<PAGE>
LETTER FROM THE PRESIDENT
[PHOTOGRAPH OF JOHN A. NEICE, JR. PRESIDENT]
Dear Shareholder:
Following is Colonial Minnesota 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 Minnesota personal income tax and opportunities
for long-term appreciation from a portfolio primarily invested in investment
grade Minnesota municipal bonds.
<TABLE>
FUND PERFORMANCE (2/1/95 -- 7/31/95)
<CAPTION>
CLASS A CLASS B
INCEPTION 9/26/86 8/4/92
- ---------------------------------------------------------------
<S> <C> <C>
Distributions declared
per share $0.199 $0.173
- ---------------------------------------------------------------
SEC yield on 7/31/95 5.34% 4.86%
- ---------------------------------------------------------------
Taxable-equivalent yield
on 7/31/95, based on the
maximum offering price 9.66% 8.79%
- ---------------------------------------------------------------
Six-month total return, assuming
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC) 4.82% 4.43%
- ---------------------------------------------------------------
Net asset value per share
on 7/31/95 $ 6.97 $ 6.97
- ---------------------------------------------------------------
</TABLE>
<TABLE>
- ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/95
<CAPTION>
CLASS A CLASS B
NAV MOP NAV w/CDSC
<S> <C> <C> <C> <C>
1 year 6.03% 0.99% 5.24% 0.24%
5 years 6.60% 5.57% -- --
Since
inception 6.30% 5.71% 3.95% 3.02%
- ----------------------------------------------
</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 Minnesota 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.
Many sectors of Minnesota's economy have slowed in recent months,
including housing. However, overall growth remains stable. There has been an
increase in unemployment, but this must be considered relative to the unusually
low unemployment rate of 3.8% posted by the state on June 30.
One notable event during the period was the discussions in St. Paul
about possibly taxing interest earned by Minnesota municipal bonds. The
legislature maintained the tax-exemption, although the measure may be
reconsidered if the U.S. Supreme Court rules unfavorably on a similar case.
INVESTMENT STRATEGY
On July 31, the Fund owned 88 individual issues in 20 public sectors.
More than 90% of the securities in the portfolio were rated investment grade,
with approximately 65% rated AAA, the highest quality rating available.
We remain cautiously optimistic about Minnesota's municipal bond
market. While we will continue to 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 5.34% for Class A shares and
4.86% 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 5.09%, and the
yield for Class B shares would have been 4.60%. Taxable-equivalent yields are
based on the maximum 44.73% combined federal and Minnesota 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, 3.00%.
Performance for different share classes will vary based on differences
in sales charges and fees associated with each class.
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO (unaudited, in thousands) July 31, 1995
- ----------------------------------------------------------------------
<CAPTION>
MUNICIPAL BONDS - 98.1% PAR VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
EDUCATION - 2.6%
Montevideo Independent School
District, Series 1993,
4.900% 02/01/10. . . . . . . $ 400 $ 364
Roseau Independent School
District No. 682,
7.000% 02/01/14. . . . . . . 200 210
State Higher Education Facilities
Authority:
Carlton College, Series 3-L1,
5.750% 11/01/12. . . . . . . 500 499
Hamline University, Series 3-K,
6.600% 06/01/08. . . . . . . 250 264
-------
1,337
- ----------------------------------------------------------------------
FINANCE, INSURANCE, & REAL ESTATE - 1.1%
REAL ESTATE - 1.1%
St. Paul Port Authority, Series 1985-F,
9.125% 12/01/14. . . . . . . 650 602
- ----------------------------------------------------------------------
GENERAL OBLIGATIONS - 25.4%
Anoka-Hennepin Independent School
District No. 11,
Series 1993-C,
5.000% 02/01/09. . . . . . . 1,000 926
Bagley Independent School District
No. 162, Series 1994,
4.850% 02/01/12. . . . . . . 750 663
Faribault Independent School
District No. 656,
5.750% 06/01/15. . . . . . . 1,500 1,485
Milaca Independent School District
No. 912,
5.500% 02/01/20. . . . . . . 740 653
Minneapolis-St. Paul International
Airport, Series 1988-7,
7.800% 01/01/11. . . . . . . 300 326
Rosemount Independent School
District No. 196, Series 1994-B,
(a) 06/01/10. . . . . . . 2,765 1,172
St. Paul Independent School
District No. 625,
Series C,
5.250% 02/01/16. . . . . . . 2,475 2,283
MN State,
5.250% 08/01/14. . . . . . . 6,000 5,618
Wadena Independent School
District No. 819,
5.500% 02/01/13. . . . . . . 200 192
-------
13,318
- ----------------------------------------------------------------------
HEALTH - 16.7%
HOSPITALS- 16.7%
Bloomington Health Care Facilities
Development Authority, Masonic Home
Care Center Project,
5.875% 07/01/22. . . . . . . $ 500 $ 498
Mankato, Immanuel St. Joseph's
Hospital, Series 1992-A,
6.300% 08/01/22. . . . . . . 250 245
Minneapolis, Lifespan, Inc.,
Series 1988-B,
8.125% 08/01/17. . . . . . . 245 267
Minneapolis-St. Paul Housing &
Redevelopment Authority, Healthspan,
Series 1993-A,
4.750% 11/15/18. . . . . . . 4,410 3,688
Princeton, Fairview Hospital,
Series 1991-C,
6.250% 01/01/21. . . . . . . 300 307
St. Cloud Hospital Facilities,
Series C,
5.300% 10/01/20. . . . . . . 1,000 904
St. Louis Park, Healthsystem, Inc.,
Series 1993-A,
5.200% 07/01/23. . . . . . . 2,670 2,363
St. Paul Housing & Redevelopment
Authority:
Healtheast Project, Series 1993-A,
6.625% 11/01/17. . . . . . . 250 242
St. Paul-Ramsey Medical
Center Project, Series 1993,
5.550% 05/15/23. . . . . . . 250 237
-------
8,751
- ----------------------------------------------------------------------
HOUSING - 13.6%
ASSISTED LIVING/SENIOR - 0.5%
Roseville, Care Institute, Series 1993,
7.750% 11/01/23. . . . . . . 300 270
-------
MULTI-FAMILY - 7.3%
Chisago & Stearns Counties,
7.050% 09/01/27. . . . . . . 1,500 1,566
Eden Prairie, Preserve Place
Apartments,
8.000% 07/01/28. . . . . . . 650 670
Lakeville, Southfork
Apartment Project, Series 1989-A,
9.875% 02/01/20. . . . . . . 200 202
Minneapolis Community Development
Agency,
7.875% 07/01/17. . . . . . . 635 652
Red Wing River Region Health
Care Facilities, Series 1993-A,
6.400% 09/01/12. . . . . . . 200 195
</TABLE>
See notes to investment portfolio.
2
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO - continued
- ------------------------------------------------------------------------------
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
MULTI-FAMILY - CONT.
Robbinsdale, Copperfield Hill, Series 1985,
9.250% 12/01/18. . . . . . . . . . . . $ 350 $ 351
White Bear Lake, Birch Lake
Townhomes Project, Series 1988-A,
9.750% 07/15/19. . . . . . . . . . . . 200 199
------
3,835
------
SINGLE-FAMILY - 5.8%
Dakota & Washington County Housing
& Redevelopment Authority:
Series 1986,
7.200% 12/01/09. . . . . . . . . . . . 85 89
Series 1988,
8.150% 09/01/16. . . . . . . . . . . . 235 293
Minneapolis Community Development
Agency, St. Paul Housing & Redevelopment,
7.750% 07/01/06. . . . . . . . . . . . 290 297
Minneapolis,
Riverplace Project, Series 1987-A,
7.100% 01/01/20. . . . . . . . . . . . 255 261
Minneapolis-St. Paul Housing
Board, Series 1987-C,
8.875% 11/01/18. . . . . . . . . . . . 495 520
Red Wing River Region Health
Care Facilities, Series 1993-A,
6.500% 09/01/22. . . . . . . . . . . . 300 290
State Housing Finance Agency:
Series 1987-A,
8.500% 02/01/17. . . . . . . . . . . . 25 26
Series 1987-C,
9.000% 08/01/18. . . . . . . . . . . . 600 617
Series 1988-C,
8.500% 07/01/19. . . . . . . . . . . . 90 94
Series 1988-D,
8.050% 08/01/18. . . . . . . . . . . . 220 229
Washington County Housing &
Redevelopment Authority:
Cottages of Aspen Project,
9.250% 06/01/22. . . . . . . . . . . . 200 200
Series 1986,
7.600% 12/01/11. . . . . . . . . . . . 95 95
------
3,011
- ------------------------------------------------------------------------------
MANUFACTURING - 2.6%
FOOD & KINDRED PRODUCTS - 1.4%
Cloquet, Diamond Brands Inc.,
9.000% 06/01/02. . . . . . . . . . . . 700 718
------
MEASURING & ANALYZING INSTRUMENTS - 0.6%
Brooklyn Park,
TL Systems Corp., Series 1991,
10.000% 09/01/16. . . . . . . . . . . . 270 317
------
TRANSPORTATION EQUIPMENT - 0.6%
Buffalo, Ruden Manufacturing Inc.,
10.500% 09/01/14. . . . . . . . . . . . $ 300 $ 319
- ------------------------------------------------------------------------------
POLLUTION CONTROL REVENUE - 1.2%
State Public Facilities Authority:
Series 1989-A,
7.000% 03/01/09. . . . . . . . . . . . 100 108
Series 1990-A,
7.100% 03/01/12. . . . . . . . . . . . 300 323
Series 1991-A,
6.950% 03/01/13. . . . . . . . . . . . 200 216
------
647
- ------------------------------------------------------------------------------
PUBLIC FACILITIES & IMPROVEMENT - 1.1%
Metropolitan Council,
Hubert H. Humphrey Metrodome,
Series 1992,
6.000% 10/01/09. . . . . . . . . . . . 300 302
Minneapolis Community Development
Agency, Series 1991-1,
8.000% 12/01/16. . . . . . . . . . . . 250 264
------
566
- ------------------------------------------------------------------------------
REFUNDED/ESCROW/PUBLIC OBLIGATIONS (B) - 8.5%
Brainerd Independent School
District No. 181,
7.000% 06/01/11. . . . . . . . . . . . 200 224
Burnsville,
Fairview Community Hospital,
Series 1982-A,
(a) 05/01/12. . . . . . . . . . . . 2,145 839
Delano Independent School
District No. 879:
7.250% 02/01/09. . . . . . . . . . . . 100 114
7.250% 02/01/10. . . . . . . . . . . . 100 114
Faribault County, Series 1988:
7.400% 04/01/06. . . . . . . . . . . . 65 69
7.400% 04/01/07. . . . . . . . . . . . 125 132
7.400% 04/01/09. . . . . . . . . . . . 25 26
7.400% 04/01/10. . . . . . . . . . . . 150 158
Moorhead Residential Mortgage,
7.100% 08/01/11. . . . . . . . . . . . 20 23
New York Mills Independent School
District No. 553, Series 1992-A,
6.850% 02/01/18. . . . . . . . . . . . 210 235
Owatonna Independent School
District No. 761, Series 1990:
7.100% 02/01/09. . . . . . . . . . . . 115 126
7.100% 02/01/10. . . . . . . . . . . . 120 132
Rockford Independent School
District No. 883,
7.100% 12/15/10. . . . . . . . . . . . 400 438
</TABLE>
See notes to investment portfolio.
3
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO - continued
- ---------------------------------------------------------------------
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ---------------------------------------------------------------------
<S> <C> <C>
REFUNDED/ESCROW/PUBLIC OBLIGATIONS - CONT.
Southern Minnesota Municipal
Power Agency, Series A,
5.750% 01/01/18. . . . . . . $ 500 $ 506
St. Cloud Hospital, Series 1990-B,
7.000% 07/01/20. . . . . . . 150 171
St. Louis Park,
Methodist Hospital, Series 1990-C,
7.250% 07/01/18. . . . . . . 165 188
St. Paul Sewers, Series 1988-A,
8.000% 12/01/08. . . . . . . 250 277
State Higher Education Facilities
Authority, St. Thomas College:
Series 2-0,
7.600% 10/01/07. . . . . . . 200 220
Series 3-C:
7.100% 09/01/10. . . . . . . 100 113
7.100% 02/01/11. . . . . . . 130 143
Virginia General Obligation,
Series 1989-B:
7.500% 02/01/07. . . . . . . 100 108
7.500% 02/01/08. . . . . . . 100 108
-------
4,464
- ---------------------------------------------------------------------
SOLID WASTE - 2.0%
MISCELLANEOUS DISPOSAL - 0.6%
Hubbard County, Potlach Corp.,
Series 1989,
7.375% 08/01/13. . . . . . . 285 303
-------
RESOURCE RECOVERY - 1.4%
Anoka County, United Power Assoc.,
Series 1987-A,
6.950% 12/01/08. . . . . . . 400 428
Hennepin County Solid Waste,
Series 1987-A,
8.200% 11/01/09. . . . . . . 300 314
-------
742
- ---------------------------------------------------------------------
TAX ALLOCATION - 0.5%
Minneapolis Community Development
Agency, Series 1987-III,
8.625% 12/01/27. . . . . . . 260 275
- ---------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITATION - 2.8%
TRANSPORTATION SERVICES - 0.0%
St. Paul Port Authority,
Series 1983-C,
9.750% 12/01/96. . . . . . . 25 25
-------
TRANSPORTATION - 2.8%
Duluth Seaway Port Authority,
Series A,
5.750% 12/01/16. . . . . . . 1,500 1,468
- ---------------------------------------------------------------------
UTILITY - 20.0%
JOINT POWER AUTHORITY - 20.0%
Northern Municipal Power Agency:
Minnesota Electric, Series B,
5.500% 01/01/18. . . . . . . $ 3,400 $ 3,209
Minnesota Power & Light Co.,
Series 1989-A,
7.250% 01/01/16. . . . . . . 700 757
Southern Municipal Power Agency:
(a) 01/01/27. . . . . . . 18,000 2,632
Series 1993-A:
4.750% 01/01/16. . . . . . . 2,000 1,693
5.000% 01/01/12. . . . . . . 750 676
Western Minnesota Municipal
Power Agency:
Series 1983-A,
9.750% 01/01/16. . . . . . . 1,000 1,467
Series 1985-A,
9.050% 01/01/00. . . . . . . 25 26
-------
10,460
- ---------------------------------------------------------------------
WATER & SEWER - 0.0%
Chaska, General Obligation,
Series 1985,
8.200% 12/01/01. . . . . . . 25 25
- ---------------------------------------------------------------------
Total investments (cost $50,707) (c) 51,453
- ---------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 2.9%
- ---------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (d)
- ---------------------------------------------------------------------
New York City Water and Sewer,
Series G,
3.800% 06/15/24. . . . . . . 1,500 1,500
- ---------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - (1.0)% (536)
- ---------------------------------------------------------------------
NET ASSETS - 100% $52,417
- ---------------------------------------------------------------------
<FN>
Notes to investment portfolio:
(a) Zero coupon bond.
(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
approximately the same.
(d) Variable rate demand notes are considered
short-term obligations. Interest rates
change periodically on specified dates. These
securities are payable on demand and
are secured by either letters of credit or
other credit support agreements from banks.
The rates listed are as of July 31, 1995.
</TABLE>
See notes to investment portfolio.
4
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
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 $50,707).................................... $51,453
Short-term obligations................................................. 1,500
-------
52,953
Receivable for:
Interest.......................................... $705
Fund shares sold.................................. 44
Other................................................ 51 800
---- -------
Total assets.................................................. 53,753
LIABILITIES
Payable for:
Investments purchased............................. 920
Distributions..................................... 240
Fund shares repurchased........................... 173
Payable to adviser................................ 2
Accrued Deferred Trustees fees....................... 1
----
Total liabilities............................................. 1,336
-------
NET ASSETS............................................................. $52,417
=======
Net asset value & redemption price per share -
Class A ($35,846/5,144)............................................ $ 6.97
=======
Maximum offering price per share - Class A
($6.97/0.9525)...................................................... $ 7.32(a)
=======
Net asset value & offering price per share -
Class B ($16,571/2,378)............................................ $ 6.97(b)
=======
COMPOSITION OF NET ASSETS
Capital paid in..................................................... $53,281
Undistributed net investment income................................. 22
Accumulated net realized loss....................................... (1,632)
Net unrealized appreciation......................................... 746
-------
$52,417
=======
<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>
<TABLE>
STATEMENT OF OPERATIONS (UNAUDITED)
Six months ended July 31, 1995
(in thousands)
- -----------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest...................................................... $1,685
EXPENSES
Management fee............................... $ 142
Service fee.................................. 32
Distribution fee - Class B................... 60
Transfer agent............................... 42
Bookkeeping fee.............................. 14
Trustees fees................................ 6
Custodian fee................................ 3
Audit fee.................................... 16
Legal fee.................................... 7
Registration fees............................ 10
Reports to shareholders...................... 3
Other........................................ 3
-------
338
Fees waived by the adviser................... (63) 275
------- ------
Net investment income................................. 1,410
------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments............................... 539
Closed futures contracts.................. (1,433)
-------
Net realized loss........................................ (894)
Net unrealized appreciation
during the period on:
Investments................................ 1,589
Open futures contracts..................... 253
-------
Net unrealized appreciation.............................. 1,842
------
Net gain.............................................. 948
------
Net increase in net assets from
operations................................................. $2,358
======
</TABLE>
See notes to financial statements.
5
<PAGE>
FINANCIAL STATEMENTS - continued
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- -------------------------------------------------------------------------------------------------------------
<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..................................................... $ 1,410 $ 3,019
Net realized gain (loss).................................................. (894) 30
Net unrealized appreciation (depreciation)................................ 1,842 (4,777)
------- -------
Net increase (decrease) from operations............................. 2,358 (1,728)
Distributions
From net investment income - Class A...................................... (1,037) (2,325)
From net investment income - Class B...................................... (391) (681)
------- -------
930 (4,734)
------- -------
Fund share transactions
Receipts for shares sold - Class A........................................ 1,372 4,991
Value of distributions reinvested - Class A............................... 702 1,606
Cost of shares repurchased - Class A...................................... (2,750) (8,415)
------- -------
(676) (1,818)
------- -------
Receipts for shares sold - Class B........................................ 2,052 6,114
Value of distributions reinvested - Class B............................... 257 430
Cost of shares repurchased - Class B...................................... (723) (1,058)
------- -------
1,586 5,486
------- -------
Net increase from Fund share transactions........................... 910 3,668
------- -------
Total increase (decrease)..................................... 1,840 (1,066)
Net assets
Beginning of period....................................................... 50,577 51,643
------- -------
End of period (including undistributed
net investment income of $22 and $39, respectively)...................... $52,417 $50,577
======= =======
Number of Fund shares
Sold - Class A............................................................ 194 708
Issued for distributions reinvested - Class A............................. 100 232
Repurchased - Class A..................................................... (392) (1,226)
------- -------
(98) (286)
------- -------
Sold - Class B............................................................ 290 869
Issued for distributions reinvested - Class B............................. 36 62
Repurchased - Class B..................................................... (102) (157)
------- -------
224 774
------- -------
</TABLE>
See notes to financial statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of management of Colonial Minnesota 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.
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
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS - continued
may differ from generally accepted accounting principles.
- --------------------------------------------------------------------------------
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
<TABLE>
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
$3,089 on sales of the Fund's Class A shares and received contingent
deferred sales charges (CDSC) of $15,690 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 0.70% annually of the Fund's average
net assets.
Effective August 1, 1995, and until further notice, the expense limit
changed to 0.75% 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 4. PORTFOLIO INFORMATION
During the six months ended July 31, 1995, purchases and sales of
investments, other than short-term obligations, were $13,732,905 and
$14,658,117, respectively.
Unrealized appreciation (depreciation) at July 31, 1995, based on cost
of investments
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS - continued
- ----------------------------------------------------------------------------
for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation....... $ 1,779,746
Gross unrealized depreciation....... (1,033,663)
-----------
Net unrealized appreciation...... $ 746,083
===========
</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>
1996.............. $396,000
1997.............. 298,000
1999.............. 4,000
2001.............. 8,000
2002.............. 39,000
--------
$745,000
========
</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 benficial interest outstanding on December 9, 1994,
6,005,281 voted for the new Management Agreement, 75,906 voted against and
281,636 abstained. Of the shares of beneficial interest outstanding that
abstained, there were no broker non-votes.
- ------------------------------------------------------------------------------
9
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are as follows:
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED
JULY 31 YEAR ENDED JANUARY 31
------------------------- ------------------------------------------------
1995 1995 1994
------------------------- --------------------- --------------------
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............. $6.840 $6.840 $7.480 $7.480 $7.160 $7.160
------- ------- ------- ------- ------- -------
Income (loss) from investment ....................
operations:...................................
Net investment income (a)..................... 0.197 0.171 0.415 0.363 0.419 0.364
Net realized and unrealized
gain (loss) on investments................. 0.132 0.132 (0.642) (0.642) 0.323 0.323
------- ------- ------- ------- ------- -------
Total from investment operations.............. 0.329 0.303 (0.227) (0.279) 0.742 0.687
------- ------- ------- ------- ------- -------
Less distributions declared
to shareholders:
From net investment income.................... (0.199) (0.173) (0.413) (0.361) (0.422) (0.367)
------- ------- ------- ------- ------- -------
Total distributions
declared to shareholders................... (0.199) (0.173) (0.413) (0.361) (0.422) (0.367)
------- ------- ------- ------- ------- -------
Net asset value - End of period................... $6.970 $6.970 $6.840 $6.840 $7.480 $7.480
======= ======= ======= ======= ======= =======
Total return (b)(c)............................... 4.82%(d) 4.43%(d) (2.92)% (3.65)% 10.62% 9.81%
======= ======= ======= ======= ======= =======
Ratios to average net assets
Expenses...................................... 0.82%(e)(f) 1.57%(e)( 0.72%(e) 1.47%(e) 0.82% 1.57%
Net investment income......................... 5.60%(f) 4.85%(f) 5.98% 5.23% 5.69% 4.94%
Fees and expenses waived
or borne by the Adviser....................... 0.24%(f) 0.24%(f) 0.26% 0.26% 0.20% 0.20%
Portfolio turnover................................ 53%(f) 53%(f) 26% 26% 9% 9%
Net assets at end of period
(000)......................................... $35,846 $16,571 $35,846 $14,731 $41,326 $10,317
<FN>
(a) Net of fees and expenses
waived or borne by the
Adviser which amounted to................... $ 0.008 $ 0.008 $ 0.018 $ 0.018 $ 0.015 $0.015
(b) Total return at net asset value assuming all distributions reinvested and no initial sales
charge or contingent deferred sales charge.
(c) Had the advisor not waived or reimbursed a portion of expenses, total return would have been reduced.
(d) Not annualized.
(e) 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.
(f) Annualized.
</TABLE>
10
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONTINUED
Selected data for a share of each class outstanding throughout each period are as follows:
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED JANUARY 31
--------------------------------------------------------
1993 1992 1991
---------------------- ------- -------
CLASS A CLASS B(b) CLASS A CLASS A
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value - Beginning of period........... $7.030 $7.210 $6.930 $6.820
------- ------- ------- -------
Income from investment operations...............
Net investment income (a)..................... 0.449 0.191 0.461 0.467
Net realized and unrealized
gain on investments....................... 0.125 0.049 0.098 0.108
------- ------- ------- -------
Total from investment operations.............. 0.574 0.142 0.559 0.575
------- ------- ------- -------
Less distributions declared
to shareholders:
From net investment income.................... (0.444) (0.192) (0.458) (0.465)
From capital paid in ......................... -- -- (0.001) --
------- ------- ------- -------
Total distributions
declared to shareholders..................... (0.444) (0.192) (0.459) (0.465)
------- ------- ------- -------
Net asset value - End of period................. $7.160 $7.160 $7.030 $6.930
======= ======= ======= =======
Total return (d)(e)............................. 8.41% 2.01%(f) 8.33% 8.70%
======= ======= ======= =======
Ratios to average net assets
Expenses...................................... 0.85% 1.60%(g) 0.88% 1.00%
Net investment income......................... 6.33% 5.58%(g) 6.58% 6.77%
Fees and expenses waived
or borne by the Adviser....................... 0.35% 0.35% 0.42% 0.37%
Portfolio turnover.............................. 5% 5% 1% 7%
Net assets at end of period
(000)......................................... $35,017 $2,173 $30,676 $24,188
<FN>
(a) Net of fees and expenses
waived or borne by the
Adviser which amounted to.................. $0.025 $0.009 $0.029 $0.026
(b) Class B shares were initially offered on August 4, 1992. Per share
amounts reflect activity from that date.
(c) Because of differences between book and tax basis accounting, there was no return of
capital for federal income tax purposes.
(d) Total return at net asset value assuming all distributions reinvested and no initial
sales charge or contingent deferred sales charge.
(e) Had the adviser not waived or reimbursed a portion of expenses total return would have
been reduced.
(f) Not annualized.
(g) Annualized.
</TABLE>
11
<PAGE>
TRUSTEES
- --------------------------------------------------------------------------------
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Trustee (formerly Chairman of the Board and Chief Executive
Officer, Shore Bank & Trust Company)
LORA S. COLLINS
Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
JAMES E. GRINNELL
Private Investor (formerly Senior
Vice President-Operations,
The Rockport Company)
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland (formerly
Dean, Simon Graduate School of Business, University of Rochester; Chairman and
Chief Executive Officer, C.S. First Boston Merchant Bank; and President and
Chief Executive Officer, The First Boston Corporation)
JOHN A. MCNEICE, JR.
Chairman of the Board and Director, The Colonial Group, Inc. and Colonial
Management Associates, Inc. (formerly Chief Executive Officer, The Colonial
Group, Inc. and Colonial Management Associates, Inc.)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief
Executive Officer, Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and
Consultant, The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
12
<PAGE>
- ------------------------------------------------------------------------------
ABOUT OUR COVER...
[LOGO] The symbol on the cover of this Report
represents the Fund's primary investment
focus on municipal bonds.
- ------------------------------------------------------------------------------
Colonial Minnesota 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 Minnesota Tax-Exempt
Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives, and operating policies of the Fund.
13
<PAGE>
THIS PAGE LEFT BLANK INTENTIONALLY
14
<PAGE>
THIS PAGE LEFT BLANK INTENTIONALLY
15
<PAGE>
[LOGO] COLONIAL
MUTUAL FUNDS
[LOGO]
COLONIAL
MINNESOTA
TAX-EXEMPT FUND
- -----------------------------------------------------
SEMIANNUAL REPORT
JULY 31, 1995
[LOGO] COLONIAL
MUTUAL FUNDS
[LOGO] Printed on recycled paper
COLONIAL INVESTMENT SERVICES, INC. [Copyright] 1995
One Financial Center, Boston, Massachusetts 02111-2621
MN-03/195B-0795
