<PAGE>
LETTER FROM THE PRESIDENT
================================================================================
Dear Shareholder:
I am pleased to present Colonial Massachusetts Tax-Exempt Fund's annual
report for the 12 months ended January 31, 1995. The Fund pursues its objective
through investments in primarily investment-grade Massachusetts municipal bonds.
FUND PERFORMANCE (2/1/94 - 1/31/95)(1)
<TABLE>
<CAPTION>
CLASS A CLASS B
INCEPTION 4/10/87 6/8/92
- -----------------------------------------------------------------------
<S> <C> <C>
Distributions declared
per share $0.446 $0.390
- -----------------------------------------------------------------------
SEC yield on 1/31/95 5.68% 5.21%
- -----------------------------------------------------------------------
Taxable-equivalent yield
on 1/31/95 at the
maximum offering price 11.74% 10.76%
- -----------------------------------------------------------------------
12-month total return, assuming
reinvestment of all distributions
and no sales charge or CDSC -3.49% -4.21%
- -----------------------------------------------------------------------
Net asset value per share
on 1/31/95 $7.39 $7.39
- -----------------------------------------------------------------------
</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, the interest rate increases by the Fed had the single
biggest impact on Massachusetts municipal bonds, resulting in lower prices.
Massachusetts debt burden remains relatively high, although for the most
part the debt is no longer being serviced with short-term borrowing. The
state's economy continues to improve, as evidenced by improving statistics for
retail sales, housing starts, and wages (among others). Also, the state has now
posted three consecutive budget surpluses. During the first 10 months of the
calendar year (the latest period for which data is available) 73,000 jobs were
added in the state. This reduced the Massachusetts unemployment rate to 5.5%,
slightly lower than the national figure of 5.6%.
The state's recent economic success reflects the fiscal restraint exercised
by Governor Weld and the legislature in recent years. This sound management has
been recognized by Standard & Poor's Corporation (S&P). S&P has revised its
assessment of the state's economic outlook from stable to positive, citing
economic improvement and relatively high income levels.
[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 Massachusetts municipal bonds, including
high-quality housing, general obligation, and hospital revenue bonds.
Investments that have provided especially strong returns for the Fund include
state general obligation bonds and bonds issued by the Massachusetts Bay
Transportation Authority.
On January 31, the Fund owned 177 individual issues in 11 public sectors.
Over 90% of portfolio holdings were rated investment grade (Baa or better).
Approximately 41% 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.
- ------------------------
President
March 10, 1995
(1)Refer to the footnote on page two.
<PAGE>
REPORT FROM COLONIAL MANAGEMENT
===============================================================================
During Colonial Massachusetts Tax-Exempt Fund's fiscal year ended January
31, 1995, developments in the municipal bond market presented mixed messages to
investors. Like most fixed-income investments, these securities felt the impact
of rising interest rates. As prices declined, yields for all municipal bonds
increased. Although returns in the municipal bond market were lower than we
would have liked, municipal bonds still performed better than 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 bond increased by almost 1.5
percentage points.
Despite the higher interest rates that plagued municipal bonds, there were
some positive developments in the market's supply/demand dynamic. In fact, over
the long term, these developments should offset the negative 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
Massachusetts new issue supply was down 52.1%. Lead Portfolio Manager Jeffrey
Augustine believes this trend will continue in 1995 - supply is expected to drop
to $3.8 billion, down from $10.3 billion in 1993. Low supply should be
complemented by strong demand for tax-exempt securities. The combination of
coupon payments and maturing bonds will generate more than $200 billion (out of
a total of approximately $1.2 trillion in municipal bonds currently outstanding
in the market) that will likely be reinvested in the municipal market. This
supply/demand dynamic should have a favorable impact on prices.
<TABLE>
COMPARISON OF THE CHANGE IN VALUE OF $10,000
Hypothetical investment in Class A shares of Colonial Massachusetts
Tax-Exempt Fund, the Lehman Brothers Municipal Bond Index, and
the Lehman Brothers 20-year Municipal Bond Index
4/10/87 - 1/31/95
LEHMAN 20-YEAR: $18,552
LEHMAN MUNICIPAL: $18,257
CLASS A NAV: $17,819
CLASS A MOP: $16,972
<CAPTION>
CLASS A MOP CLASS A NAV LEHMAN MUNICIPAL LEHMAN 20-YEAR
----------- ----------- ---------------- --------------
<S> <C> <C> <C> <C>
4/87 $ 9,525 $10,000 $10,000 $10,000
1/88 9,756 10,242 10,434 10,264
1/89 10,878 11,420 11,493 11,658
1/90 11,790 12,378 12,733 13,102
1/91 12,543 13,168 13,661 14,069
1/92 14,180 14,887 15,320 15,555
1/93 15,539 16,314 16,671 17,280
1/94 17,375 18,242 18,717 19,550
1/95 16,972 17,819 18,257 18,552
</TABLE>
<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 -3.49% -8.07% -4.21% -8.76%
5 YEARS 7.67% 6.62% -- --
SINCE INCEPTION 7.48% 6.82% 5.16% 4.12%
- ---------------------------------------------------------------------------
</TABLE>
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 Massachusetts personal income tax and opportunities for long-term
appreciation from a portfolio primarily invested in investment-grade municipal
bonds.
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 5.68% for Class A
shares and 5.21% for Class B shares reflects the portfolio's earning power, net
of expenses, and does not include changes in Fund price. SEC yield on 2/28/95
was 5.46% for Class A shares and 4.98% 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 5.58% and yield
for Class B shares would have been 5.11%. Taxable-equivalent yields are based
on the maximum combined 51.6% federal and Massachusetts income tax rate. Past
performance can not 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 3.00%). Performance for different classes will vary based on
differences in sales charges and fees associated with each class.
2
<PAGE>
Label A B C D
===============================================================================
Label Cmatef MOP NAV LEHMAN 20-YEAR
===============================================================================
1 4/87 9525 10000 10000 10000
- -------------------------------------------------------------------------------
2 6/87 9670 10152 10243 9925
- -------------------------------------------------------------------------------
3 9/87 9253 9714 9988 10348
- -------------------------------------------------------------------------------
4 12/87 9756 10242 10434 10264
- -------------------------------------------------------------------------------
5 3/88 10109 10614 10793 11018
- -------------------------------------------------------------------------------
6 6/88 10386 10904 11002 10912
- -------------------------------------------------------------------------------
7 9/88 10622 11152 11284 11234
- -------------------------------------------------------------------------------
8 12/88 10878 11420 11493 11658
- -------------------------------------------------------------------------------
9 3/89 10952 11498 11569 11970
- -------------------------------------------------------------------------------
10 6/89 11467 12039 12254 12562
- -------------------------------------------------------------------------------
11 9/89 11481 12054 12262 12765
- -------------------------------------------------------------------------------
12 12/89 11790 12378 12733 13102
- -------------------------------------------------------------------------------
13 3/90 11827 12417 12790 13220
- -------------------------------------------------------------------------------
14 6/90 12101 12705 13088 13456
- -------------------------------------------------------------------------------
15 9/90 12018 12617 13096 13510
- -------------------------------------------------------------------------------
16 12/90 12543 13168 13661 14069
- -------------------------------------------------------------------------------
17 3/91 12891 13533 13970 14427
- -------------------------------------------------------------------------------
18 6/91 13191 13849 14268 14800
- -------------------------------------------------------------------------------
19 9/91 13682 14365 14822 15173
- -------------------------------------------------------------------------------
20 12/91 14180 14887 15320 15555
- -------------------------------------------------------------------------------
21 3/92 14237 14947 15366 15928
- -------------------------------------------------------------------------------
22 6/92 14781 15518 15949 16327
- -------------------------------------------------------------------------------
23 9/92 15193 15950 16373 17009
- -------------------------------------------------------------------------------
24 12/92 15539 16314 16671 17280
- -------------------------------------------------------------------------------
25 3/93 16147 16952 17289 18442
- -------------------------------------------------------------------------------
26 6/93 16638 17468 17855 18655
- -------------------------------------------------------------------------------
27 9/93 17174 18030 18458 19486
- -------------------------------------------------------------------------------
28 12/93 17375 18242 18717 19550
- -------------------------------------------------------------------------------
29 3/94 16513 17336 17690 19671
- -------------------------------------------------------------------------------
30 6/94 16670 17501 17886 19009
- -------------------------------------------------------------------------------
31 9/94 16739 17573 18008 19304
- -------------------------------------------------------------------------------
32 12/94 16385 17202 17749 17987
- -------------------------------------------------------------------------------
33 1/95 16972 17819 18257 18552
- -------------------------------------------------------------------------------
<PAGE>
INVESTMENT PORTFOLIO (in thousands) JANUARY 31, 1995
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 99.0% PAR VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
CONSUMER PRODUCTS - 0.7%
State Industrial Finance Agency,
House of Bianchi, Inc.,
8.750% 06/01/18. . . . . . . . . $ 1,785 $ 1,747
- --------------------------------------------------------------------------
EDUCATION - 17.9%
Health and Educational Facilities:
Amherst College,
Series E,
6.800% 11/01/21. . . . . . . . . 500 512
Bentley College,
Series I,
6.125% 07/17/17. . . . . . . . . 1,250 1,194
Berklee College of Music,
Series C,
6.875% 10/01/21. . . . . . . . . 1,000 1,030
Boston College,
Series K:
5.250% 06/01/18. . . . . . . . . 6,000 5,100
5.250% 06/01/23. . . . . . . . . 3,850 3,196
Boston University, RIB, Series 1991-L,
(variable rate)
9.000% 10/01/31 1,000 1,028
Community Colleges Program,
Series A,
6.600% 10/01/22. . . . . . . . . 1,250 1,242
Harvard University:
6.250% 04/01/20(a). . . . . . . 9,250 9,296
Series 1991-M,
5.500% 12/01/15(a). . . . . . . 5,190 4,820
Nauset Regional School District:
Series A:
6.400% 06/15/09. . . . . . . . . 220 222
6.400% 06/15/10. . . . . . . . . 220 222
Series B:
6.400% 09/15/09. . . . . . . . . 260 263
6.400% 09/15/10. . . . . . . . . 260 262
Southern Berkshire Regional
School District,
7.000% 04/15/11. . . . . . . . . 500 527
State College Building Authority:
Series A,
7.500% 05/01/14. . . . . . . . . 1,825 2,085
Southeastern University,
Series 1986-A,
7.800% 05/01/16. . . . . . . . . 650 681
State Industrial Finance Agency:
Babson College,
Series 1992-A,
6.375% 10/01/09. . . . . . . . . 1,000 1,010
Brandeis University,
Series 1989-C,
6.800% 10/01/19. . . . . . . . . 1,450 1,474
Concord Academy,
Series 1991,
6.900% 09/01/21. . . . . . . . . 400 410
Emerson College,
Series 1991-A,
8.900% 01/01/18. . . . . . . . . 500 545
Milton Academy,
5.250% 09/01/19. . . . . . . . . 1,000 850
Phillips Academy,
Series 1993,
5.375% 09/01/23. . . . . . . . . 1,200 1,033
Suffolk University,
Series 1988-D,
7.700% 08/01/08. . . . . . . . . 400 435
Series 1992-B:
6.250% 07/01/12. . . . . . . . . 1,000 953
6.350% 07/01/22. . . . . . . . . 1,000 937
University of Lowell Building
Authority, Series 1987-A,
7.600% 11/01/11. . . . . . . . . 200 211
University of Massachusetts
Building Authority:
Series 1976-A,
7.500% 05/01/11. . . . . . . . . 100 111
Series 1986-A,
7.500% 05/01/11. . . . . . . . . 500 513
Series 1991-A,
7.200% 05/01/04. . . . . . . . . 400 437
Wellesley College,
5.375% 07/01/19. . . . . . . . . 3,000 2,614
Worcester Polytechnic Institute:
6.625% 09/01/17. . . . . . . . . 500 501
6.750% 09/01/11. . . . . . . . . 500 512
-------
44,226
- --------------------------------------------------------------------------
ELECTRIC - 6.0%
Commonwealth of Puerto Rico,
Electric Power Authority, Series T,
5.500% 07/01/20. . . . . . . . . 5,000 4,306
Municipal Wholesale Electric
Power Supply System:
Series 1992-C,
6.625% 07/01/10. . . . . . . . . 1,435 1,457
</TABLE>
See notes to investment portfolio.
3
<PAGE>
INVESTMENT PORTFOLIO - continued
===============================================================================
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------
<S> <C> <C>
ELECTRIC - CONT.
Series 1994-A:
4.404% 07/01/16. . . . . . . . . $ 4,000 $ 2,730
5.000% 07/01/17. . . . . . . . . 5,000 4,169
Series 1994-B,
5.000% 07/01/17. . . . . . . . . 2,000 1,658
State Industrial Finance Agency,
Eastern Edison Co., Series 1993,
5.875% 08/01/08. . . . . . . . . 500 452
-------
14,772
- ------------------------------------------------------------------
GENERAL OBLIGATIONS - 15.1%
Andover,
Lease Obligation Bonds,
Andover Old Town Hall, Series 1989,
7.700% 12/15/04. . . . . . . . . 1,255 1,366
Boston,
General Obligation Bonds,
Series 1992-A,
6.500% 07/01/12(a). . . . . . . 1,340 1,375
Commonwealth of Puerto Rico:
5.500% 07/01/08. . . . . . . . . 2,000 1,913
Series 1993,
3.785% 07/01/08(b). . . . . . . 1,000(c) 369
Series 1994,
6.500% 07/01/23. . . . . . . . . 5,000 5,000
Series 1990-A,
7.250% 06/01/96. . . . . . . . . 500 515
Fall River, General Obligation,
7.200% 06/01/10(a). . . . . . . 1,250 1,339
General Obligation Bonds,
Consolidated Loan:
Series 1990-B,
7.000% 07/01/09. . . . . . . . . 4,385 4,802
Series 1991-A,
6.000% 06/01/11. . . . . . . . . 2,600 2,554
Series 1991-B,
(d) 06/01/07. . . . . . . . . 450 219
Series 1992-A,
6.000% 06/01/13. . . . . . . . . 1,625 1,584
General Obligation Refunding Bonds:
Series 1991-A,
6.500% 08/01/11. . . . . . . . . 250 254
Series 1991-B,
6.500% 08/01/11. . . . . . . . . 2,000 2,035
Series 1991-C,
6.500% 08/01/11. . . . . . . . . 1,250 1,272
Series 1992-B,
6.500% 08/01/08. . . . . . . . . 1,000 1,038
Groveland,
Municipal Purpose Loan Bonds,
Series 1991,
6.900% 06/15/08. . . . . . . . . 250 265
Haverhill General Obligation
Municipal Purpose Loan, Series 1989,
8.200% 08/15/09. . . . . . . . . 935 1,033
Holyoke, General Obligation,
School Project Loan,
7.650% 08/01/09. . . . . . . . . 500 527
Leominster,
General Obligation Bonds,
7.500% 04/01/09(a) . . . . . . . 1,075 1,177
Lowell General Obligation Bonds,
8.400% 01/15/09. . . . . . . . . 1,000 1,140
Mansfield,
General Obligation Bonds,
6.700% 01/15/11(a) . . . . . . . 1,000 1,029
Nantucket, Series 1991,
6.800% 12/01/11. . . . . . . . . 1,000 1,042
Peabody, General Obligation Bonds:
6.900% 08/01/07. . . . . . . . . 485 517
6.950% 08/01/08. . . . . . . . . 500 533
Springfield, Series B,
7.100% 09/01/11. . . . . . . . . 2,600 2,636
Swansea, General Obligation Bonds:
6.800% 01/15/09. . . . . . . . . 250 252
6.800% 01/15/10. . . . . . . . . 125 126
6.800% 01/15/11. . . . . . . . . 210 212
Weymouth, Series 1992:
6.700% 06/15/09. . . . . . . . . 200 201
6.700% 06/15/10. . . . . . . . . 200 201
6.700% 06/15/11. . . . . . . . . 155 156
6.700% 06/15/12. . . . . . . . . 140 141
Woburn, Series 1990,
7.200% 04/01/04. . . . . . . . . 130 140
Worcester,
General Obligation Bonds,
6.900% 05/15/07(a) . . . . . . . 415 439
-------
37,402
- ------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
4
<PAGE>
INVESTMENT PORTFOLIO - continued
===============================================================================
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------
<S> <C> <C>
HOSPITALS & HEALTH CARE - 14.0%
Boston City Hospital,
Series B,
5.750% 02/15/13. . . . . . . . . $ 2,000 $ 1,802
Health and Educational Facilities:
6.000% 07/01/23. . . . . . . . . 2,000 1,860
Addison Hospital,
Series 1993-C,
5.750% 07/01/14. . . . . . . . . 2,000 1,675
Berkshire Health Systems,
Series C,
6.000% 10/01/20. . . . . . . . . 1,000 806
Beth Israel Hospital,
Series D,
7.800% 07/01/14. . . . . . . . . 250 265
Beverly Hospital,
Series D-Lot 1,
7.300% 07/01/13. . . . . . . . . 1,000 1,040
Brigham and Women's Hospital,
Series D,
6.750% 07/01/24. . . . . . . . . 3,000 2,974
Capital Asset Program,
Series 1989-F,
7.300% 10/01/18. . . . . . . . . 750 791
Charlton Memorial Hospital,
Series B:
7.250% 07/01/07. . . . . . . . . 500 524
7.250% 07/01/13. . . . . . . . . 500 516
Children's Hospital,
Series E:
5.500% 10/01/19. . . . . . . . . 3,500 3,049
6.200% 10/01/16. . . . . . . . . 2,000 1,907
Cooley Hospital,
Series A,
7.125% 11/15/18. . . . . . . . . 1,955 1,750
Dana-Farber Cancer Institute:
Series 1985, C, D & E,
6.650% 12/01/15. . . . . . . . . 250 249
Series 1992-F,
6.000% 12/01/15. . . . . . . . . 1,000 956
Falmouth Hospital,
Series C,
5.625% 07/01/11. . . . . . . . . 500 460
Holyoke Hospital,
Series B,
6.500% 07/01/15. . . . . . . . . 1,500 1,374
Lahey Clinic, Series B,
5.375% 07/01/23. . . . . . . . . 5,100 4,335
Lowell General Hospital,
Series 1991-A,
8.400% 06/01/11. . . . . . . . . 500 541
Saint Elizabeth's Hospital of Boston,
Series E,
8.770% 08/15/21. . . . . . . . . 1,000 1,036
Spaulding Rehabilitation Hospital,
Series A,
7.625% 07/01/21. . . . . . . . . 400 421
University Hospital,
Series C,
7.250% 07/01/19. . . . . . . . . 1,000 1,053
Valley Health Systems,
Series C,
5.750% 07/01/18. . . . . . . . . 2,000 1,780
Hospital Revenue Bonds,
Medical Center of Central Massachusetts,
Series A,
7.000% 07/01/12. . . . . . . . . 1,000 1,012
State Industrial Finance Agency:
Harvard Community Health Plan,
Series B,
8.125% 10/01/17. . . . . . . . . 640 677
Quincy Hospital,
Series 1993-A,
5.250% 01/15/16. . . . . . . . . 2,000 1,718
-------
34,571
- ------------------------------------------------------------------
HOUSING - 9.0%
Multi-family - 5.4%
Boston-Mount Pleasant,
Multi-family Housing Development,
Series A,
6.750% 08/01/23(a). . . . . . . 1,700 1,715
Framingham Housing Authority Revenue,
Beaver Terrace Apartments,
Series 1991-A,
6.600% 08/20/16. . . . . . . . . 655 644
Health and Educational Facilities,
Finance Authority,
Series A,
6.100% 06/01/26. . . . . . . . . 2,340 2,112
Housing Finance Agency:
6.750% 07/01/28(a). . . . . . . 4,500 4,404
7.600% 12/01/16. . . . . . . . . 705 737
Series 1989-A,
8.200% 08/01/27. . . . . . . . . 330 344
Series 1989-A,
8.200% 08/01/15. . . . . . . . . 245 249
</TABLE>
See notes to investment portfolio.
5
<PAGE>
INVESTMENT PORTFOLIO - continued
==============================================================================
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
MULTI-FAMILY - CONT.
Series 1990-A,
8.150% 02/01/29. . . . . . . . . $ 135 $ 143
Series 1992-C,
6.875% 11/15/11. . . . . . . . . 3,000 3,075
-------
13,423
SINGLE-FAMILY - 3.6%
Housing Finance Agency:
Series A:
8.700% 05/15/14. . . . . . . . . 240 268
9.000% 12/01/18. . . . . . . . . 215 225
Series B:
8.100% 08/01/23. . . . . . . . . 455 469
8.500% 08/01/20. . . . . . . . . 10 10
Series 1988-A,
8.400% 08/01/21. . . . . . . . . 1,210 1,234
Series 3,
7.875% 06/01/14. . . . . . . . . 400 411
Series 4,
7.375% 06/01/14. . . . . . . . . 760 779
Series 5,
8.375% 06/01/15. . . . . . . . . 500 517
Series 6,
8.100% 12/01/14. . . . . . . . . 495 513
Series 7,
8.100% 06/01/20. . . . . . . . . 440 457
Series 8,
7.700% 06/01/17. . . . . . . . . 575 592
Series 9
8.100% 12/01/21. . . . . . . . . 500 521
Series 12,
7.600% 12/01/13. . . . . . . . . 250 254
Series 13,
7.950% 06/01/23. . . . . . . . . 1,500 1,545
Series 18,
7.350% 12/01/16. . . . . . . . . 1,000 1,030
-------
8,825
- ------------------------------------------------------------------------------
IN-SUBSTANCE DEFEASED (E) - 7.0%
Bay Transportation Authority,
General Transportation System Bond,
Series 1990-B,
7.875% 03/01/21. . . . . . . . . 4,000 4,540
Boston,
General Obligation Bonds,
Series 1991-A,
6.750% 07/01/11(a). . . . . . . 1,000 1,081
Boston,
Water and Sewer Commission,
General Revenue Bonds, Series 1991-A,
7.000% 11/01/18(a). . . . . . . 2,700 2,963
General Obligation Bonds,
Series 1990-C,
7.000% 12/01/10. . . . . . . . . 2,000 2,152
Health and Educational Facilities:
Daughters Charity-Carney,
Series C,
7.750% 07/01/14. . . . . . . . . 500 558
Framingham Union Hospital,
Series B,
8.500% 07/01/20. . . . . . . . . 1,000 1,149
Mount Auburn Hospital,
Series 1988-A,
7.875% 07/01/18. . . . . . . . . 250 273
Saint John's Hospital,
Series 1990-B,
8.375% 12/01/20. . . . . . . . . 500 579
Winchester Hospital,
Series C,
7.550% 07/01/11. . . . . . . . . 500 559
Lynn, General Obligation Bonds,
7.850% 01/15/11. . . . . . . . . 1,000 1,159
Palmer, Series 1990-B,
7.700% 10/01/10. . . . . . . . . 1,000 1,122
Woods Hole, Martha's Vineyard &
Nantucket Steamship Authority,
Series 1992-B,
6.400% 03/01/12. . . . . . . . . 1,000 1,056
-------
17,191
- -------------------------------------------------------------------------------
NURSING HOMES - 4.4%
Boston, Nursing Home,
10.000% 01/01/20. . . . . . . . . 500 537
Health and Educational Facilities:
Family Housing Authority
Insured Project, Series A,
7.700% 11/01/31. . . . . . . . . 995 1,040
First Mortgage Revenue Bonds,
Fairview Extended Care Service, Series A,
10.250% 01/01/21. . . . . . . . . 500 540
State Industrial Finance Agency:
Series 1987-G,
7.875% 05/01/07. . . . . . . . . 100 102
American Health Foundation Inc.,
Series 1989,
10.125% 03/01/19. . . . . . . . . 1,875 1,889
Belmont Home Project,
9.270% 01/01/25. . . . . . . . . 2,000 1,994
GF/Massachusetts Inc.,
Series 1994,
8.300% 07/01/23. . . . . . . . . 2,500 2,262
</TABLE>
See notes to investment portfolio.
6
<PAGE>
INVESTMENT PORTFOLIO - continued
================================================================================
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
NURSING HOMES - CONT.
Mary Ann Morse Nursing Home,
Series 1991-I,
10.000% 01/01/21 . . . . . . . . $ 925 $ 1,145
Seacoast Nursing Home,
Series 1991,
9.625% 12/01/21 . . . . . . . . 1,260 1,290
-------
10,799
- ---------------------------------------------------------------------------
PUBLIC FACILITY & IMPROVEMENT - 0.8%
Convention Center Authority,
Boston Common Parking Garage Bonds,
Series 1993-A,
5.375% 09/01/13 . . . . . . . . 2,000 1,823
Virgin Islands Public Finance
Authority, Series 1992-A,
7.000% 10/01/02 . . . . . . . . 250 261
-------
2,084
- ---------------------------------------------------------------------------
TRANSPORTATION - 12.2%
Bay Transportation Authority:
Series A:
7.000% 03/01/10 . . . . . . . . 5,000 5,456
7.000% 03/01/21 . . . . . . . . 1,500 1,627
Series B,
5.500% 03/01/21(a). . . . . . . 10,000 8,869
Certificate of Participation,
Series 1988,
7.750% 01/15/06 . . . . . . . . 250 269
Commonwealth of Puerto Rico,
Highway & Transportation Authority:
4.040% 07/01/09(b). . . . . . . 330(c) 129
5.500% 07/01/09 . . . . . . . . 660 600
General Transportation System,
Series 1992-A,
6.200% 03/01/16 . . . . . . . . 3,700 3,658
General Transportation System Bonds,
Series 1994-A,
7.000% 03/01/14 . . . . . . . . 1,250 1,353
State Industrial Finance Agency,
Series 1990,
9.000% 10/01/20 . . . . . . . . 490 520
State Port Authority:
5.000% 07/01/18 . . . . . . . . 5,000 4,044
Series B,
6.000% 07/01/23 . . . . . . . . 1,000 931
Series 1988-A,
7.750% 07/01/18 . . . . . . . . 2,750 2,826
-------
30,282
- ---------------------------------------------------------------------------
WASTE DISPOSAL - 1.4%
Agawam, Springfield Resource
Recovery Project,
8.500% 12/01/08 . . . . . . . . $ 500 $ 529
Boston,
Industrial Development Financing,
Solid Waste Disposal,
10.500% 01/01/11(a) . . . . . . 500 554
Industrial Finance Agency,
Peabody Landfill Project,
9.000% 09/01/05 . . . . . . . . 2,300 2,326
-------
3,409
- ---------------------------------------------------------------------------
WATER & SEWER - 10.0%
Amherst,
General Obligation Municipal Purpose Loan,
6.500% 01/15/12 . . . . . . . . 695 709
Boston, Water and Sewer Commission:
Series 1992-A,
5.750% 11/01/13 . . . . . . . . 1,000 917
Series 1993-A,
5.250% 11/01/19 . . . . . . . . 4,750 3,954
State Industrial Finance Agency,
Environmental Service Project,
Series 1994-A,
8.750% 11/01/21 . . . . . . . . 3,000 2,880
State Water Resources Authority:
Series B,
5.500% 03/01/17 . . . . . . . . 1,000 895
Series C:
5.250% 12/01/15 . . . . . . . . 1,000 875
5.250% 12/01/20 . . . . . . . . 5,025 4,190
Series 1992-A,
6.500% 07/15/09 . . . . . . . . 2,000 2,062
Series 1992-B,
5.500% 11/01/15 . . . . . . . . 8,000 7,090
Series 1993-A,
5.450% 02/01/13 . . . . . . . . 1,250 1,125
-------
24,697
- ---------------------------------------------------------------------------
OTHER - 0.5%
Health and Educational Facilities,
Independent Living Bonds,
Series 1993-A,
8.100% 07/01/18 . . . . . . . . 300 282
Plymouth County,
Certificate of Participation,
Plymouth Correctional Facility, Series A,
7.000% 04/01/22 . . . . . . . . 1,000 1,008
-------
1,290
- ---------------------------------------------------------------------------
Total investments (cost $240,272) (f) 244,718
- ---------------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
7
<PAGE>
INVESTMENT PORTFOLIO - continued
===============================================================================
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS - 0.0%
- --------------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (G)
IL Health Facilities Authority,
Memorial Medical Center, Series C,
4.250% 01/01/16 . . . . . . . . $100 $ 100
- --------------------------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET-1.0% 2,458
- --------------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $247,276
- --------------------------------------------------------------------------------------------------
</TABLE>
Notes to investment portfolio:
(a) These securities, or a portion thereof, with a market value of $29,308
are being used to collateralize open futures contracts.
(b) This security is a variable rate instrument; on July 1, 1998 it will
change to a fixed rate instrument. Interest income is accrued daily on
the notional amount at the applicable interest rates.
(c) Notional amount.
(d) Zero coupon bond.
(e) 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.
(f) Cost for federal income tax purposes is approximately the same.
(g) Variable rate demand notes are considered short-term obligations.
Interest rates change periodically on specified dates. These securities
are payable on demand and are secured by either letters of credit or
other credit support agreements from banks. The rates listed are as of
January 31, 1995.
Short futures contracts open at January 31, 1995:
<TABLE>
<CAPTION>
Par value Unrealized
covered by Expiration depreciation
Type contracts month at 1/31/95
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Municipal bonds $ 23,100 March $827
Treasury bonds $ 5,300 March $121
- ---------------------------------------------------------------------
</TABLE>
Acronym Name
- ------- -----------------------
RIB Residual Interest Bonds
See notes to financial statements.
8
<PAGE>
FINANCIAL STATEMENTS - continued
================================================================================
<TABLE>
<CAPTION>
STATEMENT OF ASSETS & LIABILITIES
January 31, 1995
(in thousands except for per share amounts and footnote)
- ---------------------------------------------------------------------------------
<S> <C>
Assets
Investments at value (cost $240,272)................................ $244,718
Short-term investments.............................................. 100
--------
244,818
Receivable for:
Interest.......................................... $ 3,620
Fund shares sold.................................. 456
Expense reimbursement
from adviser..................................... 4
Other................................................ 29 4,109
------- --------
Total assets............................................... 248,927
========
Liabilities
Payable for:
Distributions..................................... 1,205
Fund shares repurchased........................... 273
Variation margin on futures....................... 155
Accrued:
Deferred Trustees fees............................ 3
Other............................................. 15
-------
Total liabilities.................................... 1,651
--------
Net assets.......................................................... $247,276
--------
Net asset value & redemption price per share -
Class A ($193,303/26,175)....................................... $ 7.39
--------
Maximum offering price per share - Class A
($7.39/0.9525)................................................... $ 7.76*
--------
Net asset value & offering price per share -
Class B ($53,973/7,308)......................................... $ 7.39
--------
Composition of net assets
Capital paid in..................................................... $248,326
Undistributed net investment income.............................. 31
Accumulated net realized loss.................................... (4,579)
Net unrealized appreciation (depreciation) on:
Investments.................................................... 4,446
Open futures contracts......................................... (948)
--------
$247,276
========
INVESTMENT INCOME
Interest............................................................. $ 16,977
Expenses
Management fee....................................... $ 1,446
Service fee.......................................... 45
Distribution fee - Class B........................... 396
Transfer agent....................................... 400
Bookkeeping fee...................................... 99
Trustees fees........................................ 18
Custodian fee........................................ 14
Audit fee............................................ 32
Legal fee............................................ 9
Registration fees.................................... 30
Reports to shareholders.............................. 9
Other................................................ 28
-------
2,526
Fees waived by the adviser........................... (298) 2,228
------- --------
Net investment income......................................... 14,749
--------
NET REALIZED AND UNREALIZED LOSS
ON PORTFOLIO POSITIONS
Net realized loss on:
Investments........................................ (2,944)
Closed futures contracts........................... (55)
-------
Net realized loss................................................ (2,999)
Net unrealized depreciation
during the period on:
Investments........................................ (21,911)
Open futures contracts............................. (948)
-------
Net unrealized depreciation...................................... (22,859)
--------
Net loss...................................................... (25,858)
--------
Net decrease in net assets from
operations......................................................... $(11,109)
--------
</TABLE>
* On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
9
<PAGE>
FINANCIAL STATEMENTS - continued
================================================================================
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended January 31
-------------------------
1995 1994
--------- ---------
<S> <C> <C>
Increase (decrease) in net assets
Operations
Net investment income ........................................ $ 14,749 $ 13,715
Net realized loss ............................................ (2,999) (1,046)
Net unrealized appreciation (depreciation) ................... (22,859) 14,196
-------- --------
Net increase (decrease) from operations ................ (11,109) 26,865
Distributions
From net investment income - Class A ......................... (12,074) (12,184)
From net investment income - Class B ......................... (2,748) (1,750)
-------- --------
(25,931) 12,931
-------- --------
Fund share transactions
Receipts for shares sold - Class A ........................... 23,448 44,294
Value of distributions reinvested - Class A .................. 6,522 6,385
Cost of shares repurchased - Class A ......................... (41,484) (22,796)
-------- --------
(11,514) 27,883
-------- --------
Receipts for shares sold - Class B ........................... 13,955 33,898
Value of distributions reinvested - Class B .................. 1,534 904
Cost of shares repurchased - Class B ......................... (8,223) (1,969)
-------- --------
7,266 32,833
-------- --------
Net increase (decrease) from Fund share transactions ... (4,248) 60,716
-------- --------
Total increase (decrease) ........................ (30,179) 73,647
NET ASSETS
Beginning of period .......................................... 277,455 203,808
-------- --------
End of period (including undistributed
net investment income of $31 and $98, respectively) ......... $247,276 $277,455
======== ========
Number of Fund shares
Sold - Class A ............................................... 3,110 5,575
Issued for distributions reinvested - Class A ................ 872 803
Repurchased - Class A ........................................ (5,556) (2,858)
-------- --------
(1,574) 3,520
-------- --------
Sold - Class B ............................................... 1,841 4,262
Issued for distributions reinvested - Class B ................ 205 113
Repurchased - Class B ........................................ (1,111) (246)
-------- --------
935 4,129
-------- --------
Net increase (decrease) in shares outstanding .......... (639) 7,649
Outstanding at
Beginning of period ....................................... 34,122 26,473
-------- --------
End of period ............................................. 33,483 34,122
======== ========
</TABLE>
See notes to financial statements.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 1. ACCOUNTING POLICIES
Colonial Massachusetts 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.
- --------------------------------------------------------------------------------
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,
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
================================================================================
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 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
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 $54,980 on sales of the
Fund's Class A shares and received contingent deferred sales charges (CDSC) of
$168,687 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 0.70% 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 $145,504,532 and
$146,935,621, respectively.
Unrealized appreciation (depreciation) at January 31, 1995, based on cost
of investments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation.................. $ 7,921,696
Gross unrealized depreciation.................. (3,475,598)
------------
Net unrealized appreciation................ $ 4,446,098
============
</TABLE>
12
<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>
2002........ 174,000
2003........ 1,749,000
---------
1,923,000
=========
</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.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
All of the distributions will be treated as exempt income for federal
income tax purposes.
13
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JANUARY 31
- ----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
------------------------- ------------------------ --------------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B (b)
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning
of period.......................... $8.130 $8.130 $7.700 $7.700 $7.420 $7.450
-------- ------- -------- ------- -------- -------
Income (loss) from investment
operations:
Net investment income (a).......... 0.444 0.388 0.453 0.395 0.481 0.272
Net realized and unrealized
gain (loss) on investments......... (0.738) (0.738) 0.439 0.439 0.301 0.275
-------- ------- -------- ------- -------- -------
Total from investment
operations......................... (0.294) (0.350) 0.892 0.834 0.782 0.547
-------- ------- -------- ------- -------- -------
Less distributions declared
to shareholders:
From net investment income......... (0.446) (0.390) (0.462) (0.404) (0.479) (0.274)
From net realized gains............ --- --- --- --- (0.002) (0.002)
-------- ------- -------- ------- -------- -------
In excess of net realized gains.... --- --- --- --- (0.021) (0.021)
Total distributions declared
to shareholders.................... (0.446) (0.390) (0.462) (0.404) (0.502) (0.297)
-------- ------- -------- ------- -------- -------
Net asset value - End of period.... $7.390 $7.390 $8.130 $8.130 $7.700 $7.700
-------- ------- -------- ------- -------- -------
Total return (c)(d)................ (3.49)% (4.21)% 11.86% 11.05% 10.87% 1.11% (f)
-------- ------- -------- ------- -------- -------
Ratios to average net assets
Expenses........................... 0.72% (e) 1.47% (e) 0.64% 1.39% 0.54% 1.29% (g)
Net investment income.............. 5.93% 5.18% 5.68% 4.93% 6.38% 5.63% (g)
Fees and expenses waived
or borne by the adviser............ 0.12% 0.12% 0.21% 0.21% 0.33% 0.33%
Portfolio turnover................. 58% 58% 7% 7% 7% 7%
Net assets at end of period(000)... $193,303 $53,973 $225,636 $51,819 $186,526 $17,282
(a) Net of fees and expenses
waived or borne by the
adviser which amounted to....... $0.009 $0.009 $0.016 $0.016 $0.025 $0.016
(b) Class B shares were initially offered on June 8, 1992. Per share data
reflects activity from that date.
(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>
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
-------------------------
1992 1991
------- -------
CLASS A CLASS A
------- -------
<S> <C> <C>
Net asset value - Beginning
of period.......................... $7.120 $7.080
-------- -------
Income (loss) from investment
operations:
Net investment income (a).......... 0.505 0.523
Net realized and unrealized
gain (loss) on investments......... 0.295 0.041
-------- -------
Total from investment
operations......................... 0.800 0.564
-------- -------
Less distributions declared
to shareholders:
From net investment income......... (0.500) (0.524)
From net realized gains............ --- ---
In excess of net realized gains.... --- ---
-------- -------
Total distributions declared
to shareholders.................... (0.500) (0.524)
-------- -------
Net asset value - End of period.... $7.420 $7.120
-------- -------
Total return (c)(d)................ 11.61% 8.31%
-------- -------
Ratios to average net assets
Expenses........................... 0.46% 0.30%
Net investment income.............. 6.89% 7.34%
Fees and expenses waived
or borne by the adviser............ 0.43% 0.65%
Portfolio turnover................. 14% 30%
Net assets at end of period(000)... $145,957 $85,301
</TABLE>
(a) Net of fees and expenses
waived or borne by the
adviser which amounted to....... $0.032 $0.046
(b) Class B shares were initially offered on June 8, 1992. Per share data
reflects activity from that date.
(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.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
===============================================================================
TO THE TRUSTEES OF COLONIAL TRUST V AND THE SHAREHOLDERS OF COLONIAL
MASSACHUSETTS 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 Massachusetts
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, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
March 10, 1995
===============================================================================
ABOUT OUR COVER...
[GRAPHIC] The symbol on the cover of this Report represents
the Fund's primary investment focus on municipal
bonds.
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Colonial Massachusetts 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.
15
<PAGE>
[GRAPHIC] COLONIAL
MUTUAL FUNDS
[GRAPHIC]
COLONIAL
MASSACHUSETTS
TAX-EXEMPT FUND
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ANNUAL REPORT
JANUARY 31, 1995
[GRAPHIC] COLONIAL
MUTUAL FUNDS
[RECYCLE LOGO] [SOY BASED INK ICON]
COLONIAL INVESTMENT SERVICES (C)1995
One Financial Center, Boston, Massachusetts 02111-2621
Printed on recycled paper
MA-02/638A-0195
