<PAGE>
LETTER FROM THE PRESIDENT
Dear Shareholder:
Following is Colonial North Carolina Tax-Exempt Fund's semiannual report
for the six months ended July 31, 1995. The Fund seeks 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 North Carolina municipal bonds.
<TABLE>
FUND PERFORMANCE (2/1/95 - 7/31/95)
<CAPTION>
CLASS A CLASS B
INCEPTION 9/1/93 9/1/93
- ---------------------------------------------------------
<S> <C> <C>
Distributions declared
per share $0.197 $0.171
- ---------------------------------------------------------
SEC yield on 7/31/95 5.46% 4.99%
- ---------------------------------------------------------
Taxable-equivalent yield
on 7/31/95, based on the
maximum offering price 9.80% 8.96%
- ---------------------------------------------------------
Six-month total return, assuming
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC) 6.55% 6.16%
- ---------------------------------------------------------
Net asset value per share
on 7/31/95 $6.92 $6.92
- ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/95
CLASS A CLASS B
NAV MOP NAV W/CDSC
<S> <C> <C> <C> <C>
1 year 7.72% 2.61% 6.92% 1.92%
Since inception 1.14% (1.52)% 0.38% (1.64)%
- ----------------------------------------------------------
</TABLE>
ECONOMIC/MARKET OVERVIEW
Although tax reform discussions in Washington have had a negative impact on
the municipal bond market, in other respects the economic climate was quite
favorable for these securities. One factor that had a positive influence on
performance was the relatively low supply of North Carolina municipal bonds.
Also, the U.S. economy has gradually slowed during 1995. Real gross domestic
product (GDP) for the first two quarters of 1995 grew at an annualized rate of
2.8% and 1.1%, respectively, down significantly from the annualized GDP growth
rate of 5.1% for the final quarter of 1994. This translated into lower interest
rates, a development that was reflected in higher prices in the municipal bond
market.
North Carolina's economy remains strong, as demonstrated by its
unemployment rate of 4.0%. In fact, your state's unemployment rate is the lowest
of the 11 largest industrial states.
The state has proposed an $800 million general obligation issue for highway
maintenance and a $500 million state-wide issue for school construction. If
approved, the new bonds will increase the relatively low supply of North
Carolina municipal bonds currently in circulation. If supply increases without a
corresponding pick up in demand, there could be a negative impact on prices.
[PHOTO]
John A. McNeice, Jr.
President
INVESTMENT STRATEGY
On July 31, the Fund owned 57 individual issues in 15 public sectors.
Almost 100% of the securities in the portfolio were rated investment grade, with
approximately 56% rated AAA, the highest quality rating available.
We remain cautiously optimistic about North Carolina's municipal bond
market. Although we will monitor the tax reform debate closely, we believe the
overall environment for these securities should continue to be favorable.
Sincerely,
/s/ John A. McNeice, Jr.
- ------------------------
John A. McNeice, Jr.
President
September 13, 1995
A portion of the Fund's income may be subject to the alternative minimum
tax.
The 30-day SEC yield on July 31, 1995, of 5.46% for Class A shares and
4.99% for Class B shares reflects the portfolio's earning power, net of
expenses, and does not include changes in Fund price.
If the adviser had not borne certain Fund expenses, total returns would
have been lower and the yield for Class A shares would have been 4.61%, and the
yield for Class B shares would have been 4.09%. Taxable-equivalent yields are
based on the maximum 44.28% combined federal and state personal income tax rate.
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 CDSC. Maximum offering price (MOP) return includes the
maximum sales charge of 4.75%. The CDSC returns reflect charges of: 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.
<PAGE>
INVESTMENT PORTFOLIO (unaudited, in thousands) JULY 31, 1995
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 99.1% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
CERTIFICATES OF PARTICIPATION - 6.0%
Charlotte Certificates of Participation:
Cityfair Parking Facility Project,
Series A,
6.125% 06/01/10 ............................ $ 430 $ 435
Law Project, Series 1993-B,
5.375% 06/01/13 ............................ 700 669
Durham County Certificates of Participation,
Hospital and Office Project,
6.000% 05/01/14 ............................ 1,000 1,011
------
2,115
- --------------------------------------------------------------------------------
CONSTRUCTION - 1.3%
BUILDING CONSTRUCTION - 1.3%
Haywood County Industrial Facilities
Pollution Control Authority, Champion
International Corp., Series 1993,
5.500% 10/01/18 ............................ 500 450
- --------------------------------------------------------------------------------
EDUCATION - 4.3%
East Carolina University:
Series 1993,
5.500% 05/01/17 ............................ 1,095 1,027
Series 1994,
6.200% 11/01/15 ............................ 475 488
------
1,515
- --------------------------------------------------------------------------------
GENERAL OBLIGATIONS - 18.9%
Commonwealth of Puerto Rico,
Public Building Authority:
Series 1993,
5.250% 07/01/18 ............................ 700 632
Series 1993-M,
5.500% 07/01/21 ............................ 900 822
Series 1994,
6.500% 07/01/23 ............................ 500 523
Lincoln County, Series 1994,
5.100% 06/01/10 ............................ 850 799
Mecklenburg County General Obligation:
Series 1993,
5.000% 04/01/08 ............................ 1,000 971
Series 1994,
5.500% 04/01/12 ............................ 1,000 993
Onslow County,
5.700% 03/01/16 ............................ 500 488
Orange County,
5.500% 02/01/14 ............................ 490 467
State of North Carolina, Series 1994-A,
4.750% 02/01/13 ............................ 1,000 901
------
6,596
- --------------------------------------------------------------------------------
HEALTH - 17.7%
HOSPITALS - 17.7%
Charlotte-Mecklenburg Hospital Authority,
6.250% 01/01/20 ............................ 1,000 1,023
Craven Regional Medical Authority,
5.500% 10/01/23(a) ........................ 600 552
Lincoln County,
9.000% 05/01/07 ........................... 300 330
New Hanover County Regional
Medical Center, Series 1993,
4.750% 10/01/13 ........................... 500 436
State Medical Care Commission:
Alamance Health Services Project,
5.500% 08/15/24 ........................... 500 453
Memorial Mission Hospital,
Series 1993,
5.500% 10/01/18 ........................... 100 92
Moore Regional Hospital, Series 1993,
5.000% 10/01/18 ........................... 750 632
Presbyterian Health Services Corp.,
Series 1993:
5.500% 10/01/14 ........................... 970 928
5.500% 10/01/20 ........................... 360 337
St. Joseph's Hospital Project,
Series 1994,
5.100% 10/01/14 ........................... 555 495
Wesley Long Community Hospital,
Series 1993,
5.250% 10/01/13 ........................... 500 459
Wake County,
5.125% 10/01/13 ........................... 500 447
------
6,184
- --------------------------------------------------------------------------------
HOUSING - 9.5%
MULTI-FAMILY - 8.0%
Durham Urban Development Authority,
Durham Hosiery Mill Project,
7.500% 08/01/29 ........................... 1,575 1,676
Eastern Carolina Regional Housing Authority,
Jacksonville New River Apartments,
8.250% 09/01/14 ........................... 250 250
State Housing Finance Agency,
Multi-family, Series 1994,
5.450% 09/01/24 ........................... 1,000 891
------
2,817
------
SINGLE FAMILY - 1.5%
State Housing Finance Agency,
Single-family, Series W,
6.450% 09/01/14 ........................... 500 508
- --------------------------------------------------------------------------------
MANUFACTURING - 2.0%
PAPER PRODUCTS - 2.0%
Martin County Industrial Facilities
& Pollution Control Authority,
Weyerhaeuser Co., Series 1993,
5.650% 12/01/23 ........................... 750 688
- --------------------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
2
<PAGE>
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
PUBLIC FACILITIES IMPROVEMENT - 13.1%
Charlotte Certificates of Participation,
Convention Facilities Project,
Series 1993-C,
5.250% 12/01/13 (a) ....................... $ 1,550 $ 1,443
Commonwealth of Puerto Rico, Public
Buildings Authority, Series M,
3.750% 07/01/16 ........................... 200 178
Cumberland County, Certificates of
Participation, Civic Center Project,
Series A,
6.400% 12/01/24(a) ........................ 2,000 2,075
Duplin County Certificates of
Participation, Law Enforcement &
Public Schools, Series 1993,
5.250% 08/01/14 (a) ....................... 100 92
Harnett County, Certificates of Participation,
6.400% 12/01/14 ........................... 250 258
Rowan County, Certificates of Participation,
Justice Center Project,
6.250% 12/01/07 ........................... 500 533
-------
4,579
- ---------------------------------------------------------------------------------
PUBLIC INFRASTRUCTURE - 2.4%
TURNPIKE/TOLL ROAD/BRIDGE - 2.4%
Commonwealth of Puerto Rico,
Highway & Transportation Authority:
5.500% 07/01/09 ........................... 240 235
Series X,
5.250% 07/01/21 ........................... 700 614
-------
849
- ---------------------------------------------------------------------------------
REFUNDED/ESCROW/SPECIAL OBLIGATIONS (b) - 2.8%
Municipal Power Agency,
5.500% 01/01/13 ........................... 1,000 994
- ---------------------------------------------------------------------------------
TRANSPORTATION - 1.5%
Chapel Hill Certificates of
Participation, Parking Facilities,
6.450% 12/01/23 ........................... 500 509
- ---------------------------------------------------------------------------------
UTILITY - 3.4%
JOINT POWER AUTHORITY - 2.0%
State Municipal Power Agency,
Catawba Number 1, Series 1992,
5.750% 01/01/20 ........................... 750 713
-------
MUNICIPAL ELECTRIC - 1.4%
Commonwealth of Puerto Rico, Power
Authority, Series 1994-T,
6.000% 07/01/16 ........................... 500 489
- ---------------------------------------------------------------------------------
WATER & SEWER - 16.2%
Buncombe County Metropolitan Sewer District,
Series 1993-A:
5.375% 07/01/13 (a) ....................... 140 132
5.500% 07/01/22 (a) ....................... 1,150 1,080
Charlotte Water & Sewer:
Series 1993,
5.250% 02/01/14 ........................... 315 298
Series 1994,
5.800% 02/01/15 (a) ....................... 1,000 1,010
Fayetteville Public Works Commission:
Series 1993,
4.750% 03/01/14 ........................... 1,500 1,284
Series A,
5.375% 03/01/20 ........................... 350 324
Mount Holly Water & Sewer System,
Series 1993,
4.900% 03/01/12 ........................... 120 108
Orange Water & Sewer Authority,
5.200% 07/01/16 ........................... 500 444
Wilmington Water System, Series 1994:
5.600% 06/01/13 ........................... 500 486
5.700% 06/01/15 ........................... 500 488
-------
5,654
- ---------------------------------------------------------------------------------
Total investments (cost $35,256) (c) 34,660
- ---------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 0.6%
- ---------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (d) - 0.6%
Halifax County Industrial Facilities
& Pollution Control Authority,
Westmoreland Coal Co.,
3.900% 12/01/19 .......................... 100 100
WY City of Green River,
3.800% 06/01/99 .......................... 100 100
- ---------------------------------------------------------------------------------
Total short-term obligations 200
- ---------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 0.3% 112
- ---------------------------------------------------------------------------------
NET ASSETS - 100.0% $34,972
- ---------------------------------------------------------------------------------
<FN>
Notes to investment portfolio:
(a) These securities, or a portion thereof, with a total market value of
$5,346, 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, soley for the payment
of the interest and principal.
(c) Cost for federal income tax purposes is $35,284.
(d) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specific dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of July 31, 1995.
</TABLE>
<TABLE>
Short futures contracts open at July 31, 1995:
<CAPTION>
Par value Unrealized
covered Expiration depreciation
Type by contracts month at 7/31/95
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Treasury bond $ 3,100 September $ (117)
- --------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
3
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENT OF ASSETS & LIABILITIES (UNAUDITED)
July 31, 1995
(in thousands except for per share amounts and footnote)
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments at value (cost $35,256)................................. $34,660
Short-term obligations.............................................. 200
-------
34,860
Receivable for:
Interest.................................. $ 536
Fund shares sold.......................... 44
Deferred organization expenses............... 19
Other 14 613
-------
Total assets............................................... 35,473
LIABILITIES
Payable for:
Fund shares repurchased................... 311
Distributions............................. 152
Variation margin on futures............... 16
Payable to Adviser........................... 15
Accrued:
Deferred Trustee fees..................... 1
Other..................................... 6
------
Total liabilities.......................................... 501
-------
Net assets.......................................................... $34,972
=======
Net asset value & redemption price per share -
Class A ($16,001/2,314)......................................... $ 6.92
=======
Maximum offering price per share - Class A
($6.92/0.9525)................................................... $ 7.27 (a)
=======
Net asset value & offering price per share -
Class B ($18,971/2,743)......................................... $ 6.92 (b)
=======
COMPOSITION OF NET ASSETS
Capital paid in.................................................. $36,783
Undistributed net investment income.............................. 13
Accumulated net realized loss.................................... (1,111)
Net unrealized depreciation on:
Investments.................................................... (596)
Open futures contracts......................................... (117)
-------
$34,972
=======
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (UNAUDITED)
Six months ended July 31, 1995
(in thousands)
- -------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest............................................................ $ 1,002
EXPENSES
Management fee............................... $ 92
Service fee.................................. 21
Distribution fee - Class B................... 70
Transfer agent............................... 29
Bookkeeping fee.............................. 14
Trustees fees................................ 3
Custodian fee................................ 2
Audit fee.................................... 5
Legal fee.................................... 4
Registration fees............................ 7
Reports to shareholders...................... 2
Amortization of deferred
organization expenses...................... 3
Other........................................ 1
-----
253
Fees and expenses waived or borne
by the Adviser............................. (145) 108
----- -------
Net investment income....................................... 894
-------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized loss on:
Investments................................ (63)
Closed futures contracts................... (613)
-----
Net realized loss.............................................. (676)
Net unrealized appreciation
during the period on:
Investments................................ 1,757
Open futures contracts..................... 42
------
Net unrealized appreciation.................................... 1,799
-------
Net gain.................................................... 1,123
-------
Net increase in net assets from
operations....................................................... $ 2,017
=======
<FN>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
</TABLE>
See notes to financial statements.
4
<PAGE>
FINANCIAL STATEMENTS - continued
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
(unaudited)
Six months Year
ended ended
July 31 January 31
----------- ----------
1995 1995
----------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income .............................. $ 894 $ 1,603
Net realized loss .................................. (676) (392)
Net unrealized appreciation (depreciation) ......... 1,799 (2,626)
-------- --------
Net increase (decrease) from operations ...... 2,017 (1,415)
Distributions
From net investment income - Class A ............... (439) (889)
From net investment income - Class B ............... (459) (707)
-------- --------
1,119 (3,011)
-------- --------
Fund share transactions
Receipts for shares sold - Class A ................. 2,479 7,134
Value of distributions reinvested - Class A ........ 253 560
Cost of shares repurchased - Class A ............... (1,430) (5,510)
-------- --------
1,302 2,184
-------- --------
Receipts for shares sold - Class B ................. 2,008 10,193
Value of distributions reinvested - Class B ........ 239 420
Cost of shares repurchased - Class B ............... (1,054) (2,072)
-------- --------
1,193 8,541
-------- --------
Net increase from Fund share transactions .... 2,495 10,725
-------- --------
Total increase ......................... 3,614 7,714
NET ASSETS
Beginning of period ................................ 31,358 23,644
-------- --------
End of period (including undistributed net invest-
ment income of $13 and $12, respectively).......... $ 34,972 $ 31,358
======== ========
NUMBER OF FUND SHARES
Sold - Class A ..................................... 358 1,035
Issued for distributions reinvested - Class A ...... 36 83
Repurchased - Class A .............................. (205) (821)
-------- --------
189 297
-------- --------
Sold - Class B ..................................... 290 1,500
Issued for distributions reinvested - Class B ...... 34 63
Repurchased - Class B .............................. (152) (317)
-------- --------
172 1,246
-------- --------
</TABLE>
See notes to financial statements.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of management of Colonial North Carolina Tax-Exempt Fund
(the Fund), a series of Colonial Trust V, the accompanying financial statements
contain all normal and recurring adjustments necessary for the fair presentation
of the financial position of the Fund at July 31, 1995, and the results of its
operations, the changes in its net assets, and the financial highlights for the
six months then ended.
- -------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES
The Fund is a non-diversified portfolio of a Massachusetts business trust,
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Fund 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.
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 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.
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
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
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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.
- --------------------------------------------------------------------------------
<TABLE>
NOTE 3. 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 based on each Fund's pro-rata portion of the
combined average net assets of Trust V as follows:
<CAPTION>
Average Net Assets 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
Colonial Investment Services, Inc., (the Distributor), an affiliate of the
Adviser, is the Fund's principal underwriter. During the six months ended July
31, 1995, the Distributor retained net underwriting discounts of $5,453 on sales
of the Fund's Class A shares and received contingent deferred sales charges
(CDSC) of $9,082 on Class B share redemptions.
<TABLE>
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. The plan also requires the payment of a
service fee to the Distributor as follows:
<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.
Effective August 1, 1995, and until further notice, the expense limit
changed to 0.30% 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.
- -------------------------------------------------------------------------------
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE 4. PORTFOLIO INFORMATION
During the six months ended July 31, 1995, purchases and sales of
investments, other than short-term obligations, were $2,267,720 and $419,702,
respectively.
<TABLE>
Unrealized appreciation (depreciation) at July 31, 1995, based on cost of
investments for federal income tax purposes, was:
<S> <C>
Gross unrealized appreciation.................................... $ 533,022
Gross unrealized depreciation.................................... (1,156,789)
-----------
Net unrealized depreciation........................................ $ (623,767)
===========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
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:
<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.
- --------------------------------------------------------------------------------
NOTE 5. RESULTS OF SPECIAL SHAREHOLDERS MEETING
On February 15, 1995, a special meeting of shareholders was held and a new
Management Agreement between the Trust and Colonial Management Associates, Inc.
was approved that became effective upon the completion of the merger of The
Colonial Group, Inc. and Apple Merger Corporation, a subsidiary of Liberty
Financial Companies, Inc. on March 24, 1995. Of the shares of beneficial
interest outstanding on December 9, 1994, 3,755,211 voted for the new Management
Agreement, 15,845 voted against and 66,588 abstained. Of the shares of
beneficial interest outstanding that abstained, there were no broker non-votes.
- --------------------------------------------------------------------------------
8
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are as follows:
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED PERIOD ENDED
JULY 31 JANUARY 31 JANUARY 31
----------------------- -------------------- --------------------
1995 1995 1994(b)
----------------------- -------------------- --------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period....... $ 6.680 $ 6.680 $ 7.500 $ 7.500 $ 7.500 $ 7.500
------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income (a)................ 0.196 0.170 0.396 0.345 0.164 0.141
Net realized and unrealized
gain(loss) on investments.............. 0.241 0.241 (0.822) (0.822) -- --
------- ------- ------- ------- ------- -------
Total from investment operations..... 0.437 0.411 (0.426) (0.477) 0.164 0.141
------- ------- ------- ------- ------- -------
Less distributions declared to shareholders:
From net investment income............... (0.197) (0.171) (0.394) (0.343) (0.164) (0.141)
------- ------- ------- ------- ------- -------
Net asset value - End of period............. $ 6.920 $ 6.920 $ 6.680 $ 6.680 $ 7.500 $ 7.500
======= ======= ======= ======= ======= =======
Total return (c)(d)......................... 6.55% (e) 6.16% (e) (5.55)% (6.27)% 2.22% (e) 1.90% (e)
======= ======= ======= ======= ======= =======
Ratios to average net assets:
Expenses................................. 0.22% (f)(g) 0.97% (f)(g) 0.12% (f) 0.87% (f) 0.10% (g) 0.85% (g)
Net investment income.................... 5.63% (g) 4.88% (g) 5.83% 5.08% 4.91% (g) 4.16% (g)
Fees and expenses waived
or borne by the Adviser................ 0.85% (g) 0.85% (g) 0.93% 0.93% 1.20% (g) 1.20% (g)
Portfolio turnover.......................... 3% (g) 3% (g) 37% 37% 1% (g) 1% (g)
Net assets at end of period
(000).................................... $16,001 $18,971 $14,189 $17,169 $13,710 $ 9,934
(a) Net of fees and expenses
waived or borne by the
Adviser which amounted
to..................................... $0.030 $0.030 $0.063 $0.063 $0.040 $0.040
<FN>
(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 contingent deferred sales charge.
(d) Had the Adviser not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) Includes the service fee of 0.12% (annualized) for the period ended
July 31, 1995, and 0.02% (not annualized) for the year ended January 31,
1995, respectively.
(g) Annualized.
</TABLE>
9
<PAGE>
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ABOUT OUR COVER...
[GRAPHIC]
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 report has been prepared for shareholders of Colonial North Carolina
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.
10
<PAGE>
THIS PAGE LEFT BLANK INTENTIONALLY
11
<PAGE>
[LOGO]
COLONIAL
MUTUAL FUNDS
[GRAPHIC]
COLONIAL
NORTH CAROLINA
TAX-EXEMPT FUND
- ------------------------------------------------------
SEMIANNUAL REPORT
JULY 31, 1995
[LOGO]
COLONIAL
MUTUAL FUNDS
[LOGO] Printed on recycled paper
COLONIAL INVESTMENT SERVICES, INC. (C)1995
One Financial Center, Boston, Massachusetts 02111-2621
NC-03/199B-0795
