<PAGE>
[graphic omitted]
COLONIAL FLORIDA TAX-EXEMPT FUND Annual report
January 31, 1998
----------------------------
NOT FDIC MAY LOSE VALUE
INSURED NO BANK GUARANTEE
----------------------------
<PAGE>
COLONIAL FLORIDA TAX-EXEMPT FUND HIGHLIGHTS
February 1, 1997- January 31, 1998
INVESTMENT OBJECTIVE: Colonial Florida 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 income tax and provides the opportunity for long-term
appreciation from a portfolio primarily invested in investment grade municipal
bonds. Fund shares are also intended to be exempt from the Florida intangibles
tax.
PORTFOLIO MANAGER COMMENTARY: " The Fund outperformed its peer group over the
last 12 months. We have been restructuring our portfolio from what had been a
defensive position to one that allowed shareholders to benefit from the recent
rally in the bond market. We continue to search for high quality bonds that
offer competitive income and the potential for long-term total return."
-- Maureen Newman
COLONIAL FLORIDA TAX-EXEMPT FUND PERFORMANCE
- -------------------------------------------------------------------------------
CLASS A CLASS B CLASS C(1)
Inception date 2/1/93 2/1/93 8/1/97
- -------------------------------------------------------------------------------
Distributions declared per share(2) $0.389 $0.333 $0.174
- -------------------------------------------------------------------------------
SEC yields on 1/31/98(3) 3.92% 3.35% 3.66%
- -------------------------------------------------------------------------------
Taxable-equivalent SEC yields(4) 6.49% 5.55% 6.06%
- -------------------------------------------------------------------------------
12-month total returns, assuming 10.37% 9.55% 3.35%
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)(5)
- -------------------------------------------------------------------------------
Net asset value per share on 1/31/98 $7.79 $7.79 $7.79
- -------------------------------------------------------------------------------
(1) Class C share total return is cumulative since inception on August 1, 1997.
(2) A portion of the Fund's income may be subject to the alternative minimum
tax.
(3) The 30-day SEC yields on 1/31/98 reflect the portfolio's earning power, net
of expenses, expressed as an annualized percentage of the public offering
price per share at the end of the period. If the Adviser or Distributor had
not waived or borne certain Fund expenses, SEC yields would have been 3.76%
for Class A shares, 3.19% for Class B shares and 3.19% for Class C shares.
(4) Taxable-equivalent SEC yields are based on the maximum effective 39.6%
federal income tax rate.
(5) Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Adviser or 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, and some
or all of this discount may be included in the Fund's ordinary income which
will be taxable when distributed.
QUALITY BREAKDOWN TOP FIVE SECTORS
(as of 1/31/98) (as of 1/31/98)
- ------------------------------ ------------------------------
AAA 66.2% Water & Sewer ..........17.3%
AA 14.3% General Obligations ....14.1%
A 8.7% Hospitals ..............13.6%
BBB 5.1% Municipal Electric .....10.2%
Non-rated 2.4% Airport ................10.1%
Short-term obligations 3.3%
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.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Harold W. Cogger]
I am pleased to present your Fund's annual report for the year ended January 31,
1998. This report provides information on the investment environment of the last
12 months and on the performance of your Fund.
With the national economy continuing its strong growth in early 1997, the
Federal Reserve Board made a preemptive strike against inflation by raising
short-term interest rates in March. This contributed to a decline in bond prices
which did not halt until May. As it became apparent that economic growth was not
leading to higher inflation rates, the bond market rallied in the late spring
and early summer. Bond prices kept rising as the Federal budget deficit for the
year was smaller than expected, and concerns about Asian economic instability
led to a belief that reduced demand from Asia, along with lower prices on goods
imported from Asia, would continue to limit inflationary pressures. The Asian
market crisis first made headlines in mid-1997, and the uncertainty of its
impact on the U.S. economy caused the yield on the long Treasury bond to fall
below six percent in December.
Municipal bond prices outperformed Treasury prices during the first six months
of the period. However, in the second half of the year, municipal bonds slightly
underperformed Treasurys for two reasons: first, lower bond yields diminished
retail demand; second, the supply of municipal bonds increased as issuers took
advantage of the lower interest rates by refunding their bonds.
Looking ahead, we expect moderate economic growth and low inflation, factors
that lead us to be moderately optimistic about the bond market environment in
1998.
Since the Fund's inception, the Adviser has voluntarily waived certain expenses.
The Adviser is continuing to waive certain fees; however, effective January 1,
1998, it is doing so at a lower rate.
During the last 12 months, your Fund has provided competitive, tax-exempt income
generated by well-researched investments in a diversified range of municipal
bonds. Colonial Florida Tax-Exempt Fund continues to offer you long-term total
return potential and the opportunity to share in Florida's economic expansion.
As always, we thank you for the opportunity to help meet your investment goals.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
March 11, 1998
Because market conditions change frequently, there can be no assurance that the
trends described in this report will continue.
<PAGE>
PORTFOLIO MANAGEMENT REPORT
MAUREEN NEWMAN is portfolio manager of Colonial Florida Tax-Exempt Fund. Ms.
Newman is vice president of Colonial Management Associates, Inc. and is the
manager of Tax-Exempt Credit Research.
POSITIONED FOR SOLID PERFORMANCE
For the 12 months ended January 31, 1998, the total return for Class A shares
was 10.37%, based on net asset value. This placed it in the top half of Florida
tax-exempt funds as measured by Lipper Analytical Services, Inc. The average
Florida fund total return was 9.74%.(1)
Bond prices declined in the beginning of the period, as the Federal Reserve
Board raised short-term interest rates in response to concerns that continued
economic growth would lead to higher inflation. However, those concerns proved
to be unwarranted as inflation rates remained low, so the bond market rallied
during the second half of the year. A change in our strategy allowed us to take
advantage of that market momentum, and shareholders benefited from that change.
REPOSITIONING THE FUND'S PORTFOLIO
At the beginning of 1997, the Fund was defensively structured in an effort to
lower its volatility. During the course of the year, however, we increased our
position in lower coupon bonds, which generally offer greater potential for
price appreciation during market rallies. When bond prices went up, the Fund's
performance improved significantly. With a steady supply of bonds being issued
to meet Florida's growing infrastructure needs, we continue to examine all new
issues to find high quality bonds we believe offer good income and the potential
for long-term appreciation. To increase yield to shareholders and take advantage
of relative value opportunities, the Fund intends to purchase some higher-yield
bonds issued in other states. The Fund may benefit from the higher yields, but
will replace the bonds by December 31st, so the Fund will not be subject to
Florida's intangibles tax.
FLORIDA REMAINS ECONOMICALLY STRONG
The Florida economy continued its robust expansion over the last 12 months, as
reflected in the State's growing number of tourists and permanent residents. The
greater demand for schools, roads, airports and water systems means the State is
one of the nation's largest issuers of municipal bonds. The state government is
financially healthy and the increased economic activity should be able to
support the new bond issues. As Florida becomes an increasingly attractive site
for corporate relocation as well as one of the world's top tourist destinations,
our outlook for its economy and fiscal balance continues to be positive.
MANAGING FOR TOTAL RETURN IN AN ERA OF DECLINING INTEREST RATES
Over the last several months, the combination of a growing economy, a lower
Federal budget deficit and subdued inflation resulted in sharp increases in bond
prices. When interest rates go down, bond prices generally increase and that has
been the case in the current rally. This effect has been reflected in a decrease
in the size of your dividend checks over time, though the net asset value of
your shares has increased. With slower economic growth, low inflation and the
possibility of a balanced Federal budget all forecast for 1998, we expect this
trend in the bond market to continue. Despite the lower general level of
interest rates, the Fund's inflation-adjusted yield, in which the inflation rate
is subtracted from the actual yield, is attractive by historical standards. Our
goal remains unchanged: to increase your total return by carefully researching
and selecting a portfolio of primarily investment-grade municipal bonds.
(1) Source: Lipper Analytical Services, Inc. Lipper rankings are based on the
Lipper Florida Tax-Exempt Municipal Fund universe. The Fund's (Class A
shares) ranking for the one-year period is in the second quartile (rated 19
out of 61 funds) and in the second quartile for the three-year period (rated
19 out of 46 funds). Rankings do not include any sales charges. Performance
for different share classes will vary with fees associated with each class.
Past performance cannot guarantee future results.
<PAGE>
COLONIAL FLORIDA TAX-EXEMPT FUND'S INVESTMENT PERFORMANCE
Change in Value of $10,000 from 2/1/93 to 1/31/98
Based on NAV and POP for Class A Shares
and NAV and applicable CDSC for Class B Shares
CLASS A SHARES
- -------------------------------------------------------------------------------
NAV W/CDSC LEHMAN
Jan 31, 1993 $10,000 $ 9,525 $10,000
Feb 28, 1993 10,359 9,867 10,362
Mar 31, 1993 10,183 9,700 10,252
Apr 30, 1993 10,300 9,811 10,355
May 31, 1993 10,363 9,871 10,414
Jun 30, 1993 10,546 10,045 10,588
Jul 31, 1993 10,552 10,051 10,601
Aug 31, 1993 10,777 10,265 10,822
Sep 30, 1993 10,907 10,389 10,946
Oct 31, 1993 10,941 10,422 10,967
Nov 30, 1993 10,822 10,308 10,870
Dec 31, 1993 11,064 10,538 11,099
Jan 31, 1994 11,167 10,636 11,226
Feb 28, 1994 10,834 10,319 10,935
Mar 31, 1994 10,217 9,732 10,490
Apr 30, 1994 10,295 9,806 10,579
May 31, 1994 10,385 9,892 10,671
Jun 30, 1994 10,391 9,897 10,605
Jul 31, 1994 10,570 10,068 10,800
Aug 31, 1994 10,547 10,046 10,837
Sep 30, 1994 10,423 9,928 10,678
Oct 31, 1994 10,140 9,658 10,489
Nov 30, 1994 9,941 9,469 10,299
Dec 31, 1994 10,260 9,773 10,526
Jan 31, 1995 10,594 10,091 10,826
Feb 28, 1995 10,947 10,427 11,141
Mar 31, 1995 11,046 10,521 11,269
Apr 30, 1995 11,055 10,530 11,283
May 31, 1995 11,336 10,797 11,643
Jun 30, 1995 11,101 10,573 11,541
Jul 31, 1995 11,187 10,656 11,650
Aug 31, 1995 11,254 10,720 11,798
Sep 30, 1995 11,337 10,799 11,873
Oct 31, 1995 11,545 10,997 12,045
Nov 30, 1995 11,784 11,225 12,245
Dec 31, 1995 11,962 11,394 12,363
Jan 31, 1996 12,030 11,459 12,456
Feb 29, 1996 11,925 11,359 12,372
Mar 31, 1996 11,742 11,184 12,214
Apr 30, 1996 11,714 11,157 12,179
May 31, 1996 11,749 11,191 12,175
Jun 30, 1996 11,866 11,302 12,307
Jul 31, 1996 11,981 11,412 12,419
Aug 31, 1996 12,001 11,431 12,416
Sep 30, 1996 12,152 11,574 12,590
Oct 31, 1996 12,254 11,672 12,732
Nov 30, 1996 12,473 11,880 12,965
Dec 31, 1996 12,395 11,806 12,910
Jan 31, 1997 12,367 11,779 12,935
Feb 28, 1997 12,472 11,879 13,053
Mar 31, 1997 12,310 11,725 12,879
Apr 30, 1997 12,416 11,826 12,987
May 31, 1997 12,606 12,007 13,183
Jun 30, 1997 12,712 12,108 13,323
Jul 31, 1997 13,177 12,551 13,692
Aug 31, 1997 12,943 12,328 13,564
Sep 30, 1997 13,100 12,478 13,725
Oct 31, 1997 13,207 12,579 13,813
Nov 30, 1997 13,296 12,664 13,894
Dec 31, 1997 13,524 12,882 14,097
Jan 31, 1998 13,649 13,001 14,242
Class B Shares
- -------------------------------------------------------------------------------
NAV POP LEHMAN
Jan 31, 1993 $10,000 $10,000 $10,000
Feb 28, 1993 10,352 10,352 10,362
Mar 31, 1993 10,171 10,171 10,252
Apr 30, 1993 10,281 10,281 10,355
May 31, 1993 10,338 10,338 10,414
Jun 30, 1993 10,514 10,514 10,588
Jul 31, 1993 10,513 10,513 10,601
Aug 31, 1993 10,731 10,731 10,822
Sep 30, 1993 10,854 10,854 10,946
Oct 31, 1993 10,882 10,882 10,967
Nov 30, 1993 10,757 10,757 10,870
Dec 31, 1993 10,990 10,990 11,099
Jan 31, 1994 11,086 11,086 11,226
Feb 28, 1994 10,748 10,748 10,935
Mar 31, 1994 10,130 10,130 10,490
Apr 30, 1994 10,200 10,200 10,579
May 31, 1994 10,284 10,284 10,671
Jun 30, 1994 10,283 10,283 10,605
Jul 31, 1994 10,454 10,454 10,800
Aug 31, 1994 10,425 10,425 10,837
Sep 30, 1994 10,295 10,295 10,678
Oct 31, 1994 10,009 10,009 10,489
Nov 30, 1994 9,806 9,806 10,299
Dec 31, 1994 10,115 10,115 10,526
Jan 31, 1995 10,439 10,439 10,826
Feb 28, 1995 10,780 10,780 11,141
Mar 31, 1995 10,870 10,870 11,269
Apr 30, 1995 10,872 10,872 11,283
May 31, 1995 11,142 11,142 11,643
Jun 30, 1995 10,904 10,904 11,541
Jul 31, 1995 10,982 10,982 11,650
Aug 31, 1995 11,041 11,041 11,798
Sep 30, 1995 11,116 11,116 11,873
Oct 31, 1995 11,312 11,312 12,045
Nov 30, 1995 11,540 11,540 12,245
Dec 31, 1995 11,707 11,707 12,363
Jan 31, 1996 11,766 11,766 12,456
Feb 29, 1996 11,656 11,656 12,372
Mar 31, 1996 11,470 11,470 12,214
Apr 30, 1996 11,435 11,435 12,179
May 31, 1996 11,462 11,462 12,175
Jun 30, 1996 11,569 11,569 12,307
Jul 31, 1996 11,674 11,674 12,419
Aug 31, 1996 11,686 11,686 12,416
Sep 30, 1996 11,825 11,825 12,590
Oct 31, 1996 11,918 11,918 12,732
Nov 30, 1996 12,123 12,123 12,965
Dec 31, 1996 12,040 12,040 12,910
Jan 31, 1997 12,005 12,005 12,935
Feb 28, 1997 12,100 12,100 13,053
Mar 31, 1997 11,935 11,935 12,879
Apr 30, 1997 12,030 12,030 12,987
May 31, 1997 12,207 12,207 13,183
Jun 30, 1997 12,302 12,302 13,323
Jul 31, 1997 12,744 12,744 13,692
Aug 31, 1997 12,510 12,510 13,564
Sep 30, 1997 12,655 12,655 13,725
Oct 31, 1997 12,749 12,749 13,813
Nov 30, 1997 12,827 12,827 13,894
Dec 31, 1997 13,040 13,040 14,097
Jan 31, 1998 13,152 12,952 14,242
A hypothetical $10,000 investment in Class C shares made on August 1, 1997
(inception) at net asset value (NAV) would have been valued at $10,335 on
January 31, 1998. The same investment after deducting the applicable contingent
deferred sales charge (CDSC) would have grown to $10,235 on January 31, 1998.
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indexes are not investments, do not incur fees or expenses, and it is not
possible to invest in an index.
AVERAGE ANNUAL TOTAL RETURNS
As of January 31, 1998
- -------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES(1)
INCEPTION 2/1/93 2/1/93 8/1/97
NAV POP NAV W/CDSC NAV W/CDSC
- -------------------------------------------------------------------------------
1 YEAR 10.37% 5.12% 9.55% 4.55% -- --
- -------------------------------------------------------------------------------
5 YEAR 6.42 5.39 5.63 5.31 -- --
- -------------------------------------------------------------------------------
SINCE INCEPTION 6.42 5.39 5.63 5.31 3.35% 2.35%
- -------------------------------------------------------------------------------
(1) Class C share total returns are cumulative since inception on August 1,
1997.
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. NAV returns do not include sales charges
or CDSC. Public offering price (POP) returns include the maximum sales charge of
4.75%. The applicable CDSC for Class B shares is 5% for 1 year, 2% for 5 years
and 2% since inception. The CDSC for Class C shares is 1% since inception.
Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Adviser 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.
<PAGE>
INVESTMENT PORTFOLIO
JANUARY 31, 1998 (IN THOUSANDS)
MUNICIPAL BONDS - 97.1% PAR VALUE
- -------------------------------------------------------------------------------
HEALTHCARE - 14.7%
HOSPITALS - 13.7%
Lakeland,
Lakeland Regional Medical Center, Series A,
5.000% 11/15/17 $ 1,000 $ 995
Orange County Health Facilities Authority,
Orlando Regional Healthcare System,
Series 1996-A,
6.250% 10/01/16 6,000 6,989
Tampa Catholic Health East,
5.250% 11/15/12(a) 1,000 1,043
--------
9,027
--------
NURSING HOMES - 1.0%
Broward County,
Beverly Enterprises, Inc.,
9.800% 11/01/10 120 133
Collier County Industrial
Development Authority,
Beverly Enterprises, Inc., Series 1991,
10.750% 03/01/03 165 189
Escambia County,
Beverly Enterprises-Florida, Inc.,
Series 1985,
9.800% 06/01/11 115 126
Leon County,
Beverly Enterprises, Inc.,
Series 1985,
9.800% 06/01/11 90 101
Palm Beach County,
Beverly Enterprises-Florida, Inc.,
Series 1984,
10.000% 06/01/11 95 105
--------
654
--------
- -------------------------------------------------------------------------------
HOUSING - 6.4%
MULTI-FAMILY - 1.8%
Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 200 190
Florida Housing Finance Agency,
Barrington,
5.350% 12/01/27 $ 1,000 $ 998
Florida Housing Finance Agency,
Windsong Apartments,
Series 1993-C,
9.250% 01/01/19 35 28
--------
1,216
--------
SINGLE FAMILY - 4.6%
Broward County Housing Finance Authority,
Series 1995,
6.700% 02/01/28(b) 1,220 1,314
Manatee County Housing
Finance Authority,
Series 1996-1,
7.450% 05/01/27 1,550 1,758
--------
3,072
--------
- -------------------------------------------------------------------------------
OTHER - 4.1%
REFUNDED/ESCROWED(c)
Clearwater Housing Authority,
Hampton Apartments,
Series 1994,
8.250% 05/01/24 575 715
Hillsborough City Aviation Authority,
6.900% 10/01/11 695 744
Port Everglades Authority,
Series 1986,
7.125% 11/01/16 1,000 1,236
--------
2,695
--------
- -------------------------------------------------------------------------------
OTHER REVENUE - 3.5%
STATE APPROPRIATED
Commonwealth of Puerto Rico Urban
Renewal & Housing Corp.,
7.875% 10/01/04 1,500 1,602
Florida Department of Corrections,
Okeechobee Correctional Institution,
Series 1995,
6.250% 03/01/15 625 695
--------
2,297
--------
- -------------------------------------------------------------------------------
TAX-BACKED - 20.3%
SPECIAL NON-PROPERTY TAX - 6.1%
Jacksonville Excise Tax,
Series 1993,
(d) 10/01/09 $ 525 $ 308
Jacksonville Transportation System,
5.000% 07/01/13 1,000 1,020
Orange County Tourist Development Tax,
5.000% 10/01/16 1,000 1,002
Tampa Sports Authority,
Tampa Bay Arena Project,
Series 1995,
5.750% 10/01/25 1,500 1,672
--------
4,002
--------
STATE GENERAL OBLIGATIONS - 14.2%
Commonwealth of Puerto Rico:
Aqueduct & Sewer Authority,
5.000% 07/01/19 2,000 1,987
Series 1996,
6.500% 07/01/14 3,000 3,552
Florida Board of Education:
Series 1989-A,
7.250% 06/01/23 1,000 1,084
Series 1992-A,
6.400% 06/01/19(b) 2,500 2,719
--------
9,342
--------
- -------------------------------------------------------------------------------
TRANSPORTATION - 14.5%
AIRPORTS - 10.2%
Dade County,
Miami International Airport:
Series B,
5.125% 10/01/17 1,500 1,500
Series 1992-B,
6.600% 10/01/22(b) 2,000 2,215
Greater Orlando Aviation Authority,
Orlando Airport Facility,
5.125% 10/01/14 1,000 1,008
Hillsborough County Aviation Authority,
6.900% 10/01/11 805 857
Palm Beach County,
County Airport System,
7.750% 10/01/10 $ 1,000 $ 1,134
--------
6,714
--------
PORTS - 4.3%
Dade County Seaport:
Series 1995,
6.200% 10/01/09 1,000 1,157
Series 1996,
5.400% 10/01/21 1,615 1,656
--------
2,813
--------
- -------------------------------------------------------------------------------
UTILITY - 33.6%
INDEPENDENT POWER PRODUCER - 2.7%
Martin County Industrial
Development Authority,
Indiantown Co-generation Project, Series 1994-A,
7.875% 12/15/25 1,500 1,763
--------
INVESTOR OWNED - 3.3%
Citrus County,
Florida Power Corp.,
Crystal River Power Plant, Series 1992-A,
6.625% 01/01/27(b) 2,000 2,181
--------
MUNICIPAL ELECTRIC - 10.2%
Lakeland Electric and Water System,
Series 1996-B,
6.000% 10/01/11 1,870 2,139
Orlando Utilities Commission,
Series 1989-D,
6.750% 10/01/17 3,750 4,625
--------
6,764
--------
WATER & SEWER - 17.4%
Coral Springs Improvement District,
6.000% 06/01/10 1,000 1,139
Dade County Water & Sewer System,
Series 1997,
5.250% 10/01/26 1,500 1,515
Hillsborough County Utility System,
Series 1991-A,
7.000% 08/01/14 2,155 2,381
Indian Trace Community Development District,
5.000% 05/01/17 $ 1,650 $ 1,650
Port St. Lucie Utility System,
Series A,
5.000% 09/01/17 1,000 1,000
Seacoast Utility Authority,
Series 1989-A,
5.500% 03/01/15 1,900 2,054
Seminole County Water and Sewer,
Series 1992,
6.000% 10/01/19 1,500 1,708
--------
11,447
--------
TOTAL INVESTMENTS (cost of $60,071)(e) 63,987
--------
SHORT-TERM OBLIGATIONS - 3.3%
- -------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (f)
CA Newport Beach Hoag Hospital,
3.600% 10/01/22 1,000 1,000
FL Pinellas County Health Facilities Authority,
Series 1985,
3.750% 12/01/15 100 100
IL State Educational Facilities Authority,
3.500% 12/01/25 1,000 1,000
NY Niagara Mohawk, Series 1985-A,
3.900% 07/01/15 100 100
--------
TOTAL SHORT-TERM OBLIGATIONS 2,200
--------
OTHER ASSETS & LIABILITIES, NET - (0.4)% (269)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 65,918
========
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) This security has been purchased on a delayed delivery basis for settlement
at a future date beyond the customary settlement time.
(b) These securities, or a portion thereof, with a total market value of $4,903,
are being used to collateralize the delayed delivery purchase indicated in
note (a) above and open futures contracts.
(c) The Fund has been informed that each issuer has placed direct obligations of
the U.S. Government in an irrevocable trust, solely for the payment of the
interest and principal.
(d) Zero coupon bond.
(e) Cost for federal income tax purposes is the same.
(f) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of January 31, 1998.
Short futures contracts open at January 31, 1998:
Par value Unrealized
covered by Expiration depreciation
Type contracts month at 1/31/98
------------------------------------------------------------------------------
Treasury bond $ 2,500 March $ 21
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JANUARY 31, 1998
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $60,071) $ 63,987
Short-term obligations 2,200
--------
66,187
Receivable for:
Interest $ 1,022
Fund shares sold 39
Receivable due from Adviser 2
Other 83 1,146
------- --------
Total Assets 67,333
LIABILITIES
Payable for:
Investment purchased 1,059
Distributions 247
Fund shares repurchased 89
Variation margin on futures 10
Accrued:
Deferred Trustees fees 3
Other 7
-------
Total Liabilities 1,415
--------
NET ASSETS $ 65,918
========
Net asset value & redemption price per share -
Class A ($32,150/4,129) $ 7.79
========
Maximum offering price per share - Class A
($7.79/0.9525) $ 8.18(a)
========
Net asset value & offering price per share -
Class B ($33,665/4,323) $ 7.79(b)
========
Net asset value & offering price per share -
Class C ($103/13) $ 7.79(b)
========
COMPOSITION OF NET ASSETS
Capital paid in $ 64,264
Undistributed net investment income 86
Accumulated net realized loss (2,327)
Net unrealized appreciation (depreciation) on:
Investments 3,916
Open futures contracts (21)
--------
$ 65,918
========
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1998
(in thousands)
INVESTMENT INCOME
Interest $ 3,689
EXPENSES
Management fee $ 325
Service fee 111
Distribution fee - Class B 249
Distribution fee - Class C (a)
Transfer agent 98
Bookkeeping fee 32
Trustees fee 12
Custodian fee 6
Audit fee 22
Legal fee 4
Registration fee 17
Reports to shareholders 5
Amortization of deferred
organization expenses 9
Other 12
------
902
Custodian credits earned (4)
------
898
Fees waived by the Adviser (266)
Fees waived by the Distributor - Class C (a) 632
------ -------
Net Investment Income 3,057
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 609
Closed futures contracts (177)
------
Net Realized Gain 432
Net unrealized appreciation (depreciation) during
the period on:
Investments 2,674
Open futures contracts (4)
------
Net Unrealized Appreciation 2,670
-------
Net Gain 3,102
-------
Increase in Net Assets from Operations $ 6,159
=======
(a) Rounds to less than one.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended January 31
-----------------------
INCREASE (DECREASE) IN NET ASSETS 1998(a) 1997
Operations:
Net investment income $ 3,057 $ 3,208
Net realized gain 432 552
Net unrealized appreciation (depreciation) 2,670 (2,305)
-------- --------
Net Increase from Operations 6,159 1,455
Distributions:
From net investment income - Class A (1,611) (1,656)
From net investment income - Class B (1,489) (1,538)
From net investment income - Class C (2) --
-------- --------
3,057 (1,739)
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 3,939 4,869
Value of distributions reinvested - Class A 723 675
Cost of shares repurchased - Class A (5,290) (6,036)
-------- --------
(628) (492)
-------- --------
Receipts for shares sold - Class B 4,014 5,202
Value of distributions reinvested - Class B 446 479
Cost of shares repurchased - Class B (5,689) (7,174)
-------- --------
(1,229) (1,493)
-------- --------
Receipts for shares sold - Class C 100 --
Value of distributions reinvested - Class C 2 --
-------- --------
102 --
-------- --------
Net Decrease from Fund Share
Transactions (1,755) (1,985)
-------- --------
Total Increase (Decrease) 1,302 (3,724)
NET ASSETS
Beginning of period 64,616 68,340
-------- --------
End of period (including undistributed
net investment income of $86 and $97,
respectively) $ 65,918 $ 64,616
======== ========
NUMBER OF FUND SHARES
Sold - Class A 523 655
Issued for distributions reinvested - Class A 96 91
Repurchased - Class A (700) (816)
-------- --------
(81) (70)
-------- --------
Sold - Class B 532 699
Issued for distributions reinvested - Class B 59 64
Repurchased - Class B (756) (968)
-------- --------
(165) (205)
-------- --------
Sold - Class C 13 --
Issued for distributions reinvested - Class C (b) --
-------- --------
13 --
-------- --------
(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
JANUARY 31, 1998
NOTE 1. ACCOUNTING POLICIES
- ------------------------------------------------------------------------------
ORGANIZATION: Colonial Florida Tax-Exempt Fund (the Fund), a series of Colonial
Trust V, 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 by pursuing current income exempt from
ordinary federal income tax and opportunities for long-term appreciation from a
portfolio primarily invested in medium-to-lower- 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 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. Effective August 1,
1997, the Fund began offering Class C shares which 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.
Futures contracts are valued based on the difference between the last sale price
and the opening price of the contract.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and asking price.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions 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 (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.
DEFERRED ORGANIZATION EXPENSE: The Fund incurred expenses of $47,925 in
connection with its organization, initial registration with the Securities and
Exchange Commission and with various states, and the initial public offering of
its shares. These expenses were deferred and were amortized on a straight-line
basis over five years.
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 2. FEES AND COMPENSATION PAID TO AFFILIATES
- ------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is the
investment Adviser of the Fund and furnishes accounting and other services
and office facilities for a monthly fee 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: 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.
Effective January 1, 1997 and continuing through calendar year 1997, the
Transfer Agent fee was reduced by 0.01% in cumulative monthly increments,
resulting in a decrease in the fee from 0.14% to 0.13% annually.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Financial
Investments, Inc., formerly Colonial Investment Services, Inc. (the
Distributor), an affiliate of the Adviser, is the Fund's principal
underwriter. During the year ended January 31, 1998, the Fund has been
advised that the Distributor retained net underwriting discounts of $10,725
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $101,708 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires the payment of a distribution
fee to the Distributor equal to 0.75% annually of the Fund's average net assets
attributable to Class B 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 does 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 November 30, 1994 0.10%
On or after December 1, 1994 0.25%
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers
who sold such shares.
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service and distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 0.60% annually of the Fund's average net
assets. Through December 31, 1997, the expense limit was 0.40% 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.
The Fund has an agreement with its custodian bank under which $4,300 of
custodian fees have been reduced by balance credits applied during the year
ended January 31, 1998. The Fund could have invested a portion of the assets
utilized in connection with expense offset arrangements in an income producing
asset if it had not entered into such arrangements.
NOTE 3. PORTFOLIO INFORMATION
- -------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended January 31, 1998, purchases and
sales of investments, other than short-term obligations, were $20,241,436
and $21,241,247 respectively.
Unrealized appreciation (depreciation) at January 31, 1998, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $ 3,975,098
Gross unrealized depreciation (59,526)
-----------
Net unrealized appreciation $ 3,915,572
===========
CAPITAL LOSS CARRYFORWARDS: At January 31, 1998, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
---------- ------------
2003 244,000
2004 1,485,000
2005 41,000
------------
$ 1,770,000
===========
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized
gains, it is unlikely that such gains would be distributed since they may be
taxable to shareholders as ordinary income.
OTHER: There are certain risks arising from geographic concentration in any
state. Certain revenue or tax related events in a state may impair the
ability of certain issuers of municipal securities to pay principal and
interest on their obligations.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
The Fund may purchase or sell municipal and Treasury bond futures contracts and
purchase and write options on futures. The Fund will invest in these instruments
to hedge against the effects of changes in the value of portfolio securities due
to anticipated changes in interest rates and/or 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 amount recorded in the Fund's Statement of Assets
and Liabilities at any given time.
NOTE 4. LINE OF CREDIT
- ------------------------------------------------------------------------------
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore
loan rate plus 1/2 of 1%. There were no borrowings under the line of credit
during the year ended January 31, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended January 31
---------------------------------------
1998
Class A Class B Class C (b)
---------- ----------- ----------------
Net asset value -
Beginning of period $ 7.430 $ 7.430 $ 7.710
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.388 0.332 0.172(c)
Net realized and
unrealized gain 0.361 0.361 0.082
------- ------- -------
Total from Investment
Operations 0.749 0.693 0.254
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.389) (0.333) (0.174)
------- ------- -------
Net asset value -
End of period $ 7.790 $ 7.790 $ 7.790
======= ======= =======
Total return (d)(e) 10.37% 9.55% 3.35%(f)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (g) 0.59% 1.34% 1.04%(c)(h)
Interest expense -- -- --
Net investment income (g) 5.08% 4.33% 4.63%(c)(h)
Fees waived or borne
by the Adviser (g) 0.41% 0.41% 0.40%(h)
Portfolio turnover 32% 32% 32%
Net assets at end
of period (000) $32,150 $33,665 $ 103
------- ------- -------
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$0.031 $0.031 $0.031
(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 $0.012 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 return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements had an impact of 0.01% and $0.001 per share.
(h) Annualized.
- -------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
All of the distributions will be treated as exempt income for federal income tax
purposes.
- -------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended January 31
----------------------------------------------
1997 1996
Class A Class B Class A Class B
------- ------- ------- -------
Net asset value -
Beginning of period $ 7.620 $ 7.620 $ 7.100 $ 7.100
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.395 0.340 0.404 0.351
Net realized and
unrealized gain (loss) (0.194) (0.194) 0.535 0.533
------- ------- ------- -------
Total from Investment
Operations 0.201 0.146 0.939 0.884
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.391) (0.336) (0.419) (0.364)
------- ------- ------- -------
Net asset value -
End of period $ 7.430 $ 7.430 $ 7.620 $ 7.620
======= ======= ======= =======
Total return (c)(d) 2.80% 2.03% 13.55% 12.72%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 0.56%(e) 1.31%(e) 0.45%(e) 1.18%(e)
Interest expense (f) (f) -- --
Net investment
income 5.31%(e) 4.56%(e) 5.45%(e) 4.72%(e)
Fees waived or borne
by the Adviser 0.44%(e) 0.44%(e) 0.55%(e) 0.55%(e)
Portfolio turnover 69% 69% 83% 83%
Net assets at end
of period (000) $31,275 $33,341 $32,599 $35,741
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.032 $ 0.032 $ 0.040 $ 0.040
(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 directed brokerage
arrangements had no impact. Prior year ratios are net of benefits received,
if any.
(f) Rounds to less than 0.01%.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended January 31
---------------------------------------------
1995 1994(b)
Class A Class B Class A Class B
-------- -------- -------- --------
Net asset value -
Beginning of period $ 7.930 $ 7.930 $ 7.500 $ 7.500
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.423 0.369 0.434 0.378
Net realized and
unrealized gain (loss) (0.839) (0.839) 0.420 0.420
-------- -------- -------- --------
Total from Investment
Operations (0.416) (0.470) 0.854 0.798
-------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.414) (0.360) (0.424) (0.368)
-------- -------- -------- --------
Net asset value -
End of period $ 7.100 $ 7.100 $ 7.930 $ 7.930
======== ======== ======== ========
Total return (c)(d) (5.11)% (5.83)% 11.66% 10.85%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses 0.22% 0.97% 0.05% 0.80%
Interest expense
Net investment
income 5.92% 5.17% 5.40% 4.65%
Fees waived or borne
by the Adviser 0.73% 0.73% 0.88% 0.88%
Portfolio turnover 45% 45% 19% 19%
Net assets at end
of period (000) $ 27,498 $ 31,116 $ 23,802 $ 31,513
======== ======== ======== ========
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.052 $ 0.052 $ 0.071 $ 0.071
(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 directed brokerage
arrangements had no impact. Prior year ratios are net of benefits received,
if any.
(f) Rounds to less than 0.01%.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST V AND THE SHAREHOLDERS OF
COLONIAL FLORIDA TAX-EXEMPT FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Florida Tax-Exempt Fund
(the "Fund") (a series of Colonial Trust V) at January 31, 1998, the results of
its operations, the changes in its net assets and the financial highlights for
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and the financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of portfolio positions at January 31, 1998 by correspondence with
the custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
March 11, 1998
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Your Fund has one of the most extensive selections of shareholder services
available. Your financial adviser can help you arrange for any of these
services, or you can call Colonial Investors Service Center directly at
1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50 on
most funds;
$25 for an IRA account.
FREE EXCHANGE(1): Exchange all or part of your account into the same share class
of another fund distributed by Liberty Financial Investments, Inc. by phone or
mail.
EASY ACCESS TO YOUR MONEY(1): Make withdrawals from your account by phone, by
mail or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it within one year, you can reinvest in any fund distributed by
Liberty Financial Investments of the same share class without any penalty or
sales charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Fund account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th calendar day of each month unless the 10th falls on a
non-business day or the first business day of the week. If this occurs, the
processing date will be the previous business day. Dividends and capital gains
must be reinvested.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any fund
with a balance of $5,000 into the same share class of up to four other funds
distributed by Liberty Financial Investments. Minimum for each transfer is $100.
RETIREMENT PLANS: Choose from a broad range of retirement plans,
including IRAs.
(1) Redemptions and exchanges are made at the next determined net asset value
after the request is received by the Transfer Agent. Proceeds may be more or
less than your original cost. The exchange privilege may be terminated at
any time. Exchanges are not available on all funds. Investors who purchase
Class B or C shares, or $1 million or more of Class A shares, may be subject
to a contingent deferred sales charge.
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
CUSTOMER CONNECTION - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
For fund prices, dividends and capital gains information........... press [1]
For account information ........................................... press [2]
To speak to a service representative............................... press [3]
For yield and total return information............................. press [4]
For duplicate statements or new supply of checks................... press [5]
To order duplicate tax forms and year-end statements............... press [6]
(February through May)
To review your options at any time during your call................ press [*]
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 a.m. to 8:00 p.m. ET, and Saturdays from February through
mid-April, 10:00 a.m. to 2:00 p.m. ET.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange or sell shares by telephone, call Monday to Friday, 9:00
a.m. to 7:00 p.m. ET. Transactions received after the close of the New York
Stock Exchange will receive the next business day's closing price.
LITERATURE - 1-800-426-3750
To request literature on any fund distributed by Liberty Financial Investments,
call Monday to Friday, 8:30 a.m. to 6:30 p.m. ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Florida Tax-Exempt Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Florida 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 Florida Tax-Exempt
Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives and operating policies of the Fund.
<PAGE>
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board and Chief Executive Officer, Hannaford
Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Retired Partner, Peat Marwick Main & Co. (formerly Management Consultant,
Saatchi and Saatchi Consulting Ltd. and Principal and International Practice
Director, Management Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
[graphic omitted]
Distributor for Colonial Funds, Stein Roe Advisor Funds and Newport Funds
One Financial Center, Boston, MA 02111-2621
Visit us at www.libertyfunds.com
FL-02/791E-0198 M (3/98) 98/233
