[GRAPHIC OMITTED]
COLONIAL NEW YORK TAX-EXEMPT FUND Annual Report
January 31, 1998
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Not FDIC May Lose Value
Insured No Bank Guarantee
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<PAGE>
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COLONIAL NEW YORK TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1997 - JANUARY 31, 1998
Investment Objective: Colonial New York 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 New York state and city 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: "Bond market conditions improved during the
period and the Fund was well positioned to take advantage of declining
interest rates. New York City's comeback and its significant contribution to
the State's financial strength contributed to the Fund's positive performance
as well."
-- Gary Swayze
Colonial New York Tax-Exempt Fund Performance
Class A Class B Class C(1)
Inception dates 9/26/86 8/4/92 8/1/97
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Distributions declared per share(2) $0.389 $0.336 $0.179
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SEC yields on 1/31/98(3) 4.03% 3.47% 3.78%
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Taxable-equivalent SEC yields(4) 7.48% 6.44% 7.01%
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12-month total returns, assuming 10.67% 9.85% 4.04%
reinvestment of all distributions and
no sales charge or contingent deferred
sales charge (CDSC)(5)
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Net asset value per share on 1/31/98 $7.38 $7.38 $7.38
(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 January 31, 1998 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 3.86%
for Class A shares, 3.30% for Class B shares and 3.60% for Class C shares.
(4) Taxable-equivalent SEC yields are based on the maximum effective 46.1%
federal and New York state and city income tax rates.
(5) Performance results reflect any voluntary waivers or reimbursements of
expenses by the Adviser or Distributor. Absent these waivers or reimbursements
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 (as of 1/31/98) Top Five Sectors (as of 1/31/98)
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AAA ..... 33.2% BBB ....... 12.5% State Appropriated.....20.2%
AA ...... 16.2% BB ......... 2.1% Sales & Excise Tax.....13.1%
A ....... 28.8% Non-rated .. 6.3% Investor Owned.........10.6%
Short-Term Obligations ......... 0.9% General Obligations.....9.6%
Water & Sewer...........5.5%
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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2
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PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OMITTED]
I am pleased to present the annual report for Colonial New York Tax-Exempt Fund.
This report reflects on the investment environment for the 12 months ended
January 31, 1998.
The strength of the economy during the first quarter of 1997 led the Federal
Reserve Board to raise short-term interest rates in March for the first time in
two years. This action was a response to growing concern about future wage and
price inflation. By mid April, economic growth appeared to moderate while
inflation remained under control. During the second half of the period, interest
rates declined and bond prices rose. As the year ended, there was good news for
the bond markets: the smallest annual increase in inflation since 1964 and a
Federal budget proposal that predicts a surplus for the first time in nearly 30
years. Strong consumer confidence, rising employment and controlled inflation
point to a firm foundation for further economic expansion. However, the rate of
economic growth in 1998 may be tempered by the slowdown in the Asian economies
and its impact on the global marketplace.
Investments in municipal bonds outperformed most alternative fixed-income
investments, including Treasury bonds, on an after-tax basis during the first
half of the period. However, during the second half, a seasonal surge in
municipal supply combined with increased refundings caused municipal bonds to
slightly underperform Treasurys. On a more positive note, this surge offered
higher relative yields and positioned the market for positive performance in the
months ahead as the supply is absorbed.
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.
The long-term benefits of investing in any municipal bond fund include tax-free
income as well as the opportunity to diversify your fixed-income portfolio.
Colonial New York Tax-Exempt Fund continues to offer you competitive tax-free
income and the potential for long-term total return as well as an opportunity to
participate in New York's economic expansion.
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.
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3
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PORTFOLIO MANAGEMENT REPORT
Gary Swayze is portfolio manager of Colonial New York Tax-Exempt Fund and is
vice president of Colonial Management Associates, Inc. Mr. Swayze assumed
management of the Fund in October, 1997.
Fund took advantage of improving investment environment despite declining
yield spreads
During the year, yield spreads between high and low quality municipal bonds
decreased. Investors later in the period, received little benefit from taking on
the additional risk of lower quality bonds, particularly in the non-rated
sector. Despite this, investors "reached" for the yield of lower quality
municipals as interest rates declined during the latter months of the period.
While these conditions made identifying new investments difficult, price
increases in the lower quality bonds already in the portfolio resulted in rising
net asset values for the Fund.
These conditions also led us to focus more closely on selected bond types that
we believed would outperform in a declining interest rate environment. For
example, we increased our holdings of non-callable bonds. Non-callable bonds are
attractive when interest rates are falling because their issuers cannot "call,"
or redeem, the bonds before they mature. Callable bonds, on the other hand, are
quite likely to be redeemed when interest rates decline because issuers want to
reduce their borrowing costs. As a result, non-callable bonds have a longer
lifespan and are more sensitive to changes in interest rates. They generally
experience greater price gains when interest rates decline.
Fund's increased sensitivity to interest rates translated into above average
performance
The Fund generated a 12-month total return of 10.67% for Class A shares, based
on net asset value. This compares favorably with the Fund's Lipper peer group
average which posted a 12-month total return of 10.09%*. Above average
performance was due primarily to the Fund's strategic shift into a larger than
average concentration in non-callable bonds, that have a relatively high
sensitivity to interest rates. These bonds experienced larger price gains as
interest rates declined.
New York's economic growth continued
The New York economy continued to grow as State revenues benefited from job
creation and general economic activity, particularly in New York City. Further
improvement will depend on the national economy, which appears likely to
continue its expansion, and on State and City governments' ability to pass
fiscally responsible budgets.
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4
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Good economic times improved the financial position of many issuers in the State
and provided a sound base for investments in selected high yield bonds. An
example of these high yield bonds include those issued by the New York Port
Authority for an electric cogeneration facility at Kennedy International
Airport, representing 2.2% of the portfolio, based on total investments. These
bonds provided good levels of coupon income as well as strong price appreciation
as the system provided an efficient and cost effective electricity supply for
the airport's increasing energy needs.
Positive outlook ahead for the economy
We do not expect any major changes in either the national or State economy over
the next few months. We believe that growth will continue, although at a slower
pace than 1997. This is due in part to the financial crisis in Asia and its
anticipated impact on the worldwide marketplace. However, we expect that
inflation will remain subdued and that interest rates may continue to decline
somewhat, as they did during the second half of the year. Declining interest
rates are positive for bond prices. When interest rates go down, bond prices
generally increase, and that has been the case in the current market rally. This
effect has been reflected in your Fund as well, with the net asset value of your
shares rising, while dividend distributions have gradually declined. 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. Even
with a decreased yield, current income outpaces inflation even before
tax-exemption is factored in. In fact, 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 the total return
by carefully researching and selecting a portfolio of primarily investment-grade
municipal bonds.
As the heavy level of refunding and year-end tax-exempt supply is absorbed by
the market, we expect new issuance to be steady and more manageable. We are
looking for fewer refundings and more infrastructure and public education
issues. Currently, municipal bonds represent excellent value when compared to
other fixed-income investments, including Treasury bonds, and we believe that
tax-exempt bonds will continue to offer compelling after-tax returns.
*Source: Lipper Analytical Services, Inc. Lipper rankings are based in the
Lipper New York Municipal Debt category. The Fund's Class A shares ranking for
the one-year period is in the 2nd quartile (rated 29 out of 94 funds) and in the
3rd quartile for the five-year period (rated 25 out of 48 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.
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5
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Colonial New York Tax-Exempt Fund's Investment Performance
vs. The Lehman Brothers Municipal Bond Index
Change in Value of $10,000 from 1/31/88 to 1/31/98
Based on NAV and POP for Class A Shares
[The information below was represented by a line graph in the printed
materials.]
Label A B C
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Label CNYTEF NAV POP Lehman
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1 Jan-88 10000 9525 10000
2 Apr-88 9943 9471 10064
3 Jul-88 10156 9673 10248
4 Oct-88 10588 10085 10627
5 Jan-89 10789 10276 10857
6 Apr-89 10879 10362 10962
7 Jul-89 11233 10700 11496
8 Oct-89 11175 10644 11488
9 Jan-90 11327 10789 11729
10 Apr-90 11315 10777 11752
11 Jul-90 11907 11342 12293
12 Oct-90 11795 11235 12341
13 Jan-91 12168 11590 12814
14 Apr-91 12509 11915 13102
15 Jul-91 12744 12139 13366
16 Oct-91 13327 12694 13842
17 Jan-92 13489 12848 14211
18 Apr-92 13712 13060 14348
19 Jul-92 14564 13873 15203
20 Oct-92 14281 13603 15004
21 Jan-93 14906 14198 15608
22 Apr-93 15430 14697 16163
23 Jul-93 15782 15033 16547
24 Oct-93 16329 15553 17117
25 Jan-94 16688 15895 17522
26 Apr-94 15536 14798 16512
27 Jul-94 15882 15128 16857
28 Oct-94 15269 14543 16371
29 Jan-95 15798 15048 16898
30 Apr-95 16497 15713 17610
31 Jul-95 16768 15971 18184
32 Oct-95 17426 16598 18800
33 Jan-96 18166 17303 19442
34 Apr-96 17664 16825 19010
35 Jul-96 17970 17116 19384
36 Oct-96 18408 17534 19872
37 Jan-97 18667 17780 20189
38 Apr-97 18742 17851 20271
39 Jul-97 19812 18871 21371
40 Oct-97 19939 18992 21560
41 Jan-98 20658 19677 22230
A $10,000 investment in Class B shares made on August 4, 1992 (inception) at net
asset value (NAV) would have grown to $13,648 on January 31, 1998. The same
investment after deducting the applicable contingent deferred sales charge
(CDSC) would have been valued at $13,548 on January 31, 1998.
A $10,000 investment in Class C shares made on August 1, 1997 (inception) at NAV
would have grown to $10,404 on January 31, 1998. The same investment after
deducting the applicable CDSC would have been valued at $10,304 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
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Class A Shares Class B Shares Class C Shares(1)
Inception 9/26/86 8/4/92 8/1/97
NAV POP NAV w/CDSC NAV w/CDSC
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1 year 10.67% 5.41% 9.85% 4.85% -- --
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5 years 6.75 5.71 5.96 5.64 -- --
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10 years (or life) 7.53 7.00 5.82 5.68 4.04% 3.04%
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(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 1% since inception. The CDSC for Class C shares is 1% since inception.
Performance results reflect any voluntary waivers or reimbursements of 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.
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6
<PAGE>
INVESTMENT PORTFOLIO
JANUARY 31, 1998 (IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 98.0% PAR VALUE
==========================================================================================
<S> <C> <C> <C> <C>
EDUCATION - 2.5%
Education
NY State Dormitory Authority:
New York University,
6.000% 07/01/06 $ 1,125 $ 1,258
Pace University,
6.500% 07/01/11 1,000 1,191
Series 1985,
7.800% 12/01/05 150 157
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2,606
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HEALTHCARE - 1.0%
Hospital
NY Dormitory Beth Israel
Medical Center,
5.125% 11/01/16 1,075 1,077
-------------
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HOUSING - 6.3%
Assisted Living/Senior - 1.1%
Glen Cove Housing Authority,
8.250% 10/01/26 1,000 1,113
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Multi-Family - 3.5%
Hudson Housing Development Corp.,
Providence Hall-Schuyler Court Project,
Series 1992-A,
6.500% 01/01/22 750 789
NY State Housing Finance Agency:
Series 1989-B,
7.550% 11/01/29 230 242
Series 1996-A,
6.100% 11/01/15 1,250 1,328
Nyack Housing Assistance Corp.,
Nyack Plaza Apartments,
7.375% 06/01/21 (a) 1,279 1,281
-------------
3,640
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Single Family - 1.7%
NY State Mortgage Agency,
Series BB-2,
7.950% 10/01/15 570 589
</TABLE>
7
<PAGE>
Investment Portfolio/January 31, 1998
<TABLE>
<CAPTION>
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MUNICIPAL BONDS - CONT. PAR VALUE
=======================================================================================
<S> <C> <C> <C> <C>
HOUSING - CONT.
Single Family - Cont.
NY State Mortgage Agency:
Series 10-A,
8.100% 04/01/14 $ 105 $ 107
Series MM-1,
7.950% 10/01/21 1,000 1,080
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1,776
-------------
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OTHER - 5.6%
Refunded/Escrowed (b)
Monroe County Industrial
Development Agency,
Roberts Wesleyan College, Series 1991,
7.400% 09/01/11 750 781
NY State Dormitory Authority,
Menorah Campus,
Series 1991,
7.400% 02/01/31 245 276
NY State Housing Finance Agency,
Series 1990-A,
8.000% 11/01/08 205 231
NY State Medical Care Facilities
Finance Agency,
Series 1990-B,
7.875% 08/15/08 395 440
NY State Power Authority,
Series Z:
6.500% 01/01/19 2,420 2,675
6.625% 01/01/12 1,295 1,437
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5,840
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OTHER REVENUE - 3.6%
Industrial - 1.0%
Monroe County Industrial
Development Agency,
Yorkmill Realty Assoc., Series 1986,
9.500% 12/01/06 1,010 1,041
-------------
Recreation - 2.6%
New York City Cultural Trust Resources,
American Museum of Natural History,
5.600% 04/01/18 1,000 1,051
</TABLE>
8
<PAGE>
Investment Portfolio/January 31, 1998
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<TABLE>
<S> <C> <C> <C> <C>
New York City Industrial
Development Agency, United States Tennis
Association, Tennis Center Project, Series 1994,
6.375% 11/15/14 $ 1,500 $ 1,681
-------------
2,732
-------------
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RESOURCE RECOVERY - 2.1%
Disposal
Westchester County Industrial
Development Agency,
Westchester Resco Co. Project,
6.000% 07/01/09 2,000 2,231
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TAX-BACKED - 43.5%
Local Appropriated - 1.1%
NY State Dormitory Authority,
Judicial Facilities,
Series 1991-A,
9.500% 04/15/14 1,000 1,167
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Local General Obligations - 5.1%
Nassau County,
5.000% 09/01/14 1,000 1,008
New York City:
Series B,
6.000% 08/01/07 1,000 1,119
Series F,
6.000% 08/01/16 2,000 2,144
Series G,
5.750% 02/01/14 1,000 1,041
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5,312
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Special Non-Property Tax - 12.9%
Local Government Assistance Corp.:
Series 1993-C,
5.500% 04/01/17 2,100 2,247
Series 1993-E:
5.000% 04/01/21 5,000 4,972
6.000% 04/01/14 2,845 3,233
New York City Transitional Finance Authority,
Series-A,
5.125% 08/15/21 3,000 2,982
-------------
13,434
-------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/January 31, 1998
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MUNICIPAL BONDS - CONT. PAR VALUE
=======================================================================================
<S> <C> <C> <C> <C>
TAX-BACKED - CONT.
State Appropriated - 20.0%
NY Metropolitan Transportation Authority,
Commuter Facilities, Series 1997-8:
5.250% 07/01/17 $ 1,120 $ 1,117
5.250% 07/01/17 1,375 1,372
5.375% 07/01/21 2,000 2,011
NY State Dormitory Authority,
City University:
Series 1990-C,
7.500% 07/01/10 1,500 1,853
Series 1993-A:
5.500% 05/15/13 3,000 3,236
6.000% 07/01/20 2,000 2,244
NY State Housing Finance Agency,
Series 1990-A,
8.000% 11/01/08 45 50
NY State Medical Care Facilities
Finance Agency:
Series 1987-A,
8.875% 08/15/07 110 113
Series 1990-B,
7.875% 08/15/08 80 88
Series 1994-D,
6.150% 02/15/15 2,000 2,185
NY State University Facilities,
5.000% 05/15/17 2,000 1,971
University of New York,
Series 1990-B,
7.500% 05/15/11 1,000 1,254
NY State Urban Development Corp.,
Series 1993-A,
5.500% 01/01/14 2,000 2,100
NY Triborough Bridge & Tunnel Authority,
Javits Convention Center Project,
Series-E,
7.250% 01/01/10 1,000 1,208
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20,802
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State General Obligations - 4.4%
PR Commonwealth of Puerto Rico
Aqueduct & Sewer Authority:
Series 1994,
6.500% 07/01/23 2,000 2,288
</TABLE>
10
<PAGE>
Investment Portfolio/January 31, 1998
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<TABLE>
<S> <C> <C> <C> <C>
Series 1995,
6.250% 07/01/12 $ 2,000 $ 2,313
-------------
4,601
-------------
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TRANSPORTATION - 11.9%
Air Transportation - 4.4%
New York City Industrial
Development Agency,
America Airlines, Inc., Series 1994,
6.900% 08/01/24 2,000 2,248
Port Authority of New York & New Jersey,
JFK International Air Terminal, Series 6,
6.250% 12/01/08 2,000 2,281
-------------
4,529
-------------
Transportation - 3.3%
Albany Parking Authority,
Green and Hudson Garage Project,
Series 1991-A,
7.150% 09/15/16 250 271
Metro Transit Authority Farebox,
Commuter Facilities, Series 1997 B-1,
5.000% 07/01/18 1,000 994
Port Authority of New York & New Jersey,
Series 85,
5.375% 03/01/28 2,000 2,119
-------------
3,384
-------------
Turnpike/Bridge/Tollroad - 4.2%
Triborough Bridge & Tunnel Authority:
Series Y,
5.500% 01/01/17 1,000 1,072
Series 1991-B:
6.875% 01/01/15 1,000 1,089
6.875% 01/01/15 2,000 2,179
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4,340
-------------
- ---------------------------------------------------------------------------------------
UTILITY - 21.5%
Investor Owned - 10.5%
NY State Energy Research & Development
Authority:
Brooklyn Union Gas Co.:
Series 1989-A,
6.750% 02/01/24 3,000 3,304
Series 1993-B, RIB (variable rate),
8.700% 04/01/20 1,500 1,847
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/January 31, 1998
- ---------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
=======================================================================================
<S> <C> <C> <C> <C>
UTILITY - CONT.
Investor Owned - Cont.
Consolidated Edison Co.:
Series 1991-A,
7.500% 01/01/26 $ 500 $ 532
Series 1993-B,
5.250% 08/15/20 3,000 3,017
Long Island Lighting Co.,
Series 1992-A,
7.150% 02/01/22 2,000 2,187
-------------
10,887
-------------
Investor Power Producer - 3.5%
Industrial Finance Authority,
Brooklyn Navy Yard Bonds,
6.200% 10/01/22 1,250 1,418
Port Authority of New York & New Jersey,
KIAC Partners,
Series 1996 IV,
6.750% 10/01/19 2,000 2,245
-------------
3,663
-------------
Municipal Electric - 2.1%
NY State Power Authority:
Series Z:
6.500% 01/01/19 1,330 1,455
6.625% 01/01/12 705 774
-------------
2,229
-------------
Water & Sewer - 5.4%
NY State Environmental Facilities Corp.,
New York City Municipal Water
Finance Authority:
5.375% 06/15/26 2,000 2,042
Series 1990-A,
7.500% 06/15/12 2,000 2,194
Suffolk County Industrial Development Agency,
Southwest Sewer Systems,
6.000% 02/01/07 1,245 1,388
-------------
5,624
-------------
TOTAL INVESTMENTS (cost of $92,668) (c) 102,028
-------------
SHORT-TERM OBLIGATIONS - 0.9%
- ---------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (d)
CA Newport Beach Hoag Hospital,
3.600% 10/01/22 100 100
</TABLE>
12
<PAGE>
Investment Portfolio/January 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
IL State Development Finance Authority,
Ulich Children's Home Project,
3.550% 04/01/07 $ 500 $ 500
IL State Educational Facilities Authority,
3.500% 12/01/25 300 300
-------------
TOTAL SHORT-TERM OBLIGATIONS 900
-------------
OTHER ASSETS & LIABILITIES, NET - 1.1% 1,233
- ---------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 104,161
=============
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) This security is exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At January 31,
1998, the value of this security amounted to $1,281 or 1.2% of net assets.
(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 $92,669.
(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 January 31, 1998.
Acronym Name
------------- ---------------------------------------
RIB Residual Interest Bond
See notes to financial statements.
13
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JANUARY 31, 1998
(in thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $92,668) $ 102,028
Short-term obligations 900
-------------
102,928
Receivable for:
Interest $ 1,465
Fund shares sold 210
Expense reimbursement due from Advisor 15
Other 69 1,759
------------- -------------
Total Assets 104,687
LIABILITIES
Payable for:
Distributions 416
Fund shares repurchased 97
Accrued:
Deferred Trustees fees 3
Other 10
-------------
Total Liabilities 526
-------------
NET ASSETS $ 104,161
=============
Net asset value & redemption price per share -
Class A ($51,744/7,012) $7.38
=============
Maximum offering price per share - Class A
($7.38/0.9525) $7.75 (a)
=============
Net asset value & offering price per share -
Class B ($52,313/7,089) $7.38 (b)
=============
Net asset value & offering price per share -
Class C ($104/14) $7.38 (b)
=============
COMPOSITION OF NET ASSETS
Capital paid in $ 98,181
Overdistributed net investment income (11)
Accumulated net realized loss (3,369)
Net unrealized appreciation 9,360
-------------
$ 104,161
=============
</TABLE>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
See notes to financial statements.
14
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1998
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $ 6,117
EXPENSES
Management fee $ 512
Service fee 163
Distribution fee - Class B 393
Distribution fee - Class C (a)
Transfer agent 157
Bookkeeping fee 46
Trustees fee 14
Audit fee 21
Legal fee 5
Custodian fee 5
Registration fee 16
Reports to shareholders 12
Other 22
-------------
1,366
Fees waived by the Adviser (289)
Fees waived by the Distributor - Class C (a) 1,077
------------- -------------
Net Investment Income 5,040
-------------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 1,547
Closed futures contracts (203)
-------------
Net Realized Gain 1,344
Net unrealized appreciation during
the period on:
Investments 3,602
Open future contracts 9
-------------
Net Unrealized Appreciation 3,611
-------------
Net Gain 4,955
-------------
Increase in Net Assets from Operations $ 9,995
=============
</TABLE>
(a) Rounds to less than one.
See notes to financial statements.
15
<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 $ 5,040 $ 5,458
Net realized gain 1,344 816
Net unrealized appreciation (depreciation) 3,611 (3,965)
--------- ---------
Net Increase from Operations 9,995 2,309
Distributions:
From net investment income - Class A (2,680) (2,934)
In excess of net investment income - Class A (38) --
From net investment income - Class B (2,429) (2,613)
In excess of net investment income - Class B (35) --
From net investment income - Class C (2) --
In excess of net investment income - Class C (b) --
--------- ---------
4,811 (3,238)
--------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 5,959 6,646
Value of distributions reinvested - Class A 1,318 1,458
Cost of shares repurchased - Class A (8,522) (12,584)
--------- ---------
(1,245) (4,480)
--------- ---------
Receipts for shares sold - Class B 3,969 7,969
Value of distributions reinvested - Class B 1,344 1,427
Cost of shares repurchased - Class B (8,329) (8,469)
--------- ---------
(3,016) 927
--------- ---------
Receipts for shares sold - Class C 115 --
Value of distributions reinvested - Class C 2 --
Cost of shares repurchased - Class C (15) --
--------- ---------
102 --
--------- ---------
Net Decrease from Fund Share
Transactions (4,159) (3,553)
--------- ---------
Total Increase (Decrease) 652 (6,791)
NET ASSETS
Beginning of period 103,509 110,300
--------- ---------
End of period (net of overdistributed and
including undistributed net investment
income of $11 and $71, respectively) $ 104,161 $ 103,509
========= =========
(a) Class C shares were initially offered on August 1, 1997.
(b) Rounds to less than one.
See notes to financial statements.
16
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
Year ended January 31
===========================
1998(a) 1997
NUMBER OF FUND SHARES
Sold - Class A 829 946
Issued for distributions reinvested - Class A 185 208
Repurchased - Class A (1,198) (1,797)
--------- ---------
(184) (643)
--------- ---------
Sold - Class B 556 1,135
Issued for distributions reinvested - Class B 188 204
Repurchased - Class B (1,165) (1,213)
--------- ---------
(421) 126
--------- ---------
Sold - Class C 16 --
Issued for distributions reinvested - Class C (b) --
Repurchased - Class C (2) --
--------- ---------
14 --
--------- ---------
(a) Class C shares were initially offered on August 1, 1997.
(b) Rounds to less than one.
See notes to financial statements.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Organization: Colonial New York 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, as is consistent with prudent risk, by
pursuing current income exempt from federal and New York state and city personal
income tax. The Fund also provides 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 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.
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.
18
<PAGE>
Notes to Financial Statements/January 31, 1998
- --------------------------------------------------------------------------------
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.
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%
19
<PAGE>
Notes to Financial Statements/January 31, 1998
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
Bookkeeping fee: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
Transfer agent: 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. For the year
ended January 31, 1998, the Fund has been advised that the Distributor retained
net underwriting discounts of $15,270 on sales of the Fund's Class A shares and
received contingent deferred sales charges (CDSC) of $141,973 and none on 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 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.
Though December 31, 1997, the expense limit was 0.50% of the Fund's average net
assets.
20
<PAGE>
Notes to Financial Statements/January 31, 1998
- --------------------------------------------------------------------------------
Other: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
Investment activity: For the year ended January 31, 1998, purchases and sales of
investments, other than short-term obligations were $37,581,755 and $42,113,226,
respectively.
Unrealized appreciation (depreciation) at January 31, 1998, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $ 9,368,881
Gross unrealized depreciation (10,000)
-------------
Net unrealized appreciation $ 9,358,881
=============
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
---------- ------------
2004 $ 2,149,000
2005 79,000
-------------
$ 2,228,000
=============
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
21
<PAGE>
Notes to Financial Statements/January 31, 1998
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION - CONT.
- --------------------------------------------------------------------------------
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 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.
22
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended January 31
==============================================================================
1998 1997
Class A Class B Class C (b) Class A Class B
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.040 $ 7.040 $ 7.270 $ 7.250 $ 7.250
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income(a) 0.383 0.330 0.171 (c) 0.393 0.340
Net realized and
unrealized gain (loss) 0.346 0.346 0.118 (0.207) (0.207)
----------- ----------- ----------- ----------- -----------
Total from Investment
Operations 0.729 0.676 0.289 0.186 0.133
----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.384) (0.331) (0.179) (0.396) (0.343)
In excess of net
investment income (0.005) (0.005) -- -- --
----------- ----------- ----------- ----------- -----------
Total Distributions
Declared to
Shareholders (0.389) (0.336) (0.179) (0.396) (0.343)
----------- ----------- ----------- ----------- -----------
Net asset value -
End of period $ 7.380 $ 7.380 $ 7.380 $ 7.040 $ 7.040
=========== =========== =========== =========== ===========
Total return(d)(e) 10.67% 9.85% 4.04% (f) 2.76% 1.99%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS
Expenses(g) 0.67% 1.42% 1.12% (c)(h) 0.65% 1.40%
Net investment
income(g) 5.31% 4.56% 4.72% (c)(h) 5.56% 4.81%
Fees and expenses
waived or borne
by the Adviser(g) 0.28% 0.28% 0.29% (h) 0.29% 0.29%
Portfolio turnover 38% 38% 38% 78% 78%
Net assets at end
of period (000) $ 51,744 $ 52,313 $ 104 $ 50,648 $ 52,861
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.020 $ 0.020 $ 0.021 $ 0.020 $ 0.020
</TABLE>
(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 return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(h) Annualized.
23
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended January 31
====================================================================
1996 1995
Class A Class B Class A Class B
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 6.680 $ 6.680 $ 7.500 $ 7.500
----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income(a) 0.401 0.349 0.427 0.376
Net realized and
unrealized gain (loss) 0.576 0.576 (0.834) (0.834)
----------- ----------- ----------- -----------
Total from Investment
Operations 0.977 0.925 (0.407) (0.458)
----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.407) (0.355) (0.413) (0.362)
----------- ----------- ----------- -----------
Net asset value -
End of period $ 7.250 $ 7.250 $ 6.680 $ 6.680
=========== =========== =========== ===========
Total return(b)(c) 14.99% 14.15% (5.32)% (6.04)%
=========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS
Expenses 0.58% (d) 1.33% (d) 0.42% 1.17%
Net investment
income 5.72% (d) 4.97% (d) 6.25% 5.50%
Fees and expenses
waived or borne
by the Adviser 0.38% (d) 0.38% (d) 0.46% 0.46%
Portfolio turnover 39% 39% 65% 65%
Net assets at end
of period (000) $ 56,795 $ 53,505 $ 53,322 $ 43,166
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.026 $ 0.026 $ 0.032 $ 0.032
</TABLE>
(b) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(c) Had the Adviser not waived or reimbursed a portion of expenses, total return
would have been reduced.
(d) The benefits derived from custody credits and directed brokerage arrange-
ments had no impact. Prior years' ratios are net of benefits received, if
any.
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
Approximately 99.1% of the income distributions will be treated as exempt income
for federal income tax purposes.
- --------------------------------------------------------------------------------
24
<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
------------- -------------
$ 7.090 $ 7.090
------------- -------------
0.421 0.368
0.407 0.407
------------- -------------
0.828 0.775
------------- -------------
(0.418) (0.365)
------------- -------------
$ 7.500 $ 7.500
============= =============
11.95% 11.14%
============= =============
0.62% 1.37%
5.68% 4.93%
0.29% 0.29%
25% 25%
$63,527 $45,061
$ 0.021 $ 0.021
25
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST V AND THE SHAREHOLDERS OF
COLONIAL NEW YORK 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 New York 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, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
March 11, 1998
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial New York Tax-Exempt Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial New York 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 New York Tax-Exempt
Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details about sales
charges, investment objectives and operating policies of the Fund.
27
<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
[LOGO] LIBERTY FINANCIAL INVESTMENTS, INC. (c)1998
Distributor for Colonial Funds, Stein Roe Advisor Funds and Newport Funds
One Financial Center, Boston, MA 02111-2621
Visit us at www.libertyfunds.com NY-02/778E-0198 (3/98) 98/227
- --------------------------------------------------------------------------------
