<PAGE>
- -------------------------------------------
COLONIAL OHIO TAX-EXEMPT FUND ANNUAL REPORT
- -------------------------------------------
January 31, 1999
[graphic omitted]
------------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
------------------------------
<PAGE>
COLONIAL OHIO TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1998 - JANUARY 31, 1999
PORTFOLIO MANAGER COMMENTARY: "Interest rate volatility, low nominal interest
rates and a near-record level of supply created challenging conditions for
tax-exempt investors. Despite these hurdles, the Fund was well-positioned. We
took advantage of declining interest rates and a well-diversified Ohio economy,
generating attractive performance relative to the Fund's Lipper peers."1 -
William Loring
COLONIAL OHIO TAX-EXEMPT FUND PERFORMANCE
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
Inception dates 9/26/86 8/4/92 8/1/97
- --------------------------------------------------------------------------------
12-month distributions declared per share(2) $0.548 $0.489 $0.512
- --------------------------------------------------------------------------------
SEC yields on 1/31/99(3) 3.62% 3.05% 3.35%
- --------------------------------------------------------------------------------
Taxable-equivalent SEC yields(4) 6.46% 5.44% 5.98%
- --------------------------------------------------------------------------------
12-month total returns, assuming reinvestment 6.44% 5.62% 5.95%
of all distributions and no sales charge or
contingent deferred sales charge (CDSC)(5)
- --------------------------------------------------------------------------------
Net asset value per share on 1/31/99 $7.65 $7.65 $7.65
QUALITY BREAKDOWN(6) (as of 1/31/99) TOP FIVE SECTORS(6) (as of 1/31/99)
- ------------------------------------ -----------------------------------
AAA ........................60.9% Local General Obligations ..30.8%
AA .........................16.6% Hospitals ..................13.6%
A ...........................6.9% Water & Sewer ..............13.6%
BBB ........................10.1% Education ...................8.4%
BB ..........................2.3% Refunded/Escrowed ...........7.2%
Nonrated ....................3.2%
(1) Please see page 3 for complete Lipper rankings.
(2) A portion of the Fund's income may be subject to the alternative minimum
tax. The Fund may at times purchase tax-exempt securities at a discount.
Some or all of this discount may be included in the Fund's ordinary income,
and will be taxable when distributed.
(3) The 30-day SEC yields on January 31, 1999, reflect the portfolio's earning
power, net of expenses, and are expressed as an annualized percentage of the
public offering price at the end of the period. If the Advisor or its
affiliates had not waived or borne certain Fund expenses, the SEC yield for
Class C shares would have been 3.05%.
(4) Taxable-equivalent SEC yields are based on the combined maximum effective
43.95% 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.
(5) Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Advisor or its affiliates. Absent these waivers or
reimbursement arrangements, performance results would have been lower.
(6) Quality and sector breakdowns are calculated as a percentage of total
investments. Because the Fund is actively managed, there can be no guarantee
the Fund will continue to maintain these quality and sector breakdowns in
the future.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Stephen E. Gibson]
I am pleased to present the annual report for Colonial Ohio Tax-Exempt Fund for
the 12 months ended January 31, 1999.
The past 12 months were generally positive for bonds, although conditions varied
considerably as domestic and international events affected all sectors of the
bond market. Despite some economic uncertainty early in the year, the economy
continued to grow and inflation remained low, creating a positive climate for
bonds.
International events played a role in the strong U.S. bond market. The economic
turmoil in Asia that began in 1997 gradually spread to other less-developed
markets, most notably Russia and Latin America. During times of increased
volatility, investors around the world sought the relative quality and stability
of U.S. Treasury bonds. Although demand for safety made Treasurys the bond
market's biggest winner, municipal bonds also benefited.
Colonial's disciplined bond fund management style and long-term investment
orientation served shareholders well during this volatile period, helping the
Fund outperform the majority of its peers over the past 12 months.(1) For
investors seeking competitive levels of tax-free income and the potential for
long-term price appreciation, Colonial Ohio Tax-Exempt Fund may provide an
attractive option.
The Portfolio Manager Report on the following pages will provide you with more
specific information on your Fund's performance and the market in which your
Fund invests. Thank you for choosing Colonial Ohio Tax-Exempt Fund and for
giving us the opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
March 11, 1999
(1) Source: Lipper, Inc. Lipper rankings are based on the Lipper Ohio Tax-Exempt
Municipal Funds universe. The Fund (Class A shares) ranked in the first
quartile for one year (3 out of 52 funds), in the first quartile for five
years (7 out of 35 funds) and in the third quartile for ten years (7 out of
12 funds). Rankings do not include any sales charges. Performance for
different share classes will vary with fees associated with each class. Past
performance cannot guarantee future results.
Because economic and market conditions change frequently, there can be no
assurance that the trends described above or on the following pages will
continue.
<PAGE>
PORTFOLIO MANAGER REPORT
WILLIAM LORING is portfolio manager of Colonial Ohio Tax-Exempt Fund. Mr. Loring
is a senior vice president of Colonial Management Associates, Inc. and has
managed various Colonial municipal bond funds since 1986.
TAX-EXEMPT MARKET GENERATED MODEST GAINS
The period began on a positive note, with the U.S. economy strong and no clear
signs of inflation. Throughout the year a series of international crises were
manifested domestically, affecting both stock and bond prices. Instability in
Asia, Russia and Latin America contributed to an increase in the U.S. trade
deficit and concerns about corporate profitability. This fall, the Federal
Reserve Board lowered short-term interest rates three times in an effort to
renew investor confidence. Sentiment about how these events might impact the
U.S. economy in the long run shifted throughout the period, taking fixed-income
investors on a roller coaster ride through much of the year. Overall, bond
prices rose during the period.
Like the broader bond market, municipal bond prices were affected by global
events and interest rate volatility. In addition, the tax-exempt market
experienced a near-record level of issuance in 1998, as issuers took advantage
of lower interest rates to refinance existing debt and to finance new projects.
At times, the market found it difficult to absorb this supply. Despite this
challenging environment, municipal bond prices rose 1.57% during the year as
measured by the Bond Buyer 40 Index, a widely used measure of municipal market
performance.
FUND'S PERFORMANCE REFLECTS INVESTMENT STRATEGY
For the 12-month period, the Fund generated a total return of 6.44% for Class A
shares, based on net asset value. This compares favorably with the performance
of the Fund's Lipper competitive peer group, which averaged 5.53% for the same
time period. We attribute this performance to the Fund's investment strategy.
Our forecast for modest economic growth and low inflation led us to believe that
interest rates would decline. Since bond prices tend to rise when interest rates
fall, we emphasized bonds with a higher sensitivity to interest rate changes for
most of the year. These included noncallable bonds, which cannot be refinanced
at a lower rate of interest prior to maturity. The longer life span of these
bonds increases their sensitivity to changes in interest rates, often producing
attractive price gains when interest rates decline.
In the final months of the year, our analysis suggested that the market was
overvalued. In response, we reduced the Fund's sensitivity to interest rate
changes by shortening its duration. We will continue to manage the Fund's
positioning actively in an effort to add value for our investors.
OHIO'S ECONOMIC GROWTH SHOWS SIGNS OF SLOWING DOWN
Economic growth in Ohio continued during 1998, with increases in total
employment, personal income and gross state product. Large metro areas were a
prime beneficiary of continued growth in service-sector employment, particularly
in health and financial services. However, the rate of growth was slower than in
1997, and manufacturing employment actually declined slightly. Further declines
are expected as a result of weak global economies which have restrained price
increases and reduced export trade. Although Ohio ranks fifth nationally in
terms of industrial diversity, the state's traditional manufacturers, such as
steel and vehicle producers, still represent a significant component of the
employment base. Higher-growth service industries now make up a larger
proportion of the economic base than earlier in the 1990s. However, the state
faces economic pressure from weak pricing and declining demand for industrial
products that may outweigh the potential growth from business services. As a
result, we emphasized both industry and geographic diversification to avoid any
concentration in industries that might be vulnerable to an economic slowdown.
POSITIVE OUTLOOK FOR MUNICIPAL MARKET CONDITIONS
Looking ahead, inflation should remain low, as we expect productivity gains and
a worldwide surplus in manufacturing capacity to limit the potential for
substantial price increases. In the municipal market, we expect positive supply
and demand dynamics. We doubt total issuance will match 1998's near-record level
of $280 billion, partially because refinancing volume should slow down as many
issuers have already refinanced. Overall, lower supply combined with generally
positive expectations for the economic environment should have a positive impact
on municipal bond prices. However, as we end the eighth consecutive year of
economic expansion in the U.S., we will watch for events and trends that could
change our expectations and possibly lead us to alter our investment strategy.
COLONIAL OHIO TAX-EXEMPT FUND'S INVESTMENT PERFORMANCE VS.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
Change in value of $10,000 from 1/31/89 - 1/31/99
Based on NAV and POP for Class A Shares
AS OF DATE NAV POP Lehman
- ---------- --- --- ------
Jan 31, 89 $10,000 $ 9,525 $10,000
Apr 30, 89 10,101 9,621 10,096
Jul 31, 89 10,447 9,951 10,588
Oct 31, 89 10,421 9,926 10,581
Jan 31, 90 10,521 10,021 10,803
Apr 30, 90 10,531 10,031 10,824
Jul 31, 90 11,103 10,575 11,322
Oct 31, 90 11,085 10,559 11,366
Jan 31, 91 11,489 10,944 11,802
Apr 30, 91 11,765 11,207 12,068
Jul 31, 91 11,927 11,360 12,311
Oct 31, 91 12,315 11,730 12,749
Jan 31, 92 12,638 12,038 13,089
Apr 30, 92 12,768 12,162 13,215
Jul 31, 92 13,520 12,878 14,002
Oct 31, 92 13,283 12,652 13,819
Jan 31, 93 13,828 13,171 14,376
Apr 30, 93 14,283 13,604 14,887
Jul 31, 93 14,580 13,888 15,240
Oct 31, 93 15,033 14,319 15,765
Jan 31, 94 15,372 14,642 16,138
Apr 30, 94 14,370 13,687 15,208
Jul 31, 94 14,696 13,998 15,526
Oct 31, 94 14,219 13,544 15,078
Jan 31, 95 14,698 14,000 15,564
Apr 30, 95 15,222 14,499 16,220
Jul 31, 95 15,449 14,715 16,748
Oct 31, 95 16,091 15,327 17,316
Jan 31, 96 16,782 15,985 17,907
Apr 30, 96 16,205 15,435 17,509
Jul 31, 96 16,573 15,786 17,853
Oct 31, 96 17,034 16,225 18,303
Jan 31, 97 17,244 16,424 18,594
Apr 30, 97 17,247 16,428 18,670
Jul 31, 97 18,326 17,456 19,683
Oct 31, 97 18,428 17,552 19,857
Jan 31, 98 19,068 18,162 20,474
Apr 30, 98 18,865 17,969 20,406
Jul 31, 98 19,226 18,313 20,863
Oct 31, 98 19,931 18,984 21,449
Jan 31, 99 20,296 19,332 21,835
VALUE OF A $10,000 INVESTMENT MADE ON 1/31/89
As of 1/31/99
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
NAV POP NAV w/CDSC NAV w/CDSC
$20,296 $19,332 $19,338 $19,338 $20,157 $20,157
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
As of 1/31/99
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
INCEPTION 9/26/86 8/4/92 8/1/97
NAV POP NAV w/CDSC NAV w/CDSC
- --------------------------------------------------------------------------------
1 YEAR 6.44% 1.38% 5.62% 0.67% 5.95% 4.96%
- --------------------------------------------------------------------------------
5 YEARS 5.71 4.69 4.92 4.59 5.57 5.57
- --------------------------------------------------------------------------------
10 YEARS 7.33 6.81 6.82 6.82 7.26 7.26
- --------------------------------------------------------------------------------
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charges or contingent deferred sales charges (CDSC). Public
offering price (POP) returns include the maximum sales charge of 4.75% for Class
A shares. CDSC returns reflect the maximum charges of 5% for one year and 2% for
five years for Class B shares, and 1% for one year for Class C shares.
Performance results reflect any voluntary waivers or reimbursements of Fund
expenses by the Advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
Class B and C share (newer class shares) performance information includes
returns of the Fund's Class A shares (the oldest existing fund class) for
periods prior to the inception dates of the newer class shares. These Class A
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between Class A shares and the newer class shares. Had the expense
differential been reflected, the returns for periods prior to the inception date
of the newer class shares would have been lower.
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indexes are not investments and do not incur fees or expenses. It is not
possible to invest in an index.
<PAGE>
INVESTMENT PORTFOLIO
JANUARY 31, 1999 (IN THOUSANDS)
MUNICIPAL BONDS - 98.3% PAR VALUE
- ------------------------------------------------------------------------------
EDUCATION - 8.3%
EDUCATION
State Higher Educational Facilities Commission:
Case Western Reserve, Series 1994:
6.125% 10/01/15 $ 1,505 $ 1,762
6.250% 10/01/17 4,340 5,158
Ohio Dominican College, Series 1994,
6.625% 12/01/14 1,500 1,652
--------
8,572
--------
..............................................................................
HEALTHCARE - 15.7%
HOSPITALS - 13.3%
Belmont County, East Ohio Regional
Hospital, Series 1998,
5.700% 01/01/13 500 496
Butler Middleton Hospital,
4.750% 11/15/18 1,000 957
Cuyahoga County, W.O. Walker Center, Inc.,
Series 1998 I,
5.250% 01/01/13 2,000 2,130
Doctors OhioHealth Corp.,
5.600% 12/01/28 1,000 977
Green Springs, St. Francis Health
Care Center, Series 1994 A,
7.000% 05/15/04 700 748
Hamilton County Childrens Hospital,
5.250% 05/15/10 (a) 1,500 1,618
Knox Community Hospital,
5.000% 06/01/12 1,300 1,350
Lake Hospital System:
5.000% 08/15/23 1,000 997
5.250% 08/15/11 1,100 1,187
5.250% 08/15/12 1,160 1,244
Marion County, Community Hospital,
Series 1996,
6.375% 05/15/11 1,000 1,094
Miami County,
Upper Valley Medical Center, Inc.,
Series 1996 C,
6.000% 05/15/06 1,000 1,068
--------
13,866
--------
LIFECARE - 0.5%
Hamilton County Twin Tower,
5.125% 10/01/18 500 499
--------
NURSING HOMES - 1.9%
Marion County,
United Church Homes, Inc.,
Series 1993,
6.375% 11/15/10 1,000 1,058
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
--------
1,938
--------
..............................................................................
HOUSING - 2.9%
MULTI-FAMILY - 1.0%
State Capital Corp. for Housing,
Series 1990 A,
7.500% 01/01/24 1,000 1,045
--------
SINGLE FAMILY - 1.9%
State Housing Finance Agency:
Series A2, IFRN (variable rate),
10.125% 03/24/31 300 335
Series 1994 B2,
6.700% 03/01/25 475 512
Series 1997 A-1,
6.050% 09/01/17 1,000 1,073
--------
1,920
--------
..............................................................................
OTHER - 7.1%
REFUNDED/ESCROWED (B)
Cuyahoga County,
Judson Retirement Community,
Series 1989,
8.875% 11/15/19 500 537
Cuyahoga County:
Deaconess Hospital of Cleveland,
Series 1985 C,
7.450% 10/01/18 500 548
Meridian Health System,
Series 1991,
7.000% 08/15/23 500 554
Delaware County,
Series 1990,
7.250% 11/01/10 250 272
Franklin County,
Holy Cross Health System Corp.:
Series 1990 B,
7.650% 06/01/10 500 538
Series 1991,
6.750% 06/01/19 500 559
Greene County,
Fairview Extended Care Service, Inc.,
Series 1990 A,
10.125% 01/01/11 205 234
Hamilton County,
Sisters of Charity Health Care System, Inc.,
Series 1992 A,
6.250% 05/15/14 500 557
Montgomery County,
St. Elizabeth Medical Center,
Series B 1,
8.100% 07/01/18 500 599
Stark County,
Doctor's Hospital, Inc.,
Series 1993,
6.000% 04/01/24 1,500 1,678
State Water Development Authority,
Series 1990 I,
6.000% 12/01/16 1,000 1,145
Virgin Islands Public Finance
Authority,
Series 1992 A,
7.000% 10/01/02 125 140
--------
7,361
--------
..............................................................................
OTHER REVENUE - 2.3%
INDUSTRIAL - 1.9%
Cuyahoga County,
Joy Technologies, Inc.,
Series 1992,
8.750% 09/15/07 500 559
State Burrows Paper Corp.,
Series 1991,
7.450% 06/01/03 655 714
State Sponge, Inc., Series 1989 5A,
8.375% 06/01/14 665 687
--------
1,960
--------
RETAIL - 0.4%
Lake County, North Madison Properties,
Series 1993:
8.069% 09/01/01 195 207
8.819% 09/01/11 200 230
--------
437
--------
..............................................................................
TAX-BACKED - 38.6%
LOCAL APPROPRIATED - 3.0%
Butler County Transportation Improvement
District, Series A,
5.125% 04/01/17 1,000 1,026
Cleveland Stadium Project,
5.250% 11/15/12 2,000 2,132
--------
3,158
--------
LOCAL GENERAL OBLIGATIONS - 30.3%
Adams County:
Human Services Building,
7.250% 12/01/11 500 543
Local School District, Series 1995,
7.000% 12/01/15 (a) 3,000 3,850
Beavercreek Local School District,
Series 1996,
6.600% 12/01/15 2,500 3,095
Bellefontaine, Storm Water Utility,
Series I,
7.050% 06/01/11 250 270
Brecksville-Broadview Heights
School District,
Series 1996,
6.500% 12/01/16 1,750 2,035
Cleveland:
4.625% 10/01/18 1,000 972
5.750% 08/01/12 500 571
5.750% 08/01/15 1,000 1,136
Crooksville,
Exempted Village School District,
7.375% 12/01/07 25 30
Cuyahoga County, Jail Facilities,
Series 1993 A,
(c) 10/01/12 1,000 536
Eastern School District,
Brown & Highland Counties,
Series 1995,
6.250% 12/01/17 (a) 1,160 1,388
Fairborn,
Library Improvement,
Series 1991,
7.200% 10/01/11 1,170 1,316
Gahanna-Jefferson City School District,
Series 1993:
(c) 12/01/10 840 501
(c) 12/01/11 795 448
Greater Cleveland Regional
Transportation Authority,
Series 1998,
5.375% 12/01/14 1,000 1,072
Hilliard School District,
Series 1995 A,
(c) 12/01/12 2,505 1,333
Kings County Local School District,
Series 1995,
7.500% 12/01/16 2,110 2,833
Middleburg Heights:
5.125% 12/01/11 1,735 1,861
5.125% 12/01/12 1,395 1,483
Massillon City School District,
Series 1994:
(c) 12/01/09 1,000 630
(c) 12/01/11 1,000 564
Newark,
Series 1998,
(c) 12/01/11 1,495 843
Richland County,
Series 1995,
6.950% 12/01/11 275 325
Shaker Heights School District,
Series 1990 A,
7.100% 12/15/10 750 912
Strongsville School District
Series 1996,
6.500% 12/01/13 1,500 1,746
Tri-County North Local School
District,
8.125% 12/01/06 75 93
Youngstown City,
5.100% 12/01/11 1,000 1,080
--------
31,466
--------
STATE APPROPRIATED - 3.3%
PR Commonwealth of Puerto Rico
Public Buildings Authority,
Series 1993 M,
5.700% 07/01/16 2,500 2,645
State Building Authority, William Green
Building, Series 1993 A,
4.750% 04/01/14 750 753
--------
3,398
--------
STATE GENERAL OBLIGATIONS - 2.0%
State:
Series 1992,
6.100% 08/01/12 380 450
Series 1998 B,
5.250% 02/01/12 1,500 1,618
--------
2,068
--------
..............................................................................
TRANSPORTATION - 6.5%
AIR TRANSPORTATION - 1.0%
Dayton,
Emery Air Freight Facilities,
Series 1993 F,
6.050% 10/01/09 1,000 1,086
--------
TOLL FACILITIES - 5.2%
State Turnpike Commission,
Series 1998 B:
4.500% 02/15/24 2,000 1,883
5.250% 02/15/11 2,295 2,485
5.250% 02/15/12 1,000 1,075
--------
5,443
--------
TRANSPORTATION - 0.3%
Cleveland, Cuyahoga County Port Authority,
C & P Docks Project,
6.000% 03/01/07 250 261
--------
..............................................................................
UTILITY - 16.9%
INDEPENDENT POWER PRODUCER - 1.1%
State Air Quality Development Authority,
JMG Funding Ltd., Series 1994,
6.375% 01/01/29 1,000 1,113
--------
INVESTOR OWNED - 1.5%
State Air Quality Development Authority,
JMG Funding Project,
5.625% 01/01/23 1,000 1,045
Toledo Edison Co., Series 1990 B,
8.000% 05/15/19 500 528
--------
1,573
--------
MUNICIPAL ELECTRIC - 1.0%
Cleveland Public Power Co.,
Series 1994 A,
(c) 11/15/13 2,000 1,004
--------
WATER & SEWER - 13.3%
Alliance Water Works Revenue,
Series 1998,
5.000% 11/15/20 1,500 1,504
Cleveland Waterworks,
Series 1993 G,
5.500% 01/01/21 3,000 3,287
Defiance,
Waterworks Systems Improvement,
Series 1998,
5.650% 12/01/18 1,000 1,085
Lakewood,
Water & Sewer Systems Revenue,
5.850% 07/01/20 2,405 2,748
State Water Development Authority,
Water Control Loan Fund,
5.500% 06/01/12 2,000 2,185
Toledo Waterworks,
Series 1996:
6.250% 11/15/09 (a) 1,050 1,213
6.250% 11/15/10 1,130 1,293
Warren Waterworks,
Series 1997,
5.500% 11/01/15 500 553
--------
13,868
--------
TOTAL MUNICIPAL BONDS (cost of $93,573) (d) 102,036
--------
OTHER ASSETS & LIABILITIES, NET - 1.7% 1,776
- ------------------------------------------------------------------------------
NET ASSETS - 100.0% $103,812
--------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) These securities, or a portion thereof, with a total market value of
$5,695, are being used to collateralize open futures contracts.
(b) The Fund has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
the interest and principal.
(c) Zero coupon bond.
(d) Cost for federal income tax purposes is the same.
Futures contracts open at January 31, 1999:
Unrealized
appreciation
Par value Expiration (depreciation)
Type covered by contracts month at 01/31/99
- -------------------------------------------------------------------------------
Treasury Bond $2,000 March $ (13)
Municipal Bond 2,000 March 7
------
$ (6)
------
Acronym Name
------------- --------------------------
IFRN Inverse Floating Rate Note
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JANUARY 31, 1999
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $93,573) $ 102,036
Receivable for:
Interest $ 1,234
Investments sold 1,055
Fund shares sold 26
Variation margin on futures 1
Other 8 2,324
------- ---------
Total Assets 104,360
LIABILITIES
Payable for:
Distributions 128
Fund shares repurchased 109
Payable to:
Custodian bank 297
Advisor 1
Accrued:
Deferred Trustees fees 4
Other 9
-------
Total Liabilities 548
---------
NET ASSETS $ 103,812
---------
Net asset value & redemption price per share -
Class A ($60,783/7,947) $ 7.65 (a)
---------
Maximum offering price per share - Class A
($7.65/0.9525) $ 8.03 (b)
---------
Net asset value & offering price per share -
Class B ($42,651/5,579) $ 7.65 (a)
---------
Net asset value & offering price per share -
Class C ($378/50) $ 7.65 (a)
---------
COMPOSITION OF NET ASSETS
Capital paid in $ 96,935
Overdistributed net investment income (121)
Accumulated net realized loss (1,459)
Net unrealized appreciation (depreciation) on:
Investments 8,463
Open futures contracts (6)
---------
$ 103,812
=========
(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 YEAR ENDED JANUARY 31, 1999
(in thousands)
INVESTMENT INCOME
Interest $ 5,670
EXPENSES
Management fee $ 523
Service fee 156
Distribution fee - Class B 328
Distribution fee - Class C 2
Transfer agent fee 158
Bookkeeping fee 46
Trustees fee 13
Audit fee 18
Legal fee 6
Custodian fee 1
Registration fee 18
Reports to shareholders 8
Other 14
-------
1,291
Fees waived by the Advisor (15)
Fees waived by the Distributor - Class C (1) 1,275
------- -------
Net Investment Income 4,395
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 2,770
Closed futures contracts 67
-------
Net Realized Gain 2,837
Net change in unrealized depreciation
during the period on:
Investments (1,192)
Open futures contracts (6)
-------
Net Change in Unrealized Depreciation (1,198)
-------
Net Gain 1,639
-------
Increase in Net Assets from Operations $ 6,034
=======
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended January 31
---------------------------------
INCREASE (DECREASE) IN NET ASSETS 1999 1998(a)
Operations:
Net investment income $ 4,395 $ 5,000
Net realized gain 2,837 647
Net unrealized appreciation (depreciation) (1,198) 5,143
-------- --------
Net Increase from Operations 6,034 10,790
Distributions:
From net investment income - Class A (2,762) (3,101)
In excess of net investment income - Class A (102) ---
From net realized gains - Class A (1,290) (89)
In excess of net realized gains - Class A (167) ---
From net investment income - Class B (1,666) (1,958)
In excess of net investment income - Class B (61) ---
From net realized gains - Class B (919) (66)
In excess of net realized gains - Class B (119) ---
From net investment income - Class C (12) (2)
In excess of net investment income - Class C (b) ---
From net realized gains - Class C (8) (b)
In excess of net realized gains - Class C (1) ---
-------- --------
(1,073) 5,574
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 2,032 1,192
Value of distributions reinvested - Class A 2,783 1,861
Cost of shares repurchased - Class A (6,277) (8,603)
-------- --------
(1,462) (5,550)
-------- --------
Receipts for shares sold - Class B 2,547 1,981
Value of distributions reinvested - Class B 1,866 1,235
Cost of shares repurchased - Class B (7,623) (8,728)
-------- --------
(3,210) (5,512)
-------- --------
Receipts for shares sold - Class C 236 129
Value of distributions reinvested - Class C 14 2
Cost of shares repurchased - Class C (b) (b)
-------- --------
250 131
-------- --------
Net Decrease from Fund Share
Transactions (4,422) (10,931)
-------- --------
Total Decrease (5,495) (5,357)
NET ASSETS
Beginning of period 109,307 114,664
-------- --------
End of period (net of overdistributed
and including undistributed net investment
income of $121 and $45, respectively) $103,812 $109,307
======== ========
(a) Class C shares were initially offered on August 1, 1997.
(b) Rounds to less than one.
Continued on next page.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
Year ended January 31
------------------------
(in thousands) 1999 1998(a)
NUMBER OF FUND SHARES
Sold - Class A 265 160
Issued for distributions reinvested - Class A 365 249
Repurchased - Class A (819) (1,153)
-------- --------
(189) (744)
-------- --------
Sold - Class B 333 266
Issued for distributions reinvested - Class B 245 165
Repurchased - Class B (997) (1,172)
-------- --------
(419) (741)
-------- --------
Sold - Class C 31 17
Issued for distributions reinvested - Class C 2 (b)
Repurchased - Class C (b) (b)
-------- --------
33 17
-------- --------
(a) Class C shares were initially offered on August 1, 1997.
(b) Rounds to less than one.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999
NOTE 1. ACCOUNTING POLICIES
...............................................................................
ORGANIZATION: Colonial Ohio Tax-Exempt Fund (the Fund), a series of Colonial
Trust V, is a non-diversified portfolio of a Massachusetts business trust,
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Fund's investment objective is to seek as
high a level of after-tax total return as is consistent with prudent risk, by
pursuing current income exempt from federal and 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 and a 1.00% contingent
deferred sales charge on redemptions made within eighteen months on an original
purchase of $1 million to $5 million. Class B shares are subject to an annual
distribution fee and a contingent deferred sales charge. 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 2. FEES AND COMPENSATION PAID TO AFFILIATES
...............................................................................
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Advisor) is the
investment Advisor of the Fund and furnishes accounting and other services and
office facilities for a monthly fee based on each Fund's pro-rata portion of the
combined average net assets of the funds constituting Trust V as follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $2 billion 0.50%
Over $2 billion 0.45%
BOOKKEEPING FEE: The Advisor provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT FEE: Liberty Funds Services, Inc., formerly Colonial Investors
Service Center, Inc., (the Transfer Agent), an affiliate of the Advisor,
provides shareholder services for a monthly fee equal to 0.13% annually of the
Fund's average net assets and receives reimbursement for certain out-of-pocket
expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds
Distributor, Inc., formerly Liberty Financial Investments, Inc., (the
Distributor), a subsidiary of the Advisor, is the Fund's principal underwriter.
During the year ended January 31, 1999, the Fund has been advised that the
Distributor retained net underwriting discounts of $8,891 on sales of the Fund's
Class A shares and received contingent deferred sales charges (CDSC) of $121,
$97,462, and none on Class A, Class B, and Class C share redemptions,
respectively.
The Fund has adopted a 12b-1 plan which requires the payment of a distribution
fee to the Distributor equal to 0.75% annually of the Fund's average net assets
attributable to Class B and Class C shares. The Distributor has voluntarily
agreed, until further notice, to waive a portion of the Class C share
distribution fee so that it will not exceed 0.45% annually. The plan also
requires the payment of a service fee to the Distributor as follows:
Valuation of shares Annual
outstanding on the 20th of Fee
each month which were issued Rate
---------------------------- -----
Prior to November 30, 1994 0.10%
On or after December 1, 1994 0.25%
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS: Through October 31, 1998, the Advisor waived fees and bore
certain Fund expenses to the extent that total expenses (exclusive of service
and distribution fees, brokerage commissions, interest, taxes, and extraordinary
expenses, if any) exceeded 0.75% annually of the Fund's average net assets.
Effective November 1, 1998, the expense limit was eliminated.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Advisor.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
The Fund has an agreement with its custodian bank under which $3,878 of
custodian fees have been reduced by balance credits of applied during the year
ended January 31, 1999. The Fund could have invested a portion of the assets
utilized in connection with the expense offset arrangements in an income
producing asset if it had not entered into such an agreement.
NOTE 3. PORTFOLIO INFORMATION
...............................................................................
INVESTMENT ACTIVITY: During the year ended January 31, 1999, purchases and sales
of investments, other than short-term obligations were $30,304,682 and
$37,854,013, respectively.
Unrealized appreciation (depreciation) at January 31, 1999, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $8,513,852
Gross unrealized depreciation (51,045)
----------
Net unrealized appreciation $8,462,807
----------
OTHER: There are certain risks arising from geographic concentration in any
state. Certain revenue or tax related events in a state may impair the ability
of certain issuers of municipal securities to pay principal and interest on
their obligations.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
The Fund may purchase or sell municipal and Treasury bond futures contracts and
purchase and write options on futures. The Fund will invest in these instruments
to hedge against the effects of changes in the value of portfolio securities due
to anticipated changes in interest rates and/or market conditions, for duration
management, or when the transactions are economically appropriate to the
reduction of risk inherent in the management of the Fund and not for trading
purposes. The use of futures contracts and options involves certain risks which
include (1) imperfect correlation between the price movement of the instruments
and the underlying securities, (2) inability to close out a position due to
different trading hours, or the temporary absence of a liquid market for either
the instrument or the underlying securities or (3) an inaccurate prediction by
the Advisor of the future direction of interest rates. Any of these risks may
involve amounts exceeding the variation margin recognized in the Fund's
Statement of Assets and Liabilities at any given time.
NOTE 4. LINE OF CREDIT
...............................................................................
The Fund may borrow up to 33 1/3% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the year ended January 31, 1999.
NOTE 5. RESULTS OF SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
...............................................................................
On October 30, 1998, a Special Meeting of Shareholders of the Fund was held to
approve the following items, all as described in the Proxy Statement for the
Meeting. On August 21, 1998, the record date for the Meeting, the Fund had
outstanding 13,510,220 shares of beneficial interest. The votes cast at the
Meeting were as follows:
AUTHORITY
FOR WITHHELD
--- --------
To elect a Board of Trustees:
Robert J. Birnbaum 8,128,441 304,738
Tom Bleasdale 8,138,772 294,407
John Carberry 8,147,014 286,165
Lora S. Collins 8,145,892 287,287
James E. Grinnell 8,137,139 296,041
Richard W. Lowry 8,149,692 283,488
Salvatore Macera 8,140,751 292,428
William E. Mayer 8,148,352 284,828
James L. Moody, Jr. 8,145,727 287,453
John J. Neuhauser 8,138,057 295,122
Thomas E. Stitzel 8,136,720 296,460
Robert L. Sullivan 8,136,487 296,692
Anne-Lee Verville 8,136,199 296,980
To amend fundamental investment policies regarding borrowing and lending:
FOR AGAINST ABSTAIN
--- ------- -------
6,493,243 210,403 519,596
To approve policies for a master fund/feeder fund structure:
FOR AGAINST ABSTAIN
--- ------- -------
6,437,863 231,215 554,163
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended January 31
--------------------------------
1999
Class A Class B Class 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 (c)
Net realized and
unrealized gain (loss) 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 (e)(f) 6.44% 5.62% 5.95%
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (h) 0.90% 1.65% 1.35% (c)
Net investment income (h) 4.51% 3.76% 4.06% (c)
Fees and expenses waived
or borne by the Advisor (h) 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) Class C shares were intially offered on August 1, 1997. Per share amounts
reflect activity from that date.
(c) Net of fees waived by the Distributor which amounted to $0.023 per share and
0.30%.
(d) Net of fees waived by the Distributor which amounted to $0.011 per share and
0.30%.
(e) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(f) Had the Advisor and Distributor not waived or reimbursed a portion of
expenses, total return would have been reduced.
(g) Not annualized
(h) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(i) Annualized.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended January 31
---------------------------------------------------------------------------
1998 1997
Class A Class B Class C (b) Class A Class B
------- ------- ------- ------- -------
$ 7.340 $ 7.340 $ 7.610 $ 7.510 $ 7.510
------- ------- ------- ------- -------
0.362 0.306 0.162 (d) 0.372 0.318
0.394 0.394 0.124 (0.179) (0.179)
------- ------- ------- ------- -------
0.756 0.700 0.286 0.193 0.139
------- ------- ------- ------- -------
(0.365) (0.309) (0.165) (0.363) (0.309)
- - - - -
(0.011) (0.011) (0.011) - -
- - - - -
------- ------- ------- ------- -------
(0.376) (0.320) (0.176) (0.363) (0.309)
------- ------- ------- ------- -------
$ 7.720 $ 7.720 $ 7.720 $ 7.340 $ 7.340
======= ======= ======= ======= =======
10.58% 9.76% 3.81%(g) 2.75% 1.98%
======= ======= ======= ======= =======
0.89% 1.64% 1.34% (d)(i) 0.88% 1.63%
4.85% 4.10% 4.21% (d)(i) 5.09% 4.34%
0.05% 0.05% 0.07% (i) 0.04% 0.04%
27% 27% 27% 31% 31%
$62,844 $46,330 $ 133 $65,190 $49,474
$ 0.004 $ 0.004 $ 0.005 $ 0.003 $ 0.003
- --------------------------------------------------------------------------------
1999 Federal Income Tax Information (unaudited) Approximately 99.2% of all
distributions will be treated as exempt income for federal income tax purposes.
For the fiscal year ended January 31, 1999 the Fund earned $1,805,354 of long
term capital gains of which none and $1,805,364 are 28% and 20% rate gains,
respectively.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS - CONT
Selected data for a share of each class outstanding throughout each period
are as follows:
Year ended January 31
---------------------------------------------
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
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 charge.
(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 directed brokerage
arrangements had no impact. Prior year's ratios are net of benefits
received, if any.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST V AND THE SHAREHOLDERS OF COLONIAL OHIO
TAX-EXEMPT FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Ohio Tax-Exempt Fund (the
"Fund") (a series of Colonial Trust V) at January 31, 1999, the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and the financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of portfolio positions
at January 31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 11, 1999
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Your Fund has one of the most extensive selections of shareholder services
available. Your financial advisor can help you arrange for any of these
services, or you can call Liberty Funds Services, Inc. directly at
1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50 on
most funds; $25 for an IRA account.
FREE EXCHANGES(1): Exchange all or part of your account into the same share
class of another fund distributed by Liberty Funds Distributor, Inc. by phone or
mail.
EASY ACCESS TO YOUR MONEY(1): Make withdrawals from your account by phone, by
mail or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it within one year, you can reinvest in any fund distributed by
Liberty Funds Distributor of the same share class without any penalty or sales
charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Fund account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th calendar day of each month unless the 10th falls on a
non-business day or the first business day of the week. If this occurs, the
processing date will be the previous business day. Dividends and capital gains
must be reinvested.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any fund
with a balance of $5,000 into the same share class of up to four other funds
distributed by Liberty Funds Distributor. Minimum for each transfer is $100.
RETIREMENT PLANS: Choose from a broad range of retirement plans,
including IRAs.
(1) Redemptions and exchanges are made at the next determined net asset value
after the request is received by the Transfer Agent. Proceeds may be more or
less than your original cost. The exchange privilege may be terminated at
any time. Exchanges are not available on all funds. Investors who purchase
Class B or C shares, or $1 million or more of Class A shares, may be subject
to a contingent deferred sales charge.
<PAGE>
HOW TO REACH US
BY PHONE OR BY MAIL
BY TELEPHONE
CUSTOMER CONNECTION - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
For fund prices, dividends and capital gains information ......... press [1]
For account information .......................................... press [2]
To speak to a service representative ............................. press [3]
For yield and total return information ........................... press [4]
For duplicate statements or new supply of checks ................. press [5]
To order duplicate tax forms and year-end statements ............. press [6]
(February through May)
To review your options at any time during your call .............. press [*]
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 a.m. to 8:00 p.m. ET, and Saturdays from February through
mid-April, 10:00 a.m. to 2:00 p.m. ET.
TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange or sell shares by telephone, call Monday to Friday, 9:00
a.m. to 7:00 p.m. ET. Transactions received after the close of the New York
Stock Exchange will receive the next business day's closing price.
LITERATURE - 1-800-426-3750
To request literature on any fund distributed by Liberty Funds Distributor,
Inc., call Monday to Friday, 8:30 a.m. to 6:30 p.m. ET.
BY MAIL
LIBERTY FUNDS SERVICES, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
<PAGE>
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale or exchange, you
receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
LIBERTY FUNDS DISTRIBUTOR INVESTOR OPPORTUNITIES: Mailed with your quarterly
account statements, this newsletter highlights timely investment strategies,
portfolio manager commentary and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
<PAGE>
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
Colonial Ohio Tax-Exempt Fund mails one shareholder report to each shareholder
address. If you would like more than one report, please call 1-800-426-3750 and
additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Ohio Tax-Exempt Fund.
It 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 the most recent copy of the
Liberty Funds Distributor, Inc. Performance Update.
* Effective October 1, 1998, Colonial Investors Service Center, Inc. - the
Transfer Agent for Colonial, Crabbe Huson, Newport and Stein Roe Advisor funds
- changed its name to Liberty Funds Services, Inc.
<PAGE>
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
[logo] L I B E R T Y
COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. (C)1999
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
OH-02/616G-0299 (3/99) 99/281
