<PAGE>
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COLONIAL MINNESOTA TAX-EXEMPT FUND SEMIANNUAL REPORT
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July 31, 1999
[graphic omitted]
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COLONIAL MINNESOTA TAX-EXEMPT FUND
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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
--------------------------
PRESIDENT'S MESSAGE
[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 remember that the Fund has provided top-quartile returns for the
one-, three- and five-year periods ended July 31, 1999, according to Lipper,
Inc.(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 Minnesota Tax-Exempt Fund and for giving us the
opportunity to serve your investment needs.
Sincerely,
/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 Minnesota Municipal
Debt Category was negative 2.05% 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 (41 out of 47 funds), in the first quartile for the one-year period
(9 out of 47 funds), in the first quartile for the three-year period (4 out
of 45 funds), in the first quartile for the five-year period (7 out of 30
funds) and in the third quartile for the 10-year period (7 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 ("the 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 of a percentage 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 generated increased demand
for tax-exempt bonds. With supply low, municipal bonds 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
30-Year
Treasury Municipal
Bond Bond
- ----------------------------------------------
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
ON 7/31/99
Class A $7.01
- -------------------------
Class B $7.01
- -------------------------
Class C $7.01
- -------------------------
DISTRIBUTIONS DECLARED PER
SHARE FROM 2/1/99 TO 7/31/99
Class A $0.168
- -------------------------
Class B $0.141
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Class C $0.152
- -------------------------
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.
30-DAY SEC YIELDS ON 7/31/99
Class A 4.32%
- -------------------------
Class B 3.77%
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Class C 4.08%
- -------------------------
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 3.77% for Class C shares.
TAXABLE-EQUIVALENT SEC YIELDS
ON 7/31/99
Class A 7.82%
- -------------------------
Class B 6.82%
- -------------------------
Class C 7.38%
- -------------------------
Taxable-equivalent SEC yields are based on the combined maximum effective 44.7%
federal and Minnesota state income tax rate. This tax rate does not reflect the
phase out of exemptions or the reduction of otherwise allowable deductions which
occur when Adjusted Gross Income exceeds certain levels.
<PAGE>
SEMIANNUAL REPORT: COLONIAL MINNESOTA TAX-EXEMPT FUND
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PORTFOLIO MANAGER'S REPORT
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MARKET VOLATILITY PROMPTED A MORE CONSERVATIVE STRATEGY
During the past six months, we pursued a more conservative investment strategy
in response to the strong U.S. economy. As a series of government 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 - with total return characteristics that
are not impacted as severely by rising interest rates.
PERFORMANCE REFLECTS WEAK BOND MARKET CONDITIONS
During the six-month period, the Fund's Class A shares generated a total return
of negative 2.50%, without a sales charge. This performance echoed the difficult
fixed-income conditions that prevailed throughout the period. Although the Fund
adopted a more conservative strategy in response, the portfolio's interest rate
sensitivity remained modestly higher than its Lipper competitive peer group,
reflecting our longer-term outlook for a more positive investment environment
for municipal bonds.
INVESTMENT ACTIVITY FOCUSED ON HIGHER-YIELDING BONDS
We selectively purchased bonds that met our rigorous investment criteria,
including well-managed facilities with strong cash flows, attractive markets or
service territories, and good long-term growth prospects. These investments
included multi-family housing, education, and health care facilities. 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. Vigorous demand and high occupancy levels supported
higher rents and increased cash flows for project owners.
MINNESOTA'S STRONG ECONOMY UNCHANGED
Minnesota's diverse economy, favorable population trends and solid income growth
provided a strong foundation for another period of economic advances. Strength
in manufacturing - despite declines in other parts of the country - as well as
construction and high technology, particularly in the Minneapolis-St. Paul area,
have fueled much of the state's growth. The state's ability to attract new
residents at a faster pace than the rest of the region also contributed to tax
receipts that exceeded forecasts in all categories for the 1999 fiscal year.
However, like much of the nation, Minnesota has been experiencing a very tight
labor market which may restrain economic growth in future periods. In response,
we have emphasized revenue-backed essential service bonds, such as those where
repayment is not dependent on economically-sensitive tax receipts.
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.
Minnesota's economy, which has been among the strongest in the nation, is
expected to continue growing for the next several years, according to the
Minnesota Department of Economic Security (MDES). The economy continues to
produce job growth in high technology and several other professional fields,
which should be sustained through 2006, according to the MDES's forecasts. This
solid economic foundation should provide a healthy backdrop for the state's
municipal bond issuers.
/s/ Brian M. Hartford
Brian M. Hartford
BRIAN M. HARTFORD is portfolio manager of Colonial Minnesota Tax-Exempt Fund and
is a senior vice president of Colonial Management Associates, Inc. (CMA).
QUALITY BREAKDOWN
AS OF 7/31/99
AAA 40.7%
- ------------------------------
AA 24.8%
- ------------------------------
A 9.5%
- ------------------------------
BBB 7.4%
- ------------------------------
BB 0.9%
- ------------------------------
CCC 1.2%
- ------------------------------
Non-rated 12.8%
- ------------------------------
Short-term obligations 2.7%
- ------------------------------
Quality breakdown categories are calculated as a percentage of total
investments, including short-term obligations. Ratings shown in Quality
Breakdown 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 this quality breakdown in the future.
BOUGHT
We purchased a high-yield position in Lakeshore multi-family housing complex
(0.94% of net assets), taking advantage of the favorable conditions in the
housing market. We also added to our non-rated holdings - which help the Fund's
yield - by purchasing Hibbing Economic Development Authority, which has a
storage facility for municipal snow removal and landscaping equipment in Hibbing
(1.00% of net assets).
CHANGE IN TOP FIVE SECTOR BREAKDOWNS 7/31/99 VS. 1/31/99
7/31/99 1/31/99
- ----------------------------------------------------------
LOCAL GENERAL OBLIGATIONS 18.7% 16.5%
HOSPITALS 15.2% 15.1%
EDUCATION 13.6% 13.4%
REFUNDED/ESCROWED 7.0% 7.9%
JOINT POWER AUTHORITY 6.1% 11.1%
Sector breakdown categories 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 this sector breakdown in the future.
<PAGE>
SEMIANNUAL REPORT: COLONIAL MINNESOTA TAX-EXEMPT FUND
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PERFORMANCE INFORMATION
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AVERAGE ANNUAL TOTAL RETURNS AS OF 7/31/99
Share Class A B C
Inception 9/26/86 8/4/92 8/1/97
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Without With Without With Without With
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
- --------------------------------------------------------------------------------
6 months (cumulative return) (2.50)% (7.13)% (2.87)% (7.63)% (2.72)% (3.67)%
- --------------------------------------------------------------------------------
1 year 2.31 (2.55) 1.54 (3.23) 1.85 0.90
- --------------------------------------------------------------------------------
5 years 6.02 4.99 5.22 4.90 5.82 5.82
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10 years 6.38 5.86 5.82 5.82 6.28 6.28
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AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/99
Share Class A B C
- --------------------------------------------------------------------------------
Without With Without With Without With
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
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1 year 2.20% (2.66)% 1.41% (3.31)% 1.73% 0.78%
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5 years 6.35 5.32 5.56 5.23 6.17 6.17
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10 years 6.47 5.96 5.92 5.92 6.38 6.38
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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 sales charge of 4.75% for Class A shares and the maximum applicable
contingent deferred sales charges of 5% for both six months and one year
returns, 2% for five years for Class B and 1% for both six months and one year
for Class C returns. 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>
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INVESTMENT PORTFOLIO
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July 31, 1999 (Unaudited)
(In thousands)
MUNICIPAL BONDS - 100.7% PAR VALUE
- ------------------------------------------------------------------------------
EDUCATION - 13.8%
EDUCATION
State Higher Education Facilities Authority:
Carleton College, Series 4-N,
5.000% 11/01/18 $ 1,500 $ 1,423
Macalester College, Series 4-N,
5.550% 03/01/17 500 513
Northwestern College of Chiropractic,
Series 1998 4-Z,
5.200% 10/01/13 275 266
St. Johns University, Series 4-L,
5.350% 10/01/17 1,000 975
St. Thomas University:
Series 4-M,
5.350% 04/01/17 500 493
Series 4-P,
5.375% 04/01/18 525 513
Univeristy of Minnesota:
Series 1996-A:
5.750% 07/01/14 500 531
5.750% 07/01/17 1,000 1,056
Series 1999-A,
5.500% 07/01/21 1,000 1,021
Victoria, Holy Family Catholic High School,
Series 1999-A,
5.875% 09/01/29 300 294
--------
7,085
--------
- -----------------------------------------------------------------------------
HEALTHCARE - 18.4%
HOSPITAL - 15.4%
Benedictine Health, 4.750% 02/15/16 1,000 925
Marshall, Weiner Memorial Medical Center,
Series 1999,
6.000% 11/01/28 300 289
Monticello-Big Lake Community Hospital District,
5.750% 12/01/19 500 504
Princeton, Fairview Hospital, Series 1991-C,
6.250% 01/01/21 300 316
Red Wing, River Region Group, Series 1993-A:
6.400% 09/01/12 200 209
6.500% 09/01/22 300 315
Redwood Falls Hospital,
5.750% 12/01/23 500 484
Rochester:
Mayo Foundation:
Series 1998-A,
5.500% 11/15/27 1,000 990
Series 1998-B,
5.500% 11/15/27 1,000 990
Mayo Medical Center, Series 1992-I,
5.900% 11/15/09 1,000 1,079
St. Paul Housing & Redevelopment Authority:
Healtheast Project, Series A,
5.500% 11/01/09 250 238
Series 1993-B,
6.625% 11/01/17 675 685
St. Paul Regions Hospital, Series 1998,
5.300% 05/15/28 1,000 907
--------
7,931
--------
LIFECARE - 1.5%
Columbia Heights, Crest View Corp.,
Series 1998,
6.000% 03/01/33 300 289
Golden Valley, Covenant Retirement
Communities, Inc.,
Series 1999-A,
5.500% 12/01/29 500 470
--------
759
--------
NURSING HOME - 1.5%
Duluth Economic Development Authority,
BSM Properties, Inc.,
Series 1998-A,
5.875% 12/01/28 250 240
Minneapolis, Walker Methodist Senior Services Group,
Series 1998-A,
5.875% 11/15/18 250 241
North Ridge Care Center, Inc., Series 1999,
5.875% 03/01/29 300 286
--------
767
--------
--------
HOUSING - 6.9%
ASSISTED LIVING/SENIOR - 0.8%
Bloomington Housing & Redevelopment Authority, Senior
Summer House, Series 1998,
5.500% 11/01/01 110 110
Roseville, Elder Care Institute, Inc., Series 1993,
7.750% 11/01/23 300 296
--------
406
--------
MULTI-FAMILY - 3.1%
Dakota County Housing & Redevelopment Authority,
Series 1999,
6.000% 11/01/09 300 294
Grand Housing & Redevelopment Authority, Lakeshore
Forest Park Apartments,
Series 1999-B,
5.700% 10/01/29 500 485
Lakeville, Southfork Apartment Project,
Series 1989-A,
9.875% 02/01/20 200 201
Minneapolis Redevelopment Mortgage,
Riverplace Project,
Series 1987-A,
7.100% 01/01/20 215 216
Washington County Housing & Redevelopment Authority,
Cottages of Aspen,
Series 1992,
9.250% 06/01/22 175 190
White Bear Lake, Birch Lake Townhomes Project,
Series 1989-A,
9.750% 07/15/19 200 201
--------
1,587
--------
SINGLE-FAMILY - 3.0%
Chicago & Stearns Counties, Series 1994-B,
7.050% 09/01/27 1,175 1,254
Dakota County Housing & Redevelopment
Authority, Series 1986,
7.200% 12/01/09 55 55
Minneapolis-St. Paul Housing Board,
Series 1987-C,
8.875% 11/01/18 205 210
Washington County Housing & Redevelopment Authority,
City of Cottage
Grove, Series 1986,
7.600% 12/01/11 30 30
--------
1,549
--------
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OTHER - 9.6%
POOL/BOND BANK - 2.5%
Minneapolis Community Development Agency, Series 1991-1,
8.000% 12/01/16 250 268
State Public Facilities Authority, Water Pollution
Control Revenue, Series 1996-B,
5.400% 03/01/16 1,000 1,007
--------
1,275
--------
REFUNDED/ESCROWED (a) - 7.1%
Burnsville, Fairview Community Hospital,
Series 1982-A,
(b) 05/01/12 (c) 2,145 986
Dakota & Washington Counties Housing & Redevelopment
Authority, Series 1988,
8.150% 09/01/16 235 310
Metropolitan Council, Hubert H. Humphrey Metrodome,
Series 1992,
6.000% 10/01/09 300 321
Moorhead Residential,
7.100% 08/01/11 20 22
St. Louis Park, Methodist Hospital, Series 1990-C,
7.250% 07/01/18 165 174
State Higher Education Facilities Authority:
Hamline University, Series 3-K,
6.600% 06/01/08 250 265
University of St. Thomas, Series 3-C,
7.100% 09/01/10 100 105
Western Minnesota Municipal Power Agency,
Series 1983-A,
9.750% 01/01/16 1,000 1,475
--------
3,658
--------
- -----------------------------------------------------------------------------
OTHER REVENUE - 8.1%
HOTELS - 0.5%
Minneapolis, Holiday Inn Metrodome Project,
6.000% 12/01/01 250 251
--------
INDUSTRIAL - 6.1%
Alexandria Industrial Development Revenue Bonds,
Seluemed Ltd.,
5.850% 03/01/18 830 822
Duluth Seaway Port Authority, Cargill Inc.,
Series 1993-A,
5.750% 12/01/16 1,500 1,543
Brooklyn Park, TL Systems Corp., Series 1991,
10.000% 09/01/16 245 289
Von Ruden Manufacturing, Inc., Series 1989,
10.500% 09/01/14 500 516
--------
3,170
--------
PAPER PRODUCTS - 1.5%
Hubbard County Solid Waste Disposal Revenue,
Potlach Corp., Series 1987-A,
7.375% 08/01/13 285 294
International Falls, Boise Cascade Corp. Project,
5.650% 12/01/22 500 474
--------
768
--------
- -----------------------------------------------------------------------------
TAX BACKED - 30.4%
LOCAL APPROPRIATED - 4.4%
Elk River Independent School District No. 728,
Series 1997-A,
5.375% 02/01/17 1,000 1,002
Hibbing Economic Development Authority,
6.400% 02/01/12 500 513
Minneapolis Special School District, Series 1998-A,
4.750% 02/01/18 500 458
Mountain Lake Economic Development Authority,
Series 1999,
5.800% 12/01/18 290 285
--------
2,258
--------
LOCAL GENERAL OBLIGATIONS - 19.0%
Austin, Series 1998-A,
5.450% 10/01/17 500 502
Minnesota Hennepin County,
5.000% 12/01/15 1,000 977
New York Mills Independent School District
No. 553, Series 1992-A,
6.850% 02/01/18 210 222
North St. Paul & Maplewood Unified School District,
Series 1996-A,
5.125% 02/01/25 2,000 1,882
Minnesota Park Rapids Independent School,
4.750% 02/01/21 1,500 1,368
Roseau Independent School District No. 682,
Series 1991,
7.000% 02/01/14 200 204
Rosemount Independent School District No. 196,
Series 1994-B,
(b) 06/01/10 2,765 1,599
St. Cloud Hydroelectric, Series 1996-D,
5.250% 12/01/18 2,000 1,976
Wasica Independent School District No. 829,
5.500% 04/01/17 1,000 1,051
--------
9,781
--------
SPECIAL NON-PROPERTY TAX - 0.6%
Red Lake Bank of Chippewa Indians, Series 1998,
6.250% 08/01/13 300 292
--------
SPECIAL PROPERTY TAX - 0.4%
Duluth Economic Development Authority,
Series 1998-A,
(b) 02/01/08 (c) 295 195
--------
STATE APPROPRIATED - 4.1%
State, Duluth Airport, Series 1995-B,
6.250% 08/01/14 2,000 2,120
--------
STATE GENERAL OBLIGATIONS - 1.9%
State, Series 1995,
5.250% 08/01/14 1,000 1,005
--------
- -----------------------------------------------------------------------------
TRANSPORTATION - 5.6%
AIRPORT - 3.8%
Minneapolis Metropolitan Airport,
6.895% 01/01/22 1,000 950
Minneapolis-St. Paul Metropolitan Airports
Commission, Series 1998-B,
5.250% 01/01/12 1,000 998
--------
1,948
--------
TRANSPORTATION - 1.8%
Blaine, Consolidated Freightways, Inc., Series 1998,
5.150% 01/01/04 300 298
St. Paul Port Authority, Series F:
9.125% 12/01/00 25 25
9.125% 12/01/01 25 25
9.125% 12/01/02 25 25
9.125% 12/01/14 575 535
--------
908
--------
- -----------------------------------------------------------------------------
UTILITY - 7.9%
INVESTOR OWNED - 1.7%
Anoka County: Northern States Power Co.,
Series 1998,
4.600% 12/01/08 (d) 500 484
United Power Assoc., Series 1987-A,
6.950% 12/01/08 400 417
--------
901
--------
JOINT POWER AUTHORITY - 6.2%
Southern Minnesota Municipal Power Agency:
Series A,
5.000% 01/01/16 1,450 1,401
Series 1993-A:
5.000% 01/01/12 750 730
4.750% 01/01/16 (c) 250 232
Series 1994-A, (b)
01/01/27 (c) 3,900 830
--------
3,193
--------
TOTAL MUNICIPAL BONDS (cost of $51,028) 51,807
--------
OPTIONS - 0.0% CONTRACTS VALUE
- -----------------------------------------------------------------------------
September 1999 Treasury Bond Put,
Strike Price 112, expiration 08/20/99 9,600 $ 17
September 1999 Treasury Bond Call,
Strike Price 124, expiration 08/21/99 1,700 (e)
--------
TOTAL OPTIONS (cost of $124) 17
--------
TOTAL INVESTMENTS (cost of $51,152) (f) 51,824
--------
SHORT TERM OBLIGATIONS - 0.8% PAR
- -----------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES(g)
NY New York City, Series B,
3.700% 10/01/22 $ 400 400
--------
OTHER ASSETS & LIABILITIES - (1.5)% (764)
- -----------------------------------------------------------------------------
NET ASSETS - 100% $ 51,460
--------
NOTES TO INVESTMENT PORTFOLIO
- -----------------------------------------------------------------------------
(a) The Fund has been informed that each issuer has placed direct obligation of
the U.S. Government in an irrevocable trust, solely for the payment of the
interest and principal.
(b) Zero coupon bond.
(c) These securities, or a portion thereof, with a total market value of $1,999
are being used to collateralize the delayed delivery purchase indicated in
note (d) below, open call on futures and open futures contracts.
(d) This security has been purchased on a delayed delivery basis for settlement
at a future date beyond the customary settlement time.
(e) Rounds to less than one.
(f) Cost for federal income tax purposes is the same.
(g) 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.
Short futures contracts open at July 31, 1999:
PAR VALUE UNREALIZED
COVERED BY EXPIRATION APPRECIATION
TYPE CONTRACTS MONTH AT 7/31/99
- --------------------------------------------------------------------------------
Treasury Bond 1,000 September $30
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
July 31, 1999 (Unaudited)
(In thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $51,152) $51,824
Short-term obligations 400
-------
52,224
Receivable for:
Interest 765
Investments sold 25
Fund shares sold 11
Variation margin on futures 3
Other 62
-------
866
-------
Total Assets 53,090
LIABILITIES
Payable for:
Investments purchased 1,450
Fund shares repurchased 97
Distributions 68
Payable to Advisor 3
Accrued:
Deferred Trustees fees 3
Other 9
-------
Total Liabilities 1,630
-------
Net Assets $51,460
-------
CLASS A
Net asset value & redemption price per share ($30,935/4,412) $ 7.01(a)
-------
Maximum offering price per share ($7.01/0.9525) $ 7.36(b)
-------
CLASS B
Net asset value & offering price per share ($20,189/2,879) $ 7.01(a)
-------
CLASS C
Net asset value & offering price per share ($336/48) $ 7.01(a)
-------
COMPOSITION OF NET ASSETS
Capital paid in $51,337
Overdistributed net investment income (66)
Accumulated net realized loss (513)
Net unrealized appreciation on:
Investments 672
Open futures contracts 30
-------
$51,460
-------
(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 $ 1,467
-------
EXPENSES
Management fee $ 133
Service fee 48
Distribution fee - Class B 80
Distribution fee - Class C 1
Transfer agent fee 35
Bookkeeping fee 14
Trustees fee 5
Audit fee 10
Legal fee 3
Custodian fee 1
Registration fee 10
Reports to shareholders 5
Other 12
-------
Total expenses 357
Fees waived by the Distributor - Class C (a)
-------
357
-------
Net Investment Income 1,110
-------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments (55)
Closed futures contracts 138
-------
Net Realized Gain 83
Net change in unrealized appreciation/depreciation during
the period on:
Investments (2,678)
Open futures contracts 43
-------
Net Change in Unrealized Appreciation/Depreciation (2,635)
-------
Net Loss (2,552)
-------
DECREASE IN NET ASSETS FROM OPERATIONS $(1,442)
-------
(a) Rounds to less than one.
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
(In thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
JULY 31, JANUARY 31,
INCREASE (DECREASE) IN NET ASSETS 1999 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 1,110 $ 2,289
Net realized gain 83 1,451
Net change in unrealized appreciation/depreciation (2,635) (619)
-------- --------
Net Increase (Decrease) from Operations (1,442) 3,121
DISTRIBUTIONS
From net investment income -- Class A (713) (1,485)
In excess of net investment income -- Class A -- (65)
From net realized gains -- Class A (29) (774)
In excess of net realized gains -- Class A -- (209)
From net investment income -- Class B (396) (802)
In excess of net investment income -- Class B -- (35)
From net realized gains -- Class B (19) (513)
In excess of net realized gains -- Class B -- (139)
From net investment income -- Class C (6) (9)
In excess of net investment income -- Class C -- (a)
From net realized gains -- Class C (a) (6)
In excess of net realized gains -- Class C -- (2)
-------- --------
(2,605) (918)
-------- --------
FUND SHARE TRANSACTIONS
Receipts for shares sold -- Class A 1,873 1,527
Value of distributions reinvested -- Class A 477 1,749
Cost of shares repurchased -- Class A (1,934) (3,475)
-------- --------
416 (199)
-------- --------
Receipt for shares sold -- Class B 1,338 2,986
Value of distributions reinvested -- Class B 288 1,105
Cost of shares repurchased -- Class B (1,802) (2,606)
-------- --------
(176) (1,485)
-------- --------
Receipts for shares sold -- Class C 76 120
Value of distributions reinvested -- Class C 6 17
Cost of shares repurchased -- Class C (a) (a)
-------- --------
82 137
-------- --------
Net Increase from Fund Share Transactions 322 1,423
-------- --------
Total Increase (Decrease) (2,283) 505
NET ASSETS
Beginning of period 53,743 53,238
-------- --------
End of period (net of overdistributed net investment
income of $66 and $61, respectively) $ 51,460 $ 53,743
======== ========
NUMBER OF FUND SHARES
Sold -- Class A 259 206
Issued for distributions reinvested -- Class A 66 237
Repurchased -- Class A (269) (467)
-------- --------
56 (24)
-------- --------
Sold -- Class B 184 402
Issued for distributions reinvested -- Class B 40 150
Repurchased -- Class B (251) (352)
-------- --------
(27) 200
-------- --------
Sold -- Class C 10 16
Issued for distributions reinvested -- Class C 1 3
Repurchased -- Class C (a) (a)
-------- --------
11 19
-------- --------
(a) Rounds to less than one.
</TABLE>
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 Minnesota 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 by pursuing current income exempt from
ordinary federal 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 on redemptions made within
eighteen months on an original purchase of $1 million to $5 million. Class B
shares are subject to an annual distribution fee and a contingent deferred sales
charge. Class B shares will convert to Class A shares when they have been
outstanding approximately eight years. Class C shares are subject to a
contingent deferred sales charge on redemptions made within one year after
purchase and an annual distribution fee.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies that are consistently followed by the Fund in
the preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS
Debt securities generally are valued by a pricing service based upon market
transactions for normal, institutional-size trading units of similar securities.
When management deems it appropriate, an over-the-counter or exchange bid
quotation is used.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and asking price.
Futures contracts are valued based on the difference between the last sale price
and the opening price of the contract.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost. Portfolio positions for which market quotations are not readily
available are valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS
All income, expenses (other than the Class B and Class C distribution fees),
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. For the six months ended July 31, 1999, the
Fund has been advised that the Distributor retained net underwriting discounts
of $3,206 on sales of the Fund's Class A shares and received contingent deferred
sales charges (CDSC) of none, $20,241 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 does not exceed 0.45% annually. The plan also
requires the payment of a service fee to the Distributor as follows:
Valuation of shares
outstanding on the 20th of
each month which were issued Annual Fee 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.
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 the custodian bank under which custodian fees
were reduced by balance credits of $1,150 applied during the six months ended
July 31, 1999. The Fund could have reinvested a portion of 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 $8,144,456 and $6,132,809, 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 $1,461,035
Gross unrealized depreciation (789,130)
---------
Net unrealized appreciation $ 671,905
==========
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 amount recorded 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 for 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:
(UNAUDITED)
SIX MONTHS ENDED JULY 31, 1999
-------------------------------
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.360 $ 7.360 $ 7.360
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.160 0.133 0.144(a)
Net realized and unrealized loss (0.342) (0.342) (0.342)
------- ------- -------
Total from Investment Operations (0.182) (0.209) (0.198)
------- ------- -------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income (0.161) (0.134) (0.145)
From net realized gains (0.007) (0.007) (0.007)
------- ------- -------
Total Distributions Declared to
Shareholders (0.168) (0.141) (0.152)
------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 7.010 $ 7.010 $ 7.010
------- ------- -------
Total return (b)(c) (2.50)% (2.87)% (2.72)%(d)
------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses (e)(f) 1.03% 1.78% 1.48%(a)
Net investment income (e)(f) 4.47% 3.72% 4.02%(a)
Portfolio turnover (c) 12% 12% 12%
Net assets at end of period (000) $30,935 $20,189 $ 336
(a) Net of fees waived by the Distributor which amounted to $0.011 per share and
0.30%.
(b) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(c) Not annualized.
(d) Had the Distributor not waived a portion of expenses, total return would
have been reduced.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(f) Annualized.
YEAR ENDED JANUARY 31, 1999
-------------------------------
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.490 $ 7.490 $ 7.490
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) 0.351 0.293 0.316(b)
Net realized and unrealized gain 0.110 0.110 0.110
------- ------- -------
Total from Investment Operations 0.461 0.403 0.426
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.345) (0.289) (0.311)
In excess of net investment income (0.015) (0.013) (0.014)
From net realized gains (0.182) (0.182) (0.182)
In excess of net realized gains (0.049) (0.049) (0.049)
------- ------- -------
Total Distributions Declared to
Shareholders (0.591) (0.533) (0.556)
------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 7.360 $ 7.360 $ 7.360
------- ------- -------
Total return (c)(d) 6.40% 5.59% 5.91%
------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses (e) 0.94% 1.69% 1.39%(b)
Net investment income (e) 4.62% 3.87% 4.17%(b)
Fees and expenses waived or borne
by the Advisor (e) 0.06% 0.06% 0.06%
Portfolio turnover 34% 34% 34%
Net assets at end of period (000) $32,075 $21,398 $ 270
(a) Net of fees and expenses waived or borne
by the Advisor which amounted to: $ 0.005 $ 0.005 $ 0.005
(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 $0.001 per share.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for a share of each class outstanding
throughout each period are as follows:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
--------------------------------------------------------------------------------------------
1998 1997 1996
---------------------------------------- ------------------------ ------------------------
CLASS A CLASS B CLASS C(b) CLASS A CLASS B CLASS A CLASS B
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 7.130 $ 7.130 $ 7.470 $ 7.350 $ 7.350 $ 6.840 $ 6.840
-------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income(a) 0.362 0.308 0.163(c) 0.369 0.316 0.384 0.332
Net realized and
unrealized gain (loss) 0.405 0.405 0.066 (0.222) (0.222) 0.516 0.516
-------- -------- -------- -------- -------- -------- --------
Total from
Investment Operations 0.767 0.713 0.229 0.147 0.094 0.900 0.848
-------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
From net investment income (0.362) (0.308) (0.164) (0.367) (0.314) (0.390 (0.338)
From net realized gains (0.045) (0.045) (0.045) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total Distributions
Declared to Shareholders (0.407) (0.353) (0.209) (0.367) (0.314) (0.390) (0.338)
-------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD $ 7.490 $ 7.490 $ 7.490 $ 7.130 $ 7.130 $ 7.350 $ 7.350
-------- -------- -------- -------- -------- -------- --------
Total return (d)(e) 11.04% 10.22% 3.13%(f) 2.16% 1.40% 13.50% 12.66%
-------- -------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE
NET ASSETS
Expenses (g) 0.91% 1.66% 1.36%(c)(h) 0.90% 1.65% 0.85% 1.60%
Net investment income (g) 4.97% 4.22% 4.40%(c)(h) 5.19% 4.44% 5.41% 4.66%
Fees and expenses waived
or borne by the Advisor (g) 0.11% 0.11% 0.12%(h) 0.13% 0.13% 0.24% 0.24%
Portfolio turnover 19% 19% 19% 27% 27% 42% 42%
Net assets at end of
period (000) $ 32,824 $ 20,278 $ 136 $ 34,986 $ 19,389 $ 36,586 $ 19,083
(a) Net of fees and expenses
waived or borne by the
Advisor which amounted to: $ 0.008 $ 0.008 $ 0.008 $ 0.009 $ 0.009 $ 0.016 $ 0.016
(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.
(f)Not annualized.
(g) The benefits derived from custody credits and directed brokerage arrangements had no impact. Prior year's ratios are net of
benefits received, if any.
(h) Annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
-------------------------------
1995
-------------------------------
CLASS A CLASS B
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.480 $ 7.480
-------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) 0.415 0.363
Net realized and unrealized loss (0.642) (0.642)
-------- --------
Total from Investment Operations (0.227) (0.279)
-------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income (0.413) (0.361)
-------- --------
NET ASSET VALUE, END OF PERIOD $ 6.840 $ 6.840
-------- --------
Total return (b)(c) (2.92)% (3.65)%
-------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.72% 1.47%
Net investment income 5.98% 5.23%
Fees and expenses waived or borne by the Advisor 0.26% 0.26%
Portfolio turnover 26% 26%
Net assets at end of period (000) $35,846 $14,731
(a) Net of fees and expenses waived or borne by the Advisor
which amounted to: $ 0.018 $ 0.018
(b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales
charge.
(c) Had the Advisor not reimbursed a portion of expenses, total return would have been reduced.
</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 Minnesota 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 Minnesota 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 MINNESOTA 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
MN-03/579H-0799 (9/99) 99/1104
