<PAGE>
COLONIAL
MINNESOTA TAX-EXEMPT FUND
SEMIANNUAL REPORT
JULY 31, 1997
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
<PAGE>
- --------------------------------------------------------------------------------
COLONIAL MINNESOTA TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1997 - July 31, 1997
INVESTMENT OBJECTIVE: Colonial Minnesota Tax-Exempt Fund seeks as high a level
of after-tax total return, as is consistent with prudent risk, by pursuing
current income exempt from federal and Minnesota state personal income tax. The
Fund also provides opportunities for long-term appreciation from a portfolio
primarily invested in investment grade municipal bonds.
THE FUND IS DESIGNED TO OFFER:
- High monthly double tax-free income
- Long-term appreciation
- Emphasis on quality
PORTFOLIO MANAGER COMMENTARY: "With a AAA rating by Moody's and less than 4%
unemployment, the State of Minnesota has one of the strongest economies in the
nation, as well as being a leader in health care reform. We continue to purchase
bonds in the revenue-backed industries, especially in the health care and higher
education sectors." -- Brian Hartford
COLONIAL MINNESOTA TAX-EXEMPT FUND PERFORMANCE
CLASS A CLASS B
Inception dates 9/26/86 8/4/92
Distributions declared per share(1) $0.181 $0.155
SEC yields on 7/31/97(2) 4.40% 3.87%
Taxable-equivalent SEC yields(3) 7.96% 7.00%
Six-month total returns, assuming reinvestment 7.43% 7.04%
of all distributions and no sales charge or
contingent deferred sales charge (CDSC)
Net asset value per share on 7/31/97 $7.47 $7.47
(1)A portion of the Fund's income may be subject to the alternative minimum tax.
(2)The 30-day SEC yields on July 31, 1997 reflect the portfolio's earning power,
net of expenses, expressed as an annualized percentage of the maximum offering
price per share at the end of the period. If the Advisor had not waived or borne
certain Fund expenses, SEC yields would have been 4.30% for Class A shares and
3.77% for Class B shares.
(3)Taxable-equivalent SEC yields are based on the maximum effective 44.7%
federal and Minnesota income tax rates.
The Fund may at times purchase tax-exempt securities at a discount, and some or
all of this discount may be included in the Fund's ordinary income which will be
taxable when distributed.
QUALITY BREAKDOWN (as of 7/31/97) TOP FIVE SECTORS (as of 7/31/97)
- --------------------------------- --------------------------------
AAA ...... 56.5% BBB ........ 3.6% General Obligations ........ 24.9%
AA ....... 23.1% CCC ........ 1.2% Hospitals .................. 16.8%
A ........ 9.0% Non rated .. 5.6% Joint Power Authority ...... 12.2%
Cash & Equivalents ........... 1.0% Education .................. 10.5%
Refunded ................... 9.7%
Because the Fund is actively managed, quality and sector weightings will change.
Quality breakdown and sector classifications are based upon total net assets.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
I am pleased to present the semiannual report for Colonial
Minnesota Tax-Exempt Fund. This report reflects on the
investment environment for the six months ended July 31,
1997.
The national economy continued to grow during the past [PICTURE OF
six months. A firm job market buoyed consumer confidence, HAROLD W. COGGER]
resulting in strong retail, auto and housing sales during
the first quarter of 1997. The Federal Reserve Board raised
short-term interest rates in March for the first time in two years in response
to growing concern about future wage and price inflation. As interest rates
rose, bond prices declined.
Bond prices recovered during the second half of the period as consumer spending
declined, dampening investors' fears of potential inflation. At the same time,
industrial production, corporate capital spending and consumer income levels
continued to expand while inflation remained very low. This indicates that while
economic growth has slowed down, the economy is still on track to post gains for
1997 and carry the current economic expansion into its eighth year.
Municipal bond prices continued to outperform Treasury prices. A low supply of
new municipal issues combined with strong demand helped support these tax-exempt
bond prices. Municipal bond prices also received a boost as the final balanced
budget agreement emerged from Congress. However, the investment environment for
municipal bonds was not without challenge. The yield advantage for investing in
lower quality municipal bonds continued to be historically low. This condition,
in combination with tight supply, created higher prices and lower yields for
many new investments.
The long-term benefits of investing in any municipal bond fund include tax-free
income and the opportunity to diversify your fixed-income portfolio. Colonial
Minnesota Tax-Exempt Fund continues to offer you competitive tax-free income and
long-term total return potential as well as an opportunity to participate in
Minnesota's economic expansion.
As always, we thank you for the opportunity to help meet your investment goals.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
September 15, 1997
Because market conditions change frequently, there can be no assurance that the
trends described in this report will continue, come to pass or affect Fund
performance.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT REPORT
BRIAN HARTFORD is portfolio manager of the Colonial Minnesota Tax-Exempt Fund.
Mr. Hartford is vice president of Colonial Management Associates, Inc. and is
the Quantitative Risk Manager for Colonial's tax-exempt investments.
WHY OUR PERFORMANCE WAS STRONG
When interest rates fall, bond prices rise. The reverse is also true: when
interest rates rise, bond prices fall. While this relationship holds true for
all bond portfolios, some portfolios are more sensitive than others. At
Colonial, we actively manage our portfolio's sensitivity to interest rates.
Because of our belief that interest rates were trending downward, we elected to
increase the portfolio's sensitivity to interest rates. Our portfolio was more
sensitive to interest rates than our industry benchmark. As a result, the
period's generally falling interest rate environment benefited us more than our
peers.
Another factor affecting performance is the decision on credit quality.
Typically, municipal bonds with lower ratings offer higher yields. However,
credit "spreads" -- the extra yield offered on lower quality credits -- remain
very tight. That is, we believe lower quality credits aren't paying enough extra
yield to justify the risk. As a result, we continue to focus on the higher
quality credits.
In addition to interest rate sensitivity and credit quality, another way we seek
to enhance the portfolio's performance is by buying securities with the right
maturities. Typically, a security with a longer maturity pays a higher yield.
However, we have noticed that beyond a 20-year maturity, securities don't offer
much additional yield. As a result, it isn't worth buying longer-maturity
securities, and taking the added price volatility inherent in a longer-term
security without getting paid to do so.
STRONG TOTAL RETURNS AND TAX-EXEMPT YIELDS
For the six months ended July 31, 1997, the total return for Class A shares,
based on net asset value, was 7.43%. In comparison, the average Minnesota
municipal bond fund as measured by Lipper Analytical Services, Inc. was 5.38%.
In addition, the Fund outperformed its benchmark, the Lehman Brothers Municipal
Bond Index, which returned 5.86%.
As of July 31, 1997, your Fund's Class A shares offered a tax-exempt yield of
4.40%. For those of you in the maximum federal and Minnesota income tax bracket,
that's equivalent to a taxable yield of 7.96%.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
MINNESOTA ECONOMY: ONE OF THE NATION'S BEST
The State's economy is extremely diverse, similar to the overall national
economy. With an unemployment rate under 4%, Minnesota is one of the few states
in the U.S. with a AAA rating by Moody's.
Recently, we have been purchasing bonds issued by educational and health care
institutions. Minnesota is a leader in the changing landscape of the health care
industry, in which competitive pressures and reform activities, in some cases,
lead to acquisitions or strategic alliances. When such a transaction takes
place, the outstanding debt of the not-for-profit entity may be refunded,
purchased at a premium or the credit rating upgraded. In addition, we also
believe that educational bonds are attractively priced and are not as sensitive
to a potential downturn in the overall economic environment as are general
obligation bonds.
During the period, the portfolio achieved excellent appreciation from bonds
issued by Southern Minnesota Power Agency, a public utility, and the University
of Minnesota. Both of these bond issues are non-callable, a substantial
advantage to investors in a falling interest rate environment. Typically, a bond
with a call feature will be redeemed by the issuer when interest rates fall and
will then be refinanced at the lower rate.
Our outlook for the State of Minnesota is very positive. In addition to a
diverse economy and low unemployment, the State's conservative budget process
has resulted in a solid financial position and a moderate debt burden.
STILL ROOM FOR FURTHER APPRECIATION
Compared to the rate of inflation, interest rates are still relatively high.
Using the 30-year U.S. Treasury bond yield at July 31 of 6.30%, the "spread"
between this yield and the rate of inflation is at least 4 percentage points,
which is higher than normal. That's one reason why interest rates could
eventually come down.
A second reason for lower interest rates is the declining federal budget
deficit. For fiscal 1997, which ends September 30, 1997, the budget deficit is
currently forecast to be about $35 billion. In comparison, the budget deficit
was nearly $300 billion in the early 1990s. With a smaller deficit, the
government will issue fewer Treasury bonds, and will need to pay lower interest
rates for what will become a more scarce commodity.
INCREASING YOUR TOTAL RETURN
With the strong economy producing the lowest inflation and unemployment in a
generation, interest rates have been going down over the last few months. If
this trend continues, its effect could be reflected in smaller dividend checks.
With inflation under control, current dividends continue to outpace the
inflation rate, and remain a source of tax-exempt income. The goal of the Fund
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
is to increase shareholders' total return, so while interest rates have gone
down, the net asset value per share of the Fund has been increasing. We will
continue to invest primarily in investment grade municipal bonds that provide
what we believe have the most potential for long-term appreciation.
COLONIAL MINNESOTA TAX-EXEMPT FUND'S INVESTMENT PERFORMANCE
Change in Value of $10,000 from 7/31/87 to 7/31/97
Based on NAV and MOP for Class A Shares
[PERFORMANCE GRAPH]
CMNTEF 1/97 NAV MOP Lehman Muni Bond
Jul 31, 87 10000 9525 10000
Oct 31, 87 9516.268 9064.245 9687
Jan 31, 88 10447.07 9950.836 10444
Apr 30, 88 10497.4 9998.773 10510
Jul 31, 88 10653.31 10147.28 10703
Oct 31, 88 10969.27 10448.23 11098
Jan 31, 89 11193.87 10662.16 11339
Apr 30, 89 11339.84 10801.2 11449
Jul 31, 89 11719.93 11163.24 12006
Oct 31, 89 11700.3 11144.54 11998
Jan 31, 90 11877.74 11313.54 12250
Apr 30, 90 11956.76 11388.81 12273
Jul 31, 90 12466.49 11874.33 12838
Oct 31, 90 12515.07 11920.61 12888
Jan 31, 91 12911.49 12298.2 13382
Apr 30, 91 13165.46 12540.1 13684
Jul 31, 91 13367.17 12732.22 13959
Oct 31, 91 13706.53 13055.47 14457
Jan 31, 92 13987.39 13322.99 14842
Apr 30, 92 14149.3 13477.21 14984
Jul 31, 92 14843.03 14137.99 15877
Oct 31, 92 14616.81 13922.51 15670
Jan 31, 93 15163.21 14442.96 16301
Apr 30, 93 15632.12 14889.6 16880
Jul 31, 93 15923.42 15167.06 17281
Oct 31, 93 16408.9 15629.48 17876
Jan 31, 94 16773.86 15977.1 18299
Apr 30, 94 15909.6 15153.89 17245
Jul 31, 94 16240.72 15469.29 17605
Oct 31, 94 15785.49 15035.68 17097
Jan 31, 95 16283.33 15509.87 17648
Apr 30, 95 16901.91 16099.07 18392
Jul 31, 95 17068.19 16257.45 18991
Oct 31, 95 17699.83 16859.09 19634
Jan 31, 96 18481.25 17603.39 20305
Apr 30, 96 17860.98 17012.58 19853
Jul 31, 96 18254.3 17387.22 20244
Oct 31, 96 18697.87 17809.72 20754
Jan 31, 97 18880.79 17983.95 21085
Apr 30, 97 18909.11 18010.93 21170
Jul 31, 97 20284.1 19320.6 22319
A $10,000 investment in Class B shares made on August 4, 1992 (inception) at NAV
would have been valued at $13,197 on July 31, 1997. The same investment after
deducting the applicable contingent deferred sales charge (CDSC) would have
grown to $12,997 on July 31, 1997.
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indexes are not investments, do not incur fees or expenses, and it is not
possible to invest in an index.
AVERAGE ANNUAL TOTAL RETURNS
as of June 30, 1997 (Most Recent Quarter End)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
INCEPTION 9/26/86 8/4/92
NAV MOP NAV W/CDSC
- --------------------------------------------------------------------------------
1 YEAR 7.90% 2.77% 7.10% 2.10%
- --------------------------------------------------------------------------------
5 YEARS 6.16 5.13 -- --
- --------------------------------------------------------------------------------
10 YEARS 7.00 6.48 -- --
- --------------------------------------------------------------------------------
SINCE INCEPTION 6.50 6.01 5.01 4.67
- --------------------------------------------------------------------------------
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charges or CDSC. Maximum offering price (MOP) returns include the
maximum sales charge of 4.75%. The CDSC returns reflect the maximum charge of 5%
for one year and 2% since inception for Class B shares.
On August 1, 1997, the Fund began offering Class C shares.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
- --------------------------------------------------------------------------------
6
<PAGE>
INVESTMENT PORTFOLIO
JULY 31, 1997 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 96.6% PAR VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 33.5%
EDUCATION - 10.5%
State Higher Education Facilities
Authority:
Carleton College,
5.000% 11/01/18 $2,000 $1,975
Macalester College,
5.550% 03/01/17 500 515
St. Johns University,
5.350% 10/01/17 1,000 1,005
University of St. Thomas,
5.350% 04/01/17 500 503
University of Minnesota,
Series 1996-A:
5.750% 07/01/14 500 543
5.750% 07/01/17 1,000 1,089
------
5,630
------
LOCAL GENERAL OBLIGATIONS - 23.0%
Bagley Independent School
District No. 162,
Series 1994,
4.850% 02/01/12 750 734
Brainerd Independent School
District No. 181,
Series 1991-A,
7.000% 06/01/11 200 217
Columbia Heights Independent
School District No. 13,
5.250% 02/01/17 1,755 1,768
Delano Independent School
District No. 879,
Series 1990:
7.250% 02/01/09 100 109
7.250% 02/01/10 100 109
Minneapolis St. Paul Metropolitan
Airports Commission,
Series 7,
7.800% 01/01/11 300 317
New Prague Independent School
District No. 721,
Series 1996-A,
5.000% 02/01/16 2,000 1,982
</TABLE>
7
<PAGE>
Investment Portfolio/July 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - CONT.
LOCAL GENERAL OBLIGATIONS - CONT.
New York Mills Independent School
District No. 553,
Series 1992-A,
6.850% 02/01/18 $ 210 $ 233
North St. Paul & Maplewood Unified
School District,
Series 1996-A,
5.125% 02/01/25 2,000 1,992
Roseau Independent School
District No. 682,
Series 1991,
7.000% 02/01/14 200 212
Rosemount Independent School
District No. 196,
Series 1994-B,
(a) 06/01/10 2,765 1,483
St. Cloud Hydroelectric,
Series 1996-D,
5.250% 12/01/18 2,000 2,035
Virginia,
Series 1989-B:
7.500% 02/01/07 100 102
7.500% 02/01/08 100 102
Waseca Independent School
District No. 829,
5.500% 04/01/17 1,000 1,017
-------
12,412
-------
- ------------------------------------------------------------------------------------------------
HEALTH - 16.8%
HOSPITALS
Minneapolis-St. Paul Housing &
Redevelopment Authority, Healthspan,
Series 1993-A,
4.75% 11/15/2018 (b) 4,410 4,140
Princeton,
Fairview Hospital,
Series 1991-C,
6.250% 01/01/21 300 319
Red Wing,
River Region Group,
Series 1993-A:
6.400% 09/01/12 200 209
6.500% 09/01/22 300 313
</TABLE>
8
<PAGE>
Investment Portfolio/July 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rochester,
Mayo Medical Center,
Series 1992-I,
5.900% 11/15/09 $1,000 $1,105
St. Cloud,
St. Cloud Hospital,
Series 1996-B,
5.000% 07/01/20 2,800 2,695
St. Paul Housing & Redevelopment
Authority, Healthcast Project,
Series 1993-A,
6.625% 11/01/17 250 263
------
9,044
------
- ------------------------------------------------------------------------------------------------
HOUSING - 7.7%
ASSISTED LIVING/SENIOR - 0.6%
Roseville,
Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 300 297
------
MULTI-FAMILY - 2.8%
Eden Prairie,
Preserve Place Apartments,
Series 1987,
8.000% 07/01/28 650 669
Lakeville,
Southfork Apartment Project,
Series 1989-A,
9.875% 02/01/20 200 203
Minneapolis,
Riverplace Project,
Series 1987-A,
7.100% 01/01/20 255 261
Washington County Housing &
Redevelopment Authority,
Cottages of Aspen,
Series 1992,
9.250% 06/01/22 180 199
White Bear Lake,
Birch Lake Townhomes Project,
Series 1989-A,
9.750% 07/15/19 200 202
------
1,534
------
</TABLE>
9
<PAGE>
Investment Portfolio/July 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING - CONT.
SINGLE FAMILY - 4.3%
Chisago & Stearns Counties,
Series 1994-B,
7.050% 09/01/27 $1,500 $1,626
Dakota County Housing &
Redevelopment Authority,
Series 1986,
7.200% 12/01/09 70 72
Minneapolis-St. Paul Housing
Board,
Series 1987-C,
8.875% 11/01/18 355 367
State Housing Finance Agency,
Series 1988-D,
8.050% 08/01/18 140 148
Washington County Housing &
Redevelopment Authority,
City of Cottage Grove,
Series 1986,
7.600% 12/01/11 80 80
------
2,293
------
- ------------------------------------------------------------------------------------------------
OTHER - 11.3%
LOCAL APPROPRIATED - 0.6%
Hibbing Economic Development
Authority Lease,
6.400% 02/01/12 300 305
------
PUBLIC INFRASTRUCTURE - 1.0%
Minneapolis Community Development Agency:
Series 1987-III,
8.625% 12/01/27 260 269
Series 1991-1,
8.000% 12/01/16 250 267
------
536
------
REFUNDED/ESCROW/SPECIAL OBLIGATIONS (c) - 9.7%
Burnsville, Fairview Community Hospital,
Series 1982-A,
(a) 5/1/2012 (b) 2,145 968
Dakota & Washington Counties
Housing & Redevelopment Authority,
Series 1988,
8.150% 09/01/16 235 308
Moorhead Residential,
7.100% 08/01/11 20 24
</TABLE>
10
<PAGE>
Investment Portfolio/July 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Owatonna Independent School
District No. 761, Series 1990:
7.100% 02/01/09 $ 115 $ 120
7.100% 02/01/10 120 126
7.100% 02/01/11 130 136
Rockford Independent School
District No. 883,
Series A,
7.100% 12/15/10 400 417
State Higher Education Facilities Authority:
Hamline University,
Series 3-K,
6.600% 06/01/08 250 275
University of St. Thomas:
Series 2-O,
7.600% 10/01/07 200 208
Series 3-C,
7.100% 09/01/10 100 110
St. Cloud Hospital,
Series 1990-B,
7.000% 07/01/20 150 168
St. Louis Park,
Methodist Hospital,
Series 1990-C,
7.250% 07/01/18 165 182
State Public Facilities Authority:
Series 1989-A,
7.000% 03/01/09 100 107
Series 1990-A,
7.100% 03/01/12 300 328
Series 1991-A,
6.950% 03/01/13 200 222
Western Minnesota Municipal
Power Agency,
Series 1983-A,
9.750% 01/01/16 1,000 1,521
------
5,220
------
- ------------------------------------------------------------------------------------------------
OTHER REVENUE - 10.8%
AMUSEMENTS & RECREATION - 0.6%
Metropolitan Council,
Hubert H. Humphrey Metrodome,
Series 1992,
6.000% 10/01/09 300 318
------
</TABLE>
11
<PAGE>
Investment Portfolio/July 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OTHER REVENUE - CONT.
MANUFACTURING - 5.7%
Brooklyn Park,
TL Systems Corp.,
Series 1991,
10.000% 09/01/16 $ 260 $ 322
Buffalo,
Von Ruden Manufacturing, Inc.,
Series 1989,
10.500% 09/01/14 540 595
Cloquet,
Diamond Brands, Inc.,
9.000% 06/01/02 600 605
Duluth Seaway Port Authority,
Cargill, Inc.,
Series 1993-A,
5.750% 12/01/16 1,500 1,566
------
3,088
------
PAPER PRODUCTS - 0.5%
Hubbard County,
Potlach Corp.,
Series 1987-A,
7.375% 08/01/13 285 303
------
STATE APPROPRIATED - 4.0%
State,
Duluth Airport,
Series 1995-B,
6.250% 08/01/14 2,000 2,128
------
- ------------------------------------------------------------------------------------------------
TAX-BACKED - 1.9%
STATE GENERAL OBLIGATIONS
State,
Series 1995,
5.250% 08/01/14 1,000 1,021
------
- ------------------------------------------------------------------------------------------------
TRANSPORTATION - 1.1%
TRANSPORTATION
St. Paul Port Authority,
Series F:
9.125% 12/01/00 25 25
9.125% 12/01/01 25 25
9.125% 12/01/02 25 25
9.125% 12/01/14 575 535
------
610
------
</TABLE>
12
<PAGE>
Investment Portfolio/July 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITY - 13.5%
INVESTOR OWNED - 0.8%
Anoka County,
United Power Association,
Series 1987-A,
6.950% 12/01/08 $ 400 $ 431
-------
JOINT POWER AUTHORITY - 12.2%
Northern Municipal Power Agency,
Minnesota Power & Light Co.,
Series 1989-A,
7.250% 01/01/16 700 740
Southern Minnesota Municipal
Power Agency:
Series 1993-A:
4.750% 01/01/16 2,000 1,903
5.000% 01/01/12 750 728
Series 1994-A,
(a) 01/01/27 10,500 2,205
Series A,
5.000% 01/01/16 1,000 974
-------
6,550
-------
WATER & SEWER - 0.5%
St. Paul,
Series 1988-A,
8.000% 12/01/08 250 265
-------
TOTAL MUNICIPAL BONDS (cost of $48,489) 51,985
-------
OPTIONS - 0.3% CONTRACTS
- ------------------------------------------------------------------------------------------------
September 1997 Treasury Bond Put,
Strike price 109, Expiration 08/23/97
(cost of $10) 2,500 (d)
September 1997 Treasury Bond Call,
Strike price 116, Expiration 08/23/97
(cost of $37) 9,000 127
-------
TOTAL OPTIONS (cost of $47) 127
-------
TOTAL INVESTMENTS - 96.9% (cost of $48,536) (e) 52,112
-------
SHORT-TERM OBLIGATIONS - 0.9% PAR
- ------------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (f)
MA State Health & Educational
Facilities Authority,
Series 1985-D,
3.650% 01/01/35 $ 100 100
</TABLE>
13
<PAGE>
Investment Portfolio/July 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - CONT. PAR VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VARIABLE RATE DEMAND NOTES (f) - CONT.
MS Perry County,
Leaf River Forest Project,
3.750% 03/01/02 $400 $ 400
-------
TOTAL SHORT-TERM OBLIGATIONS 500
-------
OTHER ASSETS & LIABILITIES, NET - 2.2% 1,199
- ------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $53,811
=======
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) These securities, or a portion thereof, with a total market value of $1,653,
are being used to collateralize open futures contracts.
(c) 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.
(d) Rounds to less than one.
(e) Cost for federal income tax purposes is the same.
(f) 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 July 31, 1997.
Short futures contracts open at July 31, 1997:
Par value Unrealized
covered by Expiration depreciation
Type contracts month at 07/31/97
- ------------------------------------------------------------------------------
Municipal Bond $1,000 December $4
See notes to financial statements.
14
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JULY 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
(in thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $48,536) $52,112
Short-term obligations 500
-------
52,612
Receivable for:
Interest $745
Investments sold 649
Fund shares sold 15
Other 92 1,501
---- -------
Total Assets 54,113
LIABILITIES
Payable for:
Distributions 207
Fund shares repurchased 87
Variation margin on futures 1
Payable to Adviser 1
Accrued:
Deferred Trustees fees 2
Other 4
----
Total Liabilities 302
-------
NET ASSETS $53,811
=======
Net asset value & redemption price per share -
Class A ($34,047/4,557) $ 7.47
=======
Maximum offering price per share - Class A
($7.47/0.9525) $ 7.84(a)
=======
Net asset value & offering price per share -
Class B ($19,764/2,645) $ 7.47(b)
=======
COMPOSITION OF NET ASSETS
Capital paid in $50,335
Undistributed net investment income 12
Accumulated net realized loss (108)
Net unrealized appreciation (depreciation) on:
Investments 3,576
Open futures contracts (4)
-------
$53,811
=======
</TABLE>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
15
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JULY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $1,592
EXPENSES
Management fee $ 133
Service fee 43
Distribution fee - Class B 72
Transfer agent 42
Bookkeeping fee 14
Registration fee 8
Custodian fee 1
Audit fee 11
Trustees fee 7
Reports to shareholders 3
Legal fee 2
Other 4
------
340
Fees waived by the Adviser (26) 314
------ ------
Net Investment Income 1,278
------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 503
Closed futures contracts (128)
------
Net Realized Gain 375
Net unrealized appreciation
during the period on:
Investments 2,084
Open futures contracts 6
------
Net Unrealized Appreciation 2,090
------
Net Gain 2,465
------
Net Increase in Net Assets from Operations $3,743
======
</TABLE>
See notes to financial statements.
16
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months
ended Year ended
(in thousands) July 31 January 31
----------- ----------
INCREASE (DECREASE) IN NET ASSETS 1997 1997
<S> <C> <C>
Operations:
Net investment income $ 1,278 $ 2,718
Net realized gain 375 156
Net unrealized appreciation (depreciation) 2,090 (1,821)
------- -------
Net Increase from Operations 3,743 1,053
Distributions:
From net investment income - Class A (855) (1,850)
From net investment income - Class B (417) (856)
------- -------
2,471 (1,653)
------- -------
Fund Share Transactions:
Receipts for shares sold - Class A 2,446 4,533
Value of distributions reinvested - Class A 584 1,255
Cost of shares repurchased - Class A (5,525) (6,290)
------- -------
(2,495) (502)
------- -------
Receipts for shares sold - Class B 904 2,571
Value of distributions reinvested - Class B 273 564
Cost of shares repurchased - Class B (1,717) (2,274)
------- -------
(540) 861
------- -------
Net Increase (Decrease) from Fund
Share Transactions (3,035) 359
------- -------
Total Decrease (564) (1,294)
NET ASSETS
Beginning of period 54,375 55,669
------- -------
End of period (including undistributed
net investment income of $12
and $4, respectively) $53,811 $54,375
======= =======
NUMBER OF FUND SHARES
Sold - Class A 338 635
Issued for distributions reinvested - Class A 82 177
Repurchased - Class A (769) (886)
------- -------
(349) (74)
------- -------
Sold - Class B 126 362
Issued for distributions reinvested - Class B 38 80
Repurchased - Class B (238) (320)
------- -------
(74) 122
------- -------
</TABLE>
See notes to financial statements.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In the opinion of management of Colonial Minnesota Tax-Exempt Fund (the Fund), a
series of Colonial Trust V, the accompanying financial statements contain all
normal and recurring adjustments necessary for the fair presentation of the
financial position of the Fund at July 31, 1997, 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 non-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 and Minnesota state
personal income tax and opportunities for long-term appreciation from a
portfolio primarily invested in investment grade municipal bonds. The Fund may
issue an unlimited number of shares. The Fund offers 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 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: 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.
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.
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.
18
<PAGE>
Notes to Financial Statements/July 31, 1997
- --------------------------------------------------------------------------------
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B distribution fee) 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 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 accredited to interest income over the
life of a security with a corresponding increase in the cost basis; market
discount is not accredit. 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 Adviser) is the
investment Adviser 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 Trust V as follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $2 billion 0.50%
Over $2 billion 0.45%
19
<PAGE>
Notes to Financial Statements/July 31, 1997
- --------------------------------------------------------------------------------
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
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 FEE: 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
reimbursement for certain out-of-pocket expenses.
Effective January 1, 1997 and continuing through calendar year 1997, the
Transfer Agent fee will be reduced by 0.01% in cumulative monthly increments,
resulting in a decrease in the fee from 0.14% to 0.13% annually.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. During the six months ended July 31, 1997, the Fund has
been advised that the Distributor retained net underwriting discounts of $1,692
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $38,073 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 Fund's average net assets
attributable to Class B shares. The plan also requires the payment of a service
fee to the Distributor as follows:
Valuation of shares Annual
outstanding on the 20th of Fee
each month which were issued Rate
---------------------------- ------
Prior to November 30, 1994 0.10%
On or after December 1, 1994 0.25%
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 0.75% 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.
20
<PAGE>
Notes to Financial Statements/July 31, 1997
- --------------------------------------------------------------------------------
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 July 31, 1997, purchases and
sales of investments, other than short-term obligations, were $7,802,908 and
$11,736,876 respectively.
Unrealized appreciation (depreciation) at July 31, 1997, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $3,651,252
Gross unrealized depreciation (75,481)
----------
Net unrealized appreciation $3,575,771
==========
CAPITAL LOSS CARRYFORWARDS: At January 31, 1997, capital loss carryforwards,
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
---------- ------------
1999 $ 4,000
2001 8,000
2002 39,000
-------
$51,000
=======
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 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
21
<PAGE>
Notes to Financial Statements/July 31, 1997
- --------------------------------------------------------------------------------
NOTE 4. PORTFOLIO INFORMATION - CONT.
- --------------------------------------------------------------------------------
market conditions, for duration management, or when the transactions are
economically appropriate to the reduction of risk inherent in the management of
the Fund and not for trading purposes. The use of futures contracts and options
involves certain risks, which include (1) imperfect correlation between the
price movement of the instruments and the underlying securities, (2) inability
to close out positions due to different trading hours or the temporary absence
of a liquid market for either the instrument or the underlying securities or (3)
an inaccurate prediction by the Adviser of the future direction of interest
rates. Any of these risks may involve amounts exceeding the amount recognized in
the Fund's Statement of Assets and Liabilities at any given time.
NOTE 5. LINE OF CREDIT
- --------------------------------------------------------------------------------
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the six months ended July 31, 1997.
22
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six months ended
July 31 Year ended January 31
------------------------- -------------------------
1997 1997
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.130 $ 7.130 $ 7.350 $ 7.350
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.182 0.156 0.369 0.316
Net realized and
unrealized gain (loss) 0.339 0.339 0.222 (0.222)
------- ------- ------- -------
Total from Investment
Operations 0.521 0.495 0.147 0.094
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.181) (0.155) (0.367) (0.314)
------- ------- ------- -------
Net asset value -
End of period $ 7.470 $ 7.470 $ 7.130 $ 7.130
======= ======= ======= =======
Total return (b)(c) 7.43%(d) 7.04%(d) 2.16% 1.40%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (e) 0.91%(f) 1.66%(f) 0.90% 1.65%
Net investment income (e) 5.09%(f) 4.34%(f) 5.19% 4.44%
Fees and expenses
waived or borne
by the Adviser (e) 0.10%(f) 0.10%(f) 0.13% 0.13%
Portfolio turnover 15%(d) 15%(d) 27% 27%
Net assets at end
of period (000) $34,047 $19,764 $34,986 $19,389
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.003 $ 0.003 $ 0.009 $ 0.009
(b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent
deferred sales charge.
(c) Had the Adviser not waived or reimbursed a portion of expenses, total return would have been reduced.
(d) Not annualized.
(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>
23
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended January 31
-------------------------------------------------------------
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 6.840 $ 6.840 $ 7.480 $ 7.480
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.384 0.332 0.415 0.363
Net realized and
unrealized gain (loss) 0.516 0.516 (0.642) (0.642)
------- ------- ------- -------
Total from Investment
Operations 0.900 0.848 (0.227) (0.279)
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.390) (0.338) (0.413) (0.361)
------- ------- ------- -------
Net asset value -
End of period $ 7.350 $ 7.350 $ 6.840 $ 6.840
======= ======= ======= =======
Total return (c)(d) 13.50% 12.66% (2.92)% (3.65)%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 0.85%(f) 1.60%(f) 0.72% 1.47%
Net investment income 5.41%(f) 4.66%(f) 5.98% 5.23%
Fees and expenses
waived or borne
by the Adviser 0.24%(f) 0.24%(f) 0.26% 0.26%
Portfolio turnover 42% 26% 42% 26%
Net assets at end
of period (000) $36,586 $19,083 $35,846 $14,731
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.016 $ 0.016 $ 0.018 $ 0.018
(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 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.
</TABLE>
24
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
<TABLE>
<CAPTION>
Year ended January 31
-------------------------------------------------------------
1994 1993
Class A Class B Class A Class B(b)
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.160 $ 7.160 $ 7.030 $ 7.210
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.419 0.364 0.449 0.191
Net realized and
unrealized gain (loss) 0.323 0.323 0.125 (0.049)
------- ------- ------- -------
Total from Investment
Operations 0.742 0.687 0.574 0.142
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.422) (0.367) (0.444) (0.192)
------- ------- ------- -------
Net asset value -
End of period $ 7.480 $ 7.480 $ 7.160 $ 7.160
======= ======= ======= =======
Total return (c)(d) 10.62% 9.81% 8.41% 2.01%(e)
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 0.82% 1.57% 0.85% 1.60%(g)
Net investment income 5.69% 4.94% 6.33% 5.58%(g)
Fees and expenses
waived or borne
by the Adviser 0.20% 0.20% 0.35% 0.35%(g)
Portfolio turnover 9% 9% 5% 5%
Net assets at end
of period (000) $41,326 $10,317 $35,017 $ 2,173
$ 0.015 $ 0.015 $ 0.025 $ 0.009
</TABLE>
25
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial 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 Colonial 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 Colonial fund, 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 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 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
payable 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
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.
Colonial 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 Colonial. 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.
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Minnesota Tax-Exempt Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Minnesota Tax-Exempt Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call
Colonial at 1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Minnesota Tax-Exempt
Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives, and operating policies of the Fund.
27
<PAGE>
[FLAG COLONIAL
LOGO] MUTUAL FUNDS
Mutual Funds for
Planned Portfolios
- --------------------------------------------------------------------------------
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (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
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board and Chief Executive Officer, Hannaford
Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Retired Partner, Peat Marwick Main & Co. (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) 1997
A Liberty Financial Company (NYSE: L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
MN-03/985D-0797 M (9/97)
- --------------------------------------------------------------------------------
