<PAGE> 1
COLONIAL FLORIDA TAX-EXEMPT FUND Annual Report
January 31, 2000
[PHOTO]
<PAGE> 2
President's Message
DEAR SHAREHOLDER:
Amid the pressure of rising interest rates, virtually all bonds -- including
municipal securities -- posted significant losses for the 12-month period ended
January 31, 2000. This was due to the U.S. economy growing better than expected
and foreign economies rebounding throughout most of 1999. Both of these
occurrences stirred up inflationary fears, which prompted bond yields to move
higher. As bond yields rose, their prices declined. In response to this
environment, the Federal Reserve implemented three interest-rate hikes, the
first of which was in June, to slow the economy and to address growing fears of
inflation.
A combination of stronger demand and reduced supply helped municipals outpace
their Treasury counterparts during the year. Investors were lured back to the
municipal market after a long hiatus to capture the attractive higher yields.
Meanwhile, the supply of municipal bonds dwindled considerably as issuers
reduced their refinancing and new issue activity in response to rising interest
rates. Under these circumstances, municipal bond investors were able to enjoy a
tax-exempt yield comparable to their taxable counterparts without having to
compromise quality.
These challenging bond market conditions were reflected in the Fund's negative
one-year total return. It's important, however, to focus on long-term
performance. That said, the Fund has provided strong performance relative to its
peers for the three- and five-year periods ended January 31, 2000, according to
Lipper, Inc.(1) Colonial Florida Tax-Exempt Fund continues to seek competitive
levels of income and long-term price appreciation.
The Portfolio Manager's 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 Florida Tax-Exempt Fund and for
giving us the opportunity to serve your investment needs.
Sincerely,
/s/ Stephen E. Gibson
- -------------------------------
Stephen E. Gibson
President
March 13, 2000
(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 Florida Municipal
Debt Category was negative 6.14% for the 12 months ended January 31, 2000.
The Fund's Class A shares were ranked in the third quartile for the 1 year
(34 out of 64 funds), in the second quartile for the 3 years (18 out of 59
funds) and in the second quartile for the 5 years (21 out of 44 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.
Not FDIC May Lose Value
Insured No Bank Guarantee
<PAGE> 3
Highlights
- - FEDERAL RESERVE BOARD RAISED RATES TO SLOW THE ECONOMY.
In June of 1999, the Federal Reserve Board made its first of three
interest-rate hikes in an attempt to slow a fast-growing economy and
keep inflation under control. Despite this anti-inflationary effort,
the first interest rate hike did little to slow the economy which
resulted in the Federal Reserve Board raising rates again in August and
November. As interest rates increased, the yields on bonds increased,
causing their prices to decline -- since bond prices and interest rates
move in opposite direction.
- - MUNICIPALS HELD UP BETTER THAN TREASURYS AMID RISING RATES.
Compared to their U.S. Treasury counterparts, municipal bonds provided
a historically generous yield during this challenging period in the
bond market. Rising bond yields attracted investors and supply
diminished.
- - SHORT-TERM OBLIGATIONS OUTPERFORMED LOWER QUALITY ISSUES AS INTEREST
RATES ROSE.
Securities such as short-term municipal notes outperformed lower
quality issues later in the period. This was expected as bonds with
shorter maturities and issues of higher quality are less sensitive to
rising interest rates.
MUNICIPAL VS. TREASURY BOND PERFORMANCE
1/31/99 - 1/31/00
[LINE CHART]
Lehman Brothers Municipal Bond Index (3.63%)
Salomon 30-Year Treasury Index (15.00%)
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. 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. Unlike mutual
funds, indexes are not investments and do not incur fees or expenses. It is not
possible to invest directly in an index.
Net asset value per share as of 1/31/00
<TABLE>
<S> <C>
Class A $7.05
Class B $7.05
Class C $7.05
</TABLE>
Distributions declared from 2/1/99 to 1/31/00
<TABLE>
<S> <C>
Class A $0.345
Class B $0.289
Class C $0.312
</TABLE>
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.
SEC yields on 1/31/00
<TABLE>
<S> <C>
Class A 4.72%
Class B 4.19%
Class C 4.49%
</TABLE>
The 30-day SEC yields reflect the portfolio's earning power, net of expenses,
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 certain Fund
expenses, the SEC yield would have been 4.63% for Class A shares, 4.09% for
Class B shares and 4.09% for Class C shares.
Taxable-equivalent SEC yields on 1/31/00
<TABLE>
<S> <C>
Class A 7.81%
Class B 6.94%
Class C 7.43%
</TABLE>
Taxable-equivalent SEC yields are based on the maximum effective 39.6% federal
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.
1
<PAGE> 4
ANNUAL REPORT: COLONIAL FLORIDA TAX-EXEMPT FUND
PORTFOLIO MANAGER'S REPORT
RISING INTEREST RATES, INFLATION FEARS ROIL BOND MARKETS
Bonds lost considerable ground during the period, plagued by rising interest
rates and persistent inflation worries. Against this unfavorable backdrop, the
Fund's Class A shares returned negative 6.39%, without a sales charge, for the
12 months ended January 31, 2000.
One factor aiding the Fund's performance was its relatively small exposure to
Florida hospital bonds, which performed poorly during the period. Hospital and
other health care bonds came under pressure from a combination of cutbacks in
Medicare reimbursements, some well-publicized problems with particular health
care organizations around the country, and the pullback on the part of some
municipal bond insurers from lower-rated hospitals. However, one of our
strongest performers was a health care holding thanks to the fact that it was
pre-refunded, so that its debt service payments are now backed by Treasury bonds
held in escrow. As a result of the pre-refunding process, the price of the bonds
went up because of the greater certainty and the shorter maturity of the payment
stream.
FUND ADOPTS MORE DEFENSIVE POSTURE
At the beginning of the period, the Fund's duration -- a measure of its
interest-rate sensitivity -- was slightly longer than that of its peers. We
chose that stance based on our view that global economic weakness would
translate into lower to stable U.S. interest rates. When interest rates rose in
the spring of 1999, the Fund's longer duration detracted from performance. In
the summer, however, the market rallied a bit as inflation worries briefly waned
and the Fund's longer duration was a plus. In the second half of the period,
however, we moved the Fund's duration toward a more neutral stance, meaning it
was no more or less sensitive to rising rates than the overall Florida Lipper
group. It was unclear whether the market would welcome potential interest rates
hikes by the Federal Reserve Board (the Fed) as pre-emptive strikes against
inflation, or whether it would view tightening actions as an indication that
inflationary pressures existed. The market's reaction to the Fed's interest rate
hikes was mostly negative during the past six months.
BOLSTERING YIELD
If there was a silver lining to the municipal bond market's declines, it was the
fact that as interest rates and bond yields rose, we were able to enhance the
Fund's yield. In particular, we found some attractively priced, high-yielding
opportunities among non-rated bonds. In some cases, those bonds offered yields
as much as 160 basis points (more than one and a half percentage points) more in
yield than comparable maturity AAA-rated bonds.
QUALITY BREAKDOWN
AS OF 1/31/00
<TABLE>
<S> <C>
AAA 56.6%
AA 13.0%
A 11.9%
BBB 4.8%
BB 1.0%
Non-rated 10.7%
Cash equivalents 2.0%
</TABLE>
Quality breakdowns are calculated as a percentage of total investments,
including short-term obligations. Ratings shown in the quality breakdowns
represent the highest rating assigned to a particular bond by one of the
following respected rating agencies: Standard & Poor's Corporation, Moody's
Investors Service, Inc. or Fitch Investors Service, Inc.
Because the Fund is actively managed, there can be no guarantee the Fund will
continue to maintain these quality breakdowns in the future.
SOLD
We sold some intermediate maturity bonds because they were priced close to par
due to high prices driven by demand from individual buyers.
2
<PAGE> 5
FLORIDA ECONOMY KEEPS ROLLING ALONG
Florida's economy continued to expand at a robust pace. Residential and
commercial real estate markets were quite strong, job growth was high and
unemployment was low. One of the state's leading industries, tourism, remained
strong. Contrary to earlier fears, falling exports to Latin America had little
effect on the state's economy.
OUTLOOK CALLS FOR MORE FAVORABLE ENVIRONMENT
We're reasonably optimistic that the interest rate environment will improve by
year-end. Our outlook calls for slower economic growth later this year in
response to rising interest rates. If this anticipated economic slowdown occurs,
we believe that long-term interest rates will stabilize. We expect that the Fed
will continue to hike short-term interest rates during the first half of 2000 in
its fight against potential inflation. Whether the market reacts positively or
negatively to further rate hikes remains uncertain, so it wouldn't be surprising
if the market remains volatile. Given that outlook, we plan to keep the Fund's
duration neutral for the time being. Finally, we believe municipal bonds are
likely to remain an attractive alternative to taxable fixed-income securities
for investors in the higher tax brackets. As for the Florida economy, we expect
growth to remain solid. One potential effect on the State's fiscal condition is
the state's expanding populations of old and young citizens, both of which
require more services funded at the state and local level.
/s/ Maureen S. Newman
- ----------------------------
MAUREEN NEWMAN is portfolio manager of Colonial Florida Tax-Exempt Fund and
is a senior vice president of Colonial Management Associates, Inc. (CMA).
Effective August 20, 1999, the Board of Trustees approved an increase in the
internal limit that the Fund's Advisor has set regarding investment in inverse
floating rate obligations. These obligations represent interest in tax-exempt
bonds and carry interest rates that vary inversely to changes in short-term
interest rates. Although floating rate obligations may have greater price
volatility and offer additional yield, the Fund's Advisor uses futures contracts
to mitigate the additional duration. The Advisor has set a policy to invest no
more than 15% of the Fund's total assets in inverse floating rate obligations.
Tax-exempt investing offers current tax-free income, but also involves certain
risks. The value of the Fund will be affected by interest rate changes and the
creditworthiness of the issues held in the Fund. The Fund's management,
including risk management specialists and credit analysts, identifies problems
and opportunities and reacts quickly to market changes.
TOP FIVE SECTOR BREAKDOWNS 1/31/00 VS. 1/31/99
<TABLE>
<S> <C> <C>
Municipal Electric 11.6% 9.2%
Special Property Tax 11.5% 4.8%
Single-Family 9.9% 6.9%
State General Obligations 8.6% 1.2%
Water & Sewer 8.4% 15.9%
</TABLE>
Sector breakdowns are calculated as a percentage of total investments, including
short-term obligations. Because the Fund is actively managed, there can be no
guarantee the Fund will continue to maintain these sector breakdowns in the
future.
BOUGHT
Heritage Palms Community Development District (0.8% of net assets) outside of
Fort Myers. Primarily condos and town homes marketed to the adult community with
a strong amenity package. U.S. Homes is the developer and a significant number
of units were pre-sold prior to the issuance of the bonds. These short maturity
bonds are paid as the units are sold.
We purchased inverse floaters -- bonds that offer additional yield but come with
additional price volatility. The inverse floaters are issued and insured by
Tampa Bay Water Utility System Revenue Bonds. We used futures contracts to
offset the additional duration associated with inverse floaters.
3
<PAGE> 6
PERFORMANCE INFORMATION
PERFORMANCE OF A $10,000 INVESTMENT IN ALL SHARE CLASSES FROM 2/1/93 - 1/31/00
<TABLE>
<CAPTION>
Without With
sales sales
charge charge
------- -------
<S> <C> <C>
Class A $13,580 $12,935
Class B $12,888 $12,888
Class C $12,985 $12,985
</TABLE>
PERFORMANCE OF A $10,000 INVESTMENT IN CLASS A SHARES 2/1/93 - 1/31/00
<TABLE>
<CAPTION>
Lehman Brothers
Fund without sales charge Fund with sales charge Municipal Bond Index
<S> <C> <C> <C>
1/31/93 10000 10000 10000
2/28/93 10385 9892 10362
3/31/93 10129 9648 10252.2
4/30/93 10341 9850 10355.7
5/31/93 10377 9884 10413.7
6/30/93 10560 10058 10587.6
7/31/93 10566 10064 10601.4
8/31/93 10915 10397 10821.9
9/30/93 10935 10416 10945.2
10/31/93 10761 10250 10966
11/30/93 10934 10415 10869.5
12/29/93 11064 10538 11098.9
1/31/94 11082 10556 11225.4
2/28/94 10622 10117 10934.7
3/31/94 10260 9773 10489.6
4/30/94 10195 9711 10578.8
5/31/94 10572 10070 10670.8
6/30/94 10405 9911 10605.8
7/31/94 10512 10013 10799.8
8/31/94 10547 10046 10837.6
9/30/94 10277 9789 10678.3
10/31/94 9772 9308 10488.2
11/30/94 10059 9581 10298.4
12/28/94 10245 9758 10525
1/31/95 10788 10276 10826
2/28/95 10827 10313 11141
3/31/95 11151 10621 11269.1
4/30/95 11025 10501 11282.7
5/31/95 11473 10928 11642.6
6/30/95 11269 10734 11541.3
7/31/95 11049 10524 11650.9
8/31/95 11331 10793 11798.9
9/30/95 11399 10858 11873.2
10/31/95 11592 11041 12045.4
11/30/95 11910 11344 12245.3
12/27/95 11931 11364 12362.9
1/31/96 12062 11489 12456.9
2/29/96 11910 11344 12372.2
3/31/96 11503 10957 12213.8
4/30/96 11601 11051 12179.6
5/31/96 11637 11084 12174.7
6/30/96 11704 11148 12307.4
7/31/96 12111 11536 12418.2
8/31/96 12001 11431 12415.7
9/30/96 12217 11637 12589.5
10/31/96 12303 11719 12731.8
11/30/96 12341 11755 12964.8
12/27/96 12427 11838 12910.3
1/31/97 12417 11827 12934.9
2/28/97 12438 11847 13053.9
3/31/97 12293 11709 12880.2
4/30/97 12416 11826 12988.4
5/31/97 12690 12088 13184.6
6/30/97 12865 12254 13325.6
7/31/97 13057 12437 13694.8
8/31/97 12943 12328 13566
9/30/97 13169 12543 13727.5
10/31/97 13138 12514 13815.3
11/30/97 13365 12730 13896.8
12/26/97 13524 12882 14099.7
1/31/98 13614 12967 14245
2/28/98 13512 12870 14249.2
3/31/98 13673 13024 14262
4/30/98 13569 12924 14197.9
5/31/98 13749 13096 14422.2
6/30/98 13805 13149 14478.4
7/20/98 13826 13169 14514.6
8/20/98 14008 13343 14739.6
9/20/98 14186 13512 14923.9
10/20/98 14201 13527 14923.9
11/20/98 14254 13577 14976.1
12/20/98 14289 13610 15013.5
1/20/99 14434 13748 15192.2
2/20/99 14340 13659 15125.4
3/20/99 14375 13692 15146.5
4/20/99 14410 13726 15184.4
5/20/99 14259 13582 15096.3
6/20/99 13959 13296 14878.9
7/20/99 14125 13454 14932.5
8/20/99 13916 13255 14813
9/20/99 13894 13234 14819
10/20/99 13588 12943 14658.9
11/20/99 13851 13193 14814.3
12/20/99 13677 13027 14703.2
1/31/00 13580 12935 14638.5
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS AS OF 1/31/00
<TABLE>
<CAPTION>
Share Class A B C
Inception 2/1/93 2/1/93 8/1/97
- --------- -------------------------- ------------------------- -------------------------
Without With Sales Without With Sales Without With Sales
Sales Charge Charge Sales Charge Charge Sales Charge Charge
------------ ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
1 year (6.39)% (10.84)% (7.10)% (11.57)% (6.82)% (7.71)%
5 years 5.09 4.07 4.31 3.97 4.46 4.46
Life of Fund 4.47 3.74 3.69 3.69 3.80 3.80
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
<TABLE>
<CAPTION>
Share Class A B C
- --------- --------------------------- ------------------------- -------------------------
Without With Sales Without With Sales Without With Sales
Sales Charge Charge Sales Charge Charge Sales Charge Charge
------------ ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
1 year (4.39)% (8.93)% (5.11)% (9.68)% (4.82)% (5.74)%
5 years 5.95 4.92 5.16 4.83 5.31 5.31
Life of Fund 4.65 3.92 3.88 3.88 3.98 3.98
</TABLE>
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. Without sales charge returns do not
include sales charges or contingent deferred sales charges (CDSC). With sales
charge returns include the maximum sales charge of 4.75% for Class A shares. The
CDSC returns reflect the maximum charges of 5% for one year, 2% for five years
for Class B shares, and 1% for one year for Class C shares.
Performance results reflect any voluntary waivers or reimbursement of Fund
expenses by the Advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
Class C share performance information includes returns of the Fund's Class B
shares (the oldest existing fund class) for periods prior to its inception date.
These Class B share returns are not restated to reflect any expense differential
(e.g., Rule 12b-1 fees) with a lower cost structure between Class B and C
shares.
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 directly in an index.
4
<PAGE> 7
Investment Portfolio
January 31, 2000
(In thousands)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 96.6% PAR VALUE
- ----------------------- --- -----
<S> <C> <C>
EDUCATION - 2.3%
EDUCATION
Pinellas County Educational
Facilities Authority,
Barry University Project, Series 1998,
5.375% 10/01/23 $1,000 $ 811
PR Commonwealth of Puerto Rico,
Industrial Tourist, Educational,
Medical & Environmental Facilities,
Ana G Mendez University,
5.375% 02/01/19 275 240
------
1,051
------
HEALTHCARE - 8.9%
CONGREGATE CARE RETIREMENT - 0.8%
Lee County Industrial Development Authority,
Shell Point Village Project,
Series 1999-A:
5.500% 11/01/29 250 182
5.750% 11/15/15 250 209
------
391
------
HOSPITAL - 7.4%
Cape Canaveral Hospital District,
Series 1998,
5.250% 01/01/18 500 385
Jacksonville Health Facilities Authority,
Charity Obligated Group,
Series 1999-C,
5.250% 08/15/19 500 445
Miami Beach Health Facilities Authority,
Mt. Sinai Medical Center of Florida,
Series 1998,
5.375% 11/15/28 500 362
Orange County Health Facilities Authority,
Orlando Regional Healthcare System,
Series 1999,
6.000% 10/01/26 500 452
Series 1996-A,
6.250% 10/01/16 880 928
Tampa,
H. Lee Moffitt Cancer Center,
Series 1999-A,
5.750% 07/01/29 1,000 854
------
3,426
------
NURSING HOME - 0.7%
Collier County Industrial
Development Authority,
Beverly Enterprises, Inc., Series 1991,
10.750% 03/01/03 130 138
Escambia County,
Beverly Enterprises-Florida, Inc.,
Series 1985,
9.800% 06/01/11 105 109
Palm Beach County,
Beverly Enterprises-Florida, Inc.,
Series 1984,
10.000% 06/01/11 85 88
------
335
------
HOUSING - 12.5%
MULTI-FAMILY - 2.7%
Orange County Housing Finance Authority,
Palms at Brentwood Apartments,
Series 1998-K,
6.500% 12/01/34 $ 250 $ 214
Palm Beach County Housing Finance Authority,
Windsor Park Apartments Project,
Series 1998-A,
5.800% 12/01/28 1,000 904
State Housing Finance Corp.,
Sunset Place Apartments,
Series 1999-K,
6.000% 10/01/19 150 142
------
1,260
------
SINGLE-FAMILY - 9.8%
Broward County Housing Finance
Authority,
Series 1995,
6.700% 02/01/28 1,220 1,245
Lee County Housing Finance Authority,
Series 1998-A,
6.300% 03/01/29 970 988
Manatee County Housing
Finance Authority,
Series 1996-1,
7.450% 05/01/27 1,470 1,576
Miami-Dade County,
Series 1999-A,
5.550% 10/01/19 500 456
Orange County Housing Finance Authority,
Series 1999-A,
6.250% 09/01/28 300 293
------
4,558
------
INDUSTRIAL - 1.0%
FOOD PRODUCTS
Hendry County Industrial Development Authority,
Savannah Foods & Industries,
Series 1992,
6.400% 03/01/17 500 453
------
OTHER - 8.4%
REFUNDED/ESCROWED (a)
Clearwater Housing Authority,
Hampton Apartments,
Series 1994,
8.250% 05/01/24 575 654
Orange County Health Facilities Authority,
Orlando Regional Healthcare System,
Series 1996-A,
6.250% 10/01/16 2,120 2,232
Seminole County,
Series 1992,
6.000% 10/01/19 1,030 1,042
------
3,928
------
</TABLE>
5
<PAGE> 8
Investment Portfolio (continued)
January 31, 2000
(In thousands)
<TABLE>
<CAPTION>
MUNICIPAL BONDS (CONTINUED) PAR VALUE
- -------------------------- --- -----
<S> <C> <C>
RESOURCE RECOVERY - 2.1%
RESOURCE RECOVERY
Palm Beach County Solid Waste Authority,
Series 1998-A,
(b) 10/01/12 $2,000 $ 965
------
TAX-BACKED - 26.4%
LOCAL APPROPRIATED - 2.2%
Hillsborough County School Board,
Series 1998-A,
5.500% 07/01/16 1,060 1,027
------
SPECIAL NON-PROPERTY TAX - 3.8%
Jacksonville, Excise Tax,
Series 1993,
(b) 10/01/09 525 304
Tampa Sports Authority,
Tampa Bay Arena Project,
Series 1995,
5.750% 10/01/25 1,500 1,453
------
1,757
------
SPECIAL PROPERTY TAX - 11.3%
Heritage Palms Community Development District,
Series 1999,
6.250% 11/01/04 400 393
Heritage Springs Community
Development District:
Series 1999-A,
6.750% 05/01/21 100 95
Series 1999-B,
6.250% 5/01/05 300 294
Indigo Community Development District,
Series 1999-B,
6.400% 05/01/06 300 296
Lexington Oaks Community Development District,
Series 1998-A,
6.125% 05/01/19 600 556
Northern Palm Beach County
Improvement District,
Series 1999,
6.000% 08/01/29 500 447
Orlando,
Conroy Road Interchange Project:
Series 1998-A,
5.800% 05/01/26 500 425
Series 1998-B,
5.250% 05/01/05 225 214
Stoneybrook Community Development District:
Series 1998-A,
6.100% 05/01/19 250 230
Series 1998-B,
5.700% 05/01/08 340 323
Village Center Community Development District,
Series 1998-A,
5.500% 11/01/12 2,000 2,003
------
5,276
------
STATE APPROPRIATED - 1.4%
State Department of Corrections,
Okeechobee Correctional Installation,
Series 1995,
6.250% 03/01/15 625 643
------
STATE GENERAL OBLIGATIONS - 7.7%
State Board of Education,
Series 1992-A,
6.400% 06/01/19 (c) $ 2,500 $2,530
PR Commonwealth of Puerto Rico,
Aqueduct & Sewer Authority,
Series 1996,
6.500% 07/01/14 1,000 1,076
------
3,606
------
TRANSPORTATION - 10.9%
AIRPORT - 6.7%
Dade County,
Miami International Airport,
Series 1992-B,
6.600% 10/01/22 (c) 2,000 2,045
Palm Beach County,
County Airport System,
7.750% 10/01/10 (c) 1,000 1,064
------
3,109
------
PORTS - 4.2%
Dade County Seaport:
Series 1995,
6.200% 10/01/09 1,000 1,069
Series 1996,
5.400% 10/01/21 1,000 909
------
1,978
------
UTILITY - 24.1%
INVESTOR OWNED - 4.4%
Citrus County,
Florida Power Corp.,
Crystal River Power Plant, Series 1992-A,
6.625% 01/01/27 2,000 2,042
------
MUNICIPAL ELECTRIC - 11.4%
Fort Pierce Utilities Authority,
Series 1999-B,
(b) 10/01/17 1,000 341
Lakeland,
Series 1999-C,
6.050% 10/01/11 1,870 1,969
Orlando Utilities Commission,
Series 1989-D,
6.750% 10/01/17 2,750 3,011
------
5,321
------
WATER & SEWER - 8.3%
Hillsborough County,
Series 1991-A,
7.000% 08/01/14 1,000 1,049
Seacoast Utility Authority,
Series 1989-A,
5.500% 03/01/15 1,900 1,863
Seminole County,
Series 1992,
6.000% 10/01/19 470 478
Tampa Bay,
7.900% 10/01/29 500 455
------
3,845
------
TOTAL MUNICIPAL BONDS (cost of $46,933) (d) 44,971
------
</TABLE>
6
<PAGE> 9
INVESTMENT PORTFOLIO (CONTINUED)
January 31, 2000
(In thousands)
<TABLE>
<CAPTION>
PAR VALUE
------- -----
<S> <C> <C>
SHORT-TERM OBLIGATIONS - 1.9%
VARIABLE RATE DEMAND NOTES (e)
GA Richmond County Development Authority,
Monsanto Co.,
Series 1998,
3.300% 06/01/21 $ 500 $500
TX Gulf Coast Waste Disposal Authority,
Monsanto Co.,
Series 1996,
3.450% 07/01/01 400 400
-------
900
-------
OTHER ASSETS & LIABILITIES, NET - 1.5% 676
-------
NET ASSETS - 100.0% $46,547
-------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO
(a) The Fund has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
the interest and principal.
(b) Zero coupon bond.
(c) These securities, or a portion thereof, with a total market value of
$2,678, are being used to collateralize open futures contracts.
(d) Cost for federal income tax purposes is the same.
(e) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of January 31, 2000.
Long futures contracts open at January 31, 2000:
<TABLE>
<CAPTION>
Par value Unrealized
covered by Expiration appreciation
Type contracts Month at 01/31/00
- ---- ---------- ---------- ------------
<S> <C> <C> <C>
Treasury Bond $1,600 March $35
</TABLE>
Short futures contracts open at January 31, 2000:
<TABLE>
<CAPTION>
Par value Unrealized
covered by Expiration depreciation
Type contracts Month at 01/31/00
- ---- ---------- ---------- ------------
<S> <C> <C> <C>
Treasury Bond $800 March $(21)
</TABLE>
See notes to financial statements. 7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
January 31, 2000
(In thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $46,933) $ 44,971
Short-term obligations 900
--------
45,871
Receivable for:
Interest $810
Expense reimbursement due from Advisor 12
Other 98 920
---- --------
Total Assets 46,791
LIABILITIES
Payable for:
Fund shares repurchased 134
Distributions 64
Variation margin on futures 5
Accrued:
Management fee 20
Transfer agent fee 5
Bookkeeping fee 2
Deferred Trustee fees 4
Other 10
----
Total Liabilities 244
--------
Net Assets $ 46,547
--------
NET ASSETS
Net asset value & redemption price per share --
Class A ($24,011/3,406) $7.05 (a)
--------
Maximum offering price per share --
Class A ($7.05/0.9525) $7.40 (b)
--------
Net asset value & offering price per share --
Class B ($22,183/3,147) $7.05 (a)
--------
Net asset value & offering price per share --
Class C ($353/50) $7.05 (a)
--------
COMPOSITION OF NET ASSETS
Capital paid in $ 49,994
Overdistributed net investment income (4)
Accumulated net realized loss (1,495)
Net unrealized appreciation (depreciation) on:
Investments (1,962)
Open futures contracts 14
--------
$ 46,547
--------
</TABLE>
(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.
STATEMENT OF OPERATIONS
For the Year Ended January 31, 2000
(In thousands)
<TABLE>
INVESTMENT INCOME
<S> <C> <C>
Interest $ 2,967
EXPENSES
Management fee $ 264
Service fee 99
Distribution fee -- Class B 196
Distribution fee -- Class C 3
Transfer agent fee 80
Bookkeeping fee 28
Trustees fee 9
Custodian fee 6
Audit fee 18
Legal fee 8
Registration fee 15
Reports to shareholders 16
Other 6
------
Total expenses 748
Fees waived by the Advisor (49)
Fees waived by the Distributor -- Class C (1)
Custodian credits earned (6) 692
------ -------
Net Investment Income 2,275
-------
NET REALIZED & UNREALIZED LOSS
ON PORTFOLIO POSITIONS
Net realized loss on:
Investments (305)
Closed futures contracts (36)
------
Net Realized Loss (341)
Net change in unrealized appreciation/depreciation
during the period on:
Investments (5,588)
Open futures contracts (39)
------
Net Change in Unrealized Appreciation/
Depreciation (5,627)
-------
Net Loss (5,968)
-------
Decrease in Net Assets from Operations $(3,693)
-------
</TABLE>
8 See notes to financial statements.
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
(In thousands)
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,
-----------------------
INCREASE (DECREASE) IN NET ASSETS 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,275 $ 2,630
Net realized gain (loss) (341) 1,168
Net change in unrealized appreciation/depreciation (5,627) (216)
-------- --------
Net Increase (Decrease) from Operations (3,693) 3,582
DISTRIBUTIONS:
From net investment income -- Class A (1,218) (1,444)
In excess of net investment income -- Class A -- (36)
From net investment income -- Class B (1,008) (1,264)
In excess of net investment income -- Class B -- (31)
From net investment income -- Class C (15) (8)
In excess of net investment income -- Class C -- (a)
-------- --------
(5,934) 799
-------- --------
FUND SHARE TRANSACTIONS:
Receipts for shares sold -- Class A 3,264 3,338
Value of distributions reinvested -- Class A 529 664
Cost of shares repurchased -- Class A (6,336) (7,013)
-------- --------
(2,543) (3,011)
-------- --------
Receipts for shares sold -- Class B 3,150 3,553
Value of distributions reinvested -- Class B 345 432
Cost of shares repurchased -- Class B (9,281) (7,166)
-------- --------
(5,786) (3,181)
-------- --------
Receipts for shares sold -- Class C 40 417
Value of distributions reinvested -- Class C 8 7
Cost of shares repurchased -- Class C -- (187)
-------- --------
48 237
-------- --------
Net Decrease from Fund Share Transactions (8,281) (5,955)
-------- --------
Total Decrease (14,215) (5,156)
NET ASSETS
Beginning of period 60,762 65,918
-------- --------
End of period (net of overdistributed net
investment income of $4 and $68,
respectively) $ 46,547 $ 60,762
======== ========
NUMBER OF FUND SHARES
Sold -- Class A 447 429
Issued for distributions reinvested -- Class A 71 86
Repurchased -- Class A (854) (902)
-------- --------
(336) (387)
-------- --------
Sold -- Class B 430 458
Issued for distributions reinvested -- Class B 47 56
Repurchased -- Class B (1,245) (922)
-------- --------
(768) (408)
-------- --------
Sold -- Class C 5 54
Issued for distributions reinvested -- Class C 1 1
Repurchased -- Class C -- (24)
-------- --------
6 31
-------- --------
</TABLE>
(a) Rounds to less than one.
See notes to financial statements. 9
<PAGE> 12
Notes to Financial Statements
January 31, 2000
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION:
Colonial Florida Tax-Exempt Fund (the Fund), a series of Liberty Funds Trust V,
formerly 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 income tax. The Fund also
provides opportunities for long-term appreciation from a portfolio primarily
invested in investment grade municipal bonds. The Fund may issue an unlimited
number of shares. The Fund offers three classes of shares: Class A, Class B and
Class C. Class A shares are sold with a front-end sales charge. A 1.00%
contingent deferred sales charge is assessed on redemptions made within eighteen
months on an original purchase of $1 million to $5 million. Class B shares are
subject to an annual distribution fee and a contingent deferred sales charge.
Class B shares will convert to Class A shares as follows:
<TABLE>
<CAPTION>
CONVERTS TO
ORIGINAL PURCHASE CLASS A SHARES
----------------- --------------
<S> <C>
Less than $250,000 8 years
$250,000 to less than $500,000 4 years
$500,000 to less than $1,000,000 3 years
</TABLE>
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.
Futures contracts are valued based on the difference between the last sale price
and the opening price of the contract.
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.
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), 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
10
<PAGE> 13
Notes to Financial Statements (continued)
January 31, 2000
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 the Fund's pro-rata portion of the combined average net
assets of the funds constituting Trust V as follows:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS ANNUAL FEE RATE
------------------ ---------------
<S> <C>
First $2 billion 0.50%
Over $2 billion 0.45%
</TABLE>
BOOKKEEPING FEE:
The Adviser 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.
Effective January 1, 2000, the Transfer Agent fee was changed to a fee comprised
of 0.07% annually of average net assets plus charges based on the number of
shareholder accounts and transactions.
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 year ended January 31, 2000, the
Fund has been advised that the Distributor retained net underwriting discounts
of $72,353 on sales of the Fund's Class A shares and received contingent
deferred sales charges (CDSC) of none, $73,800 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:
<TABLE>
<CAPTION>
VALUATION OF SHARES ANNUAL
OUTSTANDING ON THE 20TH OF FEE
EACH MONTH WHICH WERE ISSUED RATE
---------------------------- ----
<S> <C>
Prior to November 30, 1994 0.10%
On or after December 1, 1994 0.25%
</TABLE>
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS:
The Advisor has agreed, until further notice, to waive fees and bear certain
Fund expenses to the extent that total expenses (exclusive of service and
distribution fees, brokerage commissions, interest, taxes, and extraordinary
expenses, if any) exceed 0.75% annually of the Fund's average net assets.
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 $5,516 applied during the year ended January
31, 2000. The Fund could have reinvested 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:
For the year ended January 31, 2000, purchases and sales of investments, other
than short-term obligations, were $16,715,355 and $23,310,315, respectively.
Unrealized appreciation (depreciation) at January 31, 2000, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $423,783
Gross unrealized depreciation (2,385,520)
----------
Net unrealized depreciation $(1,961,737)
===========
</TABLE>
11
<PAGE> 14
Notes To Financial Statements (continued)
January 31, 2000
CAPITAL LOSS CARRYFORWARDS:
At January 31, 2000, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
<TABLE>
<CAPTION>
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- ------------
<S> <C>
2004 $ 511,000
2005 41,000
2008 683,000
----------
$1,235,000
==========
</TABLE>
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
OTHER:
There are certain risks arising from geographic concentration in any state.
Certain revenue or tax related events in a state may impair the ability of
certain issuers of municipal securities to pay principal and interest on their
obligations.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
The Fund may purchase or sell municipal and Treasury bond futures contracts and
purchase and write options on futures. The Fund will invest in these instruments
to hedge against the effects of changes in the value of portfolio securities due
to anticipated changes in interest rates and/or market conditions, for duration
management, or when the transactions are economically appropriate to the
reduction of risk inherent in the management of the Fund and not for trading
purposes. The use of futures contracts and options involves certain risks, which
include (1) imperfect correlation between the price movement of the instruments
and the underlying securities, (2) inability to close out a position due to
different trading hours, or the temporary absence of a liquid market for either
the instrument or the underlying securities or (3) an inaccurate prediction by
the Adviser of the future direction of interest rates. Any of these risks may
involve amounts exceeding the amount recorded in the Fund's Statement of Assets
and Liabilities at any given time.
NOTE 4. LINE OF CREDIT
The Fund may borrow up to 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, 2000.
CHANGE IN INDEPENDENT AUDITOR
Based on the recommendation of the Audit Committee of the Fund on June 18, 1999,
the Board of Trustees determined not to retain PricewaterhouseCoopers LLP (PwC)
as the Fund's independent auditor and voted to appoint Ernst & Young LLP for the
fiscal year ended January 31, 2000. During the two most recent fiscal years,
PwC's audit reports contained no adverse opinion or disclaimer of opinion; nor
were its reports qualified or modified as to uncertainty, audit scope, or
accounting principle, Further, in connection with its audits for the two most
recent years and through March 11, 1999, there were no disagreements between the
Fund and PwC on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which if not resolved to
the satisfaction of PwC would have caused it to make reference to the
disagreement in its report on the financial statements for such years.
12
<PAGE> 15
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31, 2000
---------------------------
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $7.890 $7.890 $7.890
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) (b) 0.349 0.293 0.316(c)
Net realized and unrealized loss (0.844) (0.844) (0.844)
------ ------ ------
Total from Investment Operations (0.495) (0.551) (0.528)
------ ------ ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.345) (0.289) (0.312)
------ ------ ------
Net asset value --
End of period $7.050 $7.050 $7.050
====== ====== ======
Total return (d) (e) (6.39)% (7.10)% (6.82)%
====== ====== ======
RATIOS TO AVERAGE NET ASSETS
Expenses (f) 0.94% 1.69% 1.39%(c)
Net investment income (f) 4.68% 3.93% 4.23%(c)
Fees waived or borne by the Advisor (f) 0.09% 0.09% 0.09%
Portfolio turnover 33% 33% 33%
Net assets at end of period (000) $24,011 $22,183 $353
(a) Net of fees and expenses waived or
borne by the Advisor which amounted to: $0.007 $0.007 $0.007
</TABLE>
(b) The per share net investment income amounts do not reflect the period's
reclassification of differences between book and tax basis net investment
income.
(c) Net of fees waived by the Distributor which amounted to $0.022 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) The benefits derived from custody credits and directed brokerage
arrangements had an impact of 0.01% and $0.001 per share.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31, 1999
---------------------------
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $7.790 $7.790 $7.790
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.356 0.296 0.320(b)
Net realized and unrealized gain 0.119 0.119 0.119
------ ------ ------
Total from Investment Operations 0.475 0.415 0.439
------ ------ ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.366) (0.307) (0.331)
In excess of net investment income (0.009) (0.008) (0.008)
------ ------ ------
Total Distributions Declared to Shareholders (0.375) (0.315) (0.339)
------ ------ ------
NET ASSET VALUE END OF PERIOD $7.890 $7.890 $7.890
====== ====== ======
Total return (c)(d) 6.29% 5.48% 5.80%
====== ====== ======
RATIOS TO AVERAGE NET ASSETS
Expenses (e) 0.82% 1.57% 1.27%(b)
Net investment income (e) 4.59% 3.84% 4.14%(b)
Fees waived or borne by the Advisor (e) 0.17% 0.17% 0.17%
Portfolio turnover 50% 50% 50%
Net assets at end of period (000) $29,526 $30,891 $345
(a) Net of fees and expenses waived or borne by the Advisor which amounted to: $0.013 $0.013 $0.013
</TABLE>
(b) Net of fees waived by the Distributor which amounted to $0.023 per share
and 0.30%.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales 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.
13
<PAGE> 16
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
YEARS 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 $7.430 $7.430 $7.710 $7.620 $7.620 $7.100 $7.100
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.388 0.332 0.172(c) 0.395 0.340 0.404 0.351
Net realized and unrealized gain (loss) 0.361 0.361 0.082 (0.194) (0.194) 0.535 0.533
------ ------ ------ ------ ------ ------ ------
Total from Investment Operations 0.749 0.693 0.254 0.201 0.146 0.939 0.884
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.389) (0.333) (0.174) (0.391) (0.336) (0.419) (0.364)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE END OF PERIOD $7.790 $7.790 $7.790 $7.430 $7.430 $7.620 $7.620
------ ------ ------ ------ ------ ------ ------
Total return (d) (e) 10.37% 9.55% 3.35%(f) 2.80% 2.03% 13.55% 12.72%
------ ------ ------ ------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS:
Expenses (g) 0.59% 1.34% 1.04%(c)(i) 0.56% 1.31% 0.45% 1.18%
Interest expense -- -- -- (h) (h)
Net investment income (g) 5.08% 4.33% 4.63%(c)(i) 5.31% 4.56% 5.45% 4.72%
Fees waived or borne by the Advisor (g) 0.41% 0.41% 0.40%(i) 0.44% 0.44% 0.55% 0.55%
Portfolio turnover 32% 32% 32% 69% 69% 83% 83%
Net assets at end of period (000) $32,150 $33,665 $103 $31,275 $33,341 $32,599 $35,741
(a) Net of fees and expenses waived
or borne by the Advisor which amounted to: $0.031 $0.031 $0.031 $0.032 $0.032 $0.040 $0.040
</TABLE>
(b) Class C shares were initially offered on August 1, 1997. Per share data
reflects activity from that date.
(c) Net of fees waived by the Distributor which amounted to $0.012 per share
and 0.30% (annualized).
(d) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(e) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) In 1998, the benefits derived from custody credits and directed brokerage
arrangements had an impact of 0.01% and $0.001 per share.
(h) Rounds to less than 0.01%.
(i) Annualized.
- --------------------------------------------------------------------------------
2000 FEDERAL TAX INFORMATION (UNAUDITED)
Approximately 100% of the income distributions will be treated as exempt income
for federal income tax purposes.
- --------------------------------------------------------------------------------
14
<PAGE> 17
Report of Ernst & Young LLP, Independent Auditors
TO THE TRUSTEES OF LIBERTY FUNDS TRUST V AND SHAREHOLDERS OF COLONIAL FLORIDA
TAX-EXEMPT FUND
We have audited the accompanying statement of assets and liabilities, including
the investment portfolio, of the Colonial Florida Tax-Exempt Fund (the Fund),
one of the series of Liberty Funds Trust V, as of January 31, 2000, and the
related statement of operations, the statement of changes in net assets and
financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the period ended January 31, 1999, and the financial highlights for each of
the four years in the period then ended were audited by other auditors whose
report dated March 11, 1999 expressed an unqualified opinion on those financial
statements and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of January 31, 2000 by correspondence with
the custodian and brokers, or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Colonial Florida Tax-Exempt Fund of Liberty Funds Trust V at January 31, 2000,
and the results of its operations, the changes in its net assets and the
financial highlights for the year then ended in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
March 13, 2000
15
<PAGE> 18
TRUSTEES & TRANSFER AGENT
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN V. 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
Academic Vice President and Dean of Faculties, Boston College (formerly 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)
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Florida 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 Florida 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.
ANNUAL REPORT:
COLONIAL FLORIDA TAX-EXEMPT FUND
<PAGE> 19
Liberty offers the independent thinking and collective strength of six financial
specialists. Our distinguished product line helps financial advisors and their
clients build diversified investment portfolios for long-term financial goals.
[LIBERTY FUNDS LOGO]
ALL-STAR INSTITUTIONAL MONEY MANAGEMENT APPROACH FOR INDIVIDUAL INVESTORS.
COLONIAL FIXED INCOME AND VALUE STYLE EQUITY INVESTING.
CRABBE A CONTRARIAN APPROACH TO FIXED INCOME AND EQUITY INVESTING.
HUSON
NEWPORT A LEADER IN INTERNATIONAL INVESTING.(SM)
STEIN ROE SOLUTIONS FOR GROWTH AND INCOME INVESTING.
ADVISOR
[KEYPORT LOGO] A LEADING PROVIDER OF INNOVATIVE ANNUITY PRODUCTS.
Liberty's mutual funds are offered by prospectus through Liberty Funds
Distributor, Inc.
BEFORE YOU INVEST, CONSULT YOUR FINANCIAL ADVISOR.
Your financial advisor can help you develop a long-term plan for reaching your
financial goals.
COLONIAL FLORIDA TAX-EXEMPT FUND Annual Report
BULK RATE
[LIBERTY FUNDS Letterhead] U.S. POSTAGE
PAID
HOLLISTON, MA
PERMIT NO. 20
781-02/351A-0200
