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COLONIAL MICHIGAN TAX-EXEMPT FUND Annual report
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January 31, 1999
[GRAPHIC OMITTED]
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Not FDIC May Lose Value
Insured No Bank Guarantee
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COLONIAL MICHIGAN TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1998 - JANUARY 31, 1999
Portfolio Manager Commentary: "Interest rate volatility, low nominal interest
rates and a near-record level of supply created challenging conditions for
tax-exempt investors. Despite these hurdles, the Fund was well positioned. We
took advantage of declining interest rates and an expanding Michigan economy,
generating attractive performance relative to the Fund's Lipper peers."(1)
-- William Loring
Colonial Michigan Tax-Exempt Fund Performance
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Class A Class B Class C
Inception dates 9/26/86 8/4/92 8/1/97
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12-month distributions declared per share(2) $0.442 $0.386 $0.408
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SEC yields on 1/31/99(3) 3.49% 2.91% 3.21%
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Taxable-equivalent SEC yields(4) 6.04% 5.04% 5.56%
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12-month total returns, assuming 6.38% 5.57% 5.89%
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 1/31/99 $7.33 $7.33 $7.33
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Quality Breakdown(6) (as of 1/31/99)
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AAA........................ 58.8%
AA......................... 14.2%
A.......................... 15.1%
BBB........................ 5.2%
Nonrated................... 4.2%
Short-Term Obligations..... 2.5%
Top Five Sectors(6) (as of 1/31/99)
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Local General Obligations.. 18.1%
Hospitals.................. 15.7%
Refunded/Escrowed.......... 13.2%
Investor Owned Utility..... 9.4%
Multi Family............... 4.5%
(1) Please see page 3 for complete Lipper rankings.
(2) A portion of the Fund's income may be subject to the alternative minimum
tax. The Fund may at times purchase tax-exempt securities at a discount.
Some or all of this discount may be included in the Fund's ordinary
income, and will be taxable when distributed.
(3) The 30-day SEC yields on January 31, 1999, reflect the portfolio's earning
power, net of expenses, and are expressed as an annualized percentage of
the public offering price at the end of the period. If the Advisor or its
affiliates had not waived or borne certain Fund expenses, SEC yields for
Class C shares would have been 2.90%.
(4) Taxable-equivalent SEC yields are based on the combined maximum effective
42.3% federal and Michigan income tax rate. This tax rate does not reflect
the phase out of exemptions or the reduction of otherwise allowable
deductions which occurs when Adjusted Gross Income exceeds certain levels.
(5) Performance results reflect any voluntary waiver of Fund expenses by the
Advisor or its affiliates. Absent these waivers, performance results would
have been lower.
(6) 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
I am pleased to present the annual report for Colonial Michigan Tax-Exempt Fund
for the 12 months ended January 31, 1999.
[PHOTO]
The past 12 months were generally positive for bonds, although conditions varied
considerably as domestic and international events affected all sectors of the
bond market. Despite some economic uncertainty early in the year, the economy
continued to grow and inflation remained low, creating a positive climate for
bonds.
International events played a role in the strong U.S. bond market. The economic
turmoil in Asia that began in 1997 gradually spread to other less-developed
markets, most notably Russia and Latin America. During times of increased
volatility, investors around the world sought the relative quality and stability
of U.S. Treasury bonds. Although demand for safety made Treasurys the bond
market's biggest winner, municipal bonds also benefited.
Colonial's disciplined bond fund management style and long-term investment
orientation served shareholders well during this volatile period, helping the
Fund outperform the majority of its peers over the past 12 months.(1) For
investors seeking competitive levels of tax-free income and the potential for
long-term price appreciation, Colonial Michigan Tax-Exempt Fund may provide an
attractive option.
The Portfolio Manager Report on the following pages will provide you with more
specific information on your Fund's performance and the market in which your
Fund invests. Thank you for choosing Colonial Michigan Tax-Exempt Fund and for
giving us the opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
March 11, 1999
(1) Source: Lipper, Inc. Lipper rankings are based on the Lipper Michigan
Tax-Exempt Municipal Funds universe. The Fund (Class A shares) ranked in
the first quartile for one year (6 out of 49 funds), in the first quartile
for five years (2 out of 25 funds) and in the fourth quartile for ten
years (8 out of 8 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.
Because market and economic conditions change frequently, there can be no
assurance that the trends described above or on the following pages will
continue.
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3
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PORTFOLIO MANAGER REPORT
William Loring is portfolio manager of Colonial Michigan Tax-Exempt Fund. Mr.
Loring is senior vice president of Colonial Management Associates, Inc. and has
managed various Colonial municipal bond funds since 1986.
Tax-exempt market generated modest gains
The period began on a positive note, with the U.S. economy strong and no clear
signs of inflation. Throughout the year a series of international crises
manifested domestically, affecting both stock and bond prices. Instability in
Asia, Russia and Latin America contributed to an increase in the U.S. trade
deficit and concerns about corporate profitability. This fall, the Federal
Reserve Board lowered short-term interest rates three times in an effort to
renew investor confidence. Sentiment about how these events might impact the
U.S. economy in the long run shifted throughout the period, taking fixed-income
investors on a roller coaster ride through much of the year. Overall, bond
prices rose during the period.
Like the broader bond market, municipal bond prices were affected by global
events and interest rate volatility. In addition, the tax-exempt market
experienced a near-record level of issuance in 1998, as issuers took advantage
of lower interest rates to refinance existing debt and to finance new projects.
At times, the market found it difficult to absorb this supply. Despite this
challenging environment, municipal bond prices rose 1.57% during the year as
measured by the Bond Buyer 40 Index, a widely used measure of municipal market
performance.
Fund's performance reflects investment strategy
For the 12-month period, the Fund generated a total return of 6.38% for Class A
shares, based on net asset value. This compares favorably with the performance
of the Fund's Lipper competitive peer group, which averaged 5.54% for the same
time period. We attribute this performance to the Fund's investment strategy.
Our forecast for modest economic growth and low inflation led us to believe that
interest rates would decline. Since bond prices tend to rise when interest rates
fall, we emphasized bonds with a higher sensitivity to interest rate changes for
most of the year. These included noncallable bonds, which cannot be refinanced
at a lower rate of interest prior to maturity. The longer life span of these
bonds increases their sensitivity to changes in interest rates, often producing
attractive price gains when interest rates decline.
In the final months of the year, our analysis suggested that the market was
overvalued. In response, we reduced the Fund's sensitivity to interest rate
changes by shortening its duration. We will continue to manage the Fund's
positioning actively in an effort to add value for our investors.
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4
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Michigan's economic expansion continued
Michigan's economy ended 1998 on a strong note. Economic growth expanded at a
good pace, despite a seven-week strike by employees at General Motors.
Service-oriented industries, such as software development, real estate, retail
and business services, all posted strong gains, illustrating the increased
importance of these employment sectors. Although about 14% of Michigan's
employment is based in the automotive industry, the relative importance of this
sector has declined as service sector employment has blossomed. In part, this
change reflects Michigan's significant efforts to attract new white-collar
business through tax incentives, which have been necessary because of the
state's high cost of doing business. Looking ahead, weak global economies may
have a negative effect on Michigan's export trade and ability to maintain
profitable pricing on its automotive products, particularly as relatively
cheaper imports enter the market. As a result, we emphasized diversification
both by industry and geographic location to avoid any concentration in
industries that might be vulnerable to this trend. In addition, Michigan's good
fiscal management and large budget surplus may provide a cushion in the event of
an economic slowdown.
Positive outlook for municipal market conditions
Looking ahead, inflation should remain low, as we expect productivity gains and
a worldwide surplus in manufacturing capacity to limit the potential for
substantial price increases. In the municipal market, we expect positive supply
and demand dynamics. We doubt total issuance will match 1998's near-record level
of $280 billion, partially because refinancing volume should slow down as many
issuers have already refinanced. Overall, lower supply combined with generally
positive expectations for the economic environment should have a positive impact
on municipal bond prices. However, as we end the eighth consecutive year of
economic expansion in the U.S., we will watch for events and trends that could
change our expectations and possibly lead us to alter our investment strategy.
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5
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Colonial Michigan Tax-Exempt Fund Investment Performance
vs. The Lehman Brothers Municipal Bond Index
Change in Value of $10,000 from 1/31/89 to 1/31/99
Based on NAV and POP for Class A Shares
[The following table was originally a mountain graph in the printed materials.]
Date Pre-Load Post-Load Lehman
- ---- -------- --------- ------
Jan 31, 89 10000 9525 10000
Apr 30, 89 10099 9619 10096
Jul 31, 89 10244 9758 10588
Oct 31, 89 10283 9795 10581
Jan 31, 90 10390 9896 10803
Apr 30, 90 10341 9850 10824
Jul 31, 90 10830 10316 11322
Oct 31, 90 10716 10207 11366
Jan 31, 91 11118 10590 11802
Apr 30, 91 11441 10897 12068
Jul 31, 91 11630 11077 12311
Oct 31, 91 11980 11411 12749
Jan 31, 92 12243 11662 13089
Apr 30, 92 12344 11757 13215
Jul 31, 92 13078 12457 14002
Oct 31, 92 12803 12195 13819
Jan 31, 93 13472 12833 14376
Apr 30, 93 13893 13233 14887
Jul 31, 93 14144 13472 15240
Oct 31, 93 14597 13903 15765
Jan 31, 94 14977 14266 16138
Apr 30, 94 14013 13347 15208
Jul 31, 94 14381 13698 15526
Oct 31, 94 13892 13232 15078
Jan 31, 95 14428 13743 15564
Apr 30, 95 14921 14212 16220
Jul 31, 95 14979 14267 16748
Oct 31, 95 15684 14939 17316
Jan 31, 96 16323 15547 17907
Apr 30, 96 15844 15092 17509
Jul 31, 96 16193 15424 17853
Oct 31, 96 16544 15759 18303
Jan 31, 97 16706 15912 18594
Apr 30, 97 16723 15928 18670
Jul 31, 97 17795 16949 19683
Oct 31, 97 17912 17061 19857
Jan 31, 98 18533 17652 20474
Apr 30, 98 18367 17495 20406
Jul 31, 98 18737 17847 20863
Oct 31, 98 19427 18504 21449
Jan 31, 99 19715 18779 21835
Value of a $10,000 Investment Made on 1/31/89
As of 1/31/99
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Class A Class B Class C
NAV POP NAV w/CDSC NAV w/CDSC
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$19,715 $18,779 $18,784 $18,784 $19,581 $19,581
Average Annual Total Returns
As of 1/31/99
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Class A Class B Class C
Inception 9/26/86 8/4/92 8/1/97
NAV POP NAV w/CDSC NAV w/CDSC
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1 year 6.38% 1.33% 5.57% 0.57% 5.89% 4.89%
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5 years 5.65 4.63 4.86 4.53 5.51 5.51
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10 years 7.02 6.50 6.51 6.51 6.95 6.95
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Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charges or contingent deferred sales charges (CDSC). Public
offering price (POP) returns include the maximum sales charge of 4.75% for Class
A shares. CDSC returns reflect the maximum charges of 5% for one year and 2% for
five years for Class B shares, and 1% for one year for Class C shares.
Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
Class B and Class C share (newer class shares) performance information includes
returns of the Fund's Class A shares (the oldest existing fund class) for
periods prior to the inception dates of the newer class shares. These Class A
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between Class A shares and the newer class shares. Had the expense
differential been reflected, the returns for periods prior to the inception date
of the newer class shares would have been lower.
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indexes are not investments and do not incur fees or expenses. It is not
possible to invest in an index.
6
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<PAGE>
INVESTMENT PORTFOLIO
JANUARY 31, 1999 (IN THOUSANDS)
MUNICIPAL BONDS - 95.8% PAR VALUE
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EDUCATION - 3.9%
Education - 1.9%
Oakland County Economic Development Corp.,
Cranbrook Educational Community Project, Series B,
5.000% 11/1/17 $ 1,000 $ 1,012
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Student Loan - 2.0%
Higher Education Student Loan Authority,
Series 17-A,
5.450% 6/1/07 1,000 1,075
-----------
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HEALTHCARE - 18.1%
Hospitals - 15.5%
Chippewa County Hospital Finance Authority,
County War Memorial Hospital, Series B,
5.625% 11/1/14 500 507
Dickinson County,
Memorial Hospital System,
Series 1994,
8.125% 11/1/24 550 633
Kalamazoo Hospital Finance Authority,
Borgess Medical Center,
Series 1994-A,
6.250% 6/1/14 1,785 2,119
Petosky Hospital Finance Authority,
Northern Michigan Hospitals, Inc.,
Series 1998,
5.000% 11/15/18(a) 1,000 999
Royal Oak Hospital Finance Authority,
William Beaumont Hospital,
Series 1993-G,
5.250% 11/15/19 2,000 2,018
Saginaw Hospital Finance Authority,
Saginaw General Hospital,
Series 1989,
7.625% 10/1/19 175 182
State Hospital Finance Authority:
Central Michigan Community Hospital,
Series 1993-A,
6.000% 10/1/08 500 527
Crittenton Hospital,
Series 1992-A,
6.700% 3/1/07 750 827
7
<PAGE>
Investment Portfolio/January 31, 1999
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MUNICIPAL BONDS - CONT. PAR VALUE
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HEALTHCARE - CONT.
Hospitals - Cont.
State Hospital Finance Authority,
Detroit Medical Center,
Series 1988-A,
8.125% 8/15/12 $ 50 $ 51
Tawas City Finance Authority,
St. Joseph Health System,
Series 1998-A,
5.600% 2/15/13 240 259
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8,122
-----------
Lifecare - 0.5%
State Strategic Fund,
Holland Home,
Series 1998,
5.750% 11/15/18 250 251
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Nursing Homes - 2.1%
Cheboygan County Economic
Development Corp.,
Metro Health Foundation Project, Series 1993,
10.000% 11/1/22(b) 600 600
Warren Economic Development Corp.,
Autumn Woods Project,
Series 1992,
6.900% 12/20/22 500 528
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1,128
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HOUSING - 7.3%
Multi-Family - 4.4%
Grand Rapids Housing Finance Authority,
Series A,
7.625% 9/1/23 1,500 1,660
State Housing Development Authority:
Series 1990-A,
7.700% 4/1/23 500 535
Series 1991-B,
7.050% 10/1/12 130 140
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2,335
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Single Family - 2.9%
State Housing Development Authority,
Series 1994-D,
6.850% 6/1/26 1,425 1,513
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8
<PAGE>
Investment Portfolio/January 31, 1999
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OTHER - 16.5%
Pool/Bond Banks - 3.5%
State Municipal Bond Authority,
Local Government Loan Program,
Series 1992-D,
6.650% 5/1/12 $ 1,000 $ 1,091
State Municipal Bond Authority,
Revolving Fund,
5.125% 10/1/20 750 756
-----------
1,847
-----------
Refunded/Escrowed - 13.0% (c)
Battle Creek,
7.650% 5/1/22 750 897
Detroit Downtown Development Authority
Area No. 1 Projects:
Series 1996-C,
6.200% 7/1/17 1,000 1,158
Series 1996-D,
6.500% 7/1/10 700 824
Kalamazoo Hospital Finance Authority,
Bronson Methodist Hospital,
Series 1992-A,
6.250% 5/15/12 1,500 1,678
Redford Township Building Authority,
Series 1992,
6.500% 11/1/13 675 753
Rockford Public Schools,
Series 1990,
7.375% 5/1/19 250 265
State Hospital Finance Authority,
Daughters of Charity-Providence,
Series 1991,
7.000% 11/1/21 1,000 1,113
Virgin Islands Public Finance
Authority, Series 1992-A,
7.000% 10/1/02 125 140
-----------
6,828
-----------
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OTHER REVENUE - 2.0%
Hotels - 1.5%
Detroit Economic Development Corp.,
E.H. Assoc. Limited Partnership,
Series 1992,
7.000% 6/1/12 750 801
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9
<PAGE>
Investment Portfolio/January 31, 1999
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MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
OTHER REVENUE - CONT.
Industrial - 0.5%
State Strategic Fund,
Michigan Sugar Co.,
Carollton Project, Series 1998-C,
6.550% 11/1/25 $ 250 $ 251
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TAX-BACKED - 33.8%
Local Appropriated - 3.9%
Wayne County Building Authority,
Series 1996-A,
5.250% 6/1/16(a) 2,000 2,072
-----------
Local General Obligations - 17.8%
Detroit Michigan City School District,
5.375% 5/1/12 1,000 1,084
Lincoln Park School District:
Series 1998,
5.000% 5/1/18 1,000 1,006
5.000% 5/1/20(a) 1,000 999
Okemos Public School District,
Series 1993,
(d) 5/1/12 500 273
Parchment School District,
Series 1998,
5.000% 5/1/25 1,000 1,024
Redford Unified School District,
Series 1997,
5.000% 5/1/22 1,000 1,021
Rochester Community School District,
5.000% 5/1/19 1,000 1,028
St. Johns Public School District,
5.000% 5/1/21 1,000 1,022
Williamston Community School District,
Series 1996,
5.500% 5/1/25 1,725 1,885
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9,342
-----------
Special Non-Property Tax - 2.3%
PR Commonwealth of Puerto Rico
Highway & Transportation Authority, Series Y,
6.250% 7/1/14 1,000 1,198
-----------
Special Property Tax - 3.3%
Detroit Downtown Development Authority,
5.250% 7/1/12 1,000 1,060
10
<PAGE>
Investment Portfolio/January 31, 1999
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Oakland County,
Pebble Creek Drainage District,
5.000% 5/1/11 $ 100 $ 103
Romulus Tax Increment
Finance Authority,
Series 1994,
6.750% 11/1/19 500 554
-----------
1,717
-----------
State Appropriated - 4.2%
PR Commonwealth of Puerto Rico
Public Buildings Authority:
Series 1993-M,
5.700% 7/1/16 750 793
Series 1995-A,
6.250% 7/1/14 1,200 1,438
-----------
2,231
-----------
State General Obligations - 2.3%
PR Commonwealth of Puerto Rico
Aqueduct & Sewer Authority,
6.250% 7/1/12 1,000 1,203
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TRANSPORTATION - 2.1%
Airport
Wayne Charter County,
Detroit Metropolitan Airport,
Series 1994-B,
6.125% 12/1/24 1,000 1,093
-----------
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UTILITY - 12.1%
Investor Owned - 9.3%
St. Clair County Economic
Development Corp.,
Detroit Edison Co., Series 1933-AA,
6.400% 8/1/24 2,000 2,287
State Strategic Fund,
Detroit Edison Co.,
Series BB,
7.000% 5/1/21(a) 2,000 2,578
-----------
4,865
-----------
11
<PAGE>
Investment Portfolio/January 31, 1999
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MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
UTILITY - CONT.
Water & Sewer - 2.8%
Detroit Water Supply System,
Series A,
5.750% 7/1/12 $ 1,310 $ 1,482
-----------
TOTAL MUNICIPAL BONDS (cost of $46,071)(e) 50,366
-----------
SHORT- TERM OBLIGATIONS - 2.5%
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (f)
CA Irvine Improvement Bond Act of 1915,
Series 1997,
3.000% 9/2/22 900 900
ID State Health Facilities Authority,
St. Lukes Regional Medical Facility,
Series 1995,
3.200% 5/1/22 200 200
NM Farmington,
Arizona Public Service Co.,
Four Corners Project, Series 1994-B,
3.150% 9/1/24 100 100
NY New York City Municipal Water
Finance Authority,
Series 1995-A,
3.250% 6/15/25 100 100
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TOTAL SHORT-TERM OBLIGATIONS 1,300
-----------
OTHER ASSETS & LIABILITIES, NET - 1.7% 879
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NET ASSETS - 100.0% $52,545
-----------
NOTES TO INVESTMENT PORTFOLIO:
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(a) These securities, or a portion thereof, with a total market value of
$3,505, are being used to collateralize open future contracts.
(b) This security is exempt from registration under Rule 144A of the Security
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At January 31,
1999, the value of this security amounted to $600 or 1.14% of net assets.
(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.
12
<PAGE>
Investment Portfolio/January 31, 1999
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(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,
1999.
Short futures contracts open at January 31, 1999:
Par value Unrealized
covered by Expiration depreciation
Type contracts month at 01/31/99
- --------------------------------------------------------------------------------
Treasury Bond $ 2,000 March $ (13)
See notes to financial statements.
13
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JANUARY 31, 1999
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $46,071) $ 50,366
Short-term obligations 1,300
--------------
51,666
Receivable for:
Interest $ 686
Fund shares sold 230
Investments sold 10
Other 44 970
----------- --------------
Total Assets 52,636
LIABILITIES
Payable for:
Distributions 67
Fund shares repurchased 7
Payable to Advisor 4
Variation margin on futures 4
Accrued:
Deferred Trustees fees 3
Other 6
-----------
Total Liabilities 91
--------------
NET ASSETS $ 52,545
==============
Net asset value & redemption price per share -
Class A ($38,606/5,267) $ 7.33 (a)
==============
Maximum offering price per share - Class A
($7.33/0.9525) $ 7.70 (b)
==============
Net asset value & offering price per share -
Class B ($12,581/1,717) $ 7.33 (a)
==============
Net asset value & offering price per share -
Class C ($1,358/185) $ 7.33 (a)
==============
COMPOSITION OF NET ASSETS
Capital paid in $ 48,861
Overdistributed net investment income (44)
Accumulated net realized loss (554)
Net unrealized appreciation (depreciation) on:
Investments 4,295
Open futures contracts (13)
--------------
$ 52,545
==============
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
14
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1999
(in thousands)
INVESTMENT INCOME
Interest $ 2,877
EXPENSES
Management fee $ 258
Service fee 80
Distribution fee - Class B 95
Distribution fee - Class C 6
Transfer agent fee 79
Bookkeeping fee 28
Trustees fee 10
Custodian fee 3
Audit fee 18
Legal fee 6
Registration fee 18
Reports to shareholders 7
Other 7
-----------
615
Fees waived by the Advisor (31)
Fees waived by the Distributor (2)
Custodian credits earned (3) 579
----------- --------------
Net Investment Income 2,298
--------------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 503
Closed futures contracts 105
-----------
Net Realized Gain 608
Net change in unrealized appreciation (depreciation)
during the period on:
Investments 224
Open futures contracts (13)
-----------
Net Change in Unrealized Appreciation 211
--------------
Net Gain 819
--------------
Increase in Net Assets from Operations $ 3,117
==============
See notes to financial statements.
15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended January 31
============================
INCREASE (DECREASE) IN NET ASSETS 1999 1998 (a)
Operations:
Net investment income $ 2,298 $ 2,473
Net realized gain 608 665
Net unrealized appreciation 211 2,110
----------- --------------
Net Increase from Operations 3,117 5,248
Distributions:
From net investment income - Class A (1,799) (1,914)
In excess of net investment income - Class A (42) --
From net realized gains - Class A (388) --
In excess of net realized gains Class A (84) --
From net investment income - Class B (498) (544)
In excess of net investment income - Class B (12) --
From net realized gains - Class B (129) --
In excess of net realized gains Class B (28) --
From net investment income - Class C (33) (2)
In excess of net investment income - Class C (1) --
From net realized gains - Class C (11) --
In excess of net realized gains Class C (3) --
----------- --------------
89 2,788
----------- --------------
Fund Share Transactions:
Receipts for shares sold - Class A 1,716 1,091
Value of distributions reinvested - Class A 1,466 1,079
Cost of shares repurchased - Class A (3,682) (4,816)
----------- --------------
(500) (2,646)
----------- --------------
Receipts for shares sold - Class B 899 649
Value of distributions reinvested - Class B 366 263
Cost of shares repurchased - Class B (1,462) (2,213)
----------- --------------
(197) (1,301)
----------- --------------
Receipts for shares sold - Class C 1,227 100
Value of distributions reinvested - Class C 45 2
Cost of shares repurchased - Class C (32) --
----------- --------------
1,240 102
----------- --------------
Net Increase (Decrease) from Fund Share
Transactions 543 (3,845)
----------- --------------
Total Increase (Decrease) 632 (1,057)
NET ASSETS
Beginning of period 51,913 52,970
----------- --------------
End of period (net of overdistributed
and including undistributed net investment
income of $44 and $32, respectively) $ 52,545 $ 51,913
=========== ==============
(a) Class C shares were initially offered on August 1, 1997.
Continued on next page.
See notes to financial statements.
16
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
Year ended January 31
===============================
(in thousands) 1999 1998 (a)
NUMBER OF FUND SHARES
Sold - Class A 235 154
Issued for distributions reinvested - Class A 202 153
Repurchased - Class A (505) (684)
----------- --------------
(68) (377)
----------- --------------
Sold - Class B 123 93
Issued for distributions reinvested - Class B 50 37
Repurchased - Class B (200) (313)
----------- --------------
(27) (183)
----------- --------------
Sold - Class C 169 14
Issued for distributions reinvested - Class C 6 (b)
Repurchased - Class C (4) --
----------- --------------
171 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, 1999
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Organization: Colonial Michigan 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 Michigan state personal income
tax and opportunities for long-term appreciation from a portfolio primarily
invested in investment-grade municipal bonds. The Fund may issue an unlimited
number of shares. The Fund offers three classes of shares: Class A, Class B, and
Class C. Class A shares are sold with a front-end sales charge and a 1.00%
contingent deferred sales charge on redemptions made within eighteen months on
an original purchase of $1 million to $5 million. Class B shares are subject to
an annual distribution fee and a contingent deferred sales charge and will
convert to Class A shares when they have been outstanding approximately eight
years. Class C shares are subject to a contingent deferred sales charge on
redemptions made within one year after purchase and an annual distribution fee.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies that are consistently followed by the Fund in
the preparation of its financial statements.
Security valuation and transactions: Debt securities generally are valued by a
pricing service based upon market transactions for normal, institutional-size
trading units of similar securities. When management deems it appropriate, an
over-the-counter or exchange bid quotation is used.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and asking price.
Futures contracts are valued based on the difference between the last sale price
and the opening price of the contract.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions for which market quotations are not readily available are
valued at fair value under procedures approved by the Trustees.
18
<PAGE>
Notes to Financial Statements/January 31, 1999
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
Determination of class net asset values and financial highlights: All income,
expenses (other than the Class B and Class C distribution fees), and realized
and unrealized gains (losses), are allocated to each class proportionately on a
daily basis for purposes of determining the net asset value of each class.
Class B and Class C per share data and ratios are calculated by adjusting the
expense and net investment income per share data and ratios for the Fund for the
entire period by the distribution fee applicable to Class B and Class C shares
only.
Federal income taxes: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable and tax-exempt
income, no federal income tax has been accrued.
Interest income, debt discount and premium: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; market
discount is not accreted. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
Distributions to shareholders: The Fund declares and records distributions daily
and pays monthly.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
Management fee: Colonial Management Associates, Inc. (the Advisor) is the
investment Advisor of the Fund and furnishes accounting and other services and
office facilities for a monthly fee based on each Fund's pro-rata portion of the
combined average net assets of 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, 1999
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
Bookkeeping fee: The Advisor provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
Transfer agent fee: Liberty Funds Services Inc., formerly Colonial Investors
Service Center, Inc. (the Transfer Agent), an affiliate of the Advisor, provides
shareholder services for a monthly fee equal to 0.13% annually of the Fund's
average net assets and receives reimbursement for certain out-of-pocket
expenses.
Underwriting discounts, service and distribution fees: Liberty Funds
Distributor, Inc., formerly Liberty Financial Investments, Inc. (the
Distributor), a subsidiary of the Advisor, is the Fund's principal underwriter.
During the year ended January 31, 1999, the Fund has been advised that the
Distributor retained net underwriting discounts of $6,682 on sales of the Fund's
Class A shares and received contingent deferred sales charges (CDSC) of none,
$17,685, and none on Class A, Class B, and Class C share redemptions,
respectively.
The Fund has adopted a 12b-1 plan which requires the payment of a distribution
fee to the Distributor equal to 0.75% annually of the Fund's average net assets
attributable to Class B and Class C shares. The Distributor has voluntarily
agreed, until further notice, to waive a portion of the Class C share
distribution fee so that it will not exceed 0.45% annually. The plan also
requires the payment of a service fee to the Distributor as follows:
Valuation of shares Annual
outstanding on the 20th of Fee
each month which were issued Rate
---------------------------- ----
Prior to 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: Through October 31, 1998, the Advisor waived fees and bore
certain Fund expenses to the extent that total expenses (exclusive of service
and distribution fees, brokerage commissions, interest, taxes, and extraordinary
expenses, if any) exceeded 0.75% annually of the Fund's average net assets.
Effective November 1, 1998, the expense limit was eliminated.
Other: The Fund pays no compensation to its officers, all of whom are employees
of the Advisor.
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 $2,923 of
custodian fees were reduced by balance credits applied during the year ended
January 31, 1999. The Fund could have invested a portion of the assets utilized
in connection with the expense offset arrangements in an income producing asset
if it had not entered into such agreements.
20
<PAGE>
Notes to Financial Statements/January 31, 1999
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
Investment activity: For the year ended January 31, 1999, purchases and sales of
investments, other than short-term obligations were $7,690,583 and $7,697,635,
respectively.
Unrealized appreciation (depreciation) at January 31, 1999, based on cost of
investments for both financial statement and federal income tax purposes was
approximately:
Gross unrealized appreciation $ 4,300,000
Gross unrealized depreciation (5,000)
-------------
Net unrealized appreciation $ 4,295,000
=============
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 Advisor of the future direction of interest rates. Any of these risks may
involve amounts exceeding the variation margin recognized in the Fund's
Statement of Assets and Liabilities at any given time.
NOTE 4. LINE OF CREDIT
- --------------------------------------------------------------------------------
The Fund may borrow up to 33 1/3% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit for the
year ended January 31, 1999.
21
<PAGE>
Notes to Financial Statements/January 31, 1999
- --------------------------------------------------------------------------------
NOTE 5. RESULTS OF SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
- --------------------------------------------------------------------------------
On October 30, 1998, a Special Meeting of Shareholders of the Fund was held to
approve the following items, all as described in the Proxy Statement for the
Meeting. On August 21, 1998, the record date for the Meeting, the Fund had
outstanding 7,082,355 shares of beneficial interest. The votes cast at the
Meeting were as follows:
Authority
For Withheld
--- --------
To elect a Board of Trustees:
Robert J. Birnbaum 4,564,264 80,608
Tom Bleasdale 4,568,308 76,564
John Carberry 4,568,308 76,564
Lora S. Collins 4,555,133 89,739
James E. Grinnell 4,568,308 76,564
Richard W. Lowry 4,568,308 76,564
Salvatore Macera 4,568,308 76,564
William E. Mayer 4,564,264 80,608
James L. Moody, Jr. 4,566,954 77,918
John J. Neuhauser 4,568,308 76,564
Thomas E. Stitzel 4,568,308 76,564
Robert L. Sullivan 4,566,954 77,918
Anne-Lee Verville 4,568,308 76,564
To amend fundamental investment policies regarding borrowing and lending:
For Against Abstain
--- ------- -------
3,528,704 323,092 252,622
To approve policies for a master fund/feeder fund structure:
For Against Abstain
--- ------- -------
3,436,196 348,709 319,513
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
===========================================
1999
Class A Class B Class C
------------ ----------- -----------
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 7.320 $ 7.320 $ 7.320
------------ ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.341 0.285 0.307(b)
Net realized and
unrealized gain 0.111 0.111 0.111
------------ ----------- -----------
Total from Investment
Operations 0.452 0.396 0.418
------------ ----------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.343) (0.288) (0.310)
In excess of net investment income (0.008) (0.007) (0.007)
From net realized gains (0.075) (0.075) (0.075)
In excess of net realized gains (0.016) (0.016) (0.016)
------------ ----------- -----------
Total Distributions
Declared to Shareholders (0.442) (0.386) (0.408)
------------ ----------- -----------
Net asset value -
End of period $ 7.330 $ 7.330 $ 7.330
============ =========== ===========
Total return (c)(d) 6.38% 5.57% 5.89%
============ =========== ===========
RATIOS TO AVERAGE NET ASSETS
Expenses (e) 0.93% 1.68% 1.38%(b)
Net investment income (e) 4.64% 3.89% 4.19%(b)
Fees and expenses waived
or borne by the Advisor (e) 0.06% 0.06% 0.06%
Portfolio turnover 15% 15% 15%
Net assets at end
of period (000) $38,606 $12,581 $ 1,358
(a) Net of fees and expenses waived or borne by the Advisor which amounted to:
$ 0.004 $ 0.004 $ 0.004
</TABLE>
(b) Net of fees waived by the Distributor which amounted to $0.022 per share
and 0.30%.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Advisor and Distributor 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 an impact of 0.01% and $ 0.000 per share.
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
Approximately 99.4% of the income distributions will be treated as exempt income
for federal income tax purposes.
For the fiscal year ended January 31, 1999 the Fund earned $490,562 of long term
capital gains of which none and $490,562 are 28% and 20% rate gains,
respectively.
- --------------------------------------------------------------------------------
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
==========================================================================================
1998 1997
Class A Class B Class C(b) Class A Class B
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 6.930 $ 6.930 $ 7.200 $ 7.130 $ 7.130
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a) 0.352 0.299 0.156(c) 0.354 0.302
Net realized and
unrealized gain (loss) 0.386 0.386 0.122 (0.198) (0.198)
----------- ----------- ----------- ----------- -----------
Total from Investment
Operations 0.738 0.685 0.278 0.156 0.104
----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.348) (0.295) (0.158) (0.354) (0.303)
In excess of net
investment income -- -- -- (0.002) (0.001)
----------- ----------- ----------- ----------- -----------
Total Distributions
Declared to
Shareholders (0.348) (0.295) (0.158) (0.356) (0.304)
----------- ----------- ----------- ----------- -----------
Net asset value -
End of period $ 7.320 $ 7.320 $ 7.320 $ 6.930 $ 6.930
=========== =========== =========== =========== ===========
Total return (d)(e) 10.93% 10.11% 3.92%(f) 2.35% 1.58%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS
Expenses 0.90%(g) 1.65%(g) 1.35%(c)(g)(h) 0.89%(g) 1.64%(g)
Net investment
income 4.95%(g) 4.20%(g) 4.35%(c)(g)(h) 5.12%(g) 4.37%(g)
Fees and expenses waived
or borne by the
Advisor 0.13%(g) 0.13%(g) 0.15%(g)(h) 0.12%(g) 0.12%(g)
Portfolio turnover 32% 32% 32% 25% 25%
Net assets at end
of period (000) $ 39,048 $ 12,762 $ 103 $ 39,606 $ 13,364
(a) Net of fees and expenses waived or borne by the Advisor which amounted to:
$ 0.009 $ 0.009 $ 0.010 $ 0.008 $ 0.008
</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 Advisor and Distributor not waived or reimbursed a portion of
expenses, total return would have been reduced.
24
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended January 31
================================================================================
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
$ 6.660 $ 6.660 $ 7.340 $ 7.340
------- ------- ------- -------
0.368 0.317 0.410 0.359
0.484 0.484 (0.689) (0.689)
------- ------- ------- -------
0.852 0.801 (0.279) (0.330)
------- ------- ------- -------
(0.382) (0.331) (0.401) (0.350)
-- -- -- --
------- ------- ------- -------
(0.382) (0.331) (0.401) (0.350)
------- ------- ------- -------
$ 7.130 $ 7.130 $ 6.660 $ 6.660
======= ======= ======= =======
13.13% 12.30% (3.66)% (4.39)%
======= ======= ======= =======
0.80%(g) 1.55%(g) 0.62% 1.37%
5.34%(g) 4.59%(g) 6.08% 5.33%
0.25%(g) 0.25%(g) 0.32% 0.32%
48% 48% 40% 40%
$43,308 $15,236 $41,844 $14,144
$ 0.017 $ 0.017 $ 0.022 $ 0.022
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(h) Annualized.
25
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST V AND THE SHAREHOLDERS OF
COLONIAL MICHIGAN 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 Michigan Tax-Exempt Fund
(the "Fund")(a series of Colonial Trust V) at January 31, 1999, 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, 1999 by correspondence with
the custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 11, 1999
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Michigan Tax-Exempt Fund is:
Liberty Funds Services, Inc.*
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Michigan 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 Michigan 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 and with the most
recent copy of the Liberty Funds Distributor, Inc. Performance Update.
* Effective October 1, 1998, Colonial Investors Service Center, Inc. -- the
Transfer Agent for Colonial, Crabbe Huson, Newport and Stein Roe Advisor
funds -- changed its name to Liberty Funds Services, Inc.
27
<PAGE>
- --------------------------------------------------------------------------------
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
[LOGO] LIBERTY
COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. (C) 1999
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com MI-02/617G-0299 (3/99) 99/280
- --------------------------------------------------------------------------------
