<PAGE>
LETTER FROM THE PRESIDENT
================================================================================
Dear Shareholder:
I am pleased to present Colonial North Carolina Tax-Exempt Fund's annual
report for the 12 months ended January 31, 1995. The Fund pursues its objective
through investments primarily in investment-grade North Carolina municipal
bonds.
FUND PERFORMANCE (2/1/94 - 1/31/95)1
<TABLE>
<CAPTION>
- --------------------------------------------------------
INCEPTION CLASS A CLASS B
9/1/93 9/1/93
<S> <C> <C>
Distributions declared
per share $0.394 $0.343
- --------------------------------------------------------
SEC yield on 1/31/95 5.82% 5.36%
- --------------------------------------------------------
Taxable-equivalent yield
on 1/31/95 at the
maximum offering price 11.05% 10.18%
- --------------------------------------------------------
12-month total return, assuming
reinvestment of all distributions
and no sales charge or CDSC -5.55% -6.27%
- --------------------------------------------------------
Net asset value per share
on 1/31/95 $6.68 $6.68
- --------------------------------------------------------
</TABLE>
ECONOMIC/MARKET OVERVIEW
The pace of economic growth during the fiscal year was much stronger than
expected. This activity, which generated renewed concerns about inflation,
prompted the Federal Reserve Board to raise short-term interest rates six times
to keep inflation under control. The yield on the bellwether 30-year Treasury
bond also moved higher, increasing from 6.26% to 7.70% from the beginning to the
end of the period, and long-term tax-exempt bonds followed suit. Over the course
of the fiscal year, interest rate increases had the single biggest impact on
North Carolina municipal bonds, resulting in lower bond prices.
Like most of the rest of the nation, North Carolina benefited from strong
economic growth during 1994. In recent years, many companies have either
relocated or been established in North Carolina. The state offers these
companies a low-cost business environment and a large, well-educated labor
force. Its low unemployment rate, which was below the national average,
reflected the contributions of many sectors of the economy, including
residential construction and retail sales.
The growth of North Carolina's economy has been reflected in an increase in
export-related industries. The state is well positioned, both economically and
geographically, to take advantage of opportunities presented by the North
American Free Trade Agreement.
[PHOTO]
John A. McNeice, Jr.
President
INVESTMENT STRATEGY
Management's strategy was to remain fully invested at all times, with
assets allocated in a diverse selection of North Carolina municipal bonds,
including hospital, water/sewer, and general obligation bonds. On January 31,
the Fund owned 54 individual issues in nine public sectors. Almost 100% of
portfolio holdings were rated investment grade. Approximately 53% were rated Aaa
- -- the highest quality rating available from the major bond rating agencies.
Colonial management is optimistic about the long-term prospects for the
municipal bond market. For further information about how you can take advantage
of additional tax-exempt investment opportunities offered by Colonial, please
contact your full-service financial adviser or call Colonial at 1-800-426-3750.
Sincerely,
/s/ John A. McNeice, Jr.
John A. McNeice, Jr.
President
March 10, 1995
(1) Refer to the footnote on page two.
<PAGE>
REPORT FROM COLONIAL MANAGEMENT
================================================================================
Although the Fund's total return was lower than we would have liked,
municipal bonds still provided returns superior to comparable U.S. Treasury
securities. Typically, when interest rates rise, bond prices decline, resulting
in higher bond yields. For example, during the fiscal year the yield for a
sample long-term municipal security with a Aaa rating -- the highest quality
rating available -- increased by 1.2 percentage points, from 5.02% to 6.22%.
Although this was a relatively sharp increase, compared to Treasury securities
the rise in municipal yields was quite moderate. Over the same period the yield
for a comparable Treasury security increased by almost 1.5 percentage points.
Despite the higher interest rates that depressed prices of municipal bonds,
there were some positive developments in the market's supply/demand dynamic.
Over the long term these may offset the impact from 1994's interest rate
increases.
SUPPLY AND DEMAND
As interest rates moved higher, the refinancing activity that had generated
record volumes of municipal securities in 1992 and 1993 subsided -- during 1994
North Carolina's new issue supply was down 64.7%. Lead Portfolio Manager Jeffrey
Augustine believes this trend will continue in 1995 -- supply is expected to
drop to $1.6 billion, down from $6.3 billion in 1993. Low supply should be
complemented by strong demand for tax-exempt securities. Nationally, the
combination of coupon payments and maturing bonds may generate more than $200
billion (out of a total of approximately $1.2 trillion in municipal bonds
currently outstanding) that will likely be reinvested in the municipal market.
This supply/demand dynamic should have a favorable impact on prices.
INVESTMENT OBJECTIVE
The Fund's Trustees recently approved modifying your Fund's investment
objective to more precisely describe the Fund's investment goals and approach.
Please note that the Fund's manager and fundamental policies remain unchanged.
As of 5/31/95, the Fund will seek as high a level of after-tax total return, as
is consistent with prudent risk, by pursuing current income exempt from federal
and North Carolina personal income tax and opportunities for long-term
appreciation from a portfolio primarily invested in investment-grade municipal
bonds. The Fund's shares are intended to be exempt from North Carolina's
intangibles tax.
<TABLE>
<CAPTION>
- ---------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 1/31/95
CLASS A CLASS B
- ---------------------------------------------------------
NAV MOP NAV w/CDSC
<S> <C> <C> <C> <C>
1 year -5.55% -10.04% -6.27% -10.72%
Since inception -2.45% -5.74% -3.18% -5.74%
- ---------------------------------------------------------
</TABLE>
<TABLE>
COMPARISON OF THE CHANGE IN VALUE OF $10,000
Hypothetical investment in Class A Shares of Colonial North Carolina
Tax-Exempt Fund, the Lehman Brothers Municipal Bond Index, and
the Lehman Brothers 20-year Municipal Bond Index
9/1/93 - 1/31/95
LEHMAN 20-YEAR: $9,893
LEHMAN MUNICIPAL: $10,004
CLASS A NAV: $9,654
CLASS A MOP: $9,196
<CAPTION>
MOP NAV LEHMAN 20-YEAR
---- ----- ------ -------
<S> <C> <C> <C> <C>
9/93 9525 10070 10114 10126
10/93 9583 10061 10133 10144
12/93 9681 10164 10256 10274
2/94 9430 9900 10104 10095
4/94 8968 9415 9775 9641
6/94 9027 9477 9800 9658
8/94 9208 9667 10015 9906
10/94 8814 9253 9692 9452
1/95 9196 9654 10004 9893
</TABLE>
<TABLE>
COMPARISON OF THE CHANGE IN VALUE OF $10,000
Hypothetical investment in Class B Shares of Colonial North Carolina
Tax-Exempt Fund, the Lehman Brothers Municipal Bond Index, and
the Lehman Brothers 20-year Municipal Bond Index
9/1/93 - 1/31/95
LEHMAN 20-YEAR: $9,893
LEHMAN MUNICIPAL: $10,004
CLASS B NAV: $9,552
CLASS B MOP: $9,195
<CAPTION>
MOP NAV LEHMAN 20-YEAR
---- ----- ------ -------
<S> <C> <C> <C> <C>
9/93 10064 10064 10114 10126
10/93 10049 10049 10133 10144
12/93 10138 10138 10256 10274
2/94 9863 9863 10104 10095
4/94 9368 9368 9775 9641
6/94 9418 9418 9800 9658
8/94 9594 9594 10015 9906
10/94 9171 9171 9692 9452
1/95 9195 9552 10004 9893
</TABLE>
The Lehman Brothers Municipal Bond Index and the Lehman Brothers 20-year
Municipal Bond Index are unmanaged indexes that track the performance of the
municipal bond market. A portion of the Fund's income may be subject to the
alternative minimum tax. The 30-day SEC yield on 1/31/95 of 5.82% for Class A
shares and 5.36% for Class B shares reflects the portfolio's earning power, net
of expenses, and does not include changes in Fund price. The 30-day SEC yield on
2/28/95 was 5.68% for Class A shares and 5.21% for Class B shares. If the
adviser had not borne certain Fund expenses, total returns for Class A and Class
B shares would have been lower; yield for Class A shares would have been 4.87%,
and yield for Class B shares would have been 4.36%. Taxable-equivalent yields
are based on the maximum combined 47.35% federal and North Carolina income tax
rates. Past performance cannot predict future results. Return 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) return does not
include sales charges or contingent deferred sales charges (CDSC). Maximum
offering price (MOP) return includes the maximum sales charge of 4.75%. The CDSC
return reflects the applicable contingent deferred sales charge (one year 5.00%,
since inception 4.00%). Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
2
<PAGE>
INVESTMENT PORTFOLIO (in thousands)
============================================================================
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 99.1% PAR VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
EDUCATION - 4.6%
East Carolina University:
Series 1993,
5.500% 05/01/17.............. $ 1,095 $ 966
Series 1994,
6.200% 11/01/15.............. 475 470
-----------
1,436
- ----------------------------------------------------------------------------
ELECTRIC - 3.7%
Commonwealth of Puerto Rico Power,
Authority, Series 1994-T,
6.000% 07/01/16.............. 500 467
State Municipal Power Agency,
Catawba Number 1, Series 1992,
5.750% 01/01/20.............. 750 690
-----------
1,157
- ----------------------------------------------------------------------------
GENERAL OBLIGATIONS - 18.8%
Commonwealth of Puerto Rico:
5.500% 07/01/08.............. 200 191
Public Building Authority:
Series 1993,
5.250% 07/01/18.............. 700 589
Series 1993-M,
5.500% 07/01/21.............. 900 778
Series 1994,
6.500% 07/01/23.............. 500 500
Lincoln County,
Series 1994,
5.100% 06/01/10(a)........... 850 752
Mecklenburg County:
Series 1993,
5.000% 04/01/08(a)........... 1,000 900
Series 1994,
5.500% 04/01/12.............. 1,000 931
Orange County,
5.500% 02/01/14.............. 490 447
State of North Carolina,
Series 1994-A,
4.750% 02/01/13.............. 1,000 825
-----------
5,913
- ----------------------------------------------------------------------------
HOSPITALS & HEALTH CARE- 18.7%
Charlotte-Mecklenburg Hospital
Authority,
6.250% 01/01/20.............. 1,000 971
Craven Regional Medical Authority,
5.500% 10/01/23.............. 600 531
Lincoln County,
9.000% 05/01/07.............. 300 320
New Hanover County Regional
Medical Center, Series 1993,
4.750% 10/01/13.............. 500 416
State Medical Care Commission:
Alamance Health Services Project,
5.500% 08/15/24.............. $ 500 $ 435
Memorial Mission Hospital,
Series 1993,
5.500% 10/01/18.............. 100 88
Moore Regional Hospital, Series 1993,
5.000% 10/01/18.............. 750 586
Presbyterian Health Services
Corp., Series 1993:
5.500% 10/01/14.............. 970 860
5.500% 10/01/20.............. 360 310
St. Joseph's Hospital Project,
Series 1994,
5.100% 10/01/14.............. 555 475
Wesley Long Community Hospital,
Series 1993,
5.250% 10/01/13.............. 500 438
Wake County Hospital Revenue,
5.125% 10/01/13.............. 500 427
-----------
5,857
- ----------------------------------------------------------------------------
HOUSING - 10.2%
MULTI-FAMILY - 8.7%
Durham Urban Development Authority,
Durham Hosiery Mill Project,
7.500% 08/01/29.............. 1,575 1,640
Eastern Carolina Regional Housing
Authority, Jacksonville New River
Apartments,
8.250% 09/01/14.............. 250 245
State Housing Finance Agency,
Multi-family, Series 1994,
5.450% 09/01/24.............. 1,000 835
-----------
2,720
-----------
SINGLE-FAMILY - 1.5%
State Housing Finance Agency,
Single-family, Series W,
6.450% 09/01/14.............. 500 492
- ----------------------------------------------------------------------------
IN-SUBSTANCE DEFEASED (b) - 3.0%
Municipal Power Agency,
5.500% 01/01/13.............. 1,000 934
- ----------------------------------------------------------------------------
POLLUTION CONTROL REVENUE - 1.3%
Haywood County Industrial Facilities
Pollution Control Authority, Champion
International Corp., Series 1993,
5.500% 10/01/18.............. 500 414
- ----------------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
3
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
===========================================================================
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
PUBLIC FACILITY & IMPROVEMENT - 16.5%
Charlotte Certificates of
Participation:
Cityfair Parking Facility Project,
Series A,
6.125% 06/01/10.............. $ 430 $ 419
Convention Facilities Project,
Series 1993-C,
5.250% 12/01/13(a)........... 1,550 1,358
Law Project, Series 1993-B
5.375% 06/01/13.............. 700 636
Cumberland County, Certificates of
Participation, Civic Center Project,
Series A,
6.400% 12/01/24.............. 1,000 995
Duplin County Certificates of
Participation, Law Enforcement &
Public Schools, Series 1993,
5.250% 08/01/14(a)........... 100 87
Durham County Certificates of
Participation, Hospital and Office
Project,
6.000% 05/01/14.............. 1,000 950
Harnett County, Certificates of
Participation,
6.400% 12/01/14.............. 250 249
Rowan County Certificates of
Participation, Justice Center
Project,
6.250% 12/01/07.............. 500 494
----------
5,188
- ---------------------------------------------------------------------------
TRANSPORTATION - 4.1%
Chapel Hill Certificates of
Participation, Parking Facilities,
6.450% 12/01/23.............. 500 484
Commonwealth of Puerto Rico,
Highway & Transportation Authority:
5.500% 07/01/09.............. 240 218
Series X,
5.250% 07/01/21.............. 700 578
----------
1,280
- ---------------------------------------------------------------------------
WASTE DISPOSAL- 2.0%
Martin County Industrial Facilities
& Pollution Control Authority,
Weyerhaeuser Co., Series 1993,
5.650% 12/01/23.............. 750 624
- ---------------------------------------------------------------------------
WATER & SEWER - 16.2%
Buncombe County Metropolitan Sewer
District, Series 1993-A:
5.375% 07/01/13(a)............ $ 140 $ 127
5.500% 07/01/22(a)............ 1,150 1,038
Charlotte Water & Sewer:
Series 1993,
5.250% 02/01/14............... 315 284
Series 1994,
5.800% 02/01/15(a)............ 1,000 961
Fayetteville Public Works
Commission, Series 1993,
4.750% 03/01/14(a)............ 1,500 1,223
Mount Holly Water & Sewer System,
Series 1993,
4.900% 03/01/12............... 120 104
Orange Water & Sewer Authority,
5.200% 07/01/16............... 500 418
Wilmington Water:
5.600% 06/01/13............... 500 460
5.700% 06/01/15............... 500 461
---------
5,076
- ---------------------------------------------------------------------------
Total investments (cost $33,444) (c) 31,091
- ---------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 0.9% 267
- ---------------------------------------------------------------------------
NET ASSETS - 100.0% $ 31,358
- ---------------------------------------------------------------------------
</TABLE>
Notes to investment portfolio:
(a) These securities with a total market value of $6,446, 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) Cost for federal income tax purposes is $33,472.
Short futures contracts open at January 31, 1995:
<TABLE>
<CAPTION>
Par value Unrealized
covered Expiration depreciation
Type by contracts month at 1/31/95
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Municipal bond $ 4,000 March $ 143
Treasury bond $ 700 March $ 16
- ---------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
4
<PAGE>
FINANCIAL STATEMENTS
================================================================================
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
January 31, 1995
(in thousands except for per share amounts and footnote)
- ----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments at value (cost $33,444) .................................... $31,091
Receivable for:
Investments sold ............................ $ 900
Interest..................................... 525
Fund shares sold ............................ 193
Deferred organization expenses.................. 22 1,640
------ -------
Total assets................................................ 32,731
LIABILITIES
Payable for:
Investments purchased....................... 974
Distributions............................... 144
Fund shares repurchased..................... 109
Variation margin on futures................. 26
Payable to custodian banks..................... 106
Payable to adviser............................. 10
Accrued other.................................. 4
------
Total liabilities ........................................... 1,373
------
NET ASSETS............................................................ $31,358
-------
Net asset value & redemption price per share -
Class A ($14,189/2,125)........................................... $ 6.68
-------
Maximum offering price per share - Class A
($6.68/0.9525)...................................................... $ 7.01*
-------
Net asset value & offering price per share -
Class B ($17,169/2,571)............................................ $ 6.68
-------
COMPOSITION OF NET ASSETS
Capital paid in.................................................... $34,293
Undistributed net investment income................................ 12
Accumulated net realized loss...................................... (435)
Net unrealized deprecian on:
Investments...................................................... (2,353)
Open futures contracts........................................... (159)
-------
$31,358
-------
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
Year ended January 31, 1995
(in thousands)
- -----------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................................. $ 1,742
-------
EXPENSES
Management fee................................. $ 165
Service fee.................................... 5
Distribution fee - Class B..................... 105
Transfer agent................................. 49
Bookkeeping fee................................ 27
Trustees fees.................................. 7
Custodian fee.................................. 4
Audit fee...................................... 8
Legal fee...................................... 4
Registration fees.............................. 16
Reports to shareholders........................ 3
Amortization of deferred
organization expenses........................ 7
Other.......................................... 10
------
410
Fees and expenses waived or borne
by the adviser............................. (271) 139
------ -------
Net investment income........................................... 1,603
-------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments................................. (782)
Closed futures contracts.................... 390
------
Net realized loss................................................... (392)
Net unrealized depreciation
during the period on:
Investments................................. (2,600)
Open futures contracts...................... (26)
------
Net unrealized depreciation......................................... (2,626)
-------
Net loss......................................................... (3,018)
-------
Net decrease in net assets from
operations............................................................ $(1,415)
-------
<FN>
* On sales of $50,000 or more the offering price is reduced.
</TABLE>
See notes to financial statements.
5
<PAGE>
FINANCIAL STATEMENTS - continued
================================================================================
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Period ended
January 31 January 31
---------- ------------
1995 1994(a)
-------- -------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income............................................. $ 1,603 $ 243
Net realized loss................................................. (392) (43)
Net unrealized appreciation (depreciation)........................ (2,626) 114
-------- -------
Net increase (decrease) from operations..................... (1,415) 314
Distributions
From net investment income - Class A.............................. (889) (133)
From net investment income - Class B.............................. (707) (112)
-------- -------
(3,011) 69
-------- -------
Fund share transactions
Receipts for shares sold - Class A................................ 7,134 13,753
Value of distributions reinvested - Class A....................... 560 51
Cost of shares repurchased - Class A.............................. (5,510) (159)
-------- -------
2,184 13,645
-------- -------
Receipts for shares sold - Class B................................ 10,193 10,083
Value of distributions reinvested - Class B....................... 420 46
Cost of shares repurchased - Class B.............................. (2,072) (199)
-------- -------
8,541 9,930
-------- -------
Net increase from Fund share transactions................... 10,725 23,575
-------- -------
Total increase ....................................... 7,714 23,644
NET ASSETS
Beginning of period............................................... 23,644
-------- -------
End of period (including undistributed
net investment income of $12 and none, respectively) $ 31,358 $23,644
-------- -------
NUMBER OF FUND SHARES
Sold - Class A.................................................... 1,035 1,842
Issued for distributions reinvested - Class A..................... 83 7
Repurchased - Class A............................................. (821) (21)
-------- -------
297 1,828
-------- -------
Sold - Class B.................................................... 1,500 1,345
Issued for distributions reinvested - Class B..................... 63 6
Repurchased - Class B............................................. (317) (26)
-------- -------
1,246 1,325
-------- -------
Net increase in shares outstanding.......................... 1,543 3,153
Outstanding at
Beginning of period............................................ 3,153
-------- -------
End of period.................................................. 4,696 3,153
-------- -------
</TABLE>
(a) The Fund commenced investment operations on September 1, 1993.
See notes to financial statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
===============================================================================
NOTE 1. ACCOUNTING POLICIES
Colonial North Carolina Tax-Exempt Fund (the Fund), a series of Colonial
Trust V, is a Massachusetts business trust, registered under the Investment
Company Act of 1940, as amended, as a non-diversified, open-end, management
investment company. The Fund may issue an unlimited number of shares. The Fund
offers Class A shares sold with a front-end sales charge and Class B shares
which 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. The following significant accounting
policies are consistently followed by the Fund in the preparation of its
financial statements and conform to generally accepted accounting principles.
- -------------------------------------------------------------------------------
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.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued at
fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased or sold.
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 distribution fee), 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 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 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.
- -------------------------------------------------------------------------------
DEFERRED ORGANIZATION EXPENSES
The Fund incurred $31,806 of expenses in connection with its organization,
initial registration with the Securities and Exchange Commission and with
various states, and the initial public offering of its shares. These expenses
were deferred and are being amortized on a straight-line basis over five years.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
================================================================================
NOTE 2. FEES AND COMPENSATION PAID TO
AFFILIATES
MANAGEMENT FEE
Colonial Management Associates, Inc. (the Adviser) is the investment
adviser of the Fund and furnishes accounting and other services and office
facilities for a monthly fee. Through June 30, 1994, this fee was 0.60%
annually of the Fund's average net assets. Effective July 1, 1994, the monthly
fee is based on each Fund's pro rata portion of the combined average net assets
of Trust V as follows:
<TABLE>
<CAPTION>
Average Net Asset Annual Fee Rate
- ------------------- ---------------
<S> <C>
First $1 billion 0.55%
Next $1 billion 0.50%
Over $2 billion 0.45%
- ----------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
BOOKKEEPING FEE
The Adviser 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
Colonial Investors Service Center, Inc. (the Transfer Agent), an affiliate
of the Adviser, provides shareholder services for a monthly fee equal to 0.14%
annually of the Fund's average net assets and receives a reimbursement for
certain out of pocket expenses.
- -------------------------------------------------------------------------------
UNDERWRITING DISCOUNTS, SERVICE AND
DISTRIBUTION FEES
The Adviser, through Colonial Investment Services, Inc. (the Distributor),
is the Fund's principal underwriter. During the year ended January 31, 1995,
the Distributor retained net underwriting discounts of $18,320 on sales of the
Fund's Class A shares and received contingent deferred sales charges (CDSC) of
$35,409 on Class B share redemptions.
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 average net
assets attributable to Class B shares. Effective December 1, 1994, the plan was
amended to include payment by the Fund of a service fee applicable to both Class
A and Class B, 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 Adviser 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 0.10% annually of the Fund's average net assets.
- -------------------------------------------------------------------------------
OTHER
The Fund pays no compensation to its officers, all of whom are employees of
the Adviser.
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.
- -------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
During the Year ended January 31, 1995, purchases and sales of investments,
other than short-term obligations, were $21,899,088 and $10,278,855,
respectively.
Unrealized appreciation (depreciation) at January 31, 1995, based on cost
of investments for federal income tax purposes was:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation... $ 42,879
Gross unrealized depreciation... (2,424,284)
-------------
Net unrealized depreciation.. $ (2,381,405)
-------------
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
================================================================================
CAPITAL LOSS CARRYFORWARDS
At January 31, 1995, 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>
2003.... $230,000
</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 sells municipal and Treasury bond futures contracts to manage
overall portfolio interest rate exposure and not for trading purposes. The use
of futures contracts involves certain risks, which include (1) imperfect
correlation between the price movement of the contracts and the underlying
securities, (2) inability to close out positions due to different trading hours,
or the temporary absence of a liquid market, for either the contract 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 initial or variation margin recorded in the Fund's Statement of
Assets and Liabilities at any given time.
- --------------------------------------------------------------------------------
9
<PAGE>
FINANCIAL HIGHLIGHTS
================================================================================
Selected data for a share of each class outstanding throughout each period are
as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JANUARY 31 JANUARY 31
-------------------- --------------------
1995 1994 (b)
-------------------- --------------------
CLASS A CLASS B CLASS A CLASS B
------ -------- ------- -------
<S> <C> <C> <C> <C>
Net asset value - Beginning of period.................... $7.500 $7.500 $7.500 $7.500
Income (loss) from investment operations:
Net investment income (a)............................. 0.396 0.345 0.164 0.141
Net realized and unrealized loss on investments....... (0.822) (0.822) --- ---
------ -------- ------- -------
Total from investment operations................ (0.426) (0.477) 0.164 0.141
------ -------- ------- -------
Less distributions declared to shareholders:
From net investment income................... (0.394) (0.343) (0.164) (0.141)
------ -------- ------- -------
Net asset value - End of period.......................... $6.680 $6.680 $7.500 $7.500
------ -------- ------- -------
Total return (c)(d)...................................... (5.55)% (6.27)% 2.22%(f) 1.90%(f)
------ -------- ------- -------
Ratios to average net assets
Expenses.............................................. 0.12%(e) 0.87%(e) 0.10%(g) 0.85%(g)
Net investment income ................................ 5.83% 5.08%(d) 4.91%(g) 4.16%(g)
Fees and expenses waived or borne by the adviser...... 0.93% 0.93%(d) 1.20%(g) 1.20%(g)
Portfolio turnover....................................... 37% 37%(d) 1%(g) 1%(g)
Net assets at end of period (000)........................ $14,189 $17,169 $13,710 $9,934
(a) Net of fees and expenses waived or borne
by the adviser which amounted to..................... $0.063 $0.063 $0.040 $0.040
(b) The Fund commenced investment operations on September 1, 1993.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or CDSC.
(d) Had the adviser not waived or reimbursed a portion of expenses total return
would have been reduced.
(e) Includes service fee since its inception on December 1, 1994, of 0.02% (not
annualized).
(f) Not annualized.
(g) Annualized.
</TABLE>
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
All of the distributions will be treated as exempt income for federal income tax
purposes.
10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST V AND THE SHAREHOLDERS OF COLONIAL NORTH
CAROLINA 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 North Carolina Tax-Exempt
Fund (a series of Colonial Trust V) at January 31, 1995, 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, 1995 by correspondence with the custodian and brokers, and the
application of alternative auditing procedures where confirmations from brokers
were not recevied, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
March 10, 1995
- -----------------------------------------------------------------------------
[GRAPHIC]
ABOUT OUR COVER...
The symbol on the cover of this Report represents the Fund's primary investment
focus on municipal bonds.
- --------------------------------------------------------------------------------
Colonial North Carolina Tax-Exempt Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call our
Literature Department at 1-800-248-2828 and additional reports will be sent to
you.
SHAREHOLDER SERVICES AND TRANSFER AGENT
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
This material may be used with potential investors if it is preceded or
accompanied by a current Fund prospectus containing more complete information
including fees, risks, and expenses.
11
<PAGE>
[GRAPHIC] COLONIAL
MUTUAL FUNDS
[GRAPHIC]
COLONIAL
NORTH CAROLINA
TAX-EXEMPT FUND
======================================
ANNUAL REPORT
JANUARY 31, 1995
[GRAPHIC] COLONIAL
MUTUAL FUNDS
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[SOY INK LOGO]
COLONIAL INVESTMENT SERVICES (C)1995
One Financial Center, Boston, Massachusetts 02111-2621
Printed on recycled paper
NC-02/641A-0195
