96 5.250% 5,000 4,951
11/13/96 5.220% 3,875 3,834
12/10/96 5.480% 5,000 4,924
---------
37,556
---------
Federal Home Loan Mortgage Corp.,
10/21/96 5.190% 5,000 4,964
---------
Federal National Mortgage Association:
09/12/96 5.120% 5,000 4,992
09/16/96 5.330% 5,000 4,989
09/18/96 5.140% 10,000 9,976
10/21/96 5.340% 5,000 4,963
11/19/96 5.380% 5,000 4,941
11/20/96 5.240% (a) 5,000 4,999
11/25/96 5.360% 5,000 4,937
11/27/96 5.210% 5,000 4,937
12/11/96 5.310% 5,000 4,995
01/15/97 5.240% 5,000 4,901
02/04/97 5.250% 5,000 4,886
02/27/97 5.300% 10,000 9,737
---------
69,253
---------
TOTAL U.S. GOVERNMENT AGENCIES (cost of $111,773) 111,773
---------
REPURCHASE AGREEMENTS - 41.3%
- --------------------------------------------------------------------------------
Repurchase agreement with Bank of America,
dated 8/30/96, due 9/03/96 at 5.240%, collateralized
by U.S. Treasury bills and notes with various
maturities to 1997, market value $40,838 (repurchase
proceeds $40,023) 40,000 40,000
</TABLE>
4
<PAGE>
Investment Portfolio/August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Repurchase agreement with Bankers Trust
Securities Corp., dated 8/30/96, due 9/03/96
at 5.240%, collaterized by U.S. Treasury notes
with various maturities to 2017, market value
$42,775 (repurchase proceeds $41,002) $40,978 $ 40,978
TOTAL REPURCHASE AGREEMENTS (cost of $80,978) 80,978
---------
TOTAL SHORT-TERM OBLIGATIONS
(cost of $192,751) (b) 192,751
---------
OTHER ASSETS & LIABILITIES, NET - 1.7 % 3,286
- --------------------------------------------------------------------------------
NET ASSETS - 100% $ 196,037
---------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Interest rates on a variable rate security change periodically. The rate
listed is as of August 31, 1996.
(b) Cost for federal income tax purposes is the same.
See notes to financial statements.
5
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
AUGUST 31, 1996
<TABLE>
<S> <C> <C>
(in thousands except for per share amounts)
ASSETS
Investments at amortized cost $ 192,751
Receivable for:
Fund shares sold $ 4,173
Interest 92
Other 12 4,277
--------- ---------
Total Assets 197,028
LIABILITIES
Payable for:
Distributions 644
Fund shares repurchased 329
Accrued Deferred Trustees fees 5
Other 13
---------
Total Liabilities 991
---------
NET ASSETS $ 196,037
=========
Net asset value:
Class A ($115,063/115,031) $ 1.00
=========
Class B ($76,539/76,543) $ 1.00(a)
=========
Class D ($4,435/4,433) $ 1.00(a)
=========
Maximum offering price per share - Class D
($1.00/0.99) $ 1.01
=========
COMPOSITION OF NET ASSETS
Capital paid in $ 196,009
Undistributed net investment income 29
Accumulated net realized loss (1)
---------
$ 196,037
---------
</TABLE>
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
6
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1996
<TABLE>
<S> <C> <C>
(in thousands)
INVESTMENT INCOME
Interest $ 8,415
EXPENSES
Management fee $ 461
Service fee - Class B 160
Service fee - Class D 6
Distribution fee - Class B 484
Distribution fee - Class D 17
Transfer agent 375
Bookkeeping fee 63
Trustee fee 23
Custodian fee 7
Audit fee 22
Legal fee 6
Registration fee 85
Reports to shareholders 7
Other 26 1,742
------ ---------
Net Investment Income $ 6,673
---------
</TABLE>
See notes to financial statements.
7
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended
(in thousands) August 31
------------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
<S> <C> <C>
Operations:
Net investment income $ 6,673 $ 6,313
--------- ---------
Distributions:
From net investment income -- Class A (4,162) (4,177)
From net investment income -- Class B (2,436) (2,093)
From net investment income -- Class D (82) (22)
--------- ---------
(7) 21
--------- ---------
Fund Share Transactions:
Receipts for shares sold -- Class A 892,066 528,856
Value of distributions reinvested -- Class A 8,827 3,257
Cost of shares repurchased -- Class A (863,413) (546,152)
--------- ---------
31,980 (14,039)
--------- ---------
Receipts for shares sold -- Class B 264,792 113,063
Value of distributions reinvested -- Class B 1,845 1,596
Cost of shares repurchased -- Class B (245,533) (113,764)
--------- ---------
21,104 895
--------- ---------
Receipts for shares sold -- Class D 9,081 124
Value of distributions reinvested -- Class D 61 20
Cost of shares repurchased -- Class D (5,884) (37)
--------- ---------
3,808 107
--------- ---------
Net Increase (Decrease) from Fund Share
Transactions 56,892 (13,037)
--------- ---------
Total Increase (Decrease) 56,885 (13,016)
NET ASSETS
Beginning of period 139,152 152,168
--------- ---------
End of period (including undistributed
net investment income of $29 and $36,
respectively) $ 196,037 $ 139,152
--------- ---------
NUMBER OF FUND SHARES
Sold -- Class A 892,065 528,856
Issued for distributions reinvested -- Class A 8,327 3,257
Repurchased -- Class A (863,413) (546,152)
--------- ---------
31,979 (14,039)
--------- ---------
Sold -- Class B 264,792 113,063
Issued for distributions reinvested -- Class B 1,845 1,596
Repurchased -- Class B (245,533) (113,764)
--------- ---------
21,104 895
--------- ---------
Sold -- Class D 9,081 124
Issued for distributions reinvested -- Class D 61 21
Repurchased -- Class D (5,334) (38)
--------- ---------
3,808 107
--------- ---------
See notes to financial statements.
</TABLE>
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION: Colonial Government Money Market Fund (the Fund), a
series of Colonial Trust II, 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, consistent
with capital preservation and liquidity. The Fund may issue an
unlimited number of shares. The Fund offers three classes of shares:
Class A, Class B and Class D. Class B shares, which are identical to
Class A shares except for an annual service and distribution fee and a
contingent deferred sales charge, will convert to Class A shares when
they have been outstanding approximately eight years. Class D shares
are subject to a reduced front-end sales charge, a contingent deferred
sales charge on redemptions made within one year after purchase and a
continuing service and 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: The Fund values its portfolio
securities utilizing the amortized cost valuation method.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income
tax purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All
income, expenses (other than the Class B and Class D service and
distribution fees), 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 D 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 service and
distribution fees applicable to Class B and Class D shares only.
9
<PAGE>
Notes to Financial Statements/August 31, 1996
NOTE 1. ACCOUNTING POLICIES - CONT.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable
income, no federal income tax has been accrued.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records
distributions daily and pays monthly.
OTHER: Interest income, including discount accretion and premium
amortization, is recorded daily on the accrual basis.
The Fund's custodian takes possession through the federal book-entry
system of securities collateralizing repurchase agreements. Collateral
is marked-to-market daily to ensure that the market value of the
underlying assets remains sufficient to protect the Fund. The Fund may
experience costs and delays in liquidating the collateral if the issuer
defaults or enters bankruptcy.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is
the investment Adviser of the Fund and furnishes accounting and other
services and office facilities for a monthly fee equal to 0.30%
annually of the Fund's average net assets.
BOOKKEEPING FEE: The Adviser 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: Colonial Investors Service Center, Inc. (the Transfer
Agent), an affiliate of the Adviser, provides shareholder services for
a monthly fee equal to 0.20% annually of the Fund's average net assets
and receives a reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial
Investment Services, Inc. (the Distributor), an affiliate of the
Adviser, is the Fund's principal underwriter. During the year ended
August 31, 1996, the Fund has been advised that the Distributor
received contingent deferred sales charges (CDSC) of $346,291 and $854
on Class B and Class D share redemptions, 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 Class B and Class
D 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 shares and
Class D shares.
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.
10
<PAGE>
Notes to Financial Statements/August 31, 1996
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive
fees and bear certain Fund expenses to the extent that total expenses
(exclusive of service and distribution fees, brokerage commissions,
interest, taxes and extraordinary expenses, if any) exceed 1.00%
annually of the Fund's average net assets.
For the year ended August 31, 1996, the Fund's operating expenses did
not exceed the 1.00% expense limit.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan
which may be terminated at any time. Obligations of the plan will be
paid solely out of the Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY: During the year ended August 31, 1996, purchases
and sales (including maturities) of short-term obligations (excluding
repurchase agreements) were $339,851,552 and $316,414,000,
respectively, all of which were U.S. government securities.
NOTE 4. OTHER RELATED PARTY TRANSACTIONS
At August 31, 1996, Colonial Investment Services, Inc. owned greater
than 5% of the Fund's shares outstanding.
11
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
Year ended August 31
----------------------------------------------
1996
Class A Class B Class D
--------- --------- --------
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 1.000 $ 1.000 $ 1.000
--------- --------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a) 0.048 0.038 0.038
--------- --------- --------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment
income (0.048) (0.038) (0.038)
--------- --------- --------
Net asset value -
End of period $ 1.000 $ 1.000 $ 1.000
--------- --------- --------
Total return (c) 4.93% 3.86% 3.85%
--------- --------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.70%(f) 1.70%(f) 1.70%(f)
Fees and expenses waived
or borne by the Adviser -- -- --
Net investment
income 4.76%(f) 3.76%(f) 3.76%(f)
Net assets at end
of period (000) $ 115,063 $ 76,539 $ 4,435
</TABLE>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ -- $ -- $ --
(b) Class D shares were initially offered on July 1, 1994. Per share amounts
reflect activity from that date.
(c) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(d) Had the Adviser not waived or reimbursed a portion of expenses, total return
would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(g) Annualized.
12
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
<TABLE>
<CAPTION>
Year ended August 31
------------------------------------------------------------------------------------------------------
1995 1994
Class A Class B Class D Class A Class B Class D(b)
--------------------------------------------- ------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
0.050 0.040 0.040 0.028 0.018 0.005
(0.050) (0.040) (0.040) (0.028) (0.018) (0.005)
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
5.14%(d) 4.08%(d) 4.07%(d) 2.85%(d) 1.82%(d) 0.45%(d)(e)
0.69% 1.69% 1.69% 0.73% 1.73% 1.73%(g)
0.04% 0.04% 0.04% 0.20% 0.20% 0.20%(g)
4.96% 3.96% 3.96% 3.01% 2.01% 2.01%(g)
$83,086 $55,441 $ 625 $97,115 $54,535 $ 518
$ 0.000 $ 0.000 $ 0.000 $ 0.002 $ 0.002 $ 0.002
</TABLE>
13
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
Year ended Period ended
August 31 August 31
1993 1992 (b)
--------------------------- ---------------------------------
Class A Class B Class A Class B(c)
------- ------- ------- ---------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a) 0.023 0.013 0.022 0.004
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment
income (0.023) (0.013) (0.022) (0.004)
Net asset value -
End of period $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total return (d) 2.28% 1.27% 2.18%(e)(f) 0.43%(e)(f)
RATIOS TO AVERAGE NET ASSETS
Expenses 0.88% 1.88% 1.00%(g) 2.00%(g)
Fees and expenses waived
or borne by the Adviser 0.20% 0.20% 0.38%(g) 0.38%(g)
Net investment
income 2.26% 1.26% 3.23%(g) 2.23%(g)
Net assets at end
of period (000) $44,693 $10,890 $ 47,885 $14,096
</TABLE>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$0.002 $0.002 $0.003 $0.001
(b) The Fund changed its fiscal year end from December 31 to August 31 in 1992.
(c) Class B shares were initially offered on June 8, 1992. Per share amounts
reflect activity from that date.
(d) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(e) Had the Adviser not waived or reimbursed a portion of expenses, total return
would have been reduced.
(f) Not annualized.
(g) Annualized.
14
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended
December 31
-----------
1991
Class A
-------
$ 1.000
0.053
(0.053)
$ 1.000
5.38%(e)
0.85%
0.20%
5.32%
$56,198
$0.002
State Tax Information for the year ended August 31, 1996 (unaudited)
An average of 18% of the Fund's investments as of the end of each quarter were
in direct obligations of the U.S. Treasury.
Approximately 23% of the Fund's distributions (18% of gross income) was derived
from interest on direct investments in U.S. Treasury bonds, notes, and bills.
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST II AND THE SHAREHOLDERS OF
COLONIAL GOVERNMENT MONEY MARKET 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 Government Money Market Fund (a series of Colonial Trust II)
at August 31, 1996, 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 include
confirmation of portfolio positions at August 31, 1996 by
correspondence with the custodian, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
October 11, 1996
16
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
COLONIAL 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:
<TABLE>
<S> <C>
For fund prices, dividends, and capital gains information ...... press 1
For account information ........................................ press 2
To speak to a Colonial 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 *
</TABLE>
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 am to 8:00 pm ET, and Saturdays from February through
mid-April, 10:00 am to 2:00 pm ET.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange, or sell shares by telephone, call Monday to Friday, 9:00
am to 8:00 pm ET. Transactions received after the close of the New York Stock
Exchange will receive the next business day's closing price.
COLONIAL LITERATURE DEPARTMENT - 1-800-248-2828
To request literature on any Colonial fund, call Monday to Friday, 8:30 am to
6:30 pm ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
17
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial has one of the most extensive selections of shareholder services
available. Your financial adviser can help you arrange for any of these
services, or you can call Colonial directly at 1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50;
$25 for an IRA account.
FREE EXCHANGES*: Exchange all or part of your account into the same share class
of another Colonial fund, by phone or mail, as your needs change over time.
EASY ACCESS TO YOUR MONEY*: 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 to Colonial within one year, you can reinvest in any
Colonial fund 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 Colonial 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 of each month. Dividends must be reinvested.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any
Colonial fund with a balance of $5,000 into the same share class of up to four
other Colonial funds. Minimum for each transfer is $100.
LOW COST IRAS: Choose from a broad range of retirement plans, including IRAs.
* Redemptions and exchanges are made at the next determined net asset value
after the request is received by Colonial in good order. Proceeds may be more or
less than your original cost. The exchange privilege may be terminated at any
time. Investors who purchase Class B or Class D shares (for applicable funds),
or $1 million or more of Class A shares, may be subject to a contingent deferred
sales charge.
18
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Government Money Market Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Government Money Market Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call our
Literature Department at 1-800-248-2828 and additional reports will be sent to
you.
This report has been prepared for shareholders of Colonial Government Money
Market Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objective, and operating policies of the Fund.
19
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Mutual Funds for
Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Trustee (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President - Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England - Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland (formerly 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.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
COLONIAL INVESTMENT SERVICES, INC., Distributor (C) 1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
MM-02/785C-0896 M (10/96)
