<PAGE>
- -----------------------------------------------
COLONIAL OHIO TAX-EXEMPT FUND Semiannual report
- -----------------------------------------------
July 31, 1998
[Graphic Omitted]
-----------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
-----------------------------
<PAGE>
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COLONIAL OHIO TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1998 - JULY 31, 1998
INVESTMENT OBJECTIVE: 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 Ohio state personal income tax. The Fund also
provides opportunities for long-term appreciation from a portfolio primarily
invested in investment grade municipal bonds.
PORTFOLIO MANAGER COMMENTARY: "The Fund was positioned for a declining interest
rate environment. While interest rates did decline modestly during parts of the
period, they experienced significant variability. While the lack of a strong
market direction restrained performance of the portfolio's more interest rate
sensitive bonds, Ohio's strong economy, responsible fiscal management and
significant financial reserves supported the prices of many of the Fund's
holdings."
--William Loring
COLONIAL OHIO TAX-EXEMPT FUND PERFORMANCE
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
Inception dates 9/26/86 8/4/92 8/1/97
Distributions declared per share(1) $0.213 $0.183 $0.195
- --------------------------------------------------------------------------------
SEC yields on 7/31/98(2) 3.86% 3.29% 3.60%
- --------------------------------------------------------------------------------
Taxable-equivalent SEC yields(3) 6.89% 5.87% 6.42%
- --------------------------------------------------------------------------------
Six-month total returns, assuming reinvestment 1.10% 0.70% 0.86%
of all distributions and no sales charge or
contingent deferred sales charge (CDSC)(4)
- --------------------------------------------------------------------------------
Net asset value per share on 7/31/98 $7.59 $7.59 $7.59
- --------------------------------------------------------------------------------
Quality Breakdown(5) (as of 7/31/98) Top Five Sectors(5) (as of 7/31/98)
- ------------------------------------- ---------------------------------------
AAA ........................... 66.0% General Obligations ............. 33.9%
AA ............................ 11.7% Water & Sewer ................... 17.5%
A ............................. 5.6% Education ....................... 8.5%
BBB ........................... 9.2% Refunded/Escrowed ............... 7.2%
BB ............................ 2.3% State Appropriated .............. 6.0%
Non-rated ..................... 3.5%
Short-term Obligations ........ 1.7%
(1) A portion of the Fund's income may be subject to the alternative minimum
tax.
(2) The 30-day SEC yields on July 31, 1998, reflect the portfolio's earning
power, net of expenses, and is expressed as an annualized percentage of the
public offering price at the end of the period. If the Distributor had not
waived or borne certain Fund expenses, the SEC yield for Class C shares
would have been 3.28%.
(3) Taxable-equivalent SEC yields are based on the combined maximum effective
43.95% federal and Ohio state income tax rates.
(4) Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Distributor. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
The Fund may at times purchase tax-exempt securities at a discount. Some or
all of this discount may be included in the Fund's ordinary income, and will
be taxable when distributed.
(5) Quality and sector breakdowns are calculated as a percentage of total
investments, including short-term obligations. Because the Fund is actively
managed, there can be no guarantee the Fund will continue to maintain these
quality and sector breakdowns in the future.
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<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
----------------------------
[Photo of Stephen E. Gibson]
----------------------------
In June 1998, Harold Cogger retired as president of Colonial Ohio Tax-Exempt
Fund. I would like to take this opportunity to thank him for his guidance over
the past few years and wish him well. As the new president of the Fund, I am
pleased to present the semiannual report for Colonial Ohio Tax-Exempt Fund for
the six-month period ended July 31, 1998.
Conditions for fixed-income investments varied during the period. Early on,
interest rates were volatile, based on uncertainty over the effects of the Asian
economic crisis on the U.S. economy. In response, bond prices rose. However,
reports of stronger-than-expected economic growth during the spring had
investors fearing the Federal Reserve Board might raise rates. In response, bond
prices fell. This environment prevailed until the final months of the period,
when weaker economic numbers hinting at slower growth encouraged fixed-income
investors.
Like the broader bond market, the tax-exempt market also experienced alternately
rising and declining prices. Supply and demand factors contributed to this
volatility. Lower interest rates resulted in an increased supply in municipal
bonds that the market initially found difficult to absorb. However, as prices
declined, investor demand increased again, pushing prices back up during the
second half of the period.
For investors seeking competitive levels of tax-free income and the potential
for long-term price appreciation, Colonial Ohio Tax-Exempt Fund remains a
suitable option for their investment portfolios.
The following report will provide you with more specific information on your
Fund's performance and the municipal bond market. Thank you for choosing
Colonial Ohio Tax-Exempt Fund and for giving us the opportunity to serve your
investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
September 10, 1998
Because economic and market conditions change frequently, there can be no
assurance that the trends described above or on the following pages will
continue.
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<PAGE>
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PORTFOLIO MANAGEMENT REPORT
WILLIAM LORING is portfolio manager of Colonial Ohio Tax-Exempt Fund. Mr. Loring
is vice president of Colonial Management Associates, Inc. and has managed
various Colonial municipal bond funds since 1986.
VARIABLE ECONOMIC AND MARKET CONDITIONS PREVAILED
Conditions for fixed-income investments varied during the period as investors
weighed the fundamental strength of the U.S. economy against the potential for
an economic slowdown caused by the crisis in Southeast Asia. Market sentiment
regarding the likelihood of an interest rate increase by the Federal Reserve
Board changed several times during the period. Uncertainty about the domestic
economy's ability to produce continued growth without inflation caused bond
prices to alternately rise and fall for much of the period. Bond prices rallied
modestly near the end of July as the Federal Reserve Board signaled that no
change in interest rates was imminent.
Like the broader bond market, the tax-exempt market also experienced alternately
declining and rising prices. Supply and demand factors contributed to this
volatility. Lower interest rates resulted in an increased supply of municipal
bonds that the market initially found difficult to absorb. However, as prices
declined, investor demand increased again, pushing prices back up during the
second half of the period.
FUND WAS POSITIONED TO BENEFIT FROM DECLINING INTEREST RATES
Based on our long-term outlook for low inflation and modest economic growth, we
structured the portfolio to take advantage of a potential decline in interest
rates. As we expected, the bond market rally of late 1997 continued in early
1998. The portfolio benefited from its holdings in non-callable bonds, which
tend to perform well in a declining-rate environment. However, over the
remainder of the period, bond prices were volatile, reflecting investors'
changing expectations about the strength and direction of the nation's economy.
This unexpected volatility had a negative impact on the overall bond market and
had a somewhat dampening effect on the Fund's non-callable holdings.
For the six months ended July 31, 1998, the total return for Class A shares was
1.10%, based on net asset value.
OHIO'S ECONOMY CONTINUES TO SHOW STRENGTH
Ohio enjoyed stronger than forecasted economic growth during the fiscal year.
Record low unemployment, low inflation and sound growth in personal income all
contributed to the State's increased level of financial reserves. The State's
labor market continued to reflect gains in the economy, particularly in the
service and construction sectors. Overall, the State's unemployment rate is the
lowest it has been since the mid-1970s. However, the State's significant export
economy in the automotive and durable goods sectors may be vulnerable to the
economic crisis in Southeast Asia. Therefore, we have emphasized both industrial
and geographic diversification among the portfolio's investments to lessen any
potential overdependence on sectors or regions with a high concentration of
exports. We sought value in industries such as health care, technology and
revenue-backed essential services, as well as in regions with higher
concentrations of non-manufacturing employment.
OUTLOOK FOR A POSITIVE ECONOMIC AND MARKET ENVIRONMENT
Our long-term outlook remains positive. We expect that low inflation and modest
economic growth will continue. Sustained high levels of productivity and global
competition are likely to keep inflation pressure low. The economic slowdown in
Asia should keep the U.S. economy from growing too fast. The current federal
budget surplus may limit the government's need to borrow money, and thus, the
need to issue Treasury securities. This could help create higher demand for
alternative fixed-income investments, including tax-exempt bonds.
Considering these factors, the Fund will remain positioned for a declining
interest rate environment. However, we do anticipate some variability in
interest rates in the months to come. Therefore, we will continue to actively
manage all aspects of the Fund to decrease the potential negative effects of
rate volatility.
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<PAGE>
COLONIAL OHIO TAX-EXEMPT FUND'S INVESTMENT PERFORMANCE VS.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
Growth of $10,000 from 7/31/88 - 7/31/98
Based on NAV and POP for Class A Shares
Date NAV POP LEHMAN
- ------------------ ------- ------- -------
July, 1988 $10,000 $ 9,425 $10,000
October, 1988 10,423 9,928 10,369
January, 1989 10,716 10,207 10,594
April, 1989 10,823 10,309 10,697
July, 1989 11,195 10,663 11,218
October, 1989 11,167 10,636 11,210
January, 1990 11,274 10,738 11,445
April, 1990 11,284 10,748 11,467
July, 1990 11,897 11,332 11,995
October, 1990 11,878 11,314 12,042
January, 1991 12,312 11,727 12,503
April, 1991 12,607 12,008 12,785
July, 1991 12,780 12,173 13,043
October, 1991 13,196 12,570 13,507
January, 1992 13,543 12,899 13,867
April, 1992 13,682 13,032 14,000
July, 1992 14,488 13,799 14,835
October, 1992 14,234 13,558 14,641
January, 1993 14,817 14,113 15,230
April, 1993 15,305 14,578 15,772
July, 1993 15,623 14,881 16,146
October, 1993 16,108 15,343 16,702
January, 1994 16,472 15,690 17,098
April, 1994 15,398 14,667 16,112
July, 1994 15,748 15,000 16,449
October, 1994 15,237 14,513 15,975
January, 1995 15,750 15,002 16,489
April, 1995 16,311 15,536 17,184
July, 1995 16,555 15,768 17,744
October, 1995 17,243 16,424 18,345
January, 1996 17,983 17,129 18,971
April, 1996 17,364 16,539 18,550
July, 1996 17,759 16,915 18,914
October, 1996 18,253 17,386 19,391
January, 1997 18,477 17,600 19,700
April, 1997 18,481 17,603 19,780
July, 1997 19,638 18,705 20,854
October, 1997 19,746 18,808 21,038
January, 1998 20,432 19,462 21,692
April, 1998 20,215 19,255 21,620
July, 1998 20,658 19,676 22,103
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT MADE ON 7/31/88
As of 7/31/98
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
NAV POP NAV w/CDSC NAV w/CDSC
- --------------------------------------------------------------------------------
$20,658 $19,676 $19,756 $19,756 $20,562 $20,562
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
As of 7/31/98
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
INCEPTION 9/26/86 8/4/92 8/1/97
NAV POP NAV w/CDSC NAV w/CDSC
- --------------------------------------------------------------------------------
1 year 5.19% 0.20% 4.39% (0.60)% 4.71% 3.71%
- --------------------------------------------------------------------------------
5 years 5.75 4.72 4.96 4.62 5.65 5.65
- --------------------------------------------------------------------------------
10 years 7.52 7.00 7.05 7.05 7.47 7.47
- --------------------------------------------------------------------------------
Past performance cannot predict future results. Returns and value of an
investment will vary resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charges or contingent deferred sales charges (CDSC). Public
offering price (POP) returns include the maximum sales charge of 4.75% for Class
A shares. The CDSC returns reflect the maximum charge of 5% for one year, and 2%
for five years for Class B shares, and 1% for one year for Class C shares.
Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Advisor or Distributor. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
Class B and C share (newer class shares) performance information includes
returns of the Fund's Class A shares (the oldest existing fund class) for
periods prior to the inception dates of the newer class shares. These Class A
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between Class A shares and the newer class shares. Had the expense
differential been reflected, the returns for periods prior to the inception date
of the newer class shares would have been lower.
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indexes are not investments, do not incur fees or expenses and it is not
possible to invest in an index.
- --------------------------------------------------------------------------------
<PAGE>
INVESTMENT PORTFOLIO
JULY 31, 1998 (UNAUDITED, IN THOUSANDS)
MUNICIPAL BONDS - 96.6% PAR VALUE
- --------------------------------------------------------------------------------
EDUCATION - 8.3%
EDUCATION - 8.3%
Miami University, Series 1993,
(a) 12/01/09 $ 400 $ 235
State Higher Educational Facilities Commission:
Case Western Reserve, Series 1994:
6.125% 10/01/15 1,505 1,710
6.250% 10/01/17 4,340 4,992
Ohio Dominican College, Series 1994,
6.625% 12/01/14 1,500 1,648
--------
8,585
--------
- --------------------------------------------------------------------------------
HEALTHCARE - 7.2%
HOSPITAL - 5.3%
Belmont County, East Ohio Regional
Hospital, Series 1998,
5.700% 01/01/13 500 493
Cuyahoga County, W.O. Walker Center, Inc.,
Series 1998 I,
5.250% 01/01/13 2,000 2,052
Green Springs, St. Francis Health
Care Center, Series 1994 A,
7.000% 05/15/04 700 750
Marion County, Community Hospital,
Series 1996,
6.375% 05/15/11 1,000 1,093
Miami County,
Upper Valley Medical Center, Inc.,
Series 1996 C,
6.000% 05/15/06 1,000 1,075
--------
5,463
--------
NURSING HOME - 1.9%
Marion County,
United Church Homes, Inc.,
Series 1993,
6.375% 11/15/10 1,000 1,057
Montgomery County,
Grafton Oaks Limited Partners,
Series 1986,
9.750% 12/01/16 735 698
Westerville,
Health Care & Retirement Corp. of America,
Series 1989, 10.000% 01/01/08 195 197
--------
1,952
--------
- --------------------------------------------------------------------------------
HOUSING - 2.9%
MULTI-FAMILY - 1.0%
Columbus-Beckley Housing Corp.,
Section 8 Assisted Project,
7.375% 10/15/21 2 2
State Capital Corp. for Housing,
Series 1990 A,
7.500% 01/01/24 1,000 1,050
--------
1,052
--------
SINGLE FAMILY - 1.9%
State Housing Finance Agency:
Series A2, IFRN (variable series)
9.770% 03/24/31 300 336
Series 1994 B2,
6.700% 03/01/25 485 520
Series 1997 A-1,
6.050% 09/01/17 1,000 1,059
--------
1,915
--------
- --------------------------------------------------------------------------------
OTHER - 7.1%
REFUNDED/ESCROWED (B) - 7.1%
Cuyahoga County,
Judson Retirement Community,
Series 1989,
8.875% 11/15/19 500 546
Cuyahoga County,
Meridian Health System,
Series 1991,
7.000% 08/15/23 500 551
Deaconess Hospital of Cleveland,
Series 1985 C,
7.450% 10/01/18 500 550
Delaware County,
Series 1990,
7.250% 11/01/10 250 273
Franklin County,
Holy Cross Health System Corp.:
Series 1990 B,
7.650% 06/01/10 500 543
Series 1991,
6.750% 06/01/19 500 554
Greene County,
Fairview Extended Care Service, Inc.,
Series 1990 A,
10.125% 01/01/11 210 239
Hamilton County,
Sisters of Charity Health Care System, Inc.,
Series 1992 A,
6.250% 05/15/14 500 549
Montgomery County,
St. Elizabeth Medical Center,
Series B-1,
8.100% 07/01/18 500 601
Stark County,
Doctor's Hospital, Inc.,
Series 1993,
6.000% 04/01/24 1,500 1,647
State Water Development Authority,
Series 1990 I,
6.000% 12/01/16 1,000 1,101
Virgin Islands Public Finance
Authority,
Series 1992 A,
7.000% 10/01/02 125 139
--------
7,293
--------
- --------------------------------------------------------------------------------
OTHER REVENUE - 2.5%
INDUSTRIAL - 2.0%
Cuyahoga County,
Joy Technologies, Inc.,
Series 1992,
8.750% 09/15/07 500 567
State Burrows Paper Corp.,
Series 1991 6,
7.450% 06/01/03 715 766
State Sponge, Inc., Series 1989 5A,
8.375% 06/01/14 665 699
--------
2,032
--------
RETAIL - 0.5%
Lake County, North Madison Properties,
Series 1993,
8.069% 09/01/01 260 279
8.819% 09/01/11 200 229
--------
508
--------
- --------------------------------------------------------------------------------
TAX-BACKED - 45.6%
LOCAL APPROPRIATED - 3.0%
Butler County Transportation Improvement
District, Series A,
5.125% 04/01/17 1,000 998
Cleveland Stadium Project,
5.250% 11/15/12 2,000 2,055
--------
3,053
--------
LOCAL GENERAL OBLIGATIONS - 29.7%
Adams County:
Human Services Building,
7.250% 12/01/11 500 546
Local School District, Series 1995,
7.000% 12/01/15 3,000 3,722
Beavercreek Local School District,
Series 1996,
6.600% 12/01/15 2,500 2,991
Bellefontaine, Storm Water Utility,
Series I,
7.050% 06/01/11 250 269
Brecksville-Broadview Heights
School District,
Series 1996,
6.500% 12/01/16 1,750 1,991
Cleveland,
5.750% 08/01/12 500 549
5.750% 08/01/15 1,000 1,095
Columbus School District,
Series 1993,
(a) 12/01/05 2,400 1,730
Crooksville,
Exempted Village School District,
7.375% 12/01/07 25 29
Cuyahoga County, Jail Facilities:
Series 1993 A,
(a) 10/01/12 1,000 496
Series 1993,
5.250% 10/01/13 3,000 3,141
Eastern School District,
Brown & Highland Counties,
Series 1995,
6.250% 12/01/17 1,160 1,342
Fairborn,
Library Improvement,
Series 1991,
7.200% 10/01/11 1,170 1,311
Gahanna-Jefferson City School District
Series 1993,
(a) 12/01/10 840 465
(a) 12/01/11 795 414
Greater Cleveland Regional
Transportation Authority,
Series 1998,
5.375% 12/01/14 1,000 1,036
Hilliard School District,
Series 1995 A,
(a) 12/01/12 2,505 1,232
Kings County Local School District,
Series 1995,
7.500% 12/01/16 2,110 2,735
Massillon City School District,
Series 1994,
(a) 12/01/08 1,000 618
(a) 12/01/09 1,000 587
(a) 12/01/11 1,000 520
Newark,
Series 1998,
(a) 12/01/11 1,495 778
Richland County,
Series 1995,
6.950% 12/01/11 275 319
Shaker Heights School District,
Series 1990 A,
7.100% 12/15/10 750 893
Strongsville School District
Series 1996,
6.500% 12/01/13 1,500 1,711
Tri-County North Local School
District,
8.125% 12/01/06 75 91
--------
30,611
--------
SPECIAL NON-PROPERTY TAX - 3.4%
Commonwealth of Puerto Rico
Highway & Transportation Authority,
Series Y,
6.250% 07/01/14 3,000 3,469
--------
STATE APPROPRIATED - 5.9%
PR Commonwealth of Puerto Rico
Public Buildings Authority,
Series 1993 M,
5.700% 07/01/16 2,500 2,613
State Building Authority, William Green
Building, Series 1993 A,
4.750% 04/01/14 3,600 3,488
--------
6,101
--------
STATE GENERAL OBLIGATIONS - 3.6%
PR Commonwealth of Puerto Rico
Aqueduct & Sewer Authority,
Series 1995,
6.250% 07/01/13 1,500 1,731
Ohio State Infrastructure,
5.250% 02/01/12 1,500 1,551
State,
Series 1992,
6.100% 08/01/12 380 432
--------
3,714
--------
- --------------------------------------------------------------------------------
TRANSPORTATION - 1.3%
AIR TRANSPORTATION - 1.1%
Dayton,
Emery Air Freight Facilities,
Series 1993 F,
6.050% 10/01/09 1,000 1,083
--------
TRANSPORTATION - 0.2%
Cleveland-Cuyahoga County Port Authority,
C & P Docks Project,
6.000% 03/01/07 250 256
--------
- --------------------------------------------------------------------------------
UTILITY - 21.8%
INDEPENDENT POWER PRODUCER - 1.1%
State Air Quality Development Authority,
JMG Funding Ltd., Series 1994,
6.375% 01/01/29 1,000 1,090
--------
INVESTOR OWNED - 1.5%
State Air Quality Development Authority,
JMG Funding Project,
5.625% 01/01/23 1,000 1,039
Toledo Edison Co., Series 1990 B,
8.000% 05/15/19 500 532
--------
1,571
--------
MUNICIPAL ELECTRIC - 2.0%
Cleveland, Public Power Co.,
Series 1994 A:
(a) 11/15/12 2,250 1,109
(a) 11/15/13 2,000 932
--------
2,041
--------
WATER & SEWER - 17.2%
Alliance Water Works Revenue,
Series 1998,
5.000% 11/15/20 1,500 1,462
Cleveland Waterworks,
Series 1993 G,
5.500% 01/01/21 7,000 7,429
Defiance,
Waterworks Systems Improvement,
Series 1998,
5.650% 12/01/18 1,000 1,058
Lakewood,
Water & Sewer Systems Revenue,
5.850% 07/01/20 2,405 2,661
State Water Development Authority,
Water Control Loan Fund,
5.500% 06/01/12 2,000 2,111
Toledo Waterworks:
Series 1996:
6.250% 11/15/09 1,050 1,182
6.250% 11/15/10 1,130 1,260
Warren Waterworks,
Series 1997,
5.500% 11/01/15 500 533
--------
17,696
--------
TOTAL MUNICIPAL BONDS (cost of $91,667) 99,485
--------
OPTIONS - 0.0% CONTRACTS
- --------------------------------------------------------------------------------
September 1998 Treasury Bond Puts,
Strike price 120, expiration 8/22/98 6,000 6
September 1998 Treasury Bond Calls,
Strike price 124, expiration 8/22/98 7,000 20
--------
TOTAL OPTIONS (cost of $125) 26
--------
TOTAL INVESTMENTS - 96.6% (cost of $91,792) (c) 99,511
--------
SHORT-TERM OBLIGATIONS - 1.7% PAR VALUE
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (d)
FL Pinellas County Health Facilities Authority,
Series 1985,
3.500% 12/01/15 100 100
NC Halifax County Industrial Facilities
& Pollution Control Authority,
Westmoreland Coal Co.,
3.750% 12/01/19 500 500
NM Farmington,
Arizona Public Service Co.,
Four Corners Project, Series 1994 B,
3.550% 09/01/24 1,000 1,000
WA State Health Care Facilities
Authority,
3.600% 01/01/18 150 150
--------
TOTAL SHORT-TERM OBLIGATIONS 1,750
--------
OTHER ASSETS & LIABILITIES, NET - 1.7% 1,691
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $102,952
========
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) The Fund has been informed that each issuer has placed direct obligations of
the U.S. Government in an irrevocable trust, solely for the payment of the
interest and principal.
(c) Cost for federal income tax purposes is the same.
(d) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of July 31, 1998.
Acronym Name
-------------- -----------------------------------
IFRN Inverse Floating Rate Note
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JULY 31, 1998 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $91,792) $ 99,511
Short-term obligations 1,750
--------
101,261
Cash $ 1,893
Receivable for:
Interest 1,049
Investments sold 518
Fund shares sold 58
Other 5 3,523
-------- --------
Total Assets 104,784
LIABILITIES
Payable for:
Investments purchased 1,546
Distributions 132
Fund shares repurchased 79
Accrued:
Deferred Trustees fees 3
Other 72
-------
Total Liabilities 1,832
--------
NET ASSETS $102,952
========
Net asset value & redemption price per share -
Class A ($59,834/7,884) $7.59(a)
========
Maximum offering price per share - Class A
($7.59/0.9525) $7.97(b)
========
Net asset value & offering price per share -
Class B ($42,857/5,649) $7.59(a)
========
Net asset value & offering price per share -
Class C ($261/34) $7.59(a)
========
COMPOSITION OF NET ASSETS
Capital paid in $ 96,899
Overdistributed net investment income (113)
Accumulated net realized loss (1,553)
Net unrealized appreciation 7,719
--------
$102,952
========
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JULY 31, 1998
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Interest $ 2,902
EXPENSES
Management fee $265
Service fee 78
Distribution fee - Class B 167
Distribution fee - Class C 1
Transfer agent fee 83
Bookkeeping fee 23
Trustees fee 7
Audit fee 10
Legal fee 1
Custodian fee 3
Registration fee 10
Reports to shareholders 4
Other 4
----
656
Fees waived by the Adviser (14)
Fees waived by the Distributor - Class C (a) 642
---- -----
Net Investment Income 2,260
-----
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 552
Closed future contracts (4)
----
Net Realized Gain 548
Net unrealized depreciation (1,936)
-------
Net Loss (1,388)
-------
Increase in Net Assets from Operations $ 872
=======
(a) Rounds to less than one.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six months ended Year ended
(in thousands) July 31 January 31
---------------- ----------
INCREASE (DECREASE) IN NET ASSETS 1998 1998(a)
Operations:
Net investment income $ 2,260 $ 5,000
Net realized gain 548 647
Net unrealized appreciation (depreciation) (1,936) 5,143
-------- --------
Net Increase from Operations 872 10,790
Distributions:
From net investment income - Class A (1,426) (3,101)
In excess of net investment income - Class A (70) --
In excess of net realized gains - Class A (204) (89)
From net investment income - Class B (874) (1,958)
In excess of net investment income - Class B (43) --
In excess of net realized gains - Class B (146) (66)
From net investment income - Class C (5) (2)
In excess of net investment income - Class C (b) --
In excess net realized gains - Class C (1) (b)
-------- --------
(1,897) 5,574
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 939 1,192
Value of distributions reinvested - Class A 1,096 1,861
Cost of shares repurchased - Class A (3,962) (8,603)
-------- --------
(1,927) (5,550)
-------- --------
Receipts for shares sold - Class B 1,457 1,981
Value of distributions reinvested - Class B 720 1,235
Cost of shares repurchased - Class B (4,841) (8,728)
-------- --------
(2,664) (5,512)
-------- --------
Receipts for shares sold - Class C 129 129
Value of distributions reinvested - Class C 4 2
Cost of shares repurchased - Class C (b) (b)
-------- --------
133 131
-------- --------
Net Decrease from Fund Share
Transactions (4,458) (10,931)
-------- --------
Total Decrease (6,355) (5,357)
NET ASSETS
Beginning of period 109,307 114,664
-------- --------
End of period (net of overdistributed
and including undistributed net investment
income of $113 and $45, respectively) $102,952 $109,307
======== ========
(a) Class C shares were initially offered on August 1, 1997.
(b) Rounds to less than one.
Continued on next page.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
(Unaudited)
Six months ended Year ended
July 31 January 31
---------------- ----------
1998 1998(a)
NUMBER OF FUND SHARES
Sold - Class A 123 160
Issued for distributions reinvested - Class A 144 249
Repurchased - Class A (519) (1,153)
-------- --------
(252) (744)
-------- --------
Sold - Class B 202 266
Issued for distributions reinvested - Class B 83 165
Repurchased - Class B (634) (1,172)
-------- --------
(349) (741)
-------- --------
Sold - Class C 17 17
Issued for distributions reinvested - Class C (b) (b)
Repurchased - Class C (b) (b)
-------- --------
17 17
-------- --------
(a) Class C shares were initially offered on August 1, 1997.
(b) Rounds to less than one.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In the opinion of management of Colonial Ohio Tax-Exempt Fund (the Fund), a
series of Colonial Trust V, the accompanying financial statements contain all
normal and recurring adjustments necessary for the fair presentation of the
financial position of the Fund at July 31, 1998, and the results of its
operations, the changes in its net assets and the financial highlights for the
six months then ended.
NOTE 2. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: The Fund is a non-diversified portfolio of a Massachusetts
business trust, registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company. The Fund's investment objective is
to seek as high a level of after-tax total return, as is consistent with prudent
risk, by pursuing current income exempt from federal and Ohio state personal
income tax and opportunities for long-term appreciation from a portfolio
primarily invested in investment-grade municipal bonds. The Fund may issue an
unlimited number of shares. The Fund offers three classes of shares: Class A,
Class B, and Class C. Class A shares are sold with a front-end sales charge and
a 1.00% contingent deferred sales charge on redemptions made within eighteen
months on an original purchase of $1 million to $5 million. Class B shares are
subject to an annual distribution fee and a contingent deferred sales charge.
Class B shares will convert to Class A shares when they have been outstanding
approximately eight years. Class C shares are subject to a contingent deferred
sales charge on redemptions made within one year after purchase and an annual
distribution fee.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies that are consistently followed by the Fund in
the preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Debt securities generally are valued by a
pricing service based upon market transactions for normal, institutional-size
trading units of similar securities. When management deems it appropriate, an
over-the-counter or exchange bid quotation is used.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and asking price.
Futures contracts are valued based on the difference between the last sale price
and the opening price of the contract.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions for which market quotations are not readily available are
valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B and Class C distribution fees), and realized
and unrealized gains (losses), are allocated to each class proportionately on a
daily basis for purposes of determining the net asset value of each class.
Class B and Class C per share data and ratios are calculated by adjusting the
expense and net investment income per share data and ratios for the Fund for the
entire period by the distribution fee applicable to Class B and Class C shares
only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable and tax-exempt
income, no federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; market
discount is not accreted. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records distributions daily
and pays monthly.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is the
investment Adviser of the Fund and furnishes accounting and other services and
office facilities for a monthly fee based on the Fund's pro-rata portion of the
combined average net assets of the funds constituting Trust V as follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $2 billion 0.50%
Over $2 billion 0.45%
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT FEE: Colonial Investors Service Center, Inc., (the Transfer
Agent), an affiliate of the Adviser, provides shareholder services for a monthly
fee equal to 0.13% annually of the Fund's average net assets and receives
reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds
Distributor, Inc., formerly Liberty Financial Investments, Inc., (the
Distributor), a subsidiary of the Adviser, is the Fund's principal underwriter.
During the six months ended July 31, 1998, the Fund has been advised that the
Distributor retained net underwriting discounts of $4,273 on sales of the Fund's
Class A shares and received contingent deferred sales charges (CDSC) of none,
$69,703 and none on Class A, Class B and Class C share redemptions,
respectively.
The Fund has adopted a 12b-1 plan which requires the payment of a distribution
fee to the Distributor equal to 0.75% annually of the Fund's average net assets
attributable to Class B and Class C shares. The Distributor has voluntarily
agreed, until further notice, to waive a portion of the Class C share
distribution fee so that it will not exceed 0.45% annually. The plan also
requires the payment of a service fee to the Distributor as follows:
Valuation of shares Annual
outstanding on the 20th of Fee
each month which were issued Rate
---------------------------- ----
Prior to December 1, 1994 0.10%
On or after December 1, 1994 0.25%
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service and distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 0.75% annually of the Fund's average net
assets.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: For the six months ended July 31, 1998, purchases and sales
of investments, other than short-term obligations were $10,434,886 and
$17,552,273, respectively.
Unrealized appreciation (depreciation) at July 31, 1998, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $7,918,233
Gross unrealized depreciation (199,137)
----------
Net unrealized appreciation $7,719,096
==========
OTHER: There are certain risks arising from geographic concentration in any
state. Certain revenue or tax related events in a state may impair the ability
of certain issuers of municipal securities to pay principal and interest on
their obligations.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
The Fund may purchase or sell municipal and Treasury bond futures contracts and
purchase and write options on futures. The Fund will invest in these instruments
to hedge against the effects of changes in the value of portfolio securities due
to anticipated changes in interest rates and/or market conditions, for duration
management, or when the transactions are economically appropriate to the
reduction of risk inherent in the management of the Fund and not for trading
purposes. The use of futures contracts and options involves certain risks which
include (1) imperfect correlation between the price movement of the instruments
and the underlying securities, (2) inability to close out a position due to
different trading hours, or the temporary absence of a liquid market for either
the instrument or the underlying securities or (3) an inaccurate prediction by
the Adviser of the future direction of interest rates. Any of these risks may
involve amounts exceeding the variation margin recognized in the Fund's
Statement of Assets and Liabilities at any given time.
NOTE 5. LINE OF CREDIT
- --------------------------------------------------------------------------------
The Fund may borrow up to 33 1/3% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the six months ended July 31, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
(Unaudited)
Six months ended July 31
---------------------------------------
1998
Class A Class B Class C
------- ------- -------
Net asset value -
Beginning of period $ 7.720 $ 7.720 $7.720
------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.176 0.146 0.158(b)
Net realized and unrealized gain (loss) (0.093) (0.093) (0.093)
------- ------- ------
Total from Investment Operations 0.083 0.053 0.065
------- ------- ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.178) (0.150) (0.161)
In excess of net investment income (0.009) (0.007) (0.008)
In excess of net realized gains (0.026) (0.026) (0.026)
------- ------- ------
Total Distributions
Declared to Shareholders (0.213) (0.183) (0.195)
------- ------- ------
Net asset value - End of period $ 7.590 $ 7.590 $7.590
======= ======= ======
Total return(c)(d)(e) 1.10% 0.70% 0.86%
======= ======= ======
RATIOS TO AVERAGE NET ASSETS
Expenses(f)(g) 0.90% 1.65% 1.35%(b)
Net investment income(f)(g) 4.59% 3.84% 4.14%(b)
Fees and expenses waived or borne
by the Adviser(f)(g) 0.03% 0.03% 0.03%
Portfolio turnover(e) 10% 10% 10%
Net assets at end of period (000) $59,834 $42,857 $ 261
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.001 $ 0.001 $ 0.001
(b) Net of fees waived by the Distributor which amounted to $0.011 per share and
30%.
(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 and Distributor 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.
(g) Annualized
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period
are as follows:
<CAPTION>
Year ended January 31
--------------------------------------------------------------------
1998 1997
Class A Class B Class C(b) Class A Class B
------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.340 $ 7.340 $7.610 $ 7.510 $ 7.510
------- ------- ------ ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income(a) 0.362 0.306 0.162(c) 0.372 0.318
Net realized and
unrealized gain (loss) 0.394 0.394 0.124 (0.179) (0.179)
------- ------- ------ ------- -------
Total from Investment
Operations 0.756 0.700 0.286 0.193 0.139
------- ------- ------ ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.365) (0.309) (0.165) (0.363) (0.309)
From net realized gains (0.011) (0.011) (0.011) -- --
------- ------- ------ ------- -------
Total Distributions
Declared to Shareholders (0.376) (0.320) (0.176) (0.363) (0.309)
------- ------- ------ ------- -------
Net asset value -
End of period $ 7.720 $ 7.720 $7.720 $ 7.340 $ 7.340
======= ======= ====== ======= =======
Total return(d)(e) 10.58% 9.76% 3.81%(f) 2.75% 1.98%
======= ======= ====== ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 0.89%(g) 1.64%(g) 1.34%(c)(g)(h) 0.88%(g) 1.63%(g)
Net investment income 4.85%(g) 4.10%(g) 4.21%(c)(g)(h) 5.09%(g) 4.34%(g)
Fees and expenses waived
or borne by the Adviser 0.05%(g) 0.05%(g) 0.07%(g)(h) 0.04%(g) 0.04%(g)
Portfolio turnover 27% 27% 27% 31% 31%
Net assets at end
of period (000) $62,844 $46,330 $ 133 $65,190 $49,474
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.004 $ 0.004 $0.004 $ 0.003 $ 0.003
(b) Class C shares were initially offered on August 1, 1997. Per share amounts
reflect activity from that date.
(c) Net of fees waived by the Distributor which amounted to $0.011 per share and
0.30%.
(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 and Distributor not waived or reimbursed a portion of
expenses, total returns 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>
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended January 31
-------------------------------------------------
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
$ 6.930 $ 6.930 $ 7.670 $ 7.670
------- ------- ------- -------
0.375 0.321 0.401 0.348
0.585 0.585 (0.745) (0.745)
------- ------- ------- -------
0.960 0.906 (0.344) (0.397)
------- ------- ------- -------
(0.380) (0.326) (0.396) (0.343)
-- -- -- --
------- ------- ------- -------
(0.380) (0.326) (0.396) (0.343)
------- ------- ------- -------
$ 7.510 $ 7.510 $ 6.930 $ 6.930
======= ======= ======= =======
14.18% 13.34% (4.38)% (5.10)%
======= ======= ======= =======
0.85%(g) 1.60%(g) 0.72% 1.47%
5.19%(g) 4.44%(g) 5.71% 4.96%
0.11%(g) 0.11%(g) 0.16% 0.16%
31% 31% 33% 33%
$74,383 $56,160 $72,123 $53,547
$ 0.008 $ 0.008 $ 0.011 $ 0.011
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended January 31
-------------------------
1994
Class A Class B
------- -------
Net asset value - Beginning of period $ 7.290 $ 7.290
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.406 0.351
Net realized and unrealized gain (loss) 0.389 0.389
------- -------
Total from Investment Operations 0.795 0.740
------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.411) (0.356)
From capital paid in (0.004) (0.004)
------- -------
Total Distributions
Declared to Shareholders (0.415) (0.360)
------- -------
Net asset value - End of period $ 7.670 $ 7.670
======= =======
Total return(b)(c) 11.17% 10.36%
======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 0.82% 1.57%
Net investment income 5.34% 4.59%
Fees and expenses waived or borne by
the Adviser 0.09% 0.09%
Portfolio turnover 3% 3%
Net assets at end of period (000) $79,394 $51,212
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.007 $ 0.007
(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.
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Ohio Tax-Exempt Fund is:
Liberty Funds Services, Inc.*
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Ohio Tax-Exempt Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call 1-800-426-3750 and
additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Ohio Tax-Exempt Fund.
It may also be used as sales literature when preceded or accompanied by the
current prospectus which provides details of sales charges, investment
objectives and operating policies of the Fund and the most recent copy of
Liberty Funds Distributor's Performance Update.
*Effective October 1, 1998, Colonial Investors Service Center, Inc. -- the
Transfer Agent for Colonial, Stein Roe Advisor and Newport Funds -- will change
its name to Liberty Funds Services, Inc.
<PAGE>
- --------------------------------------------------------------------------------
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
ROBERT L. SULLIVAN
Retired Partner, KPMG Peat Marwick LLP (formerly Management Consultant, Saatchi
and Saatchi Consulting Ltd. and Principal and International Practice Director,
Management Consulting, Peat Marwick Main & Co.)
[Logo] LIBERTY
COLONIAL FUNDS o STEIN ROE ADVISOR FUNDS o NEWPORT FUNDS
Liberty Funds Distributor, Inc. (C)1998
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
OH-03/726F-0798 (9/98) 98/927
