<PAGE>
LETTER FROM THE PRESIDENT
===============================================================================
Dear Shareholder:
I am pleased to present Colonial Ohio Tax-Exempt Fund's annual report for
the 12 months ended January 31, 1995. The Fund pursues its objective through
investments in primarily investment-grade Ohio municipal bonds.
FUND PERFORMANCE (2/1/94 - 1/31/95)(1)
<TABLE>
<CAPTION>
CLASS A CLASS B
INCEPTION 9/26/86 8/4/92
- -------------------------------------------------------
<S> <C> <C>
Distributions declared
per share $0.396 $0.343
- -------------------------------------------------------
SEC yield on 1/31/95 5.65% 5.19%
- -------------------------------------------------------
Taxable-equivalent yield
on 1/31/95, at maximum
offering price 10.68% 9.81%
- -------------------------------------------------------
12-month total return, assuming
reinvestment of all distributions
and no sales charge or CDSC -4.38% -5.10%
- -------------------------------------------------------
Net asset value per share
on 1/31/95 $6.93 $6.93
- -------------------------------------------------------
</TABLE>
ECONOMIC/MARKET OVERVIEW
The pace of economic growth during your Fund's fiscal year was stronger
than expected. This generated renewed concerns about inflation, prompting the
Federal Reserve Board to raise short-term interest rates six times to keep
inflation under control. The yield on the bellwether 30-year Treasury bond also
moved higher, increasing from 6.26% to 7.70% from the beginning to the end of
the period, and long-term tax-exempt bonds followed suit.
Although Ohio has a diverse economy, there are many automotive-related
companies concentrated in the northern part of the state. This industry was one
of the biggest beneficiaries of the national economic recovery, and this sector
made a significant contribution to Ohio's economy. Other industries, including
financial services and shipping, also contributed to the state's overall
economic health.
One region that ran into some problems was Cuyahoga County -- it reported
$115 million in investment losses for 1994. To recoup these losses, the county's
1995 budget has been cut by 11%, and no increases will be allowed for the next
four years. With these measures in place, the county looks fairly stable.
However, there may be a negative impact on issuers of municipal debt dependent
on the county for financial support. Please be assured that because of its
diversification strategy, the Fund did not own any uninsured municipal bonds
that will be impacted by tighter county finances.
[PHOTO]
John A. McNeice, Jr.
President
INVESTMENT STRATEGY
Several steps were taken to reduce the impact of interest rate volatility.
Investments were focused on higher quality securities, which performed
especially well as the gap between higher and lower quality bonds widened toward
the end of the fiscal year. The Fund also invested on a selective basis in
lower-rated and non-rated bonds, which because of their shorter durations, may
be less sensitive to fluctuating interest rates than some other municipal bonds.
In anticipation of improved conditions in the municipal bond market during
1995, the Fund's investments in housing bonds were reduced. Unlike the
performance of most tax-exempt bonds, the performance of housing bonds tends to
decline along with interest rates. These bonds are backed by their underlying
mortgages, and when interest rates move lower, housing bonds may be prepaid as
mortgage refinancing activity increases. To prepare for the possibility that
housing bonds might be called, a portion of the portfolio was structured in a
"barbell" configuration. Investments were concentrated in two types of
securities -- housing bonds for income, and zero coupon bonds for attractive
total return potential during bond market rallies.
Colonial management is optimistic about the long-term prospects for the
municipal bond market. For further information about how you can take advantage
of additional tax-exempt investment opportunities offered by Colonial, please
contact your full-service financial adviser or call Colonial at 1-800-426-3750.
Sincerely,
/s/ John A. McNeice, Jr.
- ------------------------
John A. McNeice, Jr.
President
March 10, 1995
(1) Refer to the footnote on page two.
<PAGE>
REPORT FROM COLONIAL MANAGEMENT
During Colonial Ohio Tax-Exempt Fund's fiscal year ended January 31,
1995, developments in the municipal bond market presented mixed messages to
investors. Like most fixed-income investments, these securities felt the impact
of rising interest rates. As prices declined, yields for all municipal bonds
increased.
Although returns in the municipal bond market were lower than we would have
liked, municipal bonds still performed better than comparable U.S. Treasury
securities. For example, during the fiscal year the yield for a sample long-term
municipal security with a Aaa rating -- the highest quality rating available --
increased by 1.2 percentage points, from 5.02% to 6.22%. Although this was a
relatively sharp increase, compared to Treasury securities the rise in municipal
yields was quite moderate. Over the same period, the yield for a comparable
Treasury bond increased by almost 1.5 percentage points.
Despite the higher interest rates that plagued municipal bonds, there were
some positive developments in the market's supply/demand dynamic. In fact, over
the long term, these developments should help offset the negative impact from
1994's interest rate increases.
SUPPLY AND DEMAND
As interest rates moved higher, the refinancing activity that had generated
record volumes of municipal securities in 1992 and 1993 subsided -- during 1994,
Ohio's new issue supply was down 31.8%. Lead Portfolio Manager Brian Hartford
believes this trend will continue in 1995 -- supply is expected to drop to $3.1
billion, down from $6.6 billion in 1993. Low supply should be complemented by
strong demand for tax-exempt securities. The combination of coupon payments and
maturing bonds will generate more than $200 billion (out of a total of
approximately $1.2 trillion in municipal bonds currently outstanding in the
market) that will likely be reinvested in the municipal market. This
supply/demand dynamic should have a favorable impact on prices.
INVESTMENT OBJECTIVE
The Fund's Trustees recently approved modifying your Fund's investment
objective to more precisely describe the Fund's investment goals and approach.
Please note that the Fund's manager and fundamental policies remain unchanged.
As of 5/31/95, the Fund will seek as high a level of after-tax total return, as
is consistent with prudent risk, by pursuing current income exempt from federal
and Ohio personal income tax and opportunities for long-term appreciation from a
portfolio primarily invested in investment-grade municipal bonds.
<TABLE>
COMPARISON OF THE CHANGE IN VALUE OF $10,000
Hypothetical investment in Class A shares of Colonial Ohio
Tax-Exempt Fund, the Lehman Brothers Municipal Bond Index, and
the Lehman Brothers 20-year Municipal Bond Index
9/26/86 - 1/31/95
LEHMAN 20-YEAR: $19,281
LEHMAN MUNICIPAL: $18,373
CLASS A NAV: $16,668
CLASS A MOP: $15,876
<CAPTION>
CLASS A MOP CLASS A NAV LEHMAN MUNICIPAL LEHMAN 20-YEAR
----------- ----------- ---------------- --------------
<S> <C> <C> <C> <C>
9/86 $ 9,525 $10,000 $10,000 $10,000
1/87 9,633 10,113 10,345 10,349
1/88 9,359 9,826 10,500 10,419
1/89 10,587 11,115 11,566 11,815
1/90 11,448 12,019 12,814 13,201
1/91 12,270 12,882 13,748 14,141
1/92 13,616 14,295 15,418 15,889
1/93 14,799 15,537 16,777 17,509
1/94 16,423 17,242 18,836 20,025
1/95 15,876 16,668 18,373 19,281
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 1/31/95
- ----------------------------------------------------------------------------------
CLASS A CLASS B
NAV MOP NAV W/CDSC
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year -4.38% -8.92% -5.10% -9.61%
5 years 6.92% 5.88% -- --
Since inception 6.30% 5.69% 2.74% 1.63%
</TABLE>
The Lehman Brothers Municipal Bond Index and the Lehman Brothers 20-year
Municipal Bond Index are unmanaged indexes that track the performance of the
municipal bond market. A portion of the Fund's income may be subject to the
alternative minimum tax. The 30-day SEC yield on 1/31/95, of 5.65% for Class A
shares and 5.19% for Class B shares reflects the portfolio's earning power, net
of expenses, and does not include changes in Fund price. If the adviser had not
borne certain Fund expenses, total returns for Class A and Class B shares would
have been lower; yield for Class A shares would have been 5.57%, and yield for
Class B shares would have been 5.10%. The 30-day SEC yield on 2/28/95 was 5.17%
for Class A shares and 4.67% for Class B shares. Taxable-equivalent yields are
based on the maximum combined 47.1% federal and Ohio income tax rates. Past
performance cannot predict future results. Return and value of an investment
will vary, resulting in a gain or loss on sale. All results shown assume
reinvestment of distributions. Net asset value (NAV) return does not include
sales charges or contingent deferred sales charges (CDSC). Maximum offering
price (MOP) return includes the maximum sales charge of 4.75%. The CDSC return
reflects the applicable contingent deferred sales charge (one year 5.00%, since
inception 3.00%). Performance for different share classes will vary based on
differences in sales charges and fees associated with each class.
2
<PAGE>
INVESTMENT PORTFOLIO (IN THOUSANDS) JANUARY 31, 1995
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 99.0% PAR VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER PRODUCTS - 0.9%
State Development Financing
Commission, Burrows Paper Corp.,
Series 1991,
7.450% 06/01/03............................. $ 1,065 $ 1,149
- --------------------------------------------------------------------------------------
EDUCATION - 21.2%
Benjamin Logan Local School District,
5.650% 12/01/08............................. 555 528
Buckeye Local School District,
Jefferson County,
5.625% 12/01/11 (a)......................... 1,000 934
Cleveland,
5.375% 09/01/11 (a)......................... 1,000 917
Cleveland School District,
Series 1992-A,
5.875% 12/01/11 (a)......................... 1,500 1,444
Columbus School District,
(b) 12/01/05 (a)......................... 4,000 2,140
Crookville Exempted Village School
District,
7.375% 12/01/07............................. 25 27
Cuyahoga County,
5.250% 10/01/13 (a)......................... 3,000 2,640
Franklin County, Online Computer
Library, Series C-1985,
9.750% 07/15/09............................. 30 31
Gahanna-Jefferson City School District:
(b) 12/01/10............................. 840 317
6.150% 12/01/17............................. 1,000 971
Series 1993,
(b) 12/01/11............................. 795 280
Hilliard City School District,
5.700% 12/01/12............................. 500 469
Lakota Local School District,
Series 1993,
5.650% 12/01/11............................. 1,400 1,307
Massillon City School District:
(b) 12/01/08............................. 1,000 439
Series 1994:
(b) 12/01/09............................. 1,000 407
(b) 12/01/11 (a)......................... 1,000 355
Miami University:
(b) 12/01/09............................. 400 162
5.600% 12/01/13............................. 500 466
Pickerington Local School District,
5.375% 12/01/19............................. 2,500 2,178
Shaker Heights School District,
Series 1990-A,
7.100% 12/15/10 (a)......................... 750 832
Shawnee State University,
7.100% 06/01/09............................. 400 421
Southwestern City School District,
5.000% 12/01/13............................. 1,000 855
State Higher Education Facilities
Commission:
Case Western Reserve:
6.125% 10/01/15............................. 1,505 1,479
6.250% 10/01/17............................. 1,840 1,824
Oberlin College,
5.375% 10/01/15............................. 1,000 884
Ohio Dominican College,
6.625% 12/01/14............................. 1,500 1,451
University of Dayton,
5.800% 12/01/19............................. 1,000 921
Tri-County North Local School District,
8.125% 12/01/06............................. 75 85
University of Cincinnati, Series R7,
5.200% 06/01/10 (a)......................... 1,000 891
Wright State University,
5.150% 05/01/11 (a)......................... 1,095 979
--------
26,634
- --------------------------------------------------------------------------------------
ELECTRIC - 8.6%
Athens County, Athens Inn, Inc.,
8.625% 11/01/11............................. 250 254
Cleveland Public Power System,
Series A:
(b) 11/15/12............................. 2,250 734
(b) 11/15/13............................. 2,000 608
Hamilton County,
Series 1993-A,
4.750% 10/15/23............................. 1,750 1,387
Municipal Electric Generation
Agency,
5.375% 02/15/24............................. 2,930 2,505
Puerto Rico Commonwealth,
Electric Power Authority, Series T,
5.500% 07/01/20............................. 1,000 861
State Air Quality Development Authority:
6.375% 01/01/29............................. 2,000 1,945
Ohio Edison Co.,
Series 1990-A,
7.450% 03/01/16............................. 1,000 1,064
Toledo Edison Co.,
Series 1990-B,
8.000% 05/15/19............................. 500 509
State Municipal Electricity
Generation Agency, Venture Omega JV5,
5.375% 02/15/13............................. 1,000 898
--------
10,765
- --------------------------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
3
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
=================================================================
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------
<S> <C> <C>
GENERAL OBLIGATIONS - 9.0%
Adams County,
7.250% 12/01/11................. $ 500 $ 516
Columbus:
7.100% 07/15/05................. 435 467
Series 1993-1,
5.500% 09/15/08(a).............. 2,000 1,880
Series 2,
5.500% 05/15/15................. 1,770 1,602
Cuyahoga County,
Series 1993-A,
(b) 10/01/12................. 1,000 336
Franklin County,
5.375% 12/01/20(a).............. 2,000 1,740
Mentor,
7.150% 12/01/11................. 1,000 1,051
Montgomery County,
5.500% 09/01/11................. 700 651
Puerto Rico Commonwealth:
3.785% 07/01/08(c).............. 620(d) 229
5.500% 07/01/08(a).............. 1,240 1,186
Stark County, Series 1993,
5.600% 11/15/08................. 500 478
State Infrastructure:
4.800% 08/01/13................. 1,000 839
6.100% 08/01/12................. 380 376
---------
11,351
- -----------------------------------------------------------------
HOSPITALS & HEALTH CARE - 16.1%
Akron, Bath & Copley Joint
Townships:
Akron General Medical Center,
5.500% 01/01/08(a).............. 1,000 936
Summa Health Systems,
Series 1993-A,
5.500% 11/15/13................. 2,500 2,116
Clermont County Hospital Facilities,
Mercy Health System, Series 1993-B,
5.875% 09/01/15................. 1,000 943
Cuyahoga County:
Cleveland Clinic Foundation,
Series 1988-A,
8.000% 12/01/15................. 500 536
Deaconess Hospital of Cleveland,
Series 1985-C,
7.450% 10/01/18................. 500 529
Meridian Health Systems:
6.250% 08/15/24(e).............. 1,000 948
Series 1991,
7.000% 08/15/23................. 500 509
Franklin County:
Doctor's Hospital, Series 1993:
5.875% 12/01/13................. 1,000 863
5.875% 12/01/23................. 1,000 828
Mount Carmel
Health Center, Series 1991,
6.750% 06/01/19................. 500 504
United Methodist Hospital,
Series 1993-A,
5.750% 05/15/12................. 1,500 1,361
Geauga County,
Geauga Hospital Association,
Series I-1988,
8.750% 11/15/13................. 600 639
Green Springs Health Care
Facilities, St. Francis Health Care
Center, Series A,
7.000% 05/15/04................. 700 700
Hamilton County:
Children's Hospital Medical Center,
Series 1993-F,
5.200% 05/15/09................. 1,000 913
Sisters of Charity Hospital,
Series S 1992-A,
6.250% 05/15/14................. 500 501
Lucas County:
St. Vincent's Medical Center,
Series 1993-C,
5.250% 08/15/22................. 2,000 1,695
Toledo Hospital, Series 1993,
5.000% 11/15/22(a).............. 3,000 2,460
Miami County,
Upper Valley Medical Center,
Series 1987-A,
8.375% 05/01/13................. 500 531
Montgomery County:
Miami Valley Hospital,
Series 1992-A,
6.250% 11/15/12(a).............. 1,000 991
St. Elizabeth Medical Center,
Series B-1,
8.100% 07/01/18................. 500 511
Stark County,
Doctor's Hospital, Inc.,
6.000% 04/01/24................. 1,500 1,187
---------
20,201
- -----------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
4
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - 6.9%
MULTI-FAMILY - 2.2%
Capital Corp. for Housing,
Multi-family housing, Series 1993-A,
7.500% 01/01/24.......................... $ 1,000 $ 1,051
Montgomery County,
Connifers Housing Project,
8.450% 06/01/28.......................... 1,000 1,031
State Housing Finance Agency:
Detroit Terrace, Series 1985,
10.150% 10/20/11.......................... 170 179
Series B-2,
6.700% 03/01/25.......................... 500 497
---------
2,758
---------
SINGLE-FAMILY - 4.7%
Columbus-Beckley Housing Corp.,
Section 8 Assisted Project,
7.375% 10/15/21.......................... 1,342 1,285
Columbus-Norton Housing Corp.,
Section 8 Assisted Project,
7.375% 07/15/21.......................... 1,382 1,323
Housing Finance Agency, Single-
family Mortgage, RIB (variable rate),
Series A-2,
9.111% 03/24/31.......................... 700 719
State Housing Finance Agency,
Single-family Housing:
Series 1988-A,
8.400% 02/01/20.......................... 840 873
Series 1988-B,
8.100% 12/15/08.......................... 325 336
Series 1990-F,
7.600% 09/01/16.......................... 1,300 1,336
---------
5,872
- -----------------------------------------------------------------------------------
IN-SUBSTANCE DEFEASED (f) - 8.7%
Akron, Bath & Copley Joint
Townships, Children's Hospital,
Center of Akron,
7.450% 11/15/20.......................... 500 556
Canton,
7.875% 12/01/08.......................... 500 554
Carroll County,
Timken Mercy Medical Center,
7.125% 12/01/18 (a)...................... 1,000 1,105
Cleveland School District, Series 1991,
8.250% 12/01/08.......................... 500 583
Cuyahoga County,
7.000% 10/01/13.......................... 1,000 1,090
Delaware County,
7.250% 11/01/10.......................... 250 278
Franklin County, Mount Carmel
Health Center, Series 1990-B,
7.650% 06/01/10.......................... 500 555
Hamilton County:
Christ Hospital, Series 1987,
8.375% 01/01/07.......................... 425 467
Series 1988-B,
8.000% 10/15/22 (g)...................... 2,000 2,210
Lake County, Series 1987-2,
8.125% 12/01/10.......................... 1,000 1,089
Lakota Local School District,
Series 1988,
7.900% 12/01/11.......................... 500 544
Ross County,
8.200% 12/01/06.......................... 1,000 1,099
State Building Authority,
Series 1987-A,
7.350% 04/01/07.......................... 430 473
Warren,
8.625% 11/15/13.......................... 250 283
---------
10,886
- -----------------------------------------------------------------------------------
NURSING HOMES - 2.5%
Cuyahoga County, Judson
Retirement Community,
8.875% 11/15/19.......................... 500 529
Franklin County,
Columbus West Health Care Co.,
Series 1986,
10.000% 09/01/16.......................... 100 98
Greene County,
Fairview Extended Care Service,
Series 1990-A,
10.125% 01/01/11.......................... 230 247
Lucas County,
Villa North Nursing Home,
Series 1988-B,
10.500% 06/01/18.......................... 500 450
Marion County,
United Church Homes, Inc.,
Series 1993,
6.375% 11/15/10.......................... 1,000 891
Montgomery County,
Grafton Oaks Project, Series 1986,
9.750% 12/01/16(h)....................... 735 720
Westerville,
Health Care & Retirement Project,
10.000% 01/01/08.......................... 220 225
---------
3,160
- -----------------------------------------------------------------------------------
POLLUTION CONTROL REVENUE - 1.0%
State Air Quality Development Authority,
5.625% 11/15/29.......................... 1,500 1,333
- -----------------------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
5
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C>
PUBLIC FACILITY & IMPROVEMENT - 9.6%
Cuyahoga County,
Joy Technologies, Inc.,
8.750% 09/15/07.................... $ 500 $ 523
Fairborn,
Series 1991,
7.200% 10/01/11 (a)................ 1,170 1,261
Franklin County Convention
Facilities Authority,
5.850% 12/01/19.................... 1,200 1,127
Gateway Economic Development
Corp. of Greater Cleveland,
Series 1990-A,
6.875% 09/01/05.................... 750 799
Lake County Economic Development,
North Madison Properties, Series 1993:
8.069% 09/01/01.................... 420 414
8.819% 09/01/11.................... 200 200
Ohio State Building Authority:
Administration Building Fund,
Series 1993-A,
5.500% 10/01/12.................... 1,500 1,367
William Green Building,
4.750% 04/01/14.................... 5,750 4,650
State Development Financing
Commission, Sponge, Inc. Project,
Series 1989-5A,
8.375% 06/01/14.................... 740 798
State Public Facilities Commission,
Series II-1993-A,
4.700% 06/01/08 (a)................ 1,000 845
Virgin Islands Public Finance
Authority, Series 1992-A,
7.000% 10/01/02.................... 125 130
--------
12,114
- -----------------------------------------------------------------------------------
TRANSPORTATION - 1.5%
Cleveland, Cleveland Hopkins
International Airport,
Series 1990-B,
7.250% 01/01/20.................... 500 527
Puerto Rico Commonwealth,
Highway & Transportation Authority:
4.040% 07/01/09 (c)................ 205(d) 80
5.500% 07/01/09.................... 410 373
State Turnpike Commission,
Series 1994-A,
5.750% 02/15/24.................... 1,000 912
--------
1,892
- -----------------------------------------------------------------------------------
WATER & SEWER - 13.0%
Bellefontaine,
7.050% 06/01/11.................... 250 262
Clermont County Sewer System,
5.200% 12/01/21 (a)................ 1,750 1,496
Clermont County,
5.700% 12/01/13.................... 1,000 931
Cleveland,
Series 1993-G,
5.500% 01/01/21 (a)................ 6,750 6,126
Fostoria,
5.350% 12/01/23.................... 1,735 1,492
Hamilton County,
Metropolitan Sewer District:
Series 1993-A,
5.000% 12/01/14.................... 1,000 855
5.450% 12/01/09.................... 500 470
Montgomery County,
Moraine-Beaver Creek Water & Sewer,
5.300% 11/15/08.................... 495 444
Springboro,
7.875% 06/01/18.................... 500 546
State Water Development Authority:
5.500% 12/01/18.................... 2,490 2,219
6.000% 12/01/16.................... 1,000 964
Toledo Waterworks,
Series B,
7.750% 11/15/17.................... 500 549
--------
16,354
- -----------------------------------------------------------------------------------
Total investments (cost $127,768) (i)................ 124,469
- -----------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 0.5%
- -----------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (J)
Franklin County,
3.950% 07/01/15.................... 100 100
Hamilton County,
Franciscan Sisters Poor Health
Project, Series A,
3.950% 03/01/17.................... 300 300
Ohio State University,
Series 1985-B,
3.900% 12/01/01.................... 225 225
- -----------------------------------------------------------------------------------
Total short-term obligations............................................ 625
- -----------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES - 0.5%....................................... 576
- -----------------------------------------------------------------------------------
NET ASSETS - 100.0%..................................................... $125,670
- -----------------------------------------------------------------------------------
</TABLE>
Notes to investment portfolio:
(a) These securities, or a portion thereof, with a market value of $31,832 are
being used to collateralize open futures contracts.
(b) Zero coupon bond.
See notes to investment portfolio.
6
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
===============================================================================
Notes to investment portfolio cont.:
(c) This security is a variable rate instrument; on July 1, 1998 it will change
to a fixed rate instrument. Interest income is accrued daily on the
notional amount at the applicable interest rates.
(d) Notional amount.
(e) This security has been purchased on a delayed delivery basis, for settlement
at a future date beyond the customary settlement time.
(f) The Fund has been informed that each issuer has placed direct obligations of
the U.S. Government in an irrevocable trust, solely for the payment of the
interest and principal.
(g) This security, or a portion thereof, with a market value of $2,210 is being
used to collateralize the delayed delivery purchase indicated in note (e)
above.
(h) This issuer is in default of certain debt covenants. Income is not being
accrued.
(i) Cost for federal income tax purposes is the same.
(j) 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 January 31, 1995.
Short futures contracts open at January 31, 1995:
<TABLE>
<CAPTION>
Par value Unrealized
covered by Expiration depreciation
Type contracts month at 1/31/95
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Treasury bonds $23,400 March $815
- -------------------------------------------------------------------------------
</TABLE>
Acronym Name
------- -----------------------
RIB Residual Interest Bonds
See notes to financial statements.
7
<PAGE>
FINANCIAL STATEMENTS
===============================================================================
STATEMENT OF ASSETS & LIABILITIES
January 31, 1995
(in thousands except for per share amounts and footnote)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at value (cost $127,768)........................ $ 124,469
Short-term investments...................................... 625
---------
125,094
Receivable for:
Interest..................................... $ 1,765
Fund shares sold............................. 142
Investments sold............................. 30
Other........................................... 410 2,347
------- --------
Total assets....................................... 127,441
LIABILITIES
Payable for:
Investments purchased........................ 936
Distributions................................ 553
Fund shares repurchased...................... 161
Variation margin on futures.................. 110
Accrued:
Deferred Trustees fees....................... 2
Other........................................ 9
-------
Total liabilities...................................... 1,771
---------
NET ASSETS...................................................... $ 125,670
---------
Net asset value & redemption price per share -
Class A ($72,123/10,406).................................... $ 6.93
---------
Maximum offering price per share - Class A
($6.93/0.9525)............................................... $ 7.28*
---------
Net asset value & offering price per share -
Class B ($53,547/7,726)..................................... $ 6.93
---------
COMPOSITION OF NET ASSETS
Capital paid in.............................................. $ 130,820
Undistributed net investment income.......................... 42
Accumulated net realized loss................................ (1,078)
Net unrealized depreciation on:
Investments................................................ (3,299)
Open futures contracts..................................... (815)
---------
$ 125,670
=========
</TABLE>
STATEMENT OF OPERATIONS
Year ended January 31, 1995
(in thousands)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest........................................................ $ 8,189
EXPENSES
Management fee.................................. $ 720
Service fee..................................... 23
Distribution fee - Class B...................... 399
Transfer agent.................................. 213
Bookkeeping fee................................. 54
Trustees fees................................... 14
Custodian fee................................... 8
Audit fee....................................... 30
Legal fee....................................... 5
Registration fees............................... 29
Reports to shareholders......................... 5
Other........................................... 16
-------
1,516
Fees waived by the adviser...................... (202) 1,314
------- ---------
Net investment income............................... 6,875
---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized gain (loss) on :
Investments................................... (668)
Closed futures contracts...................... 1,171
-------
Net realized gain...................................... 503
Net unrealized depreciation
during the period on:
Investments................................... (12,937)
Open futures contracts........................ (815)
-------
Net unrealized depreciation............................ (13,752)
---------
Net loss............................................ (13,249)
---------
Net decrease in net assets from
operations............................................... $ (6,374)
=========
</TABLE>
* On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
8
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
===============================================================================
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended January 31
---------------------
1995 1994
--------- --------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income................................................. $ 6,875 $ 5,370
Net realized gain (loss).............................................. 503 (141)
Net unrealized appreciation (depreciation)............................ (13,752) 5,314
-------- --------
Net increase (decrease) from operations......................... (6,374) 10,543
Distributions
From net investment income - Class A.................................. (4,183) (3,969)
In excess of net investment income - Class A........................... - (40)
From net investment income - Class B.................................. (2,598) (1,464)
In excess of net investment income- Class B........................... - (15)
-------- --------
(13,155) 5,055
Fund share transactions
Receipts for shares sold - Class A.................................... 7,374 16,539
Value of distributions reinvested - Class A........................... 2,438 2,303
Cost of shares repurchased - Class A.................................. (9,299) (5,518)
-------- --------
513 13,324
-------- --------
Receipts for shares sold - Class B.................................... 13,206 42,982
Value of distributions reinvested - Class B........................... 1,655 889
Cost of shares repurchased - Class B.................................. (7,155) (1,376)
-------- --------
7,706 42,495
-------- --------
Net increase from Fund share transactions....................... 8,219 55,819
-------- --------
Total increase (decrease)................................. (4,936) 60,874
NET ASSETS
Beginning of period................................................... 130,606 69,732
-------- --------
End of period (including undistributed and net of overdistributed
net investment income of $42 and $55, respectively).................. $125,670 $130,606
NUMBER OF FUND SHARES ======== ========
Sold - Class A........................................................ 1,035 2,210
Issued for distributions reinvested - Class A......................... 347 307
Repurchased - Class A................................................. (1,328) (735)
-------- --------
54 1,782
-------- --------
Sold - Class B........................................................ 1,845 5,742
Issued for distributions reinvested - Class B......................... 236 118
Repurchased - Class B................................................. (1,033) (183)
-------- --------
1,048 5,677
-------- --------
Net increase in shares outstanding.............................. 1,102 7,459
Outstanding at
Beginning of period................................................ 17,030 9,571
-------- --------
End of period...................................................... 18,132 17,030
======== ========
</TABLE>
See notes to financial statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
===============================================================================
NOTE 1. ACCOUNTING POLICIES
Colonial Ohio Tax-Exempt Fund (the Fund), a series of Colonial Trust V, is
a Massachusetts business trust, registered under the Investment Company Act of
1940, as amended, as a non-diversified, open-end, management investment company.
The Fund may issue an unlimited number of shares. The Fund offers Class A shares
sold with a front-end sales charge and Class B shares which 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. The following significant accounting policies are consistently
followed by the Fund in the preparation of its financial statements and conform
to generally accepted accounting principles.
- -------------------------------------------------------------------------------
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.
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 which cannot be valued as set forth above are valued at
fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased or sold.
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 distribution fee), 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 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 shares only.
- -------------------------------------------------------------------------------
FEDERAL INCOME TAXES
Consistent with the Fund's policy to qualify as a regulated investment
company and to distribute all of its taxable and tax-exempt income, no federal
income tax has been accrued.
- -------------------------------------------------------------------------------
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM
Interest income is recorded on the accrual basis. Original issue discount
is accreted to interest income over the life of a security with a corresponding
increase in the cost basis; market discount is not accreted. Premium is
amortized against interest income with a corresponding decrease in the cost
basis.
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
The Fund declares and records distributions daily and pays monthly.
The amount and character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles.
- -------------------------------------------------------------------------------
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. Through June 30, 1994,
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
================================================================================
this fee was 0.60% annually of the Fund's average net assets. Effective
July 1, 1994, the monthly fee is based on each Fund's pro rata portion of the
combined average net assets of Trust V as follows:
<TABLE>
<CAPTION>
Average Net Assets Annual Fee Rate
------------------ ---------------
<S> <C>
First $1 billion 0.55%
Next $1 billion 0.50%
Over $2 billion 0.45%
</TABLE>
- -------------------------------------------------------------------------------
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 0.14%
annually of the Fund's average net assets and receives a reimbursement for
certain out of pocket expenses.
- -------------------------------------------------------------------------------
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
The Adviser, through Colonial Investment Services, Inc. (the Distributor),
is the Fund's principal underwriter. During the year ended January 31, 1995,
the Distributor retained net underwriting discounts of $20,569 on sales of the
Fund's Class A shares and received contingent deferred sales charges (CDSC) of
$181,182 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which 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. Effective December 1, 1994, the plan was
amended to include payment by the Fund of a service fee applicable to both Class
A and Class B, to the Distributor as follows:
<TABLE>
<CAPTION>
Valuation of shares Annual
outstanding on the 20th of Fee
each month which were issued Rate
- ------------------------------------------------- ------
<S> <C>
Prior to November 30, 1994....................... 0.10%
On or after December 1, 1994..................... 0.25%
</TABLE>
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
- -------------------------------------------------------------------------------
EXPENSE LIMITS
The 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 0.70% annually of the Fund's average net assets.
- -------------------------------------------------------------------------------
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
During the year ended January 31, 1995, purchases and sales of
investments, other than short-term obligations, were $51,658,171 and
$41,279,931, respectively.
Unrealized appreciation (depreciation) at January 31, 1995, based on
cost of investments for both financial statements and federal income tax
purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation................... $ 2,743,687
Gross unrealized depreciation................... (6,042,995)
------------
Net unrealized depreciation................... $ (3,299,308)
============
- --------------------------------------------------------------------------------
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
================================================================================
CAPITAL LOSS CARRYFORWARDS
At January 31, 1995, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
</TABLE>
<TABLE>
<CAPTION>
Year of Capital loss
expiration carryforward
------------ ------------
<S> <C>
1996........ $213,000
1998........ 78,000
1999........ 8,000
2001........ 21,000
2002........ 112,000
------------
$432,000
============
</TABLE>
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized
gains, it is unlikely that such gains would be distributed since they may be
taxable to shareholders as ordinary income.
- --------------------------------------------------------------------------------
OTHER
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 sells municipal and Treasury bond futures contracts to manage
overall portfolio interest rate exposure and not for trading purposes. The use
of futures contracts involves certain risks, which include (1) imperfect
correlation between the price movement of the contracts and the underlying
securities, (2) inability to close out positions due to different trading hours,
or the temporary absence of a liquid market, for either the contract or the
underlying securities, or (3) an inaccurate prediction by the Adviser of the
future direction of interest rates. Any of these risks may involve amounts
exceeding the initial or variation margin recorded in the Fund's Statement of
Assets and Liabilities at any given time.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
All of the distributions will be treated as exempt income for federal
income tax purposes.
- --------------------------------------------------------------------------------
12
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
---------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------------------- ------------------ ------------------ -----------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B(B) CLASS A CLASS A
-------- ------- ------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning
of period........................ $ 7.670 $ 7.670 $ 7.290 $ 7.290 $ 7.090 $ 7.330 $ 6.880 $ 6.750
------- ------- ------- ------- -------- ------- ------- -------
Income (loss) from investment
operations:
Net investment income (a)........ 0.401 0.348 0.406 0.351 0.444 0.185 0.457 0.462
Net realized and unrealized
gain (loss) on investments..... (0.745) (0.745) 0.389 0.389 0.204 (0.033) 0.208 0.138
------- ------- ------- ------- -------- ------- ------- -------
Total from investment
operations..................... (0.344) (0.397) 0.795 0.740 0.648 0.152 0.665 0.600
------- ------- ------- ------- -------- ------- ------- -------
Less distributions declared
to shareholders:
From net investment income....... (0.396) (0.343) (0.411) (0.356) (0.448) (0.192) (0.455) (0.470)
In excess of net
investment income.............. -- -- (0.004) (0.004) -- -- -- --
------- ------- ------- ------- -------- ------- ------- -------
Total distributions
declared to shareholders....... (0.396) (0.343) (0.415) (0.360) (0.448) (0.192) (0.455) (0.470)
------- ------- ------- ------- -------- ------- ------- -------
Net asset value - End of period.... $ 6.930 $ 6.930 $ 7.670 $ 7.670 $ 7.290 $ 7.290 $ 7.090 $ 6.880
------- ------- ------- ------- -------- ------- ------- -------
Total return (c)(d)................ (4.38)% (5.10)% 11.17% 10.36% 9.41% 0.85% (f) 10.00% 9.21%
======= ======= ======= ======= ======== ======= ======= =======
Ratios to average net assets:
Expenses......................... 0.72% (e) 1.47% (e) 0.82% 1.57% 1.00% 1.75% (g) 1.00% 1.00%
Net investment income............ 5.71% 4.96% 5.34% 4.59% 6.18% 5.43% (g) 6.57% 6.83%
Fees and expenses waived
or borne by the adviser........ 0.16% 0.16% 0.09% 0.09% 0.03% 0.03% 0.09% 0.15%
Portfolio turnover................. 33% 33% 3% 3% 13% 13% 13% 11%
Net assets at end of period
(000)............................ $ 72,123 $ 53,547 $ 79,394 $51,212 $62,439 $ 7,293 $50,281 $41,158
(a) Net of fees and expenses waived
or borne by the adviser which
amounted to.................... $0.011 $0.011 $0.007 $0.007 $0.002 -- $0.006 $0.010
(b) Class B shares were initially offered on August 4, 1992. 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 CDSC.
(d) Had the adviser not waived or reimbursed a portion of expenses total return
would have been reduced.
(e) Includes service fee since its inception on December 1, 1994, of 0.02%
(not annualized).
(f) Not annualized.
(g) Annualized.
</TABLE>
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST V AND THE SHAREHOLDERS OF COLONIAL OHIO
TAX-EXEMPT 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 Ohio Tax-Exempt Fund (a
series of Colonial Trust V) at January 31, 1995, 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 January 31, 1995 by correspondence with the custodian and brokers, and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
March 10, 1995
===============================================================================
[GRAPHIC]
ABOUT OUR COVER...
The symbol on the cover of this Report represents the Fund's primary investment
focus on municipal bonds.
===============================================================================
Colonial Ohio Tax-Exempt 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.
SHAREHOLDER SERVICES AND TRANSFER AGENT
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
This material may be used with potential investors if it is preceded or
accompanied by a current Fund prospectus containing more complete information
including fees, risks, and expenses.
14
<PAGE>
TRUSTEES
================================================================================
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
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England - Worcester)
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, C.S. First Boston Merchant Bank; and President and Chief
Executive Officer, The First Boston Corporation)
JOHN A. MCNEICE, JR.
Chairman of the Board, Chief Executive Officer and Director, The Colonial Group,
Inc. and Colonial Management Associates, Inc.
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
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
15
<PAGE>
[GRAPHIC] COLONIAL
MUTUAL FUNDS
[GRAPHIC]
COLONIAL
OHIO
TAX-EXEMPT FUND
=================================
ANNUAL REPORT
JANUARY 31, 1995
[GRAPHIC] COLONIAL
MUTUAL FUNDS
[RECYCLE LOGO]
[SOY BASED INK ICON]
COLONIAL INVESTMENT SERVICES (C)1995
One Financial Center, Boston, Massachusetts 02111-2621
Printed on recycled paper
OH-02/643A-0195
