<PAGE>
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COLONIAL OHIO TAX-EXEMPT FUND SEMIANNUAL REPORT
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JULY 31, 1999
[Graphic Omitted]
<PAGE>
TABLE OF CONTENTS
1 HIGHLIGHTS
2 PORTFOLIO MANAGER'S REPORT
4 PERFORMANCE
5 PORTFOLIO OF INVESTMENTS
8 FINANCIAL STATEMENTS
10 NOTES TO FINANCIAL STATEMENTS
12 FINANCIAL HIGHLIGHTS
- -------------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
- -------------------------------
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PRESIDENT'S MESSAGE
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[Photo of Stephen E. Gibson]
Dear Shareholder:
During the six months ended July 31, 1999, the bond market experienced
significant volatility. Over the period, the yield on 30-year Treasury bonds
increased almost a full percentage point in response to investors' fears that
strong economic growth in the U.S., in concert with stabilizing economies
overseas, would result in higher inflation. Interest rates rose on all types of
fixed-income investments, which resulted in falling bond prices.
Fortunately, tax-exempt bonds lost less value than Treasurys as prices fell.
These challenging bond market conditions were reflected in the Fund's negative
total return. However, while past performance cannot predict future results, it
is important to maintain a long-term perspective and remember that the Fund has
provided above-average returns for the three- and five-year periods ended July
31, 1999 when compared to its Lipper peer group average.1
The following report will provide you with more specific information about your
Fund's performance and the strategies employed during the period. As always, we
thank you for choosing Colonial Ohio Tax-Exempt Fund and for giving us the
opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
September 14, 1999
(1) Lipper, Inc., a widely respected data provider in the industry, calculates
an average total return for mutual funds with similar investment objectives
as the Fund. The total return calculated for the Lipper Ohio Municipal Debt
Category was negative 2.29% for the six months ended July 31, 1999. The
Fund's Class A shares were ranked in the fourth quartile for the six-month
period (50 out of 52 funds), in the third quartile for the one year (28 out
of 52 funds), in the first quartile for the three years (11 out of 48
funds), in the second quartile for the five years (16 out of 38 funds) and
in the third quartile for ten years (8 out of 12 funds). Rankings do not
include sales charges. Performance for different share classes will vary
with fees associated with each class. Past performance cannot predict future
results.
Because economic and market conditions change frequently, there can be no
assurance that the trends described in this report will continue or come to
pass.
<PAGE>
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HIGHLIGHTS
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> INTEREST RATE VOLATILITY CHALLENGED BOND MARKET INVESTORS.
Long-term interest rates rose more than three-quarters of a percentage point
to 6.1% between February and the end of July in response to fears that
strong economic growth in the U.S. and signs of increased growth worldwide
could cause higher inflation.
> FEDERAL RESERVE BOARD PREEMPTIVELY RAISED SHORT-TERM RATES.
Midway through the period, Federal Reserve Board (Fed) policy makers
switched from a neutral stance to one biased towards raising interest rates,
causing bond prices to fall further. As expected, the Fed acted in June,
increasing short-term interest rates by one-quarter point in a preemptive
strike against inflation.
> TAX-EXEMPT BONDS OUTPERFORMED TREASURYS AS INTEREST RATES ROSE.
Within the municipal bond market, prices fell in sympathy with the Treasury
market during the period. However, higher yields and limited supply
generated increased demand for tax-exempt bonds. With low municipal supply,
municipals outperformed Treasurys, losing less of their principal value as
interest rates rose.
TREASURY VS. MUNICIPAL BOND PERFORMANCE
CHANGE IN VALUE OF $10,000 FROM 1/31/99 - 7/31/99
Municipal Bond 30-Year Treasury
Fund Bond Fund
1/99 10,000 10,000
2/99 9,290 9,956
3/99 9,250 9,970
4/99 9,217 9,995
5/99 9,075 9,937
6/99 8,899 9,794
7/99 8,805 9,829
Performance of the 30-year Treasury bond is illustrated by the Salomon 30-Year
Treasury Bond Index, a broad-based, unmanaged index that tracks the performance
of the 30-Year on-the-run Treasury market. Performance of municipal bonds is
illustrated by the Lehman Brothers Municipal Bond Index, 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 directly in an index.
NET ASSET VALUE PER SHARE AS
OF 7/31/99
----------------------------
Class A $7.21
----------------------------
Class B $7.21
----------------------------
Class C $7.21
----------------------------
DISTRIBUTIONS DECLARED PER
SHARE FROM 2/1/99 TO 7/31/99(1)
----------------------------
Class A $0.175
----------------------------
Class B $0.147
----------------------------
Class C $0.158
----------------------------
30-DAY SEC YIELDS ON 7/31/99(2)
----------------------------
Class A 4.14%
----------------------------
Class B 3.59%
----------------------------
Class C 3.89%
----------------------------
TAXABLE-EQUIVALENT
SEC YIELDS ON 7/31/99(3)
----------------------------
Class A 7.39%
----------------------------
Class B 6.40%
----------------------------
Class C 6.94%
----------------------------
(1) 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 is taxable when distributed.
(2) 30-day SEC yields reflect the portfolio's earning power net of expenses,
expressed as an annualized percentage of the public offering price per
share. If the Advisor or its affiliates had not borne certain expenses, the
SEC yield would have been 3.59% for Class C shares.
(3) Taxable-equivalent SEC yields are based on the combined maximum effective
43.9% federal and Ohio State 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.
<PAGE>
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PORTFOLIO MANAGER'S REPORT
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CHANGE IN TOP FIVE SECTOR BREAKDOWNS 7/31/99 VS. 1/31/99
FUND AS OF FUND AS OF
7/31/99 1/31/99
LOCAL GENERAL OBLIGATIONS 30.7% 30.8%
WATER & SEWER 13.0% 13.6%
HOSPITAL 12.6% 13.6%
EDUCATION 9.0% 8.4%
REFUNDED/ESCROWED 7.1% 7.2%
QUALITY BREAKDOWN AS OF 7/31/99
---------------------------------------------------------
AAA 61.0%
---------------------------------------------------------
AA 14.8%
---------------------------------------------------------
A 8.3%
---------------------------------------------------------
BBB 9.3%
---------------------------------------------------------
BB 1.9%
---------------------------------------------------------
Non-rated 4.5%
---------------------------------------------------------
Short-term obligations 0.2%
---------------------------------------------------------
Quality and sector breakdowns are calculated as a percentage of total
investments, including short-term obligations. Ratings shown in the Quality
Breakdowns represent the highest rating assigned to a particular bond by one of
the following respected rating agencies: Standard & Poor's, Moody's or Fitch.
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.
MARKET VOLATILITY PROMPTED A MORE CONSERVATIVE STRATEGY
During the past six months, we pursued a more conservative investment strategy
in response to strong economic conditions. As various reports detailed the
economy's strength, investors became increasingly nervous about inflation and
potentially higher interest rates -- both negatives for bond prices.
Consequently, we structured the Fund to be less sensitive to interest rate
movements. As the economy grew strongly throughout the first part of the period,
we focused our attention on more defensive, income-oriented securities -- such
as high-yield and housing bonds -- whose total return is less negatively
impacted by rising interest rates.
TOTAL RETURN NEGATIVELY AFFECTED BY WEAK BOND MARKET CONDITIONS
During the six-month period, the Fund's Class A shares generated a total return
of negative 3.50%, without sales charge. In addition to the difficult
fixed-income conditions that prevailed throughout the period, one of the Fund's
holdings declined significantly in price. Joy Technologies, a profitable mining
equipment manufacturer, was negatively affected by the bankruptcy filing of its
parent company, Harnischfeger Industries. We sold our Joy Technologies bonds
during the period.
INVESTMENT ACTIVITY FOCUSED ON HIGHER-YIELDING BONDS
We selectively purchased bonds that met our rigorous investment criteria,
including well-managed facilities with strong cash flow, attractive markets or
service territories and good long-term growth prospects. These investments
included health care facilities, local government obligations and higher
education. Not only did this strategy provide the Fund with total return
potential, it increased its diversification by spreading the portfolio's credit
risk over a greater number and wider variety of bonds.
HOUSING SECTOR BONDS PERFORMED WELL IN A RISING INTEREST RATE ENVIRONMENT
As interest rates rose during the past six months, a number of the Fund's
multi- and single-family housing bonds experienced price gains and outperformed
the general market. Housing issues typically outperform many other market
sectors in rising rate environments because real estate owners are less likely
to refinance and prepay their mortgages. The portfolio's holdings also benefited
from a strong real estate market nationwide -- vigorous demand and high
occupancy levels supported higher rents and increased cash flows for project
owners.
OHIO'S ECONOMY DRIVEN BY SERVICE SECTOR GROWTH
Ohio's economic growth rate continued to slow down, due in large part to
weakness in durable manufacturing. Much of Ohio's gross state product is
exported overseas and struggling global economies during the past 18 months have
negatively affected orders and deliveries. Furthermore, weak employment gains
suggest that Ohio has achieved full employment and that further growth may be
limited. However, the state has continued to diversify its historically
industrial employment base. This diversity has been most successful in large,
metropolitan areas where service sector industries have thrived, particularly in
financial services, technology and health care.
FAVORABLE LONG-TERM MARKET OUTLOOK
As we look ahead, we believe that the Federal Reserve Board's actions should
have a positive long-term effect on the bond market by reducing economic growth
to a sustainable level and keeping inflation in check. These conditions should
create a more favorable environment for fixed-income securities, and we expect
to actively manage the portfolio's interest rate sensitivity as market
conditions warrant.
Despite Ohio's slower rate of growth, the state's responsible fiscal management
and significant financial reserves should provide a cushion in the event of an
extended economic slowdown.
/s/ William Loring
WILLIAM LORING is a senior vice president of Colonial Management Associates,
Inc. and has managed the Fund since October 1997.
BOUGHT
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We purchased high-yielding positions in Highland Community Hospital near
Cincinnati and Ana Mendez University in Puerto Rico (0.55% and 0.28% of net
assets, respectively).
Highland Community Hospital has had a history of stable operations, offered an
attractive relative yield and has maintained a strong financial position among
its closest competitors. Ana Mendez University is the second largest private
university in Puerto Rico and enjoys growing enrollment. Moreover, demand for
higher education in Puerto Rico has improved markedly over the last 15 years,
which should provide further enrollment growth opportunities for this
university.
<PAGE>
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PERFORMANCE INFORMATION
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<TABLE>
AVERAGE ANNUAL TOTAL RETURNS AS OF 7/31/99
<CAPTION>
Share Class A B C
Inception 9/26/86 8/4/92 8/1/97
- -------------------------------------------------------------------------------------------
Without With Without With Without With
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6 months (3.50)% (8.08)% (3.86)% (8.57)% (3.72)% (4.66)%
(cumulative returns)
- -------------------------------------------------------------------------------------------
1 year 1.60 (3.23) 0.84 (3.91) 1.14 0.19
- -------------------------------------------------------------------------------------------
5 years 5.91 4.89 5.12 4.79 5.72 5.72
- -------------------------------------------------------------------------------------------
10 years 6.49 5.97 5.93 5.93 6.39 6.39
- -------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/99
<CAPTION>
Share Class A B C
- -------------------------------------------------------------------------------------------
Without With Without With Without With
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year 1.22% (3.59)% 0.44% (4.27)% 0.75% (0.19)%
- -------------------------------------------------------------------------------------------
5 years 6.18 5.15 5.39 5.06 6.00 6.00
- -------------------------------------------------------------------------------------------
10 years 6.54 6.02 5.99 5.99 6.45 6.45
- -------------------------------------------------------------------------------------------
</TABLE>
Past performance cannot predict future investment results. Returns and value of
an investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. The "with sales charge" returns include
the maximum 4.75% charge for Class A shares and the contingent deferred sales
charge (CDSC) maximum charges of 5% for both six months and one year return and
2% for five years for Class B shares and 1% for both six months and one year for
Class C shares. Performance results reflect any voluntary waivers or
reimbursement 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 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 of the newer class shares. These Class A share
returns were 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 the periods prior to the inception
of the newer class shares would have been lower.
<PAGE>
<TABLE>
<CAPTION>
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INVESTMENT PORTFOLIO
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July 31, 1999 (Unaudited)
(In thousands)
MUNICIPAL BONDS - 98.8% PAR VALUE
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<S> <C> <C>
EDUCATION - 8.9%
EDUCATION
State Higher Educational Facilities Commission:
Case Western Reserve, Series 1994:
6.125% 10/01/15 $1,505 $ 1,647
6.250% 10/01/17 4,340 4,795
Ohio Dominican College, Series 1994,
6.625% 12/01/14 1,500 1,597
Commonwealth of Puerto Rico Environmental Control Facilities, Ana G
Mendez Project,
5.375% 02/01/19 270 262
--------
8,301
--------
- ------------------------------------------------------------------------------------------------
HEALTHCARE - 15.0%
HOSPITALS - 12.5%
Belmont County, East Ohio Regional Hospital,
Series 1998,
5.700% 01/01/13 500 482
Butler Middleton Hospital,
4.750% 11/15/18 1,000 880
Cuyahoga County, W.O. Walker Center, Inc.,
Series 1998 I,
5.250% 01/01/13 2,000 2,006
Doctors OhioHealth Corp.,
5.600% 12/01/28 1,000 925
Green Springs, St. Francis Health Center,
Series 1994 A,
7.000% 05/15/04 700 735
Highland County Hospital,
6.750% 12/01/29 500 511
Hamilton County Children's Hospital,
5.250% 05/15/10 1,500 1,531
Knox Community Hospital, Series 1998,
5.000% 06/01/12 1,300 1,271
Lake Hospital System:
5.250% 08/15/11 1,100 1,113
5.250% 08/15/12 1,160 1,169
Miami County, Upper Valley Medical Center, Inc.,
Series 1996 C,
6.000% 05/15/06 1,000 1,029
--------
11,652
--------
LIFECARE - 0.5%
Hamilton County Twin Tower,
5.125% 10/01/18 500 467
--------
NURSING HOMES - 2.0%
Marion County, United Church Homes, Inc.,
Series 1993,
6.375% 11/15/10 1,000 1,032
Montgomery County, Grafton Oaks Limited Partners, Series 1986,
9.750% 12/01/16 735 698
Westerville, Health Care & Retirement Corp. of America, Series 1989,
10.000% 01/01/08 180 182
--------
1,912
--------
HOUSING - 3.1%
MULTI-FAMILY - 1.1%
State Capital Corp. for Housing, Series 1990 A,
7.500% 01/01/24 $1,000 $ 1,035
--------
SINGLE FAMILY - 2.0%
State Housing Finance Agency:
Series A2, IFRN (variable rate),
9.973% 03/24/31 300 327
Series 1994 B2,
6.700% 03/01/25 475 499
Series 1997 A-1,
6.050% 09/01/17 990 1,034
--------
1,860
--------
- ------------------------------------------------------------------------------------------------
OTHER - 7.1%
REFUNDED/ESCROWED(a)
Cuyahoga County, Deaconess Hospital of Cleveland, Series 1985 C,
7.450% 10/01/18 500 535
Meridian Health System, Series 1991,
7.000% 08/15/23 500 538
Delaware County, Series 1990,
7.250% 11/01/10 250 265
Franklin County, Holy Cross Health System Corp.:
Series 1990 B,
7.650% 06/01/10 500 526
Series 1991,
6.750% 06/01/19 500 543
Greene County, Fairview Extended Care
Service, Inc., Series 1990 A,
10.125% 01/01/11 205 226
Hamilton County, Sisters of Charity Health Care System, Inc., Series
1992 A,
6.250% 05/15/14 500 538
Montgomery County, St. Elizabeth Medical Center, Series B-1,
8.100% 07/01/18 500 581
Stark County, Doctor's Hospital, Inc., Series 1993,
6.000% 04/01/24 1,500 1,617
State Water Development Authority, Series 1990 I,
6.000% 12/01/16 1,000 1,074
Virgin Islands Public Finance Authority,
Series 1992 A,
7.000% 10/01/02 125 136
--------
6,579
--------
- ------------------------------------------------------------------------------------------------
OTHER REVENUE - 3.0%
INDUSTRIAL - 2.5%
Moraine Solid Waste Disposal Revenue,
5.650% 07/01/24 1,000 996
State Burrows Paper Corp., Series 1991,
7.450% 06/01/03 590 628
State Sponge, Inc., Series 1989 5A,
8.375% 06/01/14 645 676
--------
2,300
--------
RETAIL - 0.5%
Lake County, North Madison Properties,
Series 1993:
8.069% 09/01/01 195 204
8.819% 09/01/11 200 224
--------
428
--------
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TAX-BACKED - 37.1%
LOCAL APPROPRIATED - 2.1%
Cleveland Stadium Project,
5.250% 11/15/12 2,000 1,998
--------
LOCAL GENERAL OBLIGATIONS - 29.2%
Adams County:
Human Services Building,
7.250% 12/01/11 500 531
Local School District, Series 1995,
7.000% 12/01/15 3,000 3,564
Beavercreek Local School District, Series 1996,
6.600% 12/01/15 2,500 2,896
Bellefontaine, Storm Water Utility, Series I,
7.050% 06/01/11 250 266
Brecksville-Broadview Heights School District, Series 1996,
6.500% 12/01/16 1,750 1,920
Cleveland:
4.625% 10/01/18 1,000 895
5.750% 08/01/12 500 533
5.750% 08/01/15 (b) 1,000 1,064
Crooksville, Exempted Village School District,
7.375% 12/01/07 25 28
Cuyahoga County, Jail Facilities, Series 1993 A,
(c) 10/01/12 1,000 503
Dublin School,
(c) 12/01/11 1,650 873
Eastern School District, Brown & Highland Counties, Series 1995,
6.250% 12/01/17 1,160 1,301
Fairborn, Library Improvement, Series 1991,
7.200% 10/01/11 1,170 1,276
Gahanna-Jefferson City School District,
Series 1993:
(c) 12/01/10 840 472
(c) 12/01/11 795 420
Greater Cleveland Regional Transportation Authority, Series 1998,
5.375% 12/01/14 1,000 1,011
Hilliard School District, Series 1995 A,
(c) 12/01/12 2,505 1,250
Kings County Local School District, Series 1995,
7.500% 12/01/16 2,110 2,640
Massillon City School District, Series 1994,
(c) 12/01/09 1,000 597
(c) 12/01/11 1,000 529
Middleburg Heights, Series 1998,
5.125% 12/01/11 1,000 1,002
Olmsted Falls Transportation,
5.500% 12/01/03 400 400
Richland County, Series 1995,
6.950% 12/01/11 275 310
Shaker Heights School District, Series 1990 A,
7.100% 12/15/10 750 861
Southwest Licking School District, Series 1999,
5.750% 12/01/16 400 422
Strongsville School District, Series 1996,
6.500% 12/01/13 1,500 1,651
Tri-County North Local School District,
8.125% 12/01/06 75 88
--------
27,303
--------
SPECIAL PROPERTY TAX - 1.0%
Columbus Tax Increment Financing Revenue, Series 1999,
4.875% 12/01/24 1,000 914
--------
STATE APPROPRIATED - 2.7%
PR Commonwealth of Puerto Rico Public Buildings Authority, Series 1993
M,
5.700% 07/01/16 2,500 2,562
--------
STATE GENERAL OBLIGATIONS - 2.1%
State:
Series 1992,
6.100% 08/01/12 380 419
Series 1998 B,
5.250% 02/01/12 1,500 1,517
--------
1,936
--------
- ------------------------------------------------------------------------------------------------
TRANSPORTATION - 6.8%
AIR TRANSPORTATION - 1.1%
Dayton, Emery Air Freight Facilities,
Series 1993 F,
6.050% 10/01/09 1,000 1,041
--------
TOLL FACILITIES - 5.4%
State Turnpike Commission, Series 1998 B:
4.500% 02/15/24 2,000 1,701
5.250% 02/15/11 2,295 2,324
5.250% 02/15/12 1,000 1,008
--------
5,033
--------
TRANSPORTATION - 0.3%
Cleveland-Cuyahoga County Port Authority,
C & P Docks Project,
6.000% 03/01/07 250 255
--------
- ------------------------------------------------------------------------------------------------
UTILITY - 17.8%
INDEPENDENT POWER PRODUCER - 1.2%
State Air Quality Development Authority,
JMG Funding Ltd., Series 1994,
6.375% 01/01/29 1,000 1,071
--------
INVESTOR OWNED - 1.6%
State Air Quality Development Authority:
JMG Funding Project,
5.625% 01/01/23 1,000 1,001
Toledo Edison Co., Series 1990 B,
8.000% 05/15/19 500 519
--------
1,520
--------
MUNICIPAL ELECTRIC - 1.0%
Cleveland Public Power Co., Series 1994 A,
(c) 11/15/13 2,000 943
--------
WATER & SEWER - 14.0%
Butler County Sewer System, Series 1999,
5.250% 12/01/13 1,460 1,465
Cleveland, Waterworks, Series 1993 G,
5.500% 01/01/21 3,000 3,057
Defiance, Water Sewer System Improvement,
Series 1998,
5.650% 12/01/18 1,000 1,027
Lakewood, Water & Sewer Systems Revenue,
5.850% 07/01/20 2,405 2,562
State Water Development Authority,
Water Control Loan Fund,
5.500% 06/01/12 2,000 2,059
Toledo, Waterworks, Series 1996,
6.250% 11/15/09 (b) 1,050 1,152
6.250% 11/15/10 1,130 1,229
Warren Waterworks, Series 1997,
5.500% 11/01/15 500 517
--------
13,068
--------
TOTAL MUNICIPAL BONDS (cost of $89,219) 92,178
--------
OPTIONS - 0.0% CONTRACTS
- ------------------------------------------------------------------------------------------------
September 1999 Treasury Bond Puts,
Strike price 112, expiration 09/17/99 19,200 33
September 1999 Treasury Bond Calls,
Strike price 124, expiration 09/17/99 3,500 1
--------
TOTAL OPTIONS (cost of $250) 34
--------
TOTAL INVESTMENTS - 98.8% (cost of $89,469) (d) 92,212
--------
SHORT-TERM OBLIGATIONS - 0.2%
- ------------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (d)
Health Facilities Authority,
Central Dupage Hospital,
3.450% 11/01/20 $ 230 $ 230
--------
OTHER ASSETS & LIABILITIES, NET - 1.0% 919
- ------------------------------------------------------------------------------------------------
NET ASSETS - 100% $ 93,361
========
NOTES TO INVESTMENT PORTFOLIO
- ------------------------------------------------------------------------------------------------
(a) 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.
(b) These securities, or a portion thereof, with a total market value of $1,503, are being used
to collateralize open option contracts.
(c) Zero coupon bond.
(d) Cost for federal income tax purposes is the same.
(e) Variable rate demand notes are considered short-term obligations. Interest rates change
periodically on specified dates. These securities are payable on demand and are secured by
either letters of credit or other credit support agreements from banks. The rates listed are
as of July 31, 1999.
ACRONYM NAME
- ------------------ --------------------------
IFRN Inverse Floating Rate Note
See notes to financial statements.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
July 31, 1999 (Unaudited)
(In thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $89,469) $ 92,212
Short-term obligations 230
--------
92,442
Receivable for:
Interest 1,125
Investments sold 5
Fund shares sold 1
Other 84
--------
1,215
--------
Total Assets 93,657
LIABILITIES
Payable for:
Distributions 121
Fund shares repurchased 116
Payable to Advisor 1
Accrued:
Deferred Trustees fees 4
Other 54
--------
Total Liabilities 296
--------
Net Assets $ 93,361
========
CLASS A
Net asset value & redemption price per share
($55,531/7,706) $ 7.21(a)
--------
Maximum offering price per share
($7.21/0.9525) $ 7.57(b)
--------
CLASS B
Net asset value & offering price per share
($37,484/5,202) $ 7.21(a)
--------
CLASS C
Net asset value & offering price per share
($346/48) $ 7.21(a)
--------
COMPOSITION OF NET ASSETS
Capital paid in $ 92,349
Overdistributed net investment income (193)
Accumulated net realized loss (1,538)
Net unrealized appreciation 2,743
--------
$ 93,361
========
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Six Months Ended July 31, 1999 (Unaudited)
(In thousands)
INVESTMENT INCOME
Interest $ 2,663
--------
EXPENSES
Management fee 249
Service fee 77
Distribution fee - Class B 151
Distribution fee - Class C 2
Transfer agent fee 78
Bookkeeping fee 22
Trustees fee 6
Audit fee 10
Legal fee 3
Registration fee 10
Reports to shareholders 4
Other 10
--------
622
Fees waived by the Distributor - Class C (1)
--------
621
--------
Net Investment Income 2,042
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments (151)
Closed futures contracts 132
--------
Net realized loss (19)
Net change in unrealized appreciation/depreciation during
the period on:
Investments (5,720)
Open futures contracts 6
--------
Net change in unrealized appreciation/depreciation (5,714)
--------
Net loss (5,733)
--------
DECREASE IN NET ASSETS FROM OPERATIONS $ (3,691)
--------
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
(In thousands)
(UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
JULY 31, JANUARY 31,
INCREASE (DECREASE) IN NET ASSETS 1999 1998
- --------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 2,042 $ 4,395
Net realized gain (loss) (19) 2,837
Net change in unrealized appreciation/
depreciation (5,714) (1,198)
-------- --------
Net increase (decrease) from operations (3,691) 6,034
DISTRIBUTIONS
From net investment income -- Class A (1,336) (2,762)
In excess of net investment income -- Class A -- (102)
From net realized gains -- Class A (36) (1,290)
In excess of net realized gains -- Class A -- (167)
From net investment income -- Class B (771) (1,666)
In excess of net investment income -- Class B -- (61)
From net realized gains -- Class B (24) (919)
In excess of net realized gains -- Class B -- (119)
From net investment income -- Class C (7) (12)
In excess of net investment income -- Class C -- (a)
From net realized gains -- Class C (a) (8)
In excess of net realized gains -- Class C -- (1)
-------- --------
(5,865) (1,073)
-------- --------
FUND SHARE TRANSACTIONS
Receipts for shares sold -- Class A 1,194 2,032
Value of distributions reinvested -- Class A 782 2,783
Cost of shares repurchased -- Class A (3,758) (6,277)
-------- --------
(1,782) (1,462)
-------- --------
Receipt for shares sold -- Class B 1,071 2,547
Value of distributions reinvested -- Class B 501 1,866
Cost of shares repurchased -- Class B (4,364) (7,623)
-------- --------
(2,792) (3,210)
-------- --------
Receipt for shares sold -- Class C 100 236
Value of distributions reinvested -- Class C 7 14
Cost of shares repurchased -- Class C (119) (a)
-------- --------
(12) 250
-------- --------
Net Decrease from Fund Share Transactions (4,586) (4,422)
-------- --------
Total Decrease (10,451) (5,495)
NET ASSETS
Beginning of period 103,812 109,307
-------- --------
End of period (net of overdistributed income
of $193 and $121, respectively) $ 93,361 $103,812
======== ========
NUMBER OF FUND SHARES
Sold -- Class A 161 265
Issued for distributions reinvested -- Class A 106 365
Repurchased -- Class A (508) (819)
-------- --------
(241) (189)
-------- --------
Sold -- Class B 144 333
Issued for distributions reinvested -- Class B 68 245
Repurchased -- Class B (589) (997)
-------- --------
(377) (419)
-------- --------
Sold -- Class C 13 31
Issued for distributions reinvested -- Class C 1 2
Repurchased -- Class C (16) (a)
-------- --------
(2) 33
-------- --------
(a) Rounds to less than one.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
July 31, 1999 (Unaudited)
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of management of Colonial Ohio Tax-Exempt Fund (the Fund), a
series of Liberty Funds Trust V, formerly Colonial Trust V, the accompanying
financial statements contain all normal and recurring adjustments necessary
for the fair presentation of the financial position of the Fund at July 31,
1999, and the results of its operations, the changes in its net assets and the
financial highlights for the six months then ended.
NOTE 2. ACCOUNTING POLICIES
ORGANIZATION
The Fund is a non-diversified portfolio of a Massachusetts business trust,
registered under the Investment Company Act of 1940, as amended, as an open-
end management investment company. The Fund's investment objective is to seek
as high a level of after-tax total return, as is consistent with prudent risk,
by pursuing current income exempt from federal and Ohio state personal income
tax and opportunities for long-term appreciation from a portfolio primarily
invested in investment-grade municipal bonds. The Fund may issue an unlimited
number of shares. The Fund offers three classes of shares: Class A, Class B
and Class C. Class A shares are sold with a front-end sales charge. A 1.00%
contingent deferred sales charge is assessed on redemptions made within
eighteen months on an original purchase of $1 million to $5 million. Class B
shares are subject to an annual distribution fee and a contingent deferred
sales charge. Class B shares will convert to Class A shares when they have
been outstanding approximately eight years. Class C shares are subject to a
contingent deferred sales charge on redemptions made within one year after
purchase and an annual distribution fee.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary
of significant accounting policies that are consistently followed by the Fund
in the preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS
Debt securities generally are valued by a pricing service based upon market
transactions for normal, institutional-size trading units of similar
securities. When management deems it appropriate, an over-the-counter or
exchange bid quotation is used.
Options are valued at the last reported sale price, or in the absence of a
sale, the mean between the last quoted bid and asking price.
Futures contracts are valued based on the difference between the last sale
price and the opening price of the contract.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions for which market quotations are not readily available are
valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS
All income, expenses (other than the Class B and Class C distribution fees),
and realized and unrealized gains (losses), are allocated to each class
proportionately on a daily basis for purposes of determining the net asset
value of each class.
Class B and Class C per share data and ratios are calculated by adjusting the
expense and net investment income per share data and ratios for the Fund for
the entire period by the distribution fee applicable to Class B and Class C
shares only.
FEDERAL INCOME TAXES
Consistent with the Fund's policy to qualify as a regulated investment company
and to distribute all of its taxable and tax-exempt income, no federal income
tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM
Interest income is recorded on the accrual basis. Original issue discount is
accreted to interest income over the life of a security with a corresponding
increase in the cost basis; market discount is not accreted. Premium is
amortized against interest income with a corresponding decrease in the cost
basis.
DISTRIBUTIONS TO SHAREHOLDERS
The Fund declares and records distributions daily and pays monthly.
The amount and character of income and gains to be distributed are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. Reclassifications are made to the Fund's
capital accounts to reflect income and gains available for distribution (or
available capital loss carryforwards) under income tax regulations.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE
Colonial Management Associates, Inc. (the Advisor) is the investment Advisor of
the Fund and furnishes accounting and other services and office facilities for a
monthly fee based on the Fund's pro-rata portion of the combined average net
assets of the funds constituting Trust V as follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $2 billion 0.50%
Over $2 billion 0.45%
BOOKKEEPING FEE
The Advisor provides bookkeeping and pricing services for a monthly fee equal
to $27,000 annually plus 0.035% of the Fund's average net assets over $50
million.
TRANSFER AGENT FEE
Liberty Funds Services, 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., (the Distributor), a subsidiary of the
Advisor, is the Fund's principal underwriter. During the six months ended July
31, 1999, the Fund has been advised that the Distributor retained net
underwriting discounts of $4,285 on sales of the Fund's Class A shares and
received contingent deferred sales charges (CDSC) of none, $32,954 and $206 on
Class A, Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires the payment of a distribution
fee to the Distributor equal to 0.75% annually of the Fund's average net
assets attributable to Class B and Class C shares. The Distributor has
voluntarily agreed, until further notice, to waive a portion of the Class C
share distribution fee so that it will not exceed 0.45% annually. The plan
also requires the payment of a service fee to the Distributor as follows:
Valuation of shares Annual
outstanding on the 20th of Fee
each month which were issued Rate
---------------------------- ------
Prior to December 1, 1994 0.10%
On or after December 1, 1994 0.25%
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers
who sold such shares.
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 $996 of
custodian fees were reduced by balance credits applied during the six months
ended July 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 an agreement.
NOTE 4. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY
For the six months ended July 31, 1999, purchases and sales of investments,
other than short-term obligations were $5,917,579 and $10,057,829,
respectively.
Unrealized appreciation (depreciation) at July 31, 1999, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $4,012,270
Gross unrealized depreciation (1,268,862)
----------
Net unrealized appreciation $2,743,408
==========
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 5. LINE OF CREDIT
The Fund may borrow up to 33 1/3% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore
loan rate plus 1/2 of 1%. There were no borrowings under the line of credit
during the six months ended July 31, 1999.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of each class outstanding
throughout each period are as follows:
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JULY 31, 1999
---------------------------------------------------------------------------
CLASS A CLASS B CLASS C
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.650 $ 7.650 $ 7.650
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.164 0.136 0.147(a)
Net realized and unrealized loss (0.429) (0.429) (0.429)
-------- -------- --------
Total from Investment Operations (0.265) (0.293) (0.282)
-------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income (0.170) (0.142) (0.153)
From net realized gains (0.005) (0.005) (0.005)
-------- -------- --------
Total Distributions Declared to Shareholders (0.175) (0.147) (0.158)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 7.210 $ 7.210 $ 7.210
-------- -------- --------
Total return (b)(c) (3.50)% (3.86)% (3.72)%(d)
-------- -------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses (e) 0.95% 1.70% 1.40%(a)
Net investment income (e) 4.43% 3.68% 3.98%(a)
Portfolio turnover (c) 6% 6% 6%
Net assets at end of period (000) $ 55,531 $ 37,484 $ 346
(a) Net of fees waived by the Distributor which amounted to $0.011 per share and 0.30% (annualized).
(b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred
sales c harge.
(c) Not annualized.
(d) Had the Distributor not waived a portion of expenses, total return would have been reduced.
(e) Annualized.
<CAPTION>
YEAR ENDED JANUARY 31, 1999
-----------------------------------------------------------------
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.720 $ 7.720 $ 7.720
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) 0.350 0.291 0.314(b)
Net realized and unrealized gain 0.128 0.128 0.128
-------- -------- --------
Total from Investment Operations 0.478 0.419 0.442
-------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.349) (0.292) (0.314)
In excess of net investment income (0.013) (0.011) (0.012)
From net realized gains (0.165) (0.165) (0.165)
In excess of net realized gains (0.021) (0.021) (0.021)
-------- -------- --------
Total Distributions Declared to Shareholders (0.548) (0.489) (0.512)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 7.650 $ 7.650 $ 7.650
-------- -------- --------
Total return (c)(d) 6.44% 5.62% 5.95%
-------- -------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses (e) 0.90% 1.65% 1.35%(b)
Net investment income (e) 4.51% 3.76% 4.06%(b)
Fees and expenses waived or borne by the Advisor (e) 0.02% 0.02% 0.02%
Portfolio turnover 30% 30% 30%
Net assets at end of period (000) $ 60,783 $ 42,651 $ 378
(a) Net of fees and expenses waived or borne by the
Advisor which amounted to: $ 0.001 $ 0.001 $ 0.001
(b) Net of fees waived by the Distributor which amounted to $0.023 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 c harge.
(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 no impact.
<CAPTION>
YEAR ENDED JANUARY 31
---------------------------------------------------------------------------------
1998 1997
---------------------------------------------- -------------------------
CLASS A CLASS B CLASS C(b) CLASS A CLASS B
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.340 $ 7.340 $ 7.610 $ 7.510 $ 7.510
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) 0.362 0.306 0.162(c) 0.372 0.318
Net realized and unrealized gain (loss) 0.394 0.394 0.124 (0.179) (0.179)
-------- -------- -------- -------- --------
Total from Investment Operations 0.756 0.700 0.286 0.193 0.139
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income (0.365) (0.309) (0.165) (0.363) (0.309)
From net realized gains (0.011) (0.011) (0.011) -- --
-------- -------- -------- -------- --------
Total Distributions Declared to
Shareholders (0.376) (0.320) (0.176) (0.363) (0.309)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 7.720 $ 7.720 $ 7.720 $ 7.340 $ 7.340
-------- -------- -------- -------- --------
Total return (d)(e) 10.58% 9.76% 3.81%(f) 2.75% 1.98%
-------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses (g) 0.89% 1.64% 1.34%(c)(h) 0.88% 1.63%
Net investment income (g) 4.85% 4.10% 4.21%(c)(h) 5.09% 4.34%
Fees and expenses waived or borne by
the Advisor (g) 0.05% 0.05% 0.07%(i) 0.04% 0.04%
Portfolio turnover 27% 27% 27% 31% 31%
Net assets at end of period (000) $ 62,844 $ 46,330 $ 133 $ 65,190 $ 49,474
(a) Net of fees and expenses waived or borne
by the Advisor which amounted to: $ 0.004 $ 0.004 $ 0.005 $ 0.003 $ 0.003
(b) Class C shares were initially offered on August 1, 1997. Per share amounts reflect activity from that date.
(c) Net of fees waived by the Distributor which amounted to $0.011 per share and 0.30% (annualized).
(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.
(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.
<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 $ 6.930 $ 6.930 $ 7.670 $ 7.670
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) 0.375 0.321 0.401 0.348
Net realized and unrealized gain (loss) 0.585 0.585 (0.745) (0.745)
-------- -------- -------- --------
Total from Investment Operations 0.960 0.906 (0.344) (0.397)
-------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income (0.380) (0.326) (0.396) (0.343)
-------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 7.510 $ 7.510 $ 6.930 $ 6.930
-------- -------- -------- --------
Total return (b)(c) 14.18% 13.34% (4.38)% (5.10)%
-------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.85%(d) 1.60%(d) 0.72% 1.47%
Net investment income 5.19%(d) 4.44%(d) 5.71% 4.96%
Fees and expenses waived or borne by the Advisor 0.11%(d) 0.11%(d) 0.16% 0.16%
Portfolio turnover 31% 31% 33% 33%
Net assets at end of period (000) $74,383 $56,160 $72,123 $ 53,547
(a) Net of fees and expenses waived or borne by the
Advisor which amounted to: $ 0.008 $ 0.008 $ 0.011 $ 0.011
(b )Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent
deferred sales c harge.
(c) Had the Advisor and Distributor not waived or reimbursed a portion of expenses, total return would have been reduced.
(d) The benefits derived from custody credits and direct brokerage agreements had no impact. Prior years' ratios are net of
benefits received, if any.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
TRUSTEES & TRANSFER AGENT
- --------------------------------------------------------------------------------
ROBERT J. BIRNBAUM WILLIAM E. MAYER
Consultant (formerly Special Partner, Development Capital, LLC
Counsel, Dechert, Price & Rhoads; (formerly Dean, College of Business
President and Chief Operating and Management, University of
Officer, New York Stock Exchange, Maryland; Dean, Simon Graduate
Inc.; President, American Stock School of Business, University of
Exchange Inc.) Rochester; Chairman and Chief
Executive Officer, CS First Boston
TOM BLEASDALE Merchant Bank; and President and
Retired (formerly Chairman of the Chief Executive Officer, The First
Board and Chief Executive Officer, Boston Corporation)
Shore Bank & Trust Company)
JAMES L. MOODY, JR.
JOHN V. CARBERRY Retired (formerly Chairman of the
Senior Vice President of Liberty Board, Chief Executive Officer and
Financial Companies, Inc. (formerly Director Hannaford Bros. Co.)
Managing Director, Salomon
Brothers) JOHN J. NEUHAUSER
Dean, Boston College School of
LORA S. COLLINS Management
Attorney (formerly Attorney,
Kramer, Levin, Naftalis & Frankel) THOMAS E. STITZEL
Professor of Finance, College of
JAMES E. GRINNELL Business, Boise State University;
Private Investor (formerly Senior Business Consultant and Author
Vice President-Operations, The
Rockport Company) ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly
RICHARD W. LOWRY Management Consultant, Saatchi and
Private Investor (formerly Chairman Saatchi Consulting Ltd. and
and Chief Executive Officer, U.S. Principal and International
Plywood Corporation) Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SALVATORE MACERA
Private Investor (formerly ANNE-LEE VERVILLE
Executive Vice President of Itek Consultant (formerly General
Corp. and President of Itek Optical Manager, Global Education Industry,
& Electronic Industries, Inc.) and President, Applications
Solutions Division, IBM
Corporation)
- --------------------------------------------------------------------------------
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Ohio Tax-Exempt Fund is:
Liberty Funds Services, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
The Fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call 1-800-426-3750 and additional reports
will be sent to you.
This report has been prepared for shareholders of Colonial Ohio Tax-Exempt
Fund. 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.
<PAGE>
- --------------------------------------------------------------------------------
CHOOSE LIBERTY
- --------------------------------------------------------------------------------
BECAUSE NO SINGLE INVESTMENT MANAGER CAN BE ALL THINGS TO ALL INVESTORS.(SM)
- --------------------------------------------------------------------------------
L I B E R T Y
- --------------------------------------------------------------------------------
[Graphic Omitted] Colonial has long been a recognized leader in fixed-income
investing. In addition, Colonial has distinguished itself
with both a traditional value and a more contemporary
approach to equity investing.
- --------------------------------------------------------------------------------
[Graphic Omitted] Crabbe Huson's contrarian investment style seeks long-term
performance by investing in stocks from high-quality,
out-of-favor companies. This risk-averse strategy
capitalizes on the potential of these companies to regain
market popularity.
- --------------------------------------------------------------------------------
[Graphic Omitted] LAMCO brings institutional money management to individual
investors through a disciplined multi-manager investment
process that seeks to deliver consistent long-term returns.
- --------------------------------------------------------------------------------
[Graphic Omitted] A leader in Asian investing(TM), Newport has an unparalleled
knowledge of Asian economies, business and culture.
- --------------------------------------------------------------------------------
[Graphic Omitted] Stein Roe's growth management style emphasizes companies
with the ability to create, maintain and grow earnings in
different market environments.
- --------------------------------------------------------------------------------
BOSTON o CHICAGO o NEW YORK o PORTLAND o SAN FRANCISCO
- --------------------------------------------------------------------------------
That's why each of these affiliated managers has excelled in a particular
investment style. These managers not only specialize in a distinct investment
style, they hold a passion for their style along with a demonstrated track
record.
Each of these managers is a member of the Liberty Financial Companies (NYSE: L),
a diversified asset accumulation and management organization with over $62.7
billion in assets under management for more than 1.7 million investors. Many of
the affiliated managers' products are offered by prospectus through Liberty
Funds Distributor, Inc.
Ask your financial advisor to help you develop an investment strategy that
blends the complementary disciplines of different managers into a well-balanced
program tailored to your goals.
- --------------------------------------------------------------------------------
COLONIAL OHIO TAX-EXEMPT FUND SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
[Graphic
Omitted] L I B E R T Y
-----------------
F U N D S
ALL-STAR o 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
www.libertyfunds.com
OH-03/558H-0799 (9/99) 99/1161
