May 30, 1997, Revised November 7, 1997
COLONIAL CALIFORNIA
TAX-EXEMPT FUND
COLONIAL CONNECTICUT
TAX-EXEMPT FUND
COLONIAL FLORIDA
TAX-EXEMPT FUND
COLONIAL MASSACHUSETTS
TAX-EXEMPT FUND
COLONIAL MICHIGAN
TAX-EXEMPT FUND
COLONIAL MINNESOTA
TAX-EXEMPT FUND
COLONIAL NEW YORK
TAX-EXEMPT FUND
COLONIAL NORTH CAROLINA
TAX-EXEMPT FUND
COLONIAL OHIO
TAX-EXEMPT FUND
PROSPECTUS
BEFORE YOU INVEST
Colonial Management Associates, Inc. (Adviser) and your full-service financial
adviser want you to understand both the risks and benefits of mutual fund
investing.
While mutual funds offer significant opportunities and are professionally
managed, they also carry risks including possible loss of principal. Unlike
savings accounts and certificates of deposit, mutual funds are not insured or
guaranteed by any financial institution or government agency.
Please consult your full-service financial adviser to determine how investing in
one of these mutual funds may suit your unique needs, time horizon and risk
tolerance.
Each of Colonial California Tax-Exempt Fund, Colonial Connecticut Tax-Exempt
Fund, Colonial Florida Tax-Exempt Fund, Colonial Massachusetts Tax-Exempt Fund,
Colonial Michigan Tax-Exempt Fund, Colonial Minnesota Tax-Exempt Fund, Colonial
New York Tax-Exempt Fund, Colonial North Carolina Tax-Exempt Fund and Colonial
Ohio Tax-Exempt Fund (each a Fund and collectively, the Funds) is a portfolio of
Colonial Trust V (Trust), an open-end management investment company. Each 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 its state's personal
income tax (if any) and opportunities for
SP-01/277E-1097
long-term appreciation from a portfolio primarily invested in investment grade
municipal bonds. The Florida and Michigan Funds' shares are intended to be
exempt from their respective states' intangibles tax. Each Fund (except the
California Fund) is non-diversified. The Funds are managed by the Adviser, an
investment adviser since 1931.
This Prospectus explains concisely what you should know before investing in the
Funds. Read it carefully and retain it for future reference. More detailed
information about each Fund is in the May 30, 1997, revised August 1, 1997,
Statement of Additional Information which has been filed with the Securities and
Exchange Commission and is obtainable free of charge by calling the Adviser at
1-800-426-3750. The Statement of Additional Information is incorporated by
reference in (which means it is considered to be a part of) this Prospectus.
Each Fund offers three classes of shares. Class A shares are offered at net
asset value plus a sales charge imposed at the time of purchase; Class B shares
are offered at net asset value and are subject to an annual distribution fee and
a declining contingent deferred sales charge on redemptions made within six
years after purchase; and Class C shares are offered at net asset value and are
subject to an annual distribution fee and a contingent deferred sales charge on
redemptions made within one year after purchase. Class B shares automatically
convert to Class A shares after approximately eight years. See "How to Buy
Shares."
Contents Page
Summary of Expenses 2
The Funds' Financial History 6
The Funds' Investment Objective 21
How the Funds Pursue Their Objective
and Certain Risk Factors 21
How the Funds Measure Their Performance 25
How the Funds are Managed 25
How the Funds Value Their Shares 26
Distributions and Taxes 26
How to Buy Shares 26
How to Sell Shares 28
How to Exchange Shares 28
Telephone Transactions 29
12b-1 Plan 29
Organization and History 29
Appendix 29
- ----------------------------- ------------------------------
NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE
- ----------------------------- ------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in a Fund. The
following tables summarize your maximum transaction costs and your annual
expenses for an investment in each Class of each Fund's shares. See "How the
Funds are Managed" and "12b-1 Plan" for more complete descriptions of the Funds'
various costs and expenses.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses(1)(2)
Class A Class B Class C
<S> <C> <C> <C>
Maximum Initial Sales Charge Imposed on a Purchase (as a % of offering 4.75% 0.00%(5) 0.00%(5)
price)(3)
Maximum Contingent Deferred Sales Charge (as a % of offering price)(3) 1.00%(4) 5.00% 1.00%
</TABLE>
(1) For accounts less than $1,000 an annual fee of $10 may be deducted. See
"How to Buy Shares."
(2) Redemption proceeds exceeding $1,000 sent via federal funds wire will be
subject to a $7.50 charge per transaction.
(3) Does not apply to reinvested distributions.
(4) Only with respect to any portion of purchases of $1 million to $5 million
redeemed within approximately 18 months after purchase. See "How to Buy
Shares."
(5) Because of the distribution fee applicable to Class B and Class C shares,
long-term Class B and Class C shareholders may pay more in aggregate sales
charges than the maximum initial sales charge permitted by the National
Association of Securities Dealers, Inc. However, because the Class B shares
automatically convert to Class A shares after approximately 8 years, this
is less likely for Class B shares than for a class without a conversion
feature.
Annual Operating Expenses (as a % of average net assets)(6)
<TABLE>
<CAPTION>
California Connecticut Florida
Class A Class B Class C Class A Class B Class C Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fee
(after waiver) 0.51% 0.51% 0.51% 0.20% 0.20% 0.20% 0.07% 0.07% 0.07%
12b-1 fees(7)(8) 0.14 0.89 0.59 0.14 0.89 0.59 0.16 0.91 0.61
Other expenses
(after waiver) 0.23 0.23 0.23 0.25 0.25 0.25 0.33 0.33 0.33
---- ---- ---- ---- ---- ---- ---- ---- ----
Total operating
expenses (9) 0.88% 1.63% 1.33% 0.59% 1.34% 1.04% 0.56% 1.31% 1.01%
==== ==== ==== ==== ==== ==== ==== ==== ====
Massachusetts Michigan Minnesota
Class A Class B Class C Class A Class B Class C Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fee
(after waiver) 0.51% 0.51 0.51% 0.40% 0.40% 0.40% 0.38% 0.38% 0.38%
12b-1 fees(7)(8) 0.15 0.90 0.60 0.14 0.89 0.59 0.15 0.90 0.60
Other expenses
(after waiver) 0.24 0.24 0.24 0.35 0.35 0.35 0.37 0.37 0.37
---- ---- ---- ---- ---- ---- ---- ---- ----
Total operating
expenses (9) 0.90% 1.65% 1.35% 0.89% 1.64% 1.34% 0.90% 1.65% 1.35%
==== ==== ==== ==== ==== ==== ==== ==== ====
New York North Carolina Ohio
Class A Class B Class C Class A Class B Class C Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fee
(after waiver) 0.22% 0.22% 0.22% 0.00% 0.00% 0.00% 0.47% 0.47% 0.47%
12b-1 fees(7)(8) 0.15 0.90 0.60 0.15 0.90 0.60 0.13 0.88 0.58
Other expenses
(after waiver) 0.28 0.28 0.28 0.30 0.30 0.30 0.28 0.28 0.28
---- ---- ---- ---- ---- ---- ---- ---- ----
Total operating
expenses(9) 0.65% 1.40% 1.10% 0.45% 1.20% 0.90% 0.88% 1.63% 1.33%
==== ==== ==== ==== ==== ==== ==== ==== ====
<PAGE>
Without voluntary fee waivers/expense limits that the Adviser/Distributor may
discontinue at anytime, Annual Operating Expenses would be:
California Connecticut Florida Massachusetts
Class C Class A Class B Class C Class A Class B Class C Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fee 0.51% 0.51% 0.51% 0.51% 0.51% 0.51% 0.51% 0.51%
12b-1 fees(7) 0.89 0.14 0.89 0.89 0.16 0.91 0.91 0.91
Other expenses 0.23 0.25 0.25 0.25 0.33 0.33 0.33 0.24
---- ---- ---- ---- ---- ---- ---- ----
Total operating expenses 1.63% 0.90% 1.65% 1.65% 1.00% 1.75% 1.75% 1.65%
==== ==== ==== ==== ==== ==== ==== ====
Michigan Minnesota New York
Class A Class B Class C Class A Class B Class C Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fee 0.51% 0.51% 0.51% 0.51% 0.51% 0.51% 0.51% 0.51% 0.51%
12b-1 fees(7) 0.14 0.89 0.89 0.15 0.90 0.90 0.15 0.90 0.90
Other expenses 0.36 0.36 0.36 0.37 0.37 0.37 0.28 0.28 0.28
---- ---- ---- ---- ---- ---- ---- ---- ----
Total operating expenses 1.01% 1.76% 1.76% 1.03% 1.78% 1.78% 0.94% 1.69% 1.69%
==== ==== ==== ==== ==== ==== ==== ==== ====
North Carolina Ohio
Class A Class B Class C Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C>
Management fee 0.51% 0.51% 0.51% 0.51% 0.51% 0.51%
12b-1 fees(7) 0.15 0.90 0.90 0.13 0.88 0.88
Other expenses 0.45 0.45 0.45 0.28 0.28 0.28
---- ---- ---- ---- ---- ----
Total operating expenses 1.11% 1.86% 1.86% 0.92% 1.67% 1.67%
==== ==== ==== ==== ==== ====
</TABLE>
Example
The following Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in each Class of shares of each Fund for the
periods specified, assuming a 5% annual return, and, unless otherwise noted,
redemption at period end. The 5% return and expenses used in the Example should
not be considered indicative of actual or expected Fund performance or expenses,
both of which will vary.
<TABLE>
<CAPTION>
California Connecticut
Class A Class B Class C Class A Class B Class C
Period: (10) (11) (10) (11) (10) (11) (10) (11)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $ 56 $ 67 $ 17 $ 24 $ 14 $53 $ 64 $ 14 $ 21 $ 11
3 years 74 81 51 42(13) 42 66 72 42 33(13) 33
5 years 94 109 89 73 73 79 93 73 57 57
10 years 151 173(12) 173(12) 160 160 118 141(12) 141(12) 127 127
Florida Massachusetts
Class A Class B Class C Class A Class B Class C
Period: (10) (11) (10) (11) (10) (11) (10) (11)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $ 53 $ 63 $ 13 $20 $10 $56 $ 67 $ 17 $ 24 $14
3 years 65 72 42 32(13) 32 75 82 52 43(13) 43
5 years 77 92 72 56 56 95 110 90 74 74
10 years 114 137(12) 137(12) 124 124 153 175(12) 175(12) 162 162
Michigan Minnesota
Class A Class B Class C Class A Class B Class C
Period: (10) (11) (10) (11) (10) (11) (10) (11)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $ 56 $ 67 $ 17 $24 $14 $ 56 $ 67 $ 17 $ 24 $ 14
3 years 75 82 52 42(12) 42 75 82 52 43(13) 43
5 years 94 109 89 73 73 95 110 90 74 74
10 years 152 174(12) 174(12) 161 161 153 175(12) 175(12) 162 162
<PAGE>
New York North Carolina
Class A Class B Class C Class A Class B Class C
Period: (10) (11) (10) (11) (10) (11) (10) (11)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $ 54 $ 64 $ 14 $21 $11 $ 52 $ 62 $ 12 $ 19 $ 9
3 years 67 74 44 35(13) 35 61 68 38 29(13) 29
5 years 82 97 77 61 61 72 86 66 50 50
10 years 125 147(12) 147(12) 134 134 101 125(12) 125(12) 111 111
<PAGE>
Ohio
Class A Class B Class C
Period: (10) (11) (10) (11)
<S> <C> <C> <C> <C> <C>
1 year $ 56 $ 67 $17 $ 24 $ 14
3 years 74 81 51 42(13) 42
5 years 94 109 89 73 73
10 years 151 173(12) 173(12) 160 160
Without voluntary fee waivers/expense limits that the Adviser/Distributor may
discontinue at any time, the amounts in the Example would be:
California Connecticut Massachusetts
Class C Class A Class B Class C Class C
Period: (10) (11) (10) (11) (10) (11) (10) (11)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $ 27 $ 17 $56 $ 67 $17 $ 27 $ 17 $ 27 $ 17
3 years 51(13) 51 75 82 52 52(13) 52 52(13) 52
5 years 89 89 95 110 90 90 90 90 90
10 years 193 193 153 175(12) 175(12) 195 195 195 195
Florida Michigan
Class A Class B Class C Class A Class B Class C
Period: (10) (11) (10) (11) (10) (11) (10) (11)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $ 57 $ 68 $ 18 $28 $18 $57 $ 68 $ 18 $28 $18
3 years 78 85 55 55(13) 55 78 85 55 55(13) 55
5 years 100 115 95 95 95 101 115 95 95 95
10 years 164 186(12) 186(12) 206 206 165 188(12) 188(12) 207 207
Minnesota New York
Class A Class B Class C Class A Class B Class C
Period: (10) (11) (10) (11) (10) (11) (10) (11)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $ 58 $ 68 $ 18 $28 $18 $ 57 $ 67 $17 $27 $17
3 years 79 86 56 56(13) 56 76 83 53 53(13) 53
5 years 102 116 96 96 96 96 112 92 92 92
10 years 167 190(12) 190(12) 209 209 157 180(12) 180(12) 200 200
<PAGE>
North Carolina Ohio
Class A Class B Class C Class A Class B Class C
Period: (10) (11) (10) (11) (10) (11) (10) (11)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $ 58 $ 69 $ 19 $29 $19 $ 56 $67 $17 $ 27 $ 17
3 years 81 88 58 58(13) 58 75 83 53 53(13) 53
5 years 106 121 101 101 101 96 111 91 91 91
10 years 176 198(12) 198(12) 218 218 155 178(12) 178(12) 198 198
</TABLE>
<PAGE>
(6) Amounts shown (before voluntary fee waivers/expense limits by the
Adviser) are based on expenses during the fiscal year ended January 31,
1997.
(7) The 12b-1 service fee rate will fluctuate but will not exceed 0.25%.
(8) The Distributor has voluntarily agreed to waive a portion of the Class C
share Rule 12b-1 distribution fee so that it will not exceed 0.45%
annually. The Distributor may terminate the fee waiver at any time
without shareholder approval. See "12b-1 Plan."
(9) Effective August 1, 1995, the Adviser agreed to waive its fees and bear
expenses (exclusive of 12b-1 fees, brokerage commissions, interest,
taxes and extraordinary expenses, if any) to the extent such expenses
would otherwise exceed the following annual percentages of average net
assets:
<TABLE>
<CAPTION>
Massachusetts
Michigan
Minnesota
California Connecticut Florida Ohio New York North Carolina
<C> <C> <C> <C> <C> <C>
0.80% 0.45% 0.40% 0.75% 0.50% 0.30%
</TABLE>
(10) Assumes redemption at period end.
(11) Assumes no redemption at period end.
(12) Class B shares automatically convert to Class A shares after approximately
8 years; therefore years 9 and 10 reflect Class A share expenses.
(13) Class C shares do not incur a contingent deferred sales charge on
redemptions made after one year.
<PAGE>
THE FUNDS' FINANCIAL HISTORY
The following schedules of financial highlights for a share outstanding
throughout each period have been audited by Price Waterhouse LLP, independent
accountants. Their unqualified reports are included in the Funds' 1997 Annual
Reports and are incorporated by reference into the Statement of Additional
Information. No Class C shares were outstanding during the periods shown.
<TABLE>
<CAPTION>
CALIFORNIA
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended January 31
- -----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
---- ---- ---- ----
Class A Class B Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning
of period $7.540 $7.540 $6.870 $6.870 $7.660 $7.660 $7.350 $7.350
------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.386 0.331 0.388 0.334 0.413 0.360 0.434 0.378
Net realized and unrealized
gain (loss) (0.173) (0.173) 0.671 0.671 (0.791) (0.791) 0.315 0.315
------- ------- ------- ------- ------- ------- ------- -------
Total from Investment Operations 0.213 0.158 1.059 1.005 (0.378) (0.431) 0.749 0.693
------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.383) (0.328) (0.389) (0.335) (0.412) (0.359) (0.439) (0.383)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value - End of period $7.370 $7.370 $7.540 $7.540 $6.870 $6.870 $7.660 $7.660
------- ------- ------- ------- ------- ------- ------- -------
Total return(b)(c) 2.98% 2.21% 15.78% 14.94% (4.83)% (5.55)% 10.44% 9.63%
------- ------- ------- ------- ------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.88%(d) 1.63%(d) 0.89%(d) 1.64%(d) 0.77% 1.52% 0.75% 1.50%
Net investment income 5.23%(d) 4.48%(d) 5.33%(d) 4.58%(d) 5.91% 5.16% 5.73% 4.98%
Fees and expenses waived or
borne by the Adviser ---(d) ---(d) 0.01%(d) 0.01%(d) 0.06% 0.06% 0.08% 0.08%
Portfolio turnover 25% 25% 47% 47% 47% 47% 17% 17%
Net assets at end of period (000) $264,053 $100,873 $304,581 $106,925 $301,912 $98,975 $379,987 $104,578
- -----------------------------------
(a) Net of fees and expenses
waived or borne by the Adviser
which amounted to $ -- $ -- $0.001 $0.001 $0.004 $0.004 $0.006 $0.006
</TABLE>
(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) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
5
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA (CONTINUED)
------------------- ----------------------------------------------------------------------------
Two months ended
January 31 Year ended November 30
-------------------- ----------------------------------------------------------------------------
1993(b) 1992 1991 1990 1989 1988 1987
------ ---- ---- ---- ---- ---- ----
Class A Class B Class A Class B(c) Class A Class A Class A Class A Class A
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $7.270 $7.270 $7.150 $7.410 $6.940 $7.010 $6.850 $6.530 $7.490
------- ------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income(a) 0.076 0.067 0.467 0.143 0.473 0.490 0.480 0.497 0.515
Net realized and unrealized
gain (loss) 0.081 0.081 0.109 (0.151) 0.211 (0.065) 0.160 0.316 (0.950)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations 0.157 0.148 0.576 (0.008) 0.684 0.425 0.640 0.813 (0.435)
------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS:
From net investment income (0.077) (0.068) (0.456) (0.132) (0.473) (0.492) (0.480) (0.493) (0.514)
From net realized gains --- --- --- --- --- --- --- --- (0.002)
From capital paid in --- --- --- --- (0.001) (d) (0.003) --- --- (0.009)(i)
Total Distributions ------- ------- ------- ------- ------- ------- ------- ------- -------
Declared to Shareholders --- --- (0.456) (0.132) (0.474) (0.495) (0.480) (0.493) (0.525)
Net asset value - ------- ------- ------- ------- ------- ------- ------- ------- -------
End of period $7.350 $7.350 $7.270 $7.270 $7.150 $6.940 $7.010 $6.850 $6.530
------- ------- ------- ------- ------- ------- ------- ------- -------
Total return (e)(f) 8.70% (g) 1.01% (g) 8.27% 1.94%(g) 10.18% 6.30% 9.61% 12.74% (6.02)%
------- ------- ------- ------- ------- ------- ------- ------- -------
RATIOS TO AVERAGE
NET ASSETS:
Expenses 0.65% (h) 1.40% (h) 0.71% 1.46%(h) 0.80% 0.70% 0.95% 0.66% 0.52%
Net investment income 6.29% (h) 5.54% (h) 6.44% 5.69%(h) 6.69% 7.02% 6.87% 7.28% 7.33%
Fees and expenses waived
or borne by the Adviser 0.21% (h) 0.21% (h) 0.13% 0.13%(h) 0.05% 0.15% 0.15% 0.49% 0.63%
Portfolio turnover 19% (h) 19% (h) 19% 12% 11% 22% 40% 106% 94%
Net assets at end of
period (000) $337,409 $33,819 $324,012 $22,797 $295,459 $221,519 $155,514 $133,317 $113,774
- --------------------------------------
(a) Net of fees and expenses
waived or borne by the
Adviser which amounted to $0.002 $0.002 $0.010 $0.010 $0.003 $0.010 $0.011 $0.033 $0.044
</TABLE>
(b) The Fund changed its fiscal year end from November 30 to January 31 in 1992.
(c) Class B shares were initially offered on August 4, 1992. Per share amounts
reflect activity from that date.
(d) Because of differences between book and tax basis accounting there was no
return of capital for federal income tax purposes.
(e) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(f) Had the Adviser not waived or reimbursed a portion of expenses, total return
would have been reduced.
(g) Not annualized.
(h) Annualized.
(i) Represents a return of capital for book purposes only.
6
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT
--------------------------------------------------------------------------------------------------------
Year ended January 31
--------------------------------------------------------------------------------------------------------
1997 1996 1995
---- ---- ----
Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $7.630 $7.630 $7.080 $7.080 $7.890 $7.890
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income(a) 0.393 0.338 0.400 0.345 0.418 0.363
Net realized and unrealized
gain (loss) (0.141) (0.141) 0.552 0.552 (0.809) (0.809)
------- ------- ------- ------- ------- -------
Total from Investment
Operations 0.252 0.197 0.952 0.897 (0.391) (0.446)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS:
From net investment income (0.392) (0.337) (0.402) (0.347) (0.418) (0.363)
In excess of net investment
income --- --- --- --- --- ---
From net realized gains --- --- --- --- (0.001) (0.001)
In excess of net realized
gains --- --- --- --- --- ---
------- ------- ------- ------- ------- -------
Total from Distributions
Declared to Shareholders (0.392) (0.337) (0.402) (0.347) (0.419) (0.364)
------- ------- ------- ------- ------- -------
Net asset value -
End of period $7.490 $7.490 $7.630 $7.630 $7.080 $7.080
------- ------- ------- ------- ------- -------
Total return(d)(e) 3.48% 2.71% 13.77% 12.93% (4.85)% (5.57)%
------- ------- ------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.59%(g) 1.34%(g) 0.51%(g) 1.25%(g) 0.32% 1.07%
Net investment income 5.28%(g) 4.53%(g) 5.42%(g) 4.68%(g) 5.81% 5.06%
Fees and expenses waived
or borne by the Adviser 0.31%(g) 0.31%(g) 0.42%(g) 0.42%(g) 0.55% 0.55%
Portfolio turnover 21% 21% 13% 13% 22% 22%
Net assets at end of
period (000) $74,059 $81,437 $80,039 $82,785 $74,616 $73,580
- --------------------------------------
(a) Net of fees and expenses
waived or borne by the
Adviser which amounted
to $0.023 $0.023 $0.031 $0.031 $0.039 $0.039
</TABLE>
(b) Class B shares were initially offered on June 8, 1992. Per share amounts
reflect activity from that date.
(c) The Fund commenced investment operations on November 1, 1991.
(d) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(e) Had the Adviser not waived or reimbursed a portion of expenses, total return
would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(h) Annualized.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended Period ended
January 31 January 31
- -----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992
---- ---- ----
Class A Class B Class A Class B(b) Class A(c)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $7.420 $7.420 $7.190 $7.200 $7.140
------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income(a) 0.429 0.372 0.449 0.256 0.118
Net realized and unrealized
gain (loss) 0.465 0.465 0.270 0.257 0.046
------- ------- ------- ------- -------
Total from Investment
Operations 0.894 0.837 0.719 0.513 0.164
------- ------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS:
From net investment income (0.424) (0.367) (0.452) (0.256) (0.114)
In excess of net investment
income --- --- (0.002) (0.002) ---
From net realized gains --- --- (0.021) (0.021) ---
In excess of net realized
gains --- --- (0.014) (0.014) ---
------- ------- ------- ------- -------
Total from Distributions
Declared to Shareholders (0.424) (0.367) (0.489) (0.293) (0.114)
------- ------- ------- ------- -------
Net asset value -
End of period $7.890 $7.890 $7.420 $7.420 $7.190
------- ------- ------- ------- -------
Total return(d)(e) 12.30% 11.49% 10.34% 7.23%(f) 2.31%(f)
------- ------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.22% 0.97% --- 0.75%(h) ---
Net investment income 5.48% 4.73% 6.00% 5.25%(h) 4.68%(h)
Fees and expenses waived
or borne by the Adviser 0.65% 0.65% 0.90% 0.90%(h) 1.32%(h)
Portfolio turnover 5% 5% 4% 4% 53%(h)
Net assets at end of
period (000) $91,436 $71,791 $63,126 $27,839 $12,349
- ------------------------------
(a) Net of fees and expenses
waived or borne by the
Adviser which amounted
to $0.051 $0.051 $0.067 $0.042 $0.033
</TABLE>
(b) Class B shares were initially offered on June 8, 1992. Per share amounts
reflect activity from that date.
(c) The Fund commenced investment operations on November 1, 1991.
(d) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(e) Had the Adviser not waived or reimbursed a portion of expenses, total return
would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(h) Annualized.
7
<PAGE>
<TABLE>
<CAPTION>
FLORIDA
---------------------------------------------------------------------------------------------
Year ended January 31
---------------------------------------------------------------------------------------------
1997 1996 1995 1994(b)
---- ---- ---- -------
Class A Class B Class A Class B Class A Class B Class A Class B
------- ------- ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning
of period $7.620 $7.620 $7.100 $7.100 $7.930 $7.930 $7.500 $7.500
------- ------- ------- ------ ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.395 0.340 0.404 0.351 0.423 0.369 0.434 0.378
Net realized and unrealized
gain (loss) (0.194) (0.194) 0.535 0.533 (0.839) (0.839) 0.420 0.420
------- ------- ------- ------ ------- ------- ------- -------
Total from Investment Operations 0.201 0.146 0.939 0.884 (0.416) (0.470) 0.854 0.798
------- ------- ------- ------ ------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS:
From net investment income (0.391) (0.336) (0.419) (0.364) (0.414) (0.360) (0.424) (0.368)
------- ------- ------- ------ ------- ------- ------- -------
Net asset value - End of period $7.430 $7.430 $7.620 $7.620 $7.100 $7.100 $7.930 $7.930
------- ------- ------- ------ ------- ------- ------- -------
Total return(c)(d) 2.80% 2.03% 13.55% 12.72% (5.11)% (5.83)% 11.66% 10.85%
------- ------- ------- ------ ------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.56%(e) 1.31%(e) 0.45%(e) 1.18%(e) 0.22% 0.97% 0.05% 0.80%
Interest expense (f) (f) --- --- --- --- --- ---
Net investment income 5.31%(e) 4.56%(e) 5.45%(e) 4.72%(e) 5.92% 5.17% 5.40% 4.65%
Fees and expenses waived or borne
by the Adviser 0.44%(e) 0.44%(e) 0.55%(e) 0.55%(e) 0.73% 0.73% 0.88% 0.88%
Portfolio turnover 69% 69% 83% 83% 45% 45% 19% 19%
Net assets at end of period (000) $31,275 $33,341 $32,599 $35,741 $27,498 $31,116 $23,802 $31,513
- --------------------------------------
(a) Net of fees and expenses
waived or borne by the
Adviser which amounted to $0.032 $0.032 $0.040 $0.040 $0.052 $0.052 $0.071 $0.071
</TABLE>
(b) The Fund commenced investment operations on February 1, 1993.
(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) The benefits derived from custody credits and brokerage arrangements had no
impact. Prior years' ratios are net of benefits received, if any.
(f) Rounds to less than 0.01%.
8
<PAGE>
<TABLE>
<CAPTION>
MASSACHUSETTS
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended January 31
- -----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
---- ---- ----
Class A Class B Class A Class B Class A Class B
------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $8.040 $8.040 $7.390 $7.390 $8.130 $8.130
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.415 0.357 0.424 0.367 0.444 0.388
Net realized and
unrealized gain (loss) (0.234) (0.234) 0.650 0.650 (0.738) (0.738)
------- ------- ------- ------- ------- -------
Total from Investment
Operations 0.181 0.123 1.074 1.017 (0.294) (0.350)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.411) (0.353) (0.424) (0.367) (0.446) (0.390)
From net realized gains --- --- --- --- ---- ---
In excess of net realized
gains --- --- --- --- ---- ---
------- ------- ------- ------- ------- -------
Total Distributions
Declared to Shareholders (0.411) (0.353) (0.424) (0.367) (0.446) (0.390)
-------- ------- ------- ------- ------- -------
Net asset value - End
of period $7.810 $7.810 $8.040 $8.040 $7.390 $7.390
-------- ------- ------- ------- ------- -------
Total return(c)(d) 2.43% 1.66% 14.90% 14.05% (3.49)% (4.21)%
-------- ------- ------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.90%(f) 1.65%(f) 0.85%(f) 1.60%(f) 0.72% 1.47%
Net investment income 5.32%(f) 4.57%(f) 5.49%(f) 4.74%(f) 5.93% 5.18%
Fees and expense waived
or borne by the Adviser 0.00%(f) 0.00%(f) 0.06%(f) 0.06%(f) 0.12% 0.12%
Portfolio turnover 29% 29% 21% 21% 58% 58%
Net assets at end of
period (000) $184,221 $59,143 $207,759 $60,651 $193,303 $53,973
- --------------------------------------
(a) Net of fees and expenses
waived or borne by the
Adviser which amounted
to $0.000 $0.000 $0.005 $0.005 $0.009 $0.009
</TABLE>
(b) Class B shares were initially offered on June 8, 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>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1994 1993
---- ----
Class A Class B Class A Class B(b)
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $7.700 $7.700 $7.420 $7.450
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.453 0.395 0.481 0.272
Net realized and
unrealized gain (loss) 0.439 0.439 0.301 0.275
------- ------- ------- -------
Total from Investment
Operations 0.892 0.834 0.782 0.547
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.462) (0.404) (0.479) (0.274)
From net realized gains --- --- (0.002) (0.002)
In excess of net realized
gains --- --- (0.021) (0.021)
------- ------ ------- -------
Total Distributions
Declared to Shareholders (0.462) (0.404) (0.502) (0.297)
------- ------- ------- -------
Net asset value - End
of period $8.130 $8.130 $7.700 $7.700
------- ------- ------- -------
Total return(c)(d) 11.86% 11.05% 10.87% 1.11%(e)
------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.64% 1.39% 0.54% 1.29%(g)
Net investment income 5.68% 4.93% 6.38% 5.63%(g)
Fees and expense waived
or borne by the Adviser 0.21% 0.21% 0.33% 0.33%(g)
Portfolio turnover 7% 7% 7% 7%
Net assets at end of
period (000) $225,636 $51,819 $186,526 $17,282
- --------------------------------------
(a) Net of fees and expenses
waived or borne by the
Adviser which amounted
to $0.016 $0.016 $0.025 $0.016
</TABLE>
(b) Class B shares were initially offered on June 8, 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.
9
<PAGE>
<TABLE>
<CAPTION>
MASSACHUSETTS
- ------------------------------------------------------------------------------------------------------------------------------------
Period ended
January 31
- ------------------------------------------------------------------------------------------------------------------------------------
1992 1991 1990 1989 1988(b)
---- ---- ---- ---- -------
Class A Class A Class A Class A Class A
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $7.120 $7.080 $7.190 $7.060 $7.140
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.505 0.523 0.515 0.517 0.407
Net realized and unrealized gain (loss) 0.295 0.041 (0.107) 0.129 (0.085)
----- ----- ------- ----- -------
Total from Investment Operations 0.800 0.564 0.408 0.646 0.322
----- ----- ----- ----- -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.500) (0.524) (0.518) (0.516) (0.402)
Total Distributions Declared to Shareholders (0.500) (0.524) (0.518) (0.516) (0.402)
------- ------- ------- ------- -------
Net asset value - End of period $7.420 $7.120 $7.080 $7.190 $7.060
------ ------ ------ ------ ------
Total return(c)(d) 11.61% 8.31% 5.86% 9.55% 4.80% (e)
------ ----- ----- ----- ------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.46% 0.30% 0.45% 0.22% --
Net investment income 6.89% 7.34% 7.17% 7.30% 7.47% (f)
Fees and expense waived
or borne by the Adviser 0.43% 0.65% 0.89% 1.94% 2.90% (f)
Portfolio turnover 14% 30% 25% 44% 104% (f)
Net assets at end of period (000) $145,957 $85,301 $42,167 $21,987 $7,563
- --------------------------------
(a) Net of fees and expenses waived or borne by
the Adviser which amounted to $0.032 $0.046 $0.064 $0.137 $0.157
</TABLE>
(b) The Fund commenced investment operations on April 10, 1987.
(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) Annualized.
10
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended January 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
---- ---- ----
Class A Class B Class A Class B Class A Class B
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning
of period $7.130 $7.130 $6.660 $6.660 $7.340 $7.340
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (a) 0.354 0.302 0.368 0.317 0.410 0.359
Net realized and unrealized
gain (loss) (0.198) (0.198) 0.484 0.484 (0.689) (0.689)
------- ------- ----- ----- ------- -------
Total from Investment Operations 0.156 0.104 0.852 0.801 (0.279) (0.330)
----- ----- ----- ----- ------- -------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.354) (0.303) (0.382) (0.331) (0.401) (0.350)
From capital paid in -- -- -- -- -- --
In excess of net investment
income (0.002) (0.001) -- -- -- --
------- ------- ------- ------- ------- -------
Total Distributions Declared
to Shareholders (0.356) (0.304) (0.382) (0.331) (0.401) (0.350)
------- ------- ------- ------- ------- -------
Net asset value - End of period $6.930 $6.930 $7.130 $7.130 $6.660 $6.660
------ ------ ------ ------ ------ -------
Total return (c)(d) 2.35% 1.58% 13.13% 12.30% (3.66)% (4.39)%
----- ----- ------ ------ ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.89%(f) 1.64%(f) 0.80%(f) 1.55%(f) 0.62% 1.37%
Net investment income 5.12%(f) 4.37%(f) 5.34%(f) 4.59%(f) 6.08% 5.33%
Fees and expense waived
or borne by the Adviser 0.12%(f) 0.12%(f) 0.25%(f) 0.25%(f) 0.32% 0.32%
Portfolio turnover 25% 25% 48% 48% 40% 40%
Net assets at end of
period (000) $39,606 $13,364 $43,308 $15,236 $41,844 $14,144
___________
(a) Net of fees and expenses waived
or borne by the Adviser which
amounted to $0.008 $0.008 $0.017 $0.017 $0.022 $0.022
</TABLE>
(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 direct brokerage arrangements
had no impact. Prior years' ratios are net of benefits received, if any.
(g) Annualized.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1994 1993
---- ----
Class A Class B Class A Class B(b)
------- ------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value - Beginning $6.970 $6.970 $6.730 $6.950
of period ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (a) 0.404 0.351 0.405 0.167
Net realized and unrealized
gain (loss) 0.356 0.356 0.250 0.029
----- ----- ----- -----
Total from Investment Operations 0.760 0.707 0.655 0.196
----- ----- ----- -----
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.390) (0.337) (0.407) (0.168)
From capital paid in -- -- (0.008) (0.008)
In excess of net investment -- -- -- --
income -- -- -- --
------- ------- ------- -------
Total Distributions Declared (0.390) (0.337) (0.415) (0.176)
to Shareholders
------ ------ ------ ------
Net asset value - End of period $7.340 $7.340 $6.970 $6.970
------ ------ ------ --------
Total return (c)(d) 11.16% 10.36% 10.04% 0.98%(e)
RATIOS TO AVERAGE NET ASSETS
Expenses 0.66% 1.41% 0.88% 1.63%(g)
Net investment income 5.61% 4.86% 5.86% 5.11%(g)
Fees and expense waived
or borne by the Adviser 0.33% 0.33% 0.32% 0.32%(g)
Portfolio turnover 7% 7% 14% 14%
Net assets at end of $45,570 $15,030 $36,024 $6,670
period (000)
__________
(a) Net of fees and expenses waived
or borne by the Adviser which
amounted to $0.024 $0.024 $0.022 $0.009
</TABLE>
(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 direct brokerage arrangements
had no impact. Prior years' ratios are net of benefits received, if any.
(g) Annualized.
11
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended January 31
- ------------------------------------------------------------------------------------------------------------------------------------
1992 1991 1990 1989 1988
----------- ----------- ----------- ----------- -----------
Class A Class A Class A Class A Class A
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $6.520 $6.520 $6.690 $6.550 $7.260
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.432 0.441 0.422 0.438 0.495
Net realized and unrealized gain (loss) 0.208 (0.001) (0.168) 0.133 (0.709)
----- ------- ------- ----- -------
Total from Investment Operations 0.640 0.440 0.254 0.571 (0.214)
----- ----- ----- ----- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.430) (0.440) (0.424) (0.431) (0.496)
------ ------- ------- ------- -------
Total Distributions Declared to Shareholders (0.430) (0.440) (0.424) (0.431) (0.496)
------ ------- ------- ------- -------
Net asset value - End of period $6.730 $6.520 $6.520 $6.690 $6.550
----- ------ ------ ------ ------
Total return (b)(c) 10.12% 7.01% 3.90% 9.08% (2.68)%
------ ----- ----- ----- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.95% 1.00% 1.42% 1.29% 0.38%
Net investment income 6.50% 6.79% 6.37% 6.73% 7.38%
Fees and expense waived
or borne by the Adviser 0.35% 0.40% 0.30% 0.51% 1.36%
Portfolio turnover 5% 18% 16% 57% 58%
Net assets at end of period (000) $28,608 $24,273 $18,870 $20,112 $21,426
___________
(a) Net of fees and expenses waived or borne
by the Adviser which amounted to $0.023 $0.026 $0.020 $0.033 $0.089
</TABLE>
(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.
12
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended January 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
---- ---- ----
Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $7.350 $7.350 $6.840 $6.840 $7.480 $7.480
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.369 0.316 0.384 0.332 0.415 0.363
Net realized and unrealized gain (loss) (0.222) (0.222) 0.516 0.516 (0.642) (0.642)
------- ------- ----- ----- ------- -------
Total from Investment Operations 0.147 0.094 0.900 0.848 (0.227) (0.279)
----- ----- ----- ----- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.367) (0.314) (0.390) (0.338) (0.413) (0.361)
From net realized gains -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Distributions Declared to Shareholders (0.367) (0.314) (0.390) (0.338) (0.413) (0.361)
------- ------- ------- ------- ------- -------
Net asset value - End of period $7.130 $7.130 $7.350 $7.350 $6.840 $6.840
------ ------ ------ ------ ------ ------
Total return (c)(d) 2.16% 1.40% 13.50% 12.66% (2.92)% (3.65)%
----- ----- ------ ------ ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.90%(f) 1.65%(f) 0.85%(f) 1.60%(f) 0.72% 1.47%
Net investment income 5.19%(f) 4.44%(f) 5.41%(f) 4.66%(f) 5.98% 5.23%
Fees and expense waived
or borne by the Adviser 0.13%(f) 0.13%(f) 0.24%(f) 0.24%(f) 0.26% 0.26%
Portfolio turnover 27% 27% 42% 42% 26% 26%
Net assets at end of period (000) $34,986 $19,389 $36,586 $19,083 $35,846 $14,731
________________
(a) Net fees and expenses
waived or borne by the
Adviser which amounted to $0.009 $0.009 $0.016 $0.016 $0.018 $0.018
</TABLE>
(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 direct brokerage arrangements
had no impact. Prior years' ratios are net of benefits received, if any.
(g) Annualized.
<TABLE>
<CAPTION>
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)
From net realized gains -- -- -- --
------- ------- ------- -------
Total Distributions Declared to Shareholders (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 expense 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
________________
(a) Net of fees and expenses
waived or borne by the
Adviser which amounted to $0.015 $0.015 $0.025 $0.009
</TABLE>
(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 direct brokerage arrangements
had no impact. Prior years' ratios are net of benefits received, if any.
(g) Annualized.
13
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended January 31
- ------------------------------------------------------------------------------------------------------------------------------------
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
Class A Class A Class A Class A Class A
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $6.930 $6.820 $6.850 $6.820 $7.310
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.461 0.467 0.440 0.434 0.499
Net realized and unrealized gain (loss) 0.098 0.108 (0.032) 0.034 (0.490)
----- ----- ------- ----- -------
Total from Investment Operations 0.559 0.575 0.408 0.468 0.009
----- ----- ----- ----- -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.458) (0.465) (0.438) (0.438) (0.497)
From net realized gains --- --- --- --- (0.002)
From capital paid in (0.001) (b) --- --- --- ---
----------- ------- ------- ------- -------
Total Distributions Declared to Shareholders (0.459) (0.465) (0.438) (0.438) (0.499)
------- ------- ------- ------- -------
Net asset value - End of period $7.030 $6.930 $6.820 $6.850 $6.820
------- ------- ------- ------- -------
Total return (c)(d) 8.33% 8.70% 6.11% 7.15% 0.47%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.88% 1.00% 1.41% 1.47% 0.55%
Net investment income 6.58% 6.77% 6.40% 6.41% 7.22%
Fees and expense waived
or borne by the Adviser 0.42% 0.37% 0.28% 0.39% 1.36%
Portfolio turnover 1% 7% 13% 20% 43%
Net assets at end of period (000) $30,676 $24,188 $19,100 $19,721 $17,533
_____________________________
(a) Net of fees and expenses waived
or borne by the Adviser which amounted to $0.029 $0.026 $0.019 $0.027 $0.094
</TABLE>
(b) Because of differences between book and tax basis accounting, there was no
return of capital for federal income tax purposes.
(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.
14
<PAGE>
<TABLE>
<CAPTION>
NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended January 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
---- ---- ----
Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $7.250 $7.250 $6.680 $6.680 $7.500 $7.500
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.393 0.340 0.401 0.349 0.427 0.376
Net realized and unrealized gain (loss) (0.207) (0.207) 0.576 0.576 (0.834) (0.834)
------- ------- ------ ------- ------- -------
Total from Investment Operations 0.186 0.133 0.977 0.925 (0.407) (0.458)
----- ----- ----- ----- ------ ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.396) (0.343) (0.407) (0.355) (0.413) (0.362)
In excess of net investment income -- -- -- -- -- --
----- ----- ----- ----- ------ ------
Total Distributions Declared to Shareholders (0.396) (0.396) (0.407) (0.355) (0.413) (0.362)
------ ------ ------ ------ ------ ------
Net asset value - End of period $7.040 $7.040 $7.250 $7.250 $6.680 $6.680
Total return (c)(d) ------ ------ ------ ------ ------ ------
2.76% 1.99% 14.99% 14.15% (5.32)% (6.04)%
RATIOS TO AVERAGE NET ASSETS: ------ ------ ------ ------- ------- ------
Expenses
Net investment income 0.65%(f) 1.40%(f) 0.58%(f) 1.33%(f) 0.42% 1.17%
Fees and expense waived 5.56%(f) 4.81%(f) 5.72%(f) 4.97%(f) 6.25% 5.50%
or borne by the Adviser
Portfolio turnover 0.29%(f) 0.29%(f) 0.38%(f) 0.38%(f) 0.46% 0.46%
Net assets at end of period (000) 78% 78% 39% 39% 65% 65%
_____________________________ $50,648 $52,861 $56,795 $53,505 $53,322 $43,166
(a) Net of fees and expenses waived or borne
by the Adviser which amounted to $0.020 $0.020 $0.026 $0.026 $0.032 $0.032
</TABLE>
(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 direct brokerage arrangements
had no impact. Prior years' ratios are net of benefits received, if any.
(g) Annualized.
<TABLE>
<CAPTION>
1994 1993
---- ----
Class A Class B Class A Class B(b)
------- ------- ------- ----------
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $7.090 $7.090 $6.840 $7.130
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.421 0.368 0.438 0.182
Net realized and unrealized gain (loss) 0.407 0.407 0.260 (0.029)
------ ------ ------ ------
Total from Investment Operations 0.828 0.775 0.698 0.153
------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.418) (0.365) (0.445) (0.190)
In excess of net investment income --- --- (0.003) (0.003)
------ ------ ------ ------
Total Distributions Declared to Shareholders (0.418) (0.365) (0.448) (0.193)
------ ------ ------ ------
Net asset value - End of period $7.500 $7.500 $7.090 $7.090
------ ------ ------ ------
Total return (c)(d) 11.95% 11.14% 10.50% 1.16%(e)
------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.62% 1.37% 0.96% 1.71%(g)
Net investment income 5.68% 4.93% 6.25% 5.50%(g)
Fees and expense waived
or borne by the Adviser 0.29% 0.29% 0.06% 0.06%(g)
Portfolio turnover 25% 25% 7% 7%
Net assets at end of period (000) $63,527 $45,061 $53,779 $14,743
____________________________________________
(a) Net of fees and expenses waived or borne
by the Adviser which amounted to $0.021 $0.021 $0.004 $0.001
</TABLE>
(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 direct brokerage arrangements
had no impact. Prior years' ratios are net of benefits received, if any.
(g) Annualized.
15
<PAGE>
<TABLE>
<CAPTION>
NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended January 31
- ------------------------------------------------------------------------------------------------------------------------------------
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
Class A Class A Class A Class A Class A
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $6.600 $6.590 $6.690 $6.620 $7.310
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.453 0.459 0.441 0.427 0.488
Net realized and unrealized gain (loss) 0.242 0.013 (0.116) 0.073 (0.687)
----- ----- ------- ----- -------
Total from Investment Operations 0.695 0.472 0.325 0.500 (0.199)
----- ----- ----- ----- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.455) (0.462) (0.425) (0.430) (0.491)
In excess of net investment income --- --- --- --- ---
------- ------- ------- ------- -------
Total Distributions Declared to Shareholders (0.455) (0.462) (0.425) (0.430) (0.491)
------- ------- ------- ------- -------
Net asset value - End of period $6.840 $6.600 $6.590 $6.690 $6.620
------ ------ ------ ------ ------
Total return (b)(c) 10.86% 7.42% 4.98% 7.89% (2.44)%
------ ----- ----- ----- -------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.00% 1.04% 1.46% 1.46% 0.49%
Net investment income 6.71% 6.99% 6.62% 6.52% 7.35%
Fees and expense waived
or borne by the Adviser 0.14% 0.24% 0.05% 0.10% 1.04%
Portfolio turnover 17% 6% 41% 53% 112%
Net assets at end of period (000) $40,233 $31,691 $23,124 $25,360 $26,588
_____________________________
(a) Net fees and expenses waived or borne
by the Adviser which amounted to $0.009 $0.016 $0.003 $0.007 $0.070
</TABLE>
(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.
16
<PAGE>
<TABLE>
<CAPTION>
NORTH CAROLINA
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended January 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996
---- ----
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $7.270 $7.270 $6.680 $6.680
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.376 0.322 0.386 0.334
Net realized and unrealized gain (loss) (0.150) (0.150) 0.588 0.588
------- ------- ----- -----
Total from Investment Operations 0.226 0.172 0.974 0.922
----- ----- ----- -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.376) (0.322) (0.384) (0.332)
------- ------- ------- -------
Net asset value - End of period $7.120 $7.120 $7.270 $7.270
------ ------ ------ ------
Total return(c)(d) 3.29% 2.51% 14.91% 14.07%
----- ----- ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45%(f) 1.20%(f) 0.33%(f) 1.08%(f)
Net investment income 5.29%(f) 4.54%(f) 5.47%(f) 4.72%(f)
Fees and expenses waived or borne by the Adviser 0.66%(f) 0.66%(f) 0.76%(f) 0.76%(f)
Portfolio turnover 38% 38% 34% 34%
__________________________________
(a) Net of fees and expenses waived or borne
by the Adviser which amounted to $0.047 $0.047 $0.053 $0.053
</TABLE>
(b) The Fund commenced investment operations on September 1, 1993.
(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 direct brokerage arrangements
had no impact. Prior years' ratios are net of benefits received, if any.
(g) Annualized.
<TABLE>
<CAPTION>
1995 1994(b)
---- -----------
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $7.500 $7.500 $7.500 $7.500
------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.396 0.345 0.164 0.141
Net realized and unrealized gain (loss) (0.822) (0.822) --- ---
------- ------- ------- ------
Total from Investment Operations (0.426) (0.477) 0.164 0.141
------- ------- ------- ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.394) (0.343) (0.164) (0.141)
------- ------- ------- -------
Net asset value - End of period $6.680 $6.680 $7.500 $7.500
------- ------- ------- -------
Total return(c)(d) (5.55)% (6.27)% 2.22%(e) 1.90%(e)
------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.12% 0.87% 0.10%(g) 0.85%(g)
Net investment income 5.83% 5.08% 4.91%(g) 4.16%(g)
Fees and expenses waived or borne by the Adviser 0.93% 0.93% 1.20%(g) 1.20%(g)
Portfolio turnover 37% 37% 1%(g) 1%(g)
_______________________________
(a) Net of fees and expenses waived or borne
by the Adviser which amounted to $0.063 $0.063 $0.040 $0.040
</TABLE>
(b) The Fund commenced investment operations on September 1, 1993.
(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 direct brokerage arrangements
had no impact. Prior years' ratios are net of benefits received, if any.
(g) Annualized.
17
<PAGE>
<TABLE>
<CAPTION>
OHIO
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended January 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
---- ---- ----
Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $7.510 $7.510 $6.930 $6.930 $7.670 $7.670
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.372 0.318 0.375 0.321 0.401 0.348
Net realized and unrealized gain (loss) (0.179) (0.179) 0.585 0.585 (0.745) (0.745)
------- ------- ----- ----- ------- -------
Total from Investment Operations 0.193 0.139 0.960 0.906 (0.344) (0.397)
----- ----- ----- ----- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.363) (0.309) (0.380) (0.326) (0.396) (0.343)
From capital paid in --- --- --- --- --- ---
------- ------- ------- ------- ------- -------
Total Distributions Declared to Shareholders (0.363) (0.309) (0.380) (0.326) (0.396) (0.343)
------- ------- ------- ------- ------- -------
Net asset value - End of period $7.340 $7.340 $7.510 $7.510 $6.930 $6.930
------ ------ ------ ------ ------ ------
Total return (c)(d) 2.75% 1.98% 14.18% 13.34% (4.38)% (5.10)%
----- ----- ------ ------ ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.88%(f) 1.63%(f) 0.85%(f) 1.60%(f) 0.72% 1.47%
Net investment income 5.09%(f) 4.34%(f) 5.19%(f) 4.44%(f) 5.71% 4.96%
Fees and expenses waived
or borne by the Adviser 0.04%(f) 0.04%(f) 0.11%(f) 0.11%(f) 0.16% 0.16%
Portfolio turnover 31% 31% 31% 31% 33% 33%
Net assets at end of period (000) $65,190 $49,474 $74,383 $56,160 $72,123 $53,547
____________________________
(a) Net of fees and expenses waived or
borne by the Adviser which amounted to $0.003 $0.003 $0.008 $0.008 $0.011 $0.011
</TABLE>
(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 direct brokerage arrangements
had no impact. Prior years' ratios are net of benefits received, if any.
(g) Annualized.
<TABLE>
<CAPTION>
1994 1993
---- ----
Class A Class B Class A Class B(b)
------- ------- ------- ----------
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $7.290 $7.290 $7.090 $7.330
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.406 0.351 0.444 0.185
Net realized and unrealized gain (loss) 0.389 0.389 0.204 (0.033)
----- ----- ----- - -------
Total from Investment Operations 0.795 0.740 0.648 0.152
----- ----- ----- -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.411) (0.356) (0.448) (0.192)
From capital paid in (0.004) (0.004) --- ---
------- ------- ------- -------
Total Distributions Declared to Shareholders (0.415) (0.360) (0.448) (0.192)
------- ------- ------- -------
Net asset value - End of period $7.670 $7.670 $7.290 $7.290
------ ------ ------ -------
Total return (c)(d) 11.17% 10.36% 9.41% 0.85%(e)
------- ------ ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.82% 1.57% 1.00% 1.75%(g)
Net investment income 5.34% 4.59% 6.18% 5.43%(g)
Fees and expenses waived
or borne by the Adviser 0.09% 0.09% 0.03% 0.03%(g)
Portfolio turnover 3% 3% 13% 13%
Net assets at end of period (000) $79,394 $51,212 $62,439 $7,293
_____________________________
(a) Net of fees and expenses waived or
borne by the Adviser which amounted to $0.007 $0.007 $0.002 ---
</TABLE>
(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 direct brokerage arrangements
had no impact. Prior years' ratios are net of benefits received, if any.
(g) Annualized.
18
<PAGE>
<TABLE>
<CAPTION>
OHIO
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended January 31
- ------------------------------------------------------------------------------------------------------------------------------------
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
Class A Class A Class A Class A Class A
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $6.880 $6.750 $6.850 $6.640 $7.260
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.457 0.462 0.463 0.448 0.499
Net realized and unrealized gain (loss) 0.208 0.138 (0.114) 0.204 (0.615)
----- ----- ------- ----- -------
Total from Investment Operations 0.665 0.600 0.349 0.652 (0.116)
----- ----- ----- ----- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.455) (0.470) (0.449) (0.442) (0.503)
From capital paid in -- -- -- -- --
From net realized gains -- -- -- -- (0.001)
------- ------- ------- ------- -------
Total Distributions Declared to Shareholders (0.455) (0.470) (0.449) (0.442) (0.504)
------- ------- ------- ------- -------
Net asset value - End of period $7.090 $6.880 $6.750 $6.850 $6.640
------- ------- ------- ------- -------
Total return (b) (c) 10.00% 9.21% 5.21% 10.22% (1.25)%
------- ------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.00% 1.00% 1.27% 1.28% 0.41%
Net investment income 6.57% 6.83% 6.77% 6.74% 7.49%
Fees and expenses waived
or borne by the Adviser 0.09% 0.15% 0.06% 0.34% 1.12%
Portfolio turnover 13% 11% 45% 89% 69%
Net assets at end of period (000) $50,281 $41,158 $27,433 $27,676 $27,320
_____________________________
(a) Net of fees and expenses waived or borne
by the Adviser which amounted to $0.006 $0.010 $0.004 $0.022 $0.074
</TABLE>
(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.
Further performance information is contained in each Fund's Annual Report to
shareholders, which is obtainable free of charge by calling 1-800-426-3750.
THE FUNDS' INVESTMENT OBJECTIVE
Each 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 its state's
personal income tax (if any) and opportunities for long-term appreciation from a
portfolio primarily invested in investment grade municipal bonds. The Florida
and Michigan Funds' shares are intended to be exempt from their respective
states' intangibles tax.
HOW THE FUNDS PURSUE THEIR OBJECTIVE AND CERTAIN RISK FACTORS
Each Fund invests primarily in investment grade debt securities of any maturity,
the interest on which is exempt from federal income tax and that state's
personal income tax (if any), other than any alternative minimum tax (State
Bonds); in the case of the Florida and Michigan Funds, the State Bonds are
exempt from the state intangibles tax. Investment grade securities are those
rated at least Baa by Moody's Investors Service (Moody's), BBB by Standard &
Poor's Corporation (S&P), comparably rated by another national rating service or
unrated but considered similar in quality by the Adviser. Bonds rated BBB or Baa
are considered to have some speculative characteristics and could be more
adversely affected by unfavorable economic developments than higher rated bonds.
Each Fund may invest up to 25% of its net assets in securities rated below
investment grade (or comparable unrated securities), but not below CCC by S&P,
Caa by Moody's or comparable rating by another national rating service. Each
Fund may invest up to 25% of its assets in unrated State Bonds and other unrated
securities, subject to applicable state requirements.
Each Fund under normal circumstances will invest at least 80% of its assets in
its State's Bonds and will limit investments in securities that are not State
Bonds to a maximum of 20% of the Fund's total assets, subject to applicable
state requirements. The Minnesota Fund intends to invest its assets so that at
least 95% of its exempt-interest dividends each year are derived from certain
Minnesota sources, as specified by Minnesota law. There may not always be a
sufficient supply of State Bonds to enable the Funds to achieve their objective,
however, in periods of unusual market conditions, when the Adviser considers it
appropriate, each Fund may temporarily invest up to 50% of its total assets in
assets that are not State Bonds, subject to applicable state requirements. The
Adviser relies on the opinion of bond counsel to each issuer as to the
tax-exempt status of the issue. Each Fund limits investments in State Bonds
subject to individual alternative minimum tax to a maximum of 20% of total
assets.
Each Fund may invest, under normal conditions, up to 20% of its total assets in
high quality, short-term obligations of banks or corporations (rated at least
Prime-2 by Moody's, A-2 by S&P, comparably rated by another national rating
service or unrated but considered comparable by the Adviser), the U.S.
government, and repurchase agreements. These investments are subject to federal
and/or state income tax. In addition, gains realized upon the sale of portfolio
securities may be taxable when distributed by the Fund. Under a repurchase
agreement, a Fund buys a security from a bank or dealer, which is obligated to
buy it back at a fixed price and time. The security is held in a separate
account at the Fund's custodian, and constitutes that Fund's collateral for the
bank's or dealer's repurchase obligation. Additional collateral will be added so
that the obligation will at all times be fully collateralized. However, if the
bank or dealer defaults or enters bankruptcy, the Fund may experience costs and
delays in liquidating the collateral, and may experience a loss if it is unable
to demonstrate its rights to the collateral in a bankruptcy proceeding. Not more
than 15% of each Fund's net assets will be invested in repurchase agreements
maturing in more than 7 days and other illiquid assets.
The value of debt securities (and thus of Fund shares) usually fluctuates
inversely to changes in interest rates. Mutual funds investing in taxable
securities may have higher yields than the Funds. Certain bonds do not pay
interest in cash on a current basis. However, the Funds will accrue and
distribute this interest on a current basis, and may have to sell securities to
generate cash for distributions. Certain variable rate debt securities (known as
"inverse floaters") pay interest rates that move inversely to changes in
short-term market interest rates. These securities' values move inversely to
changes in long-term rates. The values of certain inverse floaters will change
substantially more, given a change in long-term rates, than would a traditional
debt security of similar maturity. Many bonds have call features, under which
the issuer can repay the bond before its stated maturity. If a bond is called,
the Funds may only be able to invest the proceeds at lower yields.
"When-Issued" Securities. To participate in the new issues market, each Fund may
without limit acquire securities on a "when-issued" basis by contracting to
purchase securities for a fixed price on a date beyond the customary settlement
time with no interest accruing until settlement. High quality securities in an
amount equal to the when-issued securities are maintained in a segregated
account at the custodian. If made through a dealer, the contract is dependent on
the dealer's consummation of the sale. The dealer's failure could deprive a Fund
of an advantageous yield or price. These contracts may be considered securities
and involve risk to the extent that the value of the underlying security changes
prior to settlement. A Fund may realize short-term profits or losses if the
contracts are sold.
Lower Rated Debt Securities. Lower rated debt securities (commonly referred to
as junk bonds) are debt securities which are not considered to be investment
grade (that is, they are rated below BBB by S&P or below Baa by Moody's or
unrated but considered by the Adviser to be of comparable credit quality). For a
description of S&P's and Moody's rating systems, see the Appendix to this
Prospectus. Lower rated bonds are generally considered more speculative and
likely to default than higher quality bonds. Because of the increased risk of
default, lower rated debt securities generally have higher yields than higher
quality debt securities. Regarding lower rated debt securities: (i) an economic
downturn may more significantly impact their potential for default as compared
to debt securities of higher quality, and (ii) the secondary market for such
securities may at times be less liquid or respond more adversely to negative
publicity or investor perceptions, making it more difficult to value or dispose
of the securities. The likelihood that these securities will help the Funds
achieve their investment objective is more dependent on the Adviser's own credit
analysis.
Options And Futures. Each Fund may write covered call and put options and
purchase call and put options on debt securities. A call option gives the
purchaser the right to buy a security from, and a put option the right to sell a
security to, the option writer at a specified price, on or before a specified
date. A Fund will pay a premium when purchasing an option, which reduces a
Fund's return on the underlying security if the option is exercised and results
in a loss if the option expires unexercised. A Fund will receive a premium from
writing an option, which may increase its return if the option expires or is
closed out at a profit. If the Fund is unable to close out an unexpired option,
the Fund must continue to hold the underlying security until the option expires.
Trading hours for options may differ from the trading hours for the underlying
securities. Thus, significant price movements may occur in the securities
markets that are not reflected in the options market. This may limit the
effectiveness of options as hedging devices.
Each Fund may buy or write options that are not traded on national securities
exchanges and not protected by the Options Clearing Corporation. These
transactions are effected directly with a broker-dealer, and each Fund bears the
risk that the broker-dealer will fail to meet its obligations. The market value
of such options and other illiquid assets will not exceed 15% of each Fund's net
assets.
Index and Interest Rate Futures. For hedging purposes each Fund may purchase or
sell (1) interest rate and tax-exempt bond index futures contracts and (2) put
and call options on such contracts and on such indices. A futures contract
creates an obligation by the seller to deliver and the buyer to take delivery of
the type of instrument at the time and in the amount specified in the contract.
Although a futures contract calls for delivery (or acceptance) of the specified
instrument, a futures contract is usually closed out before the settlement date
through the purchase (sale) of a comparable contract. If the initial sale price
of the future exceeds (or is less than) the price of the offsetting purchase,
the Fund realizes a gain (or loss). Options on futures contracts operate in a
similar manner to options on securities, except that the position assumed is in
the futures contracts rather than in the security. A Fund may not purchase or
sell futures contracts or purchase related options if immediately thereafter the
sum of the amount of deposits for initial margin or premiums on the existing
futures and related options positions would exceed 5% of the market value of the
Fund's total assets. Transactions in futures and related options involve the
risk of (1) imperfect correlation between the price movement of the contracts
and the underlying securities, (2) significant price movement in one but not the
other market because of different trading hours, (3) the possible absence of a
liquid secondary market at any point in time, and (4) if the Adviser's
prediction on interest rates is inaccurate, the Fund may be worse off than if it
had not hedged.
Borrowing of Money. Each Fund may borrow money from banks for temporary or
emergency purposes up to 10% of its net assets; however, a Fund will not
purchase additional portfolio securities while borrowings exceed 5% of net
assets.
Special Considerations. State Bonds include general obligation bonds (GOs),
revenue bonds (RBs) and industrial revenue bonds (IRBs). GOs are payable from
the issuer's unrestricted revenues and may depend on appropriation by the
applicable legislative body. RBs are payable only from a specified revenue
source, not the unrestricted revenues of the issuer. An IRB generally is payable
only from the revenues of the corporate user of a facility and consequently its
credit rating relates to that of the corporate user. Each Fund may invest more
than 25% of its total assets in IRBs, but intends to limit investments in IRBs
which are based on the credit of private entities in any one industry to 25% or
less.
State Fiscal Conditions. The value of each Fund's shares may be affected by
factors pertaining to its state's economy (which may affect issuer tax revenues)
and the ability of issuers of State Bonds to meet their obligations, and may
fluctuate more widely than the value of shares of a portfolio investing in a
number of different states. The availability of federal, state and local aid to
issuers of State Bonds may also affect their ability to meet their obligations.
Payments of principal and interest on RBs and IRBs will depend on the economic
condition of the specific revenue source, which could be affected by economic,
political and demographic conditions in the relevant state. There is no
assurance that any issuer of a State Bond will make full and timely payments of
principal and interest or remain solvent. For example, in December 1994, Orange
County, California filed for protection under the federal bankruptcy laws. A
reduction in the actual or perceived ability of an issuer of State Bonds to meet
its obligations (including a reduction in the rating of its outstanding
securities) could also affect adversely the value and marketability of State
Bonds.
California. Following its worst economic period since the 1930s, the California
economy has entered into a period of steady growth. The recession of the early
1990's resulted in significant job losses particularly in construction,
manufacturing (especially aerospace), and financial services. In 1994,
employment growth resumed, led by high technology, electronic manufacturing and
motion picture production sectors.
The State's finances have improved markedly reflecting the economy's rebound.
Substantial deficits which were amassed during the early 1990s have largely been
eliminated. In 1996, the State's credit rating was upgraded by both Standard and
Poor's and Fitch Investors Service.
Certain California State Bonds rely on real property taxes as a source of
revenue. In 1978, California voters approved Proposition 13, which limits ad
valorem taxes on real property and restricts the ability of taxing entities to
increase real property and other taxes. At various times since the enactment of
Proposition 13, voters have enacted additional constitutional amendments that
limit taxing and spending authority of local governments. The most recent
example, Proposition 218, was passed in November 1996. This far-reaching measure
will require local governments to seek voter approval for many new and existing
taxes and fees and will reduce the financial flexibility of many local issuers
with the possible outcome being a reduction in credit quality.
It is impossible to predict the time, location or magnitude of a major
earthquake or its effect on the California economy. In January 1994, a major
earthquake struck Los Angeles, causing significant property damage over a four
county area. The possibility exists that another earthquake could create a major
dislocation of the California economy.
Connecticut. The State of Connecticut has a mature economy with primary
dependence on services, retail trade and manufacturing, particularly in
defense-related industries. Significant job losses in the manufacturing sector
coupled with restructurings in the insurance and other service industries have
resulted in the State losing 8% of its job base between 1989 and 1994. While no
signs of a strong economic recovery are present, unemployment levels have
started to improve. Rising employment in the growing gaming and tourism sectors
have been aiding in the State's recovery. Favorably noted is the State's
exceptional personal wealth level, which, despite the poverty of certain of its
largest cities, continues to rank among the highest in the nation in terms of
per capita income. However, the State's rate of growth of personal income has
lagged behind the nation's rate for several years. In 1992, the State
implemented a personal income tax while cutting certain business and consumption
based taxes with the intent of reducing economic vulnerability and diversifying
the revenue base. These actions have been coupled with a constitutional cap on
the rate of spending growth and have served to stabilize the State's finances
and restore budgetary balance. The outlook for future economic growth is modest
and a return to the growth rates of the 1980s is unlikely.
Florida. Despite tight labor markets, the State continues to add jobs at a
strong rate, sustained through healthy labor force growth. Florida is becoming
more dependent on the service industry to fuel job growth. Currently one in
three jobs is service related. Employment in the service sector is generally
more stable than other industries. While Florida's growth has been impressive,
continued strong fiscal and economic performance in the future will be based on
the State's ability to adequately fund service and infrastructure needs driven
by rapid population growth. Without a personal income tax, Florida's financial
operations remain largely dependent on consumption based taxes which are more
vulnerable to general economic conditions.
Massachusetts. The Commonwealth of Massachusetts has a highly developed economy
with a large service sector, particularly in health care, financial services and
education. Strong economic growth in the 1980s was halted late in the decade by
weakening in the high technology, real estate and finance sectors, resulting in
steady job losses. While the Commonwealth's economy has turned around over the
past five years, it is unlikely that the growth rates of the 1980's will be
matched. The economy is dependent on the health care sector which could be hurt
by continuing consolidation, proposed cuts in Medicare/Medicaid funding and
other proposed reforms. The Commonwealth has made progress in stabilizing its
fiscal position since 1990. More realistic revenue expectations and increased
efforts to impose spending discipline have resulted in the elimination of
deficit financing, reduced reliance on short-term financing and six consecutive
years of positive fund balances. Significant state infrastructure projects will
increase the debt burden of the State in the near future.
Michigan. The State of Michigan is highly industrialized with a strong economic
concentration in motor vehicle production and other durable goods manufacturing.
A significant degree of industrial restructuring took place in the early 1980s,
mitigating the economic impact of the recession in the early 1990s. Positive
economic factors for the State include a stabilizing market share, improving
profitability and higher productivity for the domestic auto manufacturers. In
addition, the State has demonstrated its commitment to addressing budget
imbalances and promoting public service efficiencies, resulting in balanced
general fund operations and enabling the State to transfer annual surpluses to
the budget stabilization fund, with a balance in excess of $1.1 billion as of
September 30, 1996.
Minnesota. The State of Minnesota's overall economic structure closely parallels
that of the nation as a whole, although manufacturing is modestly more
significant than construction, finance and real estate. The State's natural
resource base is evidenced in its strong positions in food and forestry
products, and the State serves as a major regional commercial center. While the
recession of the early 1990s was less severe in the State than in the nation
overall, the State was not immune to its impact as evidenced by slowdowns in
income and sales tax revenue growth. Because the State relies on a progressive
personal income tax and retail sales tax for general fund revenue, its fiscal
system is sensitive to economic conditions as evidenced by budget deficits in
1991 and 1992. The State demonstrated its financial discipline by curing the
deficits through a variety of measures, including a sales tax rate increase and
spending cuts. An improved economy since 1993 has led to stronger revenues and a
more favorable expectation for balanced budget operations.
New York. The State of New York enjoys a generally diverse and substantial
economic base and a strong socio-economic profile. Although currently in
recovery following a severe downturn in the early 1990s, the State's economy is
expanding at only a tepid pace. Consolidations in the commercial banking area,
continuing weakness in the recently deregulated health care sector and ongoing
declines in upstate manufacturing industries are at the root of the State's slow
growth. Somewhat offsetting these trends is the robust performance of the
investment bank sector which continues to benefit from the sharp upturn in the
equity markets. While employment levels are rising, the State's unemployment
rate continues to be in excess of the national rate. Similarly the State's
income levels have suffered as growth rates have consistently been below those
of the nation as a whole.
Historically, New York State's financial operations have been weak,
characterized by chronic budget deficits, untimely budget passage, significant
use of non-recurring revenue measures and overly optimistic economic
assumptions. Fortuitous revenue and expenditure adjustments, which rescued New
York State's fiscal year 1997 budget, cannot be relied on for future years, and
structural imbalances caused by the use of one time revenue items and sizable
multi-year tax cuts may combine to make future State budget deliberations as
difficult as those of prior years. Additionally, the effects of federal welfare
reform and a potential weakening in the State's fragile economic recovery could
further exacerbate the State's tenuous fiscal position. New York City continues
to enjoy the benefits of a booming securities industry. Improving economic
performance has reduced social service needs while revenues should continue to
exceed expectations into fiscal year 1998. However, concerns remain about the
duration of the economic expansion and still sizable out-year budget gaps.
North Carolina. Historically dependent on textiles and furniture manufacturing,
North Carolina's economy has diversified significantly in recent years as
financial services, research, and high technology have grown in importance.
Development of technologically advanced industries ranging from computer
software to biotechnology is closely related to the major universities located
in the Raleigh-Durham metropolitan area. Although textiles, tobacco, and
furniture manufacturing are still significant components of the economy, their
percentage share has been greatly reduced. The textile industry has experienced
job losses in recent years as many manufacturers have moved operations overseas
in an effort to lower production costs. These job losses are particularly
damaging to the economy as idled workers are not easily absorbed into the high
technology industries.
The diversification of the State's economy has coincided with a period of rapid
growth. Employment growth now far outpaces that of the United States economy,
and despite rapid labor force growth, the State's jobless rate fell to 4.3%
during 1996, well below the national rate. While personal income levels have
been growing rapidly in recent years, per capita personal income levels remain
below the national average, reflecting the historically low wage rates of the
textile and tobacco industries.
Following a period of recession-induced strain in the early 1990s, financial
balance was restored through tax increases and expenditure reductions.
Ohio. While diversifying more into the service and other non-manufacturing
areas, the State's economy continues to rely to a significant extent on durable
goods manufacturing, largely concentrated in motor vehicles and equipment,
steel, rubber products and household appliances. As a result, general economic
activity, as in many other industrial states, tends to be more cyclical than in
the nation as a whole. In each of the last six years, the State's average
monthly unemployment rate was below the national average, reversing the trend of
the 1980s.
The economic expansion has yielded strong financial performance. Since 1993,
strong revenue growth combined with lower than projected health and human
service expenditures have resulted in growing reserve levels. At the end of
1996, available reserves were in excess of $1.1 billion or 6.8% of annual
revenues. During 1996, Moody's and S&P upgraded the credit ratings of the
State's general obligation bonds and the bonds issued by Ohio Building Authority
and Ohio Public Facilities Commission, the State's two major borrowing
authorities.
A recent Ohio Supreme Court decision will require major changes to Ohio's school
funding arrangements and may pose significant challenges to future State
budget-balancing efforts. State officials expect that a new arrangement will
require substantially larger state funding contributions for schools, but the
nature and extent of the funding changes will not be clear for some time. The
court stayed the effect of its ruling for twelve months, to afford time for
adequate study, legislative drafting and transition to the new funding formula.
Non-Diversification. Because of the relatively small number of issuers of
investment grade State Bonds, each Fund (except the California Fund) may
concentrate in the securities of a few issuers which the Adviser considers to be
attractive. This may
increase the risk of loss to those Funds. It is also possible that there will
not be a sufficient supply of State Bonds available to enable each Fund to
achieve its objective.
Other. The Funds may not always achieve their investment objective. The Funds'
investment objective and non-fundamental investment policies may be changed
without shareholder approval. Each Fund will notify investors in connection with
any material change in its investment objective. If there is a change in a
Fund's investment objective or investment policies, shareholders should consider
whether the Fund remains an appropriate investment in light of their financial
position and needs. Shareholders may incur a contingent deferred sales charge if
shares are redeemed in response to a change in investment objective or
investment policies. Additional information concerning certain of the securities
and investment techniques described above is contained in the Statement of
Additional Information.
HOW THE FUNDS MEASURE THEIR PERFORMANCE
Performance may be quoted in sales literature and advertisements. Each Class's
average annual total returns are calculated in accordance with the Securities
and Exchange Commission's formula and assume the reinvestment of all
distributions, the maximum initial sales charge of 4.75% on Class A shares and
the contingent deferred sales charge applicable to the time period quoted on
Class B and Class C shares. Other total returns differ from the average annual
total return only in that they may relate to different time periods, may
represent aggregate as opposed to average annual total returns, and may not
reflect the initial or contingent deferred sales charges.
Each Class's yield and tax-equivalent yield, which differ from total return
because they do not consider the change in net asset value, are calculated in
accordance with the Securities and Exchange Commission's formula. Each Class's
distribution rate is calculated by dividing the most recent month's
distributions, annualized, by the maximum offering price of that Class at the
end of the month. Each Class's performance may be compared to various indices.
Quotations from various publications may be included in sales literature and
advertisements. See "Performance Measures" in the Statement of Additional
Information for more information.
All performance information is historical and does not predict future results.
HOW THE FUNDS ARE MANAGED
The Trustees formulate the Funds' general policies and oversee the Funds'
affairs as conducted by the Adviser.
Liberty Financial Investments, Inc. (Distributor), a subsidiary of the Adviser,
serves as the distributor for the Funds' shares. Colonial Investors Service
Center, Inc. (Transfer Agent), an affiliate of the Adviser, serves as the
shareholder services and transfer agent for the Funds. Each of the Adviser, the
Distributor and the Transfer Agent is an indirect subsidiary of Liberty
Financial Companies, Inc. which in turn is an indirect subsidiary of Liberty
Mutual Insurance Company (Liberty Mutual). Liberty Mutual is considered to be
the controlling entity of the Adviser and its affiliates. Liberty Mutual is an
underwriter of workers' compensation insurance and a property and casualty
insurer in the U.S.
The Adviser furnishes each Fund with investment management, accounting and
administrative personnel and services, office space and other equipment and
services at the Adviser's expense. For these services, the Funds pay the Adviser
at the following annual percentages of the Funds' combined average daily net
assets: on the first $2 billion of combined average daily net assets, the annual
rate shall be 0.5%; and on the combined average daily net assets in excess of $2
billion, the annual rate shall be 0.45%.
Brian M. Hartford, Vice President of the Adviser, has managed the Minnesota Fund
and other Colonial tax-exempt funds since 1993 and the North Carolina Fund since
August 1997. Mr. Hartford was a senior municipal trader of the Adviser from 1991
until 1993.
William C. Loring, Vice President of the Adviser, has managed the Ohio Fund and
the Michigan Fund since October 1997. Mr. Loring has managed various other
Colonial tax-exempt funds since 1986.
Maureen G. Newman, Vice President of the Adviser, has managed the Connecticut
Fund and the Massachusetts Fund since May 1996 and the Florida Fund since August
1997. Effective November 30, 1997, Ms. Newman will no longer manage the
Connecticut Fund. Prior to joining the Adviser, Ms. Newman was a portfolio
manager and bond analyst at Fidelity Investments from May 1985 until May 1996.
Gary Swayze, Vice President of the Adviser, has managed the New York Fund since
September 1997 and the California Fund since October 1997. Effective November
30, 1997, Mr. Swayze will become the manager of the Connecticut Fund. Prior to
joining the Adviser in 1997, Mr. Swayze was a portfolio manager and group leader
at Fidelity Management and Research Company and the writer and editor of a bond
market newsletter.
The Adviser also provides pricing and bookkeeping services to each Fund for a
monthly fee of $2,250 per Fund plus a percentage of each Fund's average net
assets over $50 million. The Transfer Agent provides transfer agency and
shareholder services to each Fund for a fee of 0.14% annually of average net
assets plus certain out-of-pocket expenses. Effective January 1, 1997, and
continuing through calendar year 1997, the 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.
Each of the foregoing fees is subject to any reimbursement or fee waiver or
expense reimbursement to which the Adviser may agree.
The Adviser places all orders for the purchase and sale of portfolio securities.
In selecting broker-dealers, the Adviser may consider research and brokerage
services furnished by such broker-dealers to the Adviser and its affiliates. In
recognition of the research and brokerage services provided, the Adviser may
cause the Fund to pay the selected broker-dealer a higher commission than would
have been charged by another broker-dealer not providing such services. Subject
to seeking best execution, the Adviser may consider sales of shares of the Funds
(and of certain other Colonial funds) in selecting broker-dealers for portfolio
security transactions.
HOW THE FUNDS VALUE THEIR SHARES
Per share net asset value is calculated by dividing the total value of each
Class's net assets by its number of outstanding shares. Shares of the Funds are
valued as of the close (normally 4:00 p.m. Eastern time) of the New York Stock
Exchange (Exchange) each day the Exchange is open. Portfolio securities for
which market quotations are readily available are valued at current market
value. Short-term investments maturing in 60 days or less are valued at
amortized cost when the Adviser determines, pursuant to procedures adopted by
the Trustees, that such cost approximates current market value. All other
securities and assets are valued at their fair value following procedures
adopted by the Trustees.
DISTRIBUTIONS AND TAXES
Each Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code and to distribute to shareholders net income monthly and
any net realized gain at least annually.
The Funds generally declare distributions daily. Distributions are invested in
additional shares of the same Class of the Fund at net asset value unless the
shareholder elects to receive cash. Regardless of the shareholder's election,
distributions of $10 or less will not be paid in cash to shareholders but will
be invested in additional shares of the same Class of the Fund at net asset
value. If a shareholder has elected to receive dividends and/or capital gain
distributions in cash and the postal or other delivery service selected by the
Transfer Agent is unable to deliver checks to the shareholder's address of
record, such shareholder's distribution option will automatically be converted
to having all dividend and other distributions reinvested in additional shares.
No interest will accrue on amounts represented by uncashed distribution or
redemption checks. To change your election, call the Transfer Agent for
information. The Funds' distributions of net income generally will be exempt
from Federal and the relevant State's personal income taxes. However, as
described above under "How the Funds Pursue Their Objective and Certain Risk
Factors," certain investments may produce taxable income (including capital
gains) for federal, state and local purposes, and portfolio transactions may
produce gains a portion of which may be taxable at ordinary Federal income tax
rates and state and local taxes. If the Funds make distributions attributable to
taxable income, those distributions will generally be taxable whether you
receive them in cash or in additional Fund shares, unless you are a tax-exempt
institution. Each January, information on the amount and nature of distributions
for the prior year, including the alternative minimum tax portion, is sent to
shareholders. A loss on shares held for six months or less will be disallowed to
the extent of any exempt-interest dividends received thereon.
While each Fund's distributions from income on its State's Bonds are generally
not taxable at the federal level or subject to that Fund's state's personal
income tax, if any, a portion may be included in computing a shareholder's
alternative minimum tax liability. Each Fund may at times purchase tax-exempt
securities at a discount from the price at which they were originally issued,
especially during periods of rising interest rates. For federal income tax
purposes, some or all of the market discount may be included in the Fund's
ordinary income and will be taxable to shareholders as such when it is
distributed to them. Social security benefits may be taxed as a result of
receiving tax-exempt income. If you receive social security or railroad
retirement benefits, you should consult your tax adviser to determine what
effect, if any, an investment in the Funds may have on the taxation of your
benefits.
The foregoing is a summary of certain income tax consequences of investing in
the Funds. You should consult your tax adviser to determine the effect of an
investment in a Fund on your particular tax situation (including possible
liability for federal alternative minimum tax and for state and local taxes).
HOW TO BUY SHARES
Shares of the Funds are offered continuously. Orders received in good form prior
to the time at which the Funds value their shares (or placed with a financial
service firm before such time and transmitted by the financial service firm
before a Fund processes that day's share transactions) will be processed based
on that day's closing net asset value, plus any applicable initial sales charge.
The minimum initial investment is $1,000; subsequent investments may be as small
as $50. The minimum initial investment for the Colonial Fundamatic program is
$50. Certificates will not be issued for Class B shares and there are some
limitations on the issuance of Class A share certificates. The Funds may refuse
any purchase order for their shares. See the Statement of Additional Information
for more information. Class A Shares. Class A shares are offered at net asset
value plus an initial sales charge as follows:
______Initial Sales Charge_____
Retained
by
Financial
Service
Firm as
as % of % of
---------------------
Amount Offering Offering
Amount Purchased Invested Price Price
[S] [C] [C] [C]
Less than $50,000 4.99% 4.75% 4.25%
$50,000 to less than
$100,000 4.71% 4.50% 4.00%
$100,000 to less than
$250,000 3.63% 3.50% 3.00%
$250,000 to less than
$500,000 2.56% 2.50% 2.00%
$500,000 to less than
$1,000,000 2.04% 2.00% 1.75%
$1,000,000 or more 0.00% 0.00% 0.00%
On purchases of $1 million or more of each Fund, the Distributor pays the
financial service firm a cumulative commission as follows:
Amount Purchased Commission
[S] [C]
First $3,000,000 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25% (1)
(1) Paid over 12 months but only to the
extent the shares remain outstanding.
In determining the sales charge and commission applicable to a new purchase
under the above schedules, the amount of the current purchase is added to the
current value of shares previously purchased and still held by an investor. If a
purchase results in an account having a value from $1 million to $5 million,
then the shares purchased will be subject to a 1.00% contingent deferred sales
charge payable to the Distributor, if redeemed within 18 months from the first
day of the month following the purchase. If the purchase results in an account
having a value in excess of $5 million, the contingent deferred sales charge
will not apply to the portion of the purchased shares comprising such excess
amount.
Class B Shares. Class B shares are offered at net asset value, without an
initial sales charge and are subject to a 0.75% annual distribution fee for
approximately eight years (at which time they automatically convert to Class A
shares not bearing a distribution fee) and a declining contingent deferred sales
charge if redeemed within six years after purchase. As shown below, the amount
of the contingent deferred sales charge depends on the number of years after
purchase that the redemption occurs:
Years Contingent Deferred
After Purchase Sales Charge
[C] [C]
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
More than 6 0.00%
Year one ends one year after the end of the month in which the purchase was
accepted and so on. The Distributor pays financial service firms a commission of
4.00% on Class B share purchases.
Class C Shares. Class C shares are offered at net asset value and are subject to
a 0.75% annual distribution fee and a 1.00% contingent deferred sales charge on
redemptions made within one year after the end of the month in which the
purchase was accepted. The Distributor has voluntarily agreed to waive a portion
of the distribution fee so that it will not exceed 0.45% annually. This waiver
may be terminated by the Distributor at any time without shareholder approval.
The Distributor pays financial service firms an initial commission of 1.00% on
Class C share purchases and an ongoing commission of 0.35% annually commencing
after the shares purchased have been outstanding for one year. Payment of the
ongoing commission is conditioned on receipt by the Distributor of the 0.45%
annual distribution fee referred to above. The commission may be reduced or
eliminated by the Distributor at any time.
General. All contingent deferred sales charges are deducted from the amount
redeemed, not the amount remaining in the account, and are paid to the
Distributor. Shares issued upon distribution reinvestment and amounts
representing appreciation are not subject to a contingent deferred sales charge.
The contingent deferred sales charge is imposed on redemptions which result in
the account value falling below its Base Amount (the total dollar value of
purchase payments in the account reduced by prior redemptions on which a
contingent deferred sales charge was paid and any exempt redemptions). When a
redemption subject to a contingent deferred sales charge is made, generally,
older shares will be redeemed first unless the shareholder instructs otherwise.
See the Statement of Additional Information for more information.
Which Class is more beneficial to an investor depends on the amount and intended
length of the investment. Large investments, qualifying for a reduced Class A
sales charge, avoid the distribution fee. Investments in Class B shares have
100% of the purchase invested immediately. Investors investing for a relatively
short period of time might consider Class C shares. Purchases of $250,000 or
more must be for Class A or Class C shares. Purchases of $1,000,000 or more must
be for Class A shares. Consult your financial service firm.
Financial service firms may receive different compensation rates for selling
different classes of shares. The Distributor may pay additional compensation to
financial service firms which have made or may make significant sales. See the
Statement of Additional Information for more information.
Special Purchase Programs. The Funds allow certain investors or groups of
investors to purchase shares with reduced or without initial or contingent
deferred sales charges. The programs are described in the Statement of
Additional Information under "Programs for Reducing or Eliminating Sales
Charges."
Shareholder Services and Account Fees. A variety of shareholder services are
available. For more information about these services or your account, call
1-800-345-6611. Some services are described in the attached account application.
A shareholder's manual explaining all available services will be provided upon
request.
In June of any year, a Fund may deduct $10 (payable to the Transfer Agent) from
accounts valued at less than $1,000 unless the account value has dropped below
$1,000 solely as a result of share value depreciation. Shareholders will receive
60 days' written notice to increase the account before the fee is deducted. The
Fund may also deduct annual maintenance and processing fees (payable to the
Transfer Agent) in connection with certain retirement plan accounts. See
"Special Purchase Programs/Investor Services" in the Statement of Additional
Information for more information.
HOW TO SELL SHARES
Shares of the Funds may be sold on any day the Exchange is open, either directly
to a Fund or through your financial service firm. Sale proceeds generally are
sent within seven days (usually on the next business day after your request is
received in good form). However, for shares recently purchased by check, the
Fund will send proceeds as soon as the check has cleared (which may take up to
15 days).
Selling Shares Directly To A Fund. Send a signed letter of instruction or stock
power form to the Transfer Agent, along with any certificates for shares to be
sold. The sale price is the net asset value (less any applicable contingent
deferred sales charge) next calculated after the particular Fund receives the
request in proper form. Signatures must be guaranteed by a bank, a member firm
of a national stock exchange or another eligible guarantor institution. Stock
power forms are available from financial service firms, the Transfer Agent and
many banks. Additional documentation is required for sales by corporations,
agents, fiduciaries, surviving joint owners and individual retirement account
holders. For details contact:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Selling Shares Through Financial Service Firms. Financial service firms must
receive requests prior to the time at which the Funds value their shares to
receive that day's price, are responsible for furnishing all necessary
documentation to the Transfer Agent and may charge for this service.
General. The sale of shares is a taxable transaction for income tax purposes and
may be subject to a contingent deferred sales charge. The contingent deferred
sales charge may be waived under certain circumstances. See the Statement of
Additional Information for more information. Under unusual circumstances, a Fund
may suspend repurchases or postpone payment for up to seven days or longer, as
permitted by federal securities law.
HOW TO EXCHANGE SHARES
Except as described below with respect to money market funds, a Fund's shares
may be exchanged at net asset value for shares of other mutual funds distributed
by the Distributor, including funds advised by the Adviser, Stein Roe & Farnham
Incorporated and Newport Fund Management, Inc. Generally, such exchanges must be
between the same classes of shares. Consult your financial service firm or the
Transfer Agent for information regarding what funds are available. Shares will
continue to age without regard to the exchange for purposes of conversion and
determining the contingent deferred sales charge, if any, upon redemption.
Carefully read the prospectus of the fund into which the exchange will go before
submitting the request. Call 1-800-426-3750 to receive a prospectus and an
exchange authorization form. Call 1-800-422-3737 to exchange shares by
telephone. An exchange is a taxable capital transaction. The exchange service
may be changed, suspended or eliminated on 60 days' written notice. A Fund will
terminate the exchange privilege as to a particular shareholder if the Adviser
determines in its sole and absolute discretion, that the shareholder's exchange
activity is likely to adversely impact the Adviser's ability to manage a Fund's
investments in accordance with its investment objective or otherwise harm a Fund
or its remaining shareholders.
Class A Shares. An exchange from a money market fund into a non-money market
fund will be at the applicable offering price next determined (including sales
charge), except for amounts on which an initial sales charge was paid. Non-money
market fund shares must be held for five months before qualifying for exchange
to a fund with a higher sales charge, after which exchanges are made at the net
asset value next determined.
Class B Shares. Exchanges of Class B shares are not subject to the contingent
deferred sales charge. However, if shares are redeemed within six years after
the original purchase, a contingent deferred sales charge will be assessed using
the schedule of the fund into which the original investment was made.
Class C Shares. Exchanges of Class C shares are not subject to the contingent
deferred sales charge. However, if shares are redeemed within one year after the
original purchase, a 1.00% contingent deferred sales charge will be assessed.
Only one "roundtrip" exchange of each Fund's Class C shares may be made per
three-month period, measured from the date of the initial purchase. For example,
an exchange from Fund A to Fund B and back to Fund A would be permitted only
once during each three-month period.
TELEPHONE TRANSACTIONS
All shareholders and/or their financial advisers are automatically eligible to
exchange Fund shares and redeem up to $50,000 of Fund shares by calling
1-800-422-3737 toll-free any business day between 9:00 a.m. and the time at
which the Fund values its shares. Telephone redemption privileges for larger
amounts may be elected on the account application. The Transfer Agent will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine and may be liable for losses related to unauthorized or
fraudulent transactions in the event reasonable procedures are not employed.
Such procedures include restrictions on where proceeds of telephone redemptions
may be sent, limitations on the ability to redeem by telephone shortly after an
address change, recording of telephone lines and requirements that the redeeming
shareholder and/or their financial adviser provide certain identifying
information. Shareholders and/or their financial advisers wishing to redeem or
exchange shares by telephone may experience difficulty in reaching the Fund at
its toll-free telephone number during periods of drastic economic or market
changes. In that event, shareholders and/or their financial advisers should
follow the procedures for redemption or exchange by mail as described above
under "How to Sell Shares." The Adviser, the Transfer Agent and the Fund reserve
the right to change, modify or terminate the telephone redemption or exchange
services at any time upon prior written notice to shareholders. Shareholders
and/or their financial advisers are not obligated to transact by telephone.
12B-1 PLAN
Under a 12b-1 Plan, each Fund pays the Distributor monthly a service fee at an
annual rate of 0.10% of each Fund's net assets for shares outstanding on
November 30, 1994, and an annual rate of 0.25% of net assets for shares issued
thereafter. The 12b-1 Plan also requires each Fund to pay the Distributor
monthly a distribution fee at an annual rate of 0.75% of the average daily net
assets attributed to its Class B and Class C shares. The Distributor has
voluntarily agreed to waive a portion of the Class C share distribution fee so
that it does not exceed 0.45% annually. The Distributor may terminate this
waiver at any time without shareholder approval. Because the Class B and Class C
shares bear the additional fee, their dividends will be lower than the dividends
of Class A shares. Class B shares automatically convert to Class A shares,
approximately eight years after the Class B shares were purchased. Class C
shares do not convert. The multiple class structure could be terminated should
certain Internal Revenue Service rulings be rescinded. See the Statement of
Additional Information for more information. The Distributor uses the fees to
defray the cost of commissions and service fees paid to financial service firms
which have sold Fund shares and to defray other expenses such as sales
literature, prospectus printing and distribution, shareholder servicing costs,
and compensation to wholesalers. Should the fees exceed the Distributor's
expenses in any year, the Distributor would realize a profit. The Plan also
authorizes other payments to the Distributor and its affiliates (including the
Adviser) which may be construed to be indirect financing of sales of Fund
shares.
ORGANIZATION AND HISTORY
The Trust is a Massachusetts business trust organized in 1987. Each Fund
represents the entire interest in a separate portfolio of the Trust.
The Trust is not required to hold annual shareholder meetings, but special
meetings may be called for certain purposes. Shareholders receive one vote for
each Fund share. Shares of the Trust vote together except when required by law
to vote separately by fund or by class. Shareholders owning in the aggregate ten
percent of Trust shares may call meetings to consider removal of Trustees. Under
certain circumstances, the Trust will provide information to assist shareholders
in calling such a meeting. See the Statement of Additional Information for more
information.
APPENDIX
DESCRIPTION OF BOND RATINGS
S&P
AAA bonds have the highest rating assigned by S&P. Capacity to pay interest and
repay principal is extremely strong.
AA bonds have a very strong capacity to pay interest and repay principal, and
they differ from AAA only in a small degree.
A bonds have a strong capacity to pay interest and repay principal, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB bonds are regarded as having an adequate capacity to pay interest and repay
principal. Whereas they normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal than for bonds in the A
category.
BB, B, CCC, CC and C bonds are regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and C the highest degree. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or large exposures to adverse conditions.
BB bonds have less near-term vulnerability to default than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The BB rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B bonds have a greater vulnerability to default but currently has the capacity
to meet interest payments and principal repayments. Adverse business, financial,
or economic conditions will likely impair capacity or willingness to pay
interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC bonds have a currently identifiable vulnerability to default, and are
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, the bonds are not likely to have
the capacity to pay interest and repay principal. The CCC rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.
CC rating typically is applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating.
C rating typically is applied to debt subordinated to senior debt which assigned
an actual or implied CCC- debt rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but debt service payments
are continued.
CI rating is reserved for income bonds on which no interest is being paid.
D bonds are in payment default. The D rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
Plus(+) or minus(-) ratings from AA to CCC may be modified by the addition of a
plus or minus sign to show relative standing within the major rating categories.
MOODY'S
Aaa bonds are judged to be of the best quality. They carry the smallest degree
of investment risk and are generally referred to as "gilt edge". Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
Aa bonds are judged to be of high quality by all standards. Together with Aaa
bonds they comprise what are generally known as high grade bonds. They are rated
lower than the best bonds because margins of protection may not be as large as
in Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
Those bonds in the Aa through B groups which Moody's believes possess the
strongest investment attributes are designated by the symbol Aa1, A1, Baa1, Ba1
and B1.
A bonds possess many favorable investment attributes and are to be considered as
upper medium grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa bonds are considered as medium grade obligations, i.e. they are neither
highly protected nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have speculative
characteristics as well.
Ba bonds are judged to have speculative elements; their future cannot be
considered as well secured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B bonds generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.
Caa bonds are of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca bonds represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings.
C bonds are the lowest rated class of bonds and issues so rated can be regarded
as having extremely poor prospects of ever attaining any real investment
standing.
<PAGE>
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Investment Adviser
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Distributor
Liberty Financial Investments, Inc.
One Financial Center
Boston, MA 02111-2621
Custodian
UMB, n.a.
928 Grand Avenue
Kansas City, MO 64106
Custodian
(Effective Late November 1997)
The Chase Manhattan Bank
4 Chase MetroTech Center
Brooklyn, NY 11245
Shareholder Services and Transfer Agent
Colonial Investors Service Center, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110-2624
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624
Your financial service firm is:
Printed in U.S.A.
May 30,1997, Revised November 7, 1997
COLONIAL CALIFORNIA
TAX-EXEMPT FUND
COLONIAL CONNECTICUT
TAX-EXEMPT FUND
COLONIAL FLORIDA
TAX-EXEMPT FUND
COLONIAL MASSACHUSETTS
TAX-EXEMPT FUND
COLONIAL MICHIGAN
TAX-EXEMPT FUND
COLONIAL MINNESOTA
TAX-EXEMPT FUND
COLONIAL NEW YORK
TAX-EXEMPT FUND
COLONIAL NORTH CAROLINA
TAX-EXEMPT FUND
COLONIAL OHIO
TAX-EXEMPT FUND
PROSPECTUS
Each of Colonial California Tax-Exempt Fund, Colonial Connecticut Tax-Exempt
Fund, Colonial Florida Tax-Exempt Fund, Colonial Massachusetts Tax-Exempt Fund,
Colonial Michigan Tax-Exempt Fund, Colonial Minnesota Tax-Exempt Fund, Colonial
New York Tax-Exempt Fund, Colonial North Carolina Tax-Exempt Fund and Colonial
Ohio 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
its state's personal income tax (if any) and opportunities for long-term
appreciation from a portfolio primarily invested in investment grade municipal
bonds.
For more detailed information about the Funds, call the Adviser at
1-800-426-3750 for the May 30, 1997, revised August 1, 1997, Statement of
Additional Information.
- ----------------------------- ------------------------------
NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE
- ----------------------------- ------------------------------
Colonial Mutual Funds
Please send your completed application to:
Colonial Investors Service Center, Inc. (CISC)
P.O. Box 1722
Boston, Massachusetts 02105-1722
New A, B & C Shares Account Application/Revision to Existing Account
To open a new account, complete sections 1, 2, 3, & 7.
To apply for special services for a new or existing account, complete sections
4, 5, 6, or 8 as appropriate.
___ Please check here if this is a revision.
1-----------Account ownership--------------
Please choose one of the following.
__Individual: Print your name, Social Security #, U.S. citizen status.
__Joint Tenant: Print all names, the Social Security # for the first person,
and his/her U.S. citizen status.
__Uniform Gift to Minors: Names of custodian and minor, minor's Social Security
#, minor's U.S. citizen status.
__Corporation, Association, Partnership: Include full name, Taxpayer I.D. #.
__Trust: Name of trustee, trust title & date, and trust's Taxpayer I.D. #.
______________________________________
Name of account owner
______________________________________
Name of joint account owner
______________________________________
Street address
______________________________________
Street address
______________________________________
City, State, and Zip
______________________________________
Daytime phone number
______________________________________
Social Security # or Taxpayer I.D. #
Are you a U.S. citizen? ___Yes ___No
______________________________________
If no, country of permanent residence
______________________________________
Account Owner's date of birth
______________________________________
Account number (if existing account)
2 -----Colonial fund(s) you are purchasing--------
Your investment will be made in Class A shares if no class is indicated.
Certificates are not available for Class B or C shares. If no distribution
option is selected, distributions will be reinvested in additional fund
shares. Please consult your financial adviser to determine which class of
shares best suits your needs.
Fund Fund Fund
________________ ___________________ _____________________
Name of Fund Name of Fund Name of Fund
$_______________ $__________________ $____________________
Amount Amount Amount
Class
___ A Shares ___ B Shares (less than $250,000) ___ C Shares (less than
$1,000,000)
Method of Payment Choose one
___Check payable to the Fund ___Bank wired on ____/____/____ (Date)
Wire/Trade confirmation #_____________
Ways to receive your distributions
Choose one (If none chosen, dividends and capital gains will be reinvested)
Distributions of $10.00 or less will automatically be reinvested in additional
fund shares.
___Reinvest dividends and capital gains
___Dividends and capital gains in cash
___Dividends in cash; reinvest capital gains
___Automatic Dividend Diversification See section 5A, inside
___Direct Deposit via Colonial Cash Connection Complete Bank information
in section 4B. I understand that my bank must be a member of the
Automated Clearing House System.
3---Your signature & taxpayer I.D. number certification----
Each person signing on behalf of an entity represents that his/her actions are
authorized. I have received and read each appropriate fund prospectus and
understand that its terms are incorporated by reference into this application.
I understand that this application is subject to acceptance. I understand that
certain redemptions may be subject to a contingent deferred sales charge. It
is agreed that the fund, The Colonial Group, Inc. and its affiliates and their
officers, directors, agents, and employees will not be liable for any loss,
liability, damage, or expense for relying upon this application or any
instruction believed genuine.
I certify, under penalties of perjury, that:
1. The Social Security # or Taxpayer I.D. # provided is correct.
You must cross out Item 2a, b or c below only if you have been notified by the
Internal Revenue Service (IRS) that you are currently subject to back-up
withholding because of under-reporting interest or dividends on you tax return.
2. I am not subject to back-up withholding because: (a) I am exempt from back-
up withholding, or (b) I have not been notified by the IRS that I am
subject to back-up withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer
subject to back-up withholding.
The Internal Revenue Service does not require your consent to any provision of
this document other than the certifications required to avoid backup
withholdings.
X______________________________________________
Signature
_______________________________________________
Capacity, if applicable Date
X______________________________________________
Signature
_______________________________________________
Capacity, if applicable Date
4--------Ways to withdraw from your fund-------
It may take up to 30 days to activate the following features. Complete only
the sections that apply to the features you would like.
A. Systematic Withdrawal Plan (SWP)
You can receive monthly, quarterly, or semiannual checks from your account in
any amount you select, with certain limitations. Your redemption checks can
be sent to you at the address of record for your account, to your bank
account, or to another person you choose. The value of the shares in your
account must be at least $5,000 and you must reinvest all of your
distributions. Checks will be processed on the 10th calendar day of the month
or the preceding business day if the 10th falls on a non-business day. If you
receive your SWP payment via electronic funds transfer (EFT), you may request
it to be processed any day of the month. Withdrawals in excess of 12% annually
of your current account value will not be accepted. Redemptions made in
addition to SWP payments may be subject to a contingent deferred sales charge
for Class B or C shares. Please consult your financial or tax adviser before
electing this option.
Funds for withdrawal:
___________________
Name of fund
Withdrawal amount
Redeem shares from account as follows:
Dollar amount of payment $___________
or
Total annual %_________
Frequency (choose one)
__Monthly __Quarterly __Semiannually
I would like payments to begin _____/_____ (day, if indicating EFT, month).
___________________
Name of fund
Withdrawal Amount
Redeem shares from account as follows:
Dollar amount of payment $___________
or
Total annual %_________
Frequency (choose one)
__Monthly __Quarterly __Semiannually
I would like payments to begin _____/_____ (day,if indicating EFT, month).
Payment instructions
Send the payment to (choose one):
__My address of record.
__My bank account via EFT. Please complete the Bank Information section below.
All EFT transactions will be made two business days after the processing date.
Your bank must be a member of the Automated Clearing House System.
__The payee listed at right. If more than one payee, provide the name,
address, payment amount, and frequency for other payees (maximum of 5) on
a separate sheet. If you are adding this service to an existing account,
please sign below and have your signature(s) guaranteed.
______________________________________________
Name of payee
______________________________________________
Address of payee
______________________________________________
City
______________________________________________
State Zip
______________________________________________
Payee's bank account number, if applicable
B. Telephone withdrawal pptions
All telephone transaction calls are recorded. These options are not available
for retirement accounts. Please sign below and have your signature(s)
guaranteed.
1. Fast Cash
You are automatically eligible for this service. You or your financial
adviser can withdraw up to $50,000 from your account and have it sent to your
address of record. For your protection, this service is only available on
accounts that have not had an address change within 30 days of the redemption
request.
2. Telephone Redemption
__I would like the Telephone Redemption privilege either by federal fund wire
or EFT. Telephone redemptions over $500 will be sent via federal fund wire,
usually on the next business day ($7.50 will be deducted). Redemptions of
$500 or less will be sent by check to your designated bank.
3. On-Demand EFT Redemption
__I would like the On-Demand EFT Redemption Privilege. Proceeds paid via EFT
will be credited to your bank account two business days after the process
date. You or your financial adviser may withdraw shares from your fund account
by telephone and send your money to your bank account. If you are adding this
service to an existing account, complete the Bank Information section below
and have all shareholder signatures guaranteed.
Colonial Investor Service Center, Inc. (CISC) and the fund's liability is
limited when following telephone instructions; a shareholder may suffer a loss
from an unauthorized transaction reasonably believed by CISC to have been
authorized.
Bank Information (For Sections A and B Above)
I authorize deposits to the following bank account:
____________________________________________________________
Bank name City Bank account number
____________________________________________________________
Bank street address State Zip Bank routing # (your bank
can provide this)
X__________________________________
Signature of account owner(s)
X__________________________________
Signature of account owner(s) Place signature guarantee here.
5-----Ways to make additional investments--------
These services involve continuous investments regardless of varying share
prices. Please consider your ability to continue purchases through periods of
price fluctuations. Dollar cost averaging does not assure a profit or protect
against loss in declining markets.
A. Automatic Dividend Diversification
Please diversify my portfolio by investing distributions from one fund into
another Colonial, Newport or Stein Roe Advisor fund. These investments will
be made in the same share class and without sales charges. Accounts must be
identically registered. I have carefully read the prospectus for the
fund(s) listed below.
____________________________
From fund
____________________________
Account number (if existing)
____________________________
To fund
____________________________
Account number (if existing)
____________________________
From fund
____________________________
Account number (if existing)
____________________________
To fund
____________________________
Account number (if existing)
B. Automated Dollar Cost Averaging
This program allows you to automatically have money from any Colonial, Newport
or Stein Roe Advisor fund in which you have a balance of at least $5,000
exchanged into the same share class of up to four other identically registered
Colonial accounts, on a monthly basis. The minimum amount for each exchange is
$100. Please complete the section below.
____________________________________
Fund from which shares will be sold
$_________________________
Amount to redeem monthly
____________________________________
Fund to invest shares in
$_________________________
Amount to invest monthly
____________________________________
Fund to invest shares in
$_________________________
Amount to invest monthly
C. Fundamatic/On-Demand EFT Purchase
Fundamatic automatically transfers the specified amount from your bank
checking account to your Colonial, Newport or Stein Roe Advisor fund
account on a regular basis. The On-Demand EFT Purchase program moves money
from your bank checking account to your Colonial, Newport or Stein Roe
Advisor fund account by electronic funds transfer based on your
telephone request. You will receive the applicable price two
business days after the receipt of your request. Your bank needs to be a
member of the Automated Clearing House System. Please attach a blank check
marked "VOID." (Deposit slips are not a substitution). Also, complete the
section below. Please allow 3 weeks for CISC to establish these services
with your bank.
____________________________________
Fund name
_________________________________
Account number
$_____________________ _________________
Amount to transfer Month to start
___________________________________
Fund name
________________________________
Account number
$_____________________ _________________
Amount to transfer Month to start
__On-Demand Purchase (will be automatically established if you choose
Fundamatic)
__Fundamatic Frequency
__Monthly or __Quarterly
Check one:
__EFT- Choose any day of the month_____________________
__Paper Draft-Choose either the:
__5th day of the month
__20th day of the month
Authorization to honor checks drawn by Colonial Investors Service Center,
Inc. (CISC) Do Not Detach. Make sure all depositors on the bank account sign
to the far right. Please attach a blank check marked "VOID" here. (Deposit
slips are not a substitution). See reverse for bank instructions.
I authorize CISC to draw on my bank account, by check or electronic funds
transfer, for an investment in a Colonial, Newport or Stein Roe Advisor fund.
CISC and my bank are not liable for any loss arising from delays or dishonored
draws. If a draw is not honored, I understand that notice may not be given and
CISC may reverse the purchase and charge my account $15.
______________________________________
Bank name
______________________________________
Bank street address
______________________________________
Bank street address
______________________________________
City State Zip
______________________________________
Bank account number
______________________________________
Bank routing #
X_____________________________________
Depositor's Signature(s)
Exactly as appears on bank records
X_____________________________________
Depositor's Signature(s)
Exactly as appears on bank records
6------------Ways to reduce your sales charges------------
These services can help you reduce your sales charge while increasing your
share balance over the long term.
A. Right of Accumulation
If you, your spouse or your children own any other shares in other
Colonial, Newport or Stein Roe Advisor funds, you may be eligible for a reduced
sales charge. The combined value of your accounts must be $50,000 or more.
Class A shares of money market funds are not eligible unless purchased by
exchange from another Colonial, Newport or Stein Roe Advisor fund.
The sales charge for your purchase will be based on the sum of the purchase(s)
added to the value of all shares in other Colonial, Newport or Stein Roe
Advisor funds at the previous day's public offering price.
__Please link the accounts listed below for Right of Accumulation privileges,
so that this and future purchases will receive any discount for which they
are eligible.
_____________________________________
Name on account
_____________________________________
Account number
_____________________________________
Name on account
_____________________________________
Account number
B. Statement of Intent
If you agree in advance to invest at least $50,000 within 13 months, you'll
pay a lower sales charge on every dollar you invest. If you sign a Statement
of Intent within 90 days after you establish your account, you can receive a
retroactive discount on prior investments. The amount required to receive a
discount varies by fund; see the sales charge table in the "How to Buy Shares"
section of your fund prospectus.
__I want to reduce my sales charge.
I agree to invest $ _______________ over a 13-month period starting
______/______/ 19______ (not more than 90 days prior to this application). I
understand an additional sales charge must be paid if I do not complete this
Statement of Intent.
7-------------Financial service firm---------------------
To be completed by a Representative of your financial service firm.
This application is submitted in accordance with our selling agreement with
Liberty Financial Investments, Inc. (LFII), the Fund's prospectus, and this
application. We will notify LFII, of any purchase made under a Statement
of Intent, Right of Accumulation, or Sponsored Arrangement. We guarantee the
signatures on this application and the legal capacity of the signers.
_____________________________________
Representative's name
_____________________________________
Representative's number
_____________________________________
Representative's phone number
_____________________________________
Account # for client at financial
service firm
_____________________________________
Branch office address
_____________________________________
City
_____________________________________
State Zip
_____________________________________
Branch office number
_____________________________________
Name of financial service firm
_____________________________________
Main office address
_____________________________________
Main office address
_____________________________________
City
_____________________________________
State Zip
X____________________________________
Authorized signature
8----------Request for a combined quarterly statement mailing-----------
CISC can mail all of your quarterly statements in one envelope. This
option simplifies your record keeping and helps reduce fund expenses.
__I want to receive a combined quarterly mailing for all my accounts. Please
indicate account numbers or tax I.D. numbers of accounts to be linked.
________________________________________________________________________
Fundamatic (See reverse side)
Applications must be received before the start date for processing.
This program's deposit privilege can be revoked by CISC without prior
notice if any check is not paid upon presentation. CISC has no obligation
to notify the shareholder of non-payment of any draw. This program may be
discontinued by Colonial by written notice at least 30 business days prior
to the due date of any draw or by the shareholder at any time.
To the Bank Named on the Reverse Side:
Your depositor has authorized Colonial Investors Service Center, Inc. (CISC) to
collect amounts due under an investment program from his/her personal checking
account. When you pay and charge the draws to the account of your depositor
executing the authorization payable to the order of CISC, CISC, hereby
indemnifies and holds you harmless from any loss (including reasonable
expenses) you may suffer from honoring such draw, except any losses due to your
payment of any draw against insufficient funds.
Liberty Financial Investments, Inc., Distributor SH-185E-0997
[Colonial Flag Logo]
Colonial
Mutual Funds
Checkwriting Signature Card
(Class A Shares Only)
Signature Card for the Bank of Boston ("Bank").
- -----------------------------------------------
Name of Fund
- -----------------------------------------------
Fund account number
Indicate the number of signatures required
- -----------------------------------------------
Account Name:
You must sign below exactly as your account is registered.
X
- -----------------------------------------------
Signature
X
- -----------------------------------------------
Signature
By signing this card, you are subject to the conditions printed on the reverse
side. If adding this privilege to an existing account, your signatures must be
guaranteed.
Checkwriting Privilege
By electing the checkwriting privilege and signing the signature card, I
acknowledge that I am subject to the rules and regulations of the Bank of
Boston ("Bank") as currently existing and as they may be amended from time
to time. I designate the Bank as my representative to present checks drawn
on my Fund account to the Fund or its Agent and deposit the proceeds in this
checking account. I understand that the shares for which share certificates
have been issued or requested cannot be redeemed in this manner.
If the account is registered in joint tenancy, all persons must sign this card,
and each person guarantees the genuineness of all other parties' signatures. I
understand that if only one person signs a check, that all other tenants have
authorized that signature.
Minimum and Maximum
I understand that checks may not be in amounts less than $500 nor more than
$100,000, and that the Fund reserves the right to change these limits in its
sole discretion. I agree that neither the Fund nor its Agent is responsible
for any loss, expense, or cost arising from these redemptions. Also, if I have
recently made additional investments, I understand that redemption proceeds
will not be available until the check used to purchase the investment
(including a certified or cashier's check) has been cleared by the bank on
which it is drawn, which could take up to 15 days or more.
D-999D-0797
