<PAGE>
LETTER FROM THE PRESIDENT
Dear Shareholder:
Following is Colonial Connecticut 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 Connecticut personal income tax and opportunities for
long-term appreciation from a portfolio primarily invested in investment grade
Connecticut municipal bonds.
FUND PERFORMANCE (2/1/95 - 7/31/95)
<TABLE>
<CAPTION>
CLASS A CLASS B
INCEPTION 11/1/91 6/8/92
- -------------------------------------------------------------------------------
<S> <C> <C>
Distributions declared per share $0.207 $0.179
- -------------------------------------------------------------------------------
SEC yield on 7/31/95 5.35% 4.87%
- -------------------------------------------------------------------------------
Taxable-equivalent yield on 7/31/95, based on the
maximum offering price 9.27% 8.44%
- -------------------------------------------------------------------------------
Six-month total return, assuming reinvestment of all
distributions and no sales charge or contingent
deferred sales charge (CDSC) 5.48% 5.08%
- -------------------------------------------------------------------------------
Net asset value per share on 7/31/95 $7.26 $7.26
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/95
CLASS A CLASS B
NAV MOP NAV W/CDSC
<S> <C> <C> <C> <C>
1 YEAR 6.88% 1.80% 6.09% 1.09%
SINCE INCEPTION 6.69% 5.29% 5.64% 4.76%
- --------------------------------------------------------------------------------
</TABLE>
ECONOMIC/MARKET OVERVIEW
Although tax reform discussions in Washington 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 Connecticut municipal bonds. Also,
the U.S. economy 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.
While the state's economy has not shown much improvement, there has been a
modest decline in unemployment, from 5.3% to 5.1%. This improvement represents a
balance between continued job losses in defense related industries and job
growth in the service sector.
There was one piece of favorable news for the defense industry. Congress
approved $1.5 billion for the construction of a third Seawolf submarine at
Groton's Electric Boat plant.
[PHOTO]
John A. McNeice, Jr.
President
INVESTMENT STRATEGY
The Fund remained fully invested in a diverse selection of Connecticut
municipal bonds. On July 31, the Fund owned 139 individual issues in 18 public
sectors. Almost 100% of the securities in the portfolio were rated investment
grade, with approximately 40% rated AAA, the highest quality rating available.
We remain cautiously optimistic about Connecticut's municipal bond market.
Although we will monitor the tax-reform debate closely, we believe the overall
environment for these securities should continue to be favorable.
Sincerely,
/S/John A. McNeice, Jr.
- -----------------------
John A. McNeice, Jr.
President
September 13, 1995
A portion of the Fund's income may be subject to the alternative minimum
tax. The 30-day SEC yield on July 31, 1995, of 5.35% for Class A shares and
4.87% for Class B shares reflects the portfolio's earning power, net of
expenses, and does not include changes in Fund price.
If the adviser had not borne certain Fund expenses, total returns would
have been lower and the yield for Class A shares would have been 4.85%, and the
yield for Class B shares would have been 4.34%. Taxable-equivalent yields are
based on the maximum 42.32% combined federal and Connecticut personal income tax
rate.
Past performance cannot predict future results. Return and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) return does not
include sales charges or CDSC. Maximum offering price (MOP) return includes the
maximum sales charge of 4.75%. The CDSC returns reflect charges of: one year,
5.00%; since inception, 3.00%.
Performance for different share classes will vary based on differences in
sales charges and fees associated with each class.
<PAGE>
INVESTMENT PORTFOLIO (UNAUDITED, IN THOUSANDS) JULY 31, 1995
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 98.3% PAR VALUE
- ------------------------------------------------------------------------------------
<S> <C> <C>
EDUCATION - 5.1%
State Health & Educational
Facilities Authority:
Kent School, Series B,
5.400% 07/01/23 . . . . . . . . . . . . . . . $ 1,300 $ 1,211
The Taft School, Series 1993-B:
5.250% 07/01/13 . . . . . . . . . . . . . . . 350 315
5.400% 07/01/20 . . . . . . . . . . . . . . . 1,750 1,568
Trinity College, Series C,
6.000% 07/01/12 . . . . . . . . . . . . . . . 1,000 1,011
Yale University:
Series K,
6.375% 07/01/13 . . . . . . . . . . . . . . . 500 509
Series 1992-R, RIB (variable rate),
7.721% 06/10/30 . . . . . . . . . . . . . . . 2,500 2,459
State Higher Education
Supplemental Loan Authority, Family
Education Loan Program, Series A,
7.200% 11/15/10 . . . . . . . . . . . . . . . 880 925
--------
7,998
- ------------------------------------------------------------------------------------
GENERAL OBLIGATIONS - 22.8%
Brookfield, Series 1992:
6.000% 09/15/09 . . . . . . . . . . . . . . . 240 248
6.000% 09/15/10 . . . . . . . . . . . . . . . 235 242
Commonwealth of Puerto Rico:
5.500% 07/01/13 . . . . . . . . . . . . . . . 1,850 1,760
Series 1993,
3.260% 07/01/08 (a) . . . . . . . . . . . . . 1,250 (b) 423
Series 1994,
6.500% 07/01/23 . . . . . . . . . . . . . . . 2,000 2,090
Cromwell, Series 1991,
5.250% 12/15/08 . . . . . . . . . . . . . . . 100 98
Danbury:
4.500% 02/01/12 . . . . . . . . . . . . . . . 1,280 1,093
4.500% 02/01/13 . . . . . . . . . . . . . . . 1,280 1,080
5.625% 08/15/11 . . . . . . . . . . . . . . . 690 678
East Haddam,
6.300% 06/15/09 . . . . . . . . . . . . . . . 260 269
Granby, Series 1993:
6.500% 04/01/09 . . . . . . . . . . . . . . . 200 216
6.550% 04/01/10 . . . . . . . . . . . . . . . 175 190
Griswold, Series 1992,
6.000% 04/15/09 . . . . . . . . . . . . . . . 410 420
Groton,
5.750% 01/15/07 . . . . . . . . . . . . . . . 285 293
Hamden, Series 1992:
6.000% 10/01/11 . . . . . . . . . . . . . . . 425 429
6.000% 10/01/12 . . . . . . . . . . . . . . . 425 429
Hartford County Metropolitan District:
5.625% 02/01/11 . . . . . . . . . . . . . . . $600 $592
5.625% 02/01/12 . . . . . . . . . . . . . . . 600 589
5.625% 02/01/13 . . . . . . . . . . . . . . . 600 589
Series 1993:
5.200% 12/01/12 . . . . . . . . . . . . . . . 600 557
5.200% 12/01/13 . . . . . . . . . . . . . . . 600 553
Montville, Series 1993,
6.300% 03/01/12 . . . . . . . . . . . . . . . 335 357
New Britain:
Series 1992,
6.000% 02/01/08 . . . . . . . . . . . . . . . 400 419
Series 1993-A,
6.000% 10/01/12 . . . . . . . . . . . . . . . 2,000 2,050
North Branford, General Obligation:
6.200% 02/15/11 . . . . . . . . . . . . . . . 195 200
6.200% 02/15/12 . . . . . . . . . . . . . . . 225 231
Norwich, General Obligation:
5.750% 09/15/13 . . . . . . . . . . . . . . . 875 865
5.750% 09/15/14 . . . . . . . . . . . . . . . 870 855
Plainfield, General Obligation,
Series 1992,
6.375% 08/01/11 . . . . . . . . . . . . . . . 500 521
Somers, General Obligation:
6.000% 01/15/11 . . . . . . . . . . . . . . . 125 127
6.250% 01/15/08 . . . . . . . . . . . . . . . 270 284
South Windsor, General Obligation,
Series 1992,
6.200% 09/01/10 . . . . . . . . . . . . . . . 495 510
Southington, General Obligation,
Series 1993,
5.000% 06/15/13 . . . . . . . . . . . . . . . 210 192
Stamford, General Obligation:
5.250% 03/15/14 . . . . . . . . . . . . . . . 2,750 2,606
Series 1992,
6.125% 11/01/11 . . . . . . . . . . . . . . . 1,050 1,093
State Regional School District No.5:
Series 1992,
6.300% 03/01/10 . . . . . . . . . . . . . . . 400 416
Series 1993,
5.600% 02/15/12 . . . . . . . . . . . . . . . 150 147
State:
Series 1989-B,
(c) 11/01/09 . . . . . . . . . . . . . . . 1,450 645
Series 1992-A1,
(c) 05/15/12 . . . . . . . . . . . . . . . 524 198
Series 1993-A,
5.600% 11/15/10 . . . . . . . . . . . . . . . 1,000 985
</TABLE>
See notes to investment portfolio.
2
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------------------------
<S> <C> <C>
GENERAL OBLIGATIONS - CONT.
Series 1993-B:
5.400% 03/15/09 . . . . . . . . . . . . . . . $ 100 $ 98
5.400% 09/15/09 . . . . . . . . . . . . . . . 4,500 4,393
State, Regional School District No. 14,
Woodbury & Bethlehem, Series 1991,
6.100% 12/15/06 . . . . . . . . . . . . . . . 285 303
Torrington, General Obligation:
Series 1992,
6.400% 05/15/10 . . . . . . . . . . . . . . . 750 785
Series 1993:
5.400% 04/15/10 . . . . . . . . . . . . . . . 725 698
5.400% 04/15/11 . . . . . . . . . . . . . . . 725 692
Vernon, General Obligation,
Series 1988,
7.100% 10/15/03 . . . . . . . . . . . . . . . 250 287
Waterbury, General Obligation,
Series 1993,
5.375% 04/15/08 . . . . . . . . . . . . . . . 750 743
West Haven, General Obligation,
Series 1993-B:
5.400% 06/01/10 . . . . . . . . . . . . . . . 705 679
5.400% 06/01/11 . . . . . . . . . . . . . . . 740 709
Westbrook, General Obligation,
Series 1992:
6.300% 03/15/12 . . . . . . . . . . . . . . . 265 280
6.400% 03/15/09 . . . . . . . . . . . . . . . 630 673
--------
35,879
- ------------------------------------------------------------------------------------
HEALTH - 20.5%
HOSPITALS - 14.3%
State Health & Educational
Facilities Authority:
Bridgeport Hospital, Series A,
6.500% 07/01/12 . . . . . . . . . . . . . . . 1,000 1,045
Danbury Hospital, Series E,
6.500% 07/01/14 . . . . . . . . . . . . . . . 1,400 1,458
Lawrence & Memorial Hospitals,
Series 1993-D,
5.000% 07/01/22 . . . . . . . . . . . . . . . 1,500 1,292
Manchester Memorial Hospital,
Series 1993-D,
5.750% 07/01/22 . . . . . . . . . . . . . . . 400 385
Middlesex Hospital, Series G,
6.250% 07/01/22 . . . . . . . . . . . . . . . 1,250 1,272
New Britain Hospital, Series 1991-A,
7.750% 07/01/22 . . . . . . . . . . . . . . . 200 209
Norwalk Hospital, Series D:
6.250% 07/01/12 . . . . . . . . . . . . . . . 1,750 1,800
6.250% 07/01/22 . . . . . . . . . . . . . . . 1,000 1,017
Pope John Paul II Health Center,
6.250% 11/01/13 . . . . . . . . . . . . . . . 2,000 2,035
St. Francis Medical Center:
Series B:
6.125% 07/01/10 . . . . . . . . . . . . . . . $1,000 $1,024
6.200% 07/01/22 . . . . . . . . . . . . . . . 1,000 1,015
Series 1993-C,
5.000% 07/01/13 . . . . . . . . . . . . . . . 4,500 4,011
St. Raphael Medical Center:
Series E,
6.750% 07/01/13 . . . . . . . . . . . . . . . 1,400 1,484
Series 1992-F,
6.200% 07/01/14 . . . . . . . . . . . . . . . 750 767
Series 1992-G,
6.200% 07/01/14 . . . . . . . . . . . . . . . 225 230
Series 1993-H,
5.250% 07/01/09 . . . . . . . . . . . . . . . 3,410 3,291
William W. Backus Hospital, Series C,
6.000% 07/01/12 . . . . . . . . . . . . . . . 250 239
--------
22,574
--------
NURSING HOMES - 6.2%
State Development Authority:
Clintonville Manor Realty,
6.750% 06/20/21 . . . . . . . . . . . . . . . 1,490 1,518
Duncaster Inc., Series 1992:
6.700% 09/01/07 . . . . . . . . . . . . . . . 500 543
6.750% 09/01/15 . . . . . . . . . . . . . . . 2,500 2,578
State Health & Educational
Facilities Authority:
AHF/Windsor Nursing Home Project,
7.125% 11/01/24 . . . . . . . . . . . . . . . 2,000 2,163
Mansfield Center for Nursing,
6.000% 11/01/22 . . . . . . . . . . . . . . . 1,250 1,219
Noble Horizons Nursing Home:
5.875% 11/01/12 . . . . . . . . . . . . . . . 640 632
6.000% 11/01/22 . . . . . . . . . . . . . . . 600 585
Yale New Haven Hospital, Series G,
6.500% 07/01/12 . . . . . . . . . . . . . . . 500 522
--------
9,760
- ------------------------------------------------------------------------------------
HOUSING - 13.4%
MULTI-FAMILY - 6.9%
New Britain Housing Authority,
Nathan Hale Apartments:
Series 1992-A,
6.500% 07/01/02 . . . . . . . . . . . . . . . 140 147
Series 1992-B,
6.875% 07/01/24 . . . . . . . . . . . . . . . 2,590 2,664
State Housing Finance Authority:
Series 1992 A-1,
5.850% 11/15/16 . . . . . . . . . . . . . . . 2,000 1,905
Series 1993-B:
5.650% 05/15/06 . . . . . . . . . . . . . . . 550 545
6.200% 05/15/12 . . . . . . . . . . . . . . . 5,000 4,987
</TABLE>
See notes to investment portfolio.
3
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
MULTI-FAMILY - CONT.
Waterbury Nonprofit Housing Corp.,
Fairmont Heights, Series 1993-A,
6.500% 01/01/26 . . . . . . . . . . . . . . . $ 600 $ 608
--------
10,856
--------
SINGLE-FAMILY - 6.5%
State Housing Finance Authority:
6.350% 05/15/17 . . . . . . . . . . . . . . . 1,250 1,228
Series B2,
6.750% 05/15/22 . . . . . . . . . . . . . . . 2,500 2,506
Series D 1,
6.625% 05/15/24 . . . . . . . . . . . . . . . 500 507
Series 1990 B-4,
7.300% 11/15/03 . . . . . . . . . . . . . . . 225 237
Series 1991-C,
6.600% 11/15/23 . . . . . . . . . . . . . . . 1,590 1,594
Series 1991 C-1,
6.450% 11/15/11 . . . . . . . . . . . . . . . 1,325 1,333
Series 1991 C-2,
6.700% 11/15/22 . . . . . . . . . . . . . . . 110 110
Series 1992-B,
6.700% 11/15/12 . . . . . . . . . . . . . . . 2,700 2,754
--------
10,269
- ------------------------------------------------------------------------------------
PUBLIC FACILITIES & IMPROVEMENT - 6.4%
Commonwealth of Puerto Rico
Public Buildings Authority:
Series L,
5.750% 07/01/16 . . . . . . . . . . . . . . . 2,000 1,903
Series M,
3.750% 07/01/16 . . . . . . . . . . . . . . . 3,300 2,933
Farmington, Series 1993:
5.700% 01/15/12 . . . . . . . . . . . . . . . 590 595
5.700% 01/15/13 . . . . . . . . . . . . . . . 570 572
State Certificates of Participation,
Middletown Courthouse Project:
6.250% 12/15/09 . . . . . . . . . . . . . . . 1,685 1,750
6.250% 12/15/10 . . . . . . . . . . . . . . . 750 781
6.250% 12/15/12 . . . . . . . . . . . . . . . 100 104
6.250% 12/15/13 . . . . . . . . . . . . . . . 850 880
State Development Authority, Jewish
Community of New Haven, Series 1992,
6.600% 09/01/17 . . . . . . . . . . . . . . . 500 524
--------
10,042
- ------------------------------------------------------------------------------------
PUBLIC INFRASTRUCTURE - 0.8%
TURNPIKE/TOLL ROAD/BRIDGE
Commonwealth of Puerto Rico,
Highway & Transportation Authority:
3.515% 07/01/09 (a) . . . . . . . . . . . . . 415 (b) 143
5.500% 07/01/09 . . . . . . . . . . . . . . . 1,110 1,088
--------
1,231
- ------------------------------------------------------------------------------------
REFUNDED/ESCROW/SPECIAL OBLIGATION (D) - 1.5%
South Central Regional Water
Authority, Series 10-A,
5.875% 08/01/12 . . . . . . . . . . . . . . . $1,000 $1,084
State Health & Educational
Facilities Authority:
Lawrence & Memorial Hospitals, Series C,
6.250% 07/01/22 . . . . . . . . . . . . . . . 400 444
Lutheran General Health Care System,
7.250% 07/01/04 . . . . . . . . . . . . . . . 185 214
Stratford, General Obligation,
Series 1992,
7.300% 03/01/12 . . . . . . . . . . . . . . . 500 574
--------
2,316
- ------------------------------------------------------------------------------------
SERVICES - 0.4%
AMUSEMENT & RECREATION
State Development Authority,
Series 1993-A,
5.250% 11/15/11 . . . . . . . . . . . . . . . 750 693
- ------------------------------------------------------------------------------------
SOLID WASTE - 6.0%
MISCELLANEOUS DISPOSAL - 0.9%
State Disposal Facility,
Waterbury Project,
Series 1995,
9.375% 06/01/16 . . . . . . . . . . . . . . . 1,500 1,485
--------
RESOURCE RECOVERY - 5.1%
Bristol Resource Recovery Facility,
Ogden Martin Systems,
6.500% 07/01/14 . . . . . . . . . . . . . . . 1,500 1,539
State Development Authority,
Pfizer Inc. Project,
7.000% 07/01/25 . . . . . . . . . . . . . . . 2,000 2,168
State Resource Recovery Authority:
Series 1985 B,
7.300% 11/15/12 . . . . . . . . . . . . . . . 200 210
American Ref-Fuel Co. Project:
Series 1988-A,
8.000% 11/15/15 . . . . . . . . . . . . . . . 2,500 2,750
Series 1992-A,
6.450% 11/15/22 . . . . . . . . . . . . . . . 1,425 1,423
--------
8,090
- ------------------------------------------------------------------------------------
STUDENT LOAN - 0.3%
State Higher Education,
Supplemental Loan Authority,
Series 1993-A,
6.375% 11/15/99 . . . . . . . . . . . . . . . 475 487
- ------------------------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
4
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - 5.3%
State Special Tax Obligation,
Transportation Infrastructure:
Series 1991-B,
6.250% 10/01/09 . . . . . . . . . . . . . . . $ 2,500 $ 2,584
Series 1992-B,
6.125% 09/01/12 . . . . . . . . . . . . . . . 4,600 4,726
Series 1993-A,
5.375% 09/01/08 . . . . . . . . . . . . . . . 1,000 990
--------
8,300
- ------------------------------------------------------------------------------------
UTILITY - 6.4%
INVESTOR OWNED - 2.3%
State Development Authority,
New England Power Co.,
7.250% 10/15/15 . . . . . . . . . . . . . . . 3,450 3,687
--------
JOINT POWER AUTHORITY - 1.2%
State Municipal Electric Energy
Cooperative, Series A,
5.000% 01/01/18 . . . . . . . . . . . . . . . 2,250 1,988
--------
MUNICIPAL ELECTRIC - 2.9%
Commonwealth of Puerto Rico,
Electric Power Authority, Series T,
5.500% 07/01/20 . . . . . . . . . . . . . . . 5,000 4,556
- ------------------------------------------------------------------------------------
WATER & SEWER - 9.4%
Hartford County Metropolitan
District, Series 1991,
6.200% 11/15/10 . . . . . . . . . . . . . . . 220 230
New Britain, General Obligation,
Series 1993-B,
6.000% 03/01/12 . . . . . . . . . . . . . . . 1,000 1,024
South Central Regional Water Authority,
5.750% 08/01/12 . . . . . . . . . . . . . . . 3,500 3,483
State Clean Water Fund:
Series 1991,
7.000% 01/01/11 . . . . . . . . . . . . . . . 1,850 2,021
Series 1992,
6.125% 02/01/12 . . . . . . . . . . . . . . . 3,630 3,707
Series 1993,
5.875% 04/01/09 . . . . . . . . . . . . . . . 1,000 1,041
Series 1994,
5.800% 06/01/16 . . . . . . . . . . . . . . . 1,000 994
State Development Authority:
Bridgeport Hydraulic Co., Series B,
5.500% 06/01/28 . . . . . . . . . . . . . . . 1,000 924
Stamford Water Co., Series 1993,
5.300% 09/01/28 . . . . . . . . . . . . . . . 1,500 1,352
--------
14,776
- ------------------------------------------------------------------------------------
Total investments (cost $152,656 ) (e) 154,987
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 0.8%
- ------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (f)
IL Development Finance Authority,
Uhlich Children's Home Project,
3.850% 04/01/07 . . . . . . . . . . . . . . . $600 $600
IL Health Facilities Authority,
Central Dupage Hospital,
4.050% 11/01/20 . . . . . . . . . . . . . . . 500 500
NC Person County Industrial Facilities
& Pollution Control Authority,
Carolina Power & Light Co.,
4.500% 11/01/16 . . . . . . . . . . . . . . . 100 100
- ------------------------------------------------------------------------------------
Total short-term obligations 1,200
- ------------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 0.9% 1,388
- ------------------------------------------------------------------------------------
NET ASSETS - 100.0% $157,575
- ------------------------------------------------------------------------------------
</TABLE>
Notes to investment portfolio:
(a) These securities are variable rate instruments; on July 1, 1998 they will
change to fixed rate instruments. Interest income is accrued daily on the
notional amount at the applicable interest rates.
(b) Notional amount.
(c) Zero coupon bond.
(d) The Fund has been informed that each issuer has placed direct obligation of
the U.S. Government in an irrecovable trust, solely for the payment of the
interest and principal.
(e) Cost for federal income tax purposes is the same.
(f) 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>
<CAPTION>
Acronym Name
- ------- ----
<S> <C>
RIB Residual Interest Bonds
</TABLE>
See notes to financial statements.
5
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENT OF ASSETS & LIABILITIES (UNAUDITED)
July 31, 1995
(in thousands except for per share amounts and footnote)
- -------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments at value (cost $152,656)........................... $154,987
Short-term investments......................................... 1,200
--------
156,187
Receivable for:
Interest.......................................... $2,103
Fund shares sold.................................. 247
Deferred organization expenses....................... 4
Other................................................ 18 2,372
------ --------
Total assets.......................................... 158,559
LIABILITIES
Payable for:
Distributions..................................... 691
Fund shares repurchased........................... 254
Payable to adviser................................... 5
Accrued:
Deferred Trustees fees............................ 1
Other................................................ 33
------
Total liabilities..................................... 984
--------
NET ASSETS..................................................... $157,575
========
Net asset value & redemption price per share -
Class A ($78,656/10,828)................................... $ 7.26
========
Maximum offering price per share - Class A
($7.26/0.9525).............................................. $ 7.62(a)
========
Net asset value & offering price per share -
Class B ($78,919/10,864)................................... $ 7.26(b)
========
COMPOSITION OF NET ASSETS
Capital paid in............................................. $161,901
Undistributed net investment income......................... 19
Accumulated net realized loss............................... (6,676)
Net unrealized appreciation................................. 2,331
--------
$157,575
========
</TABLE>
(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>
STATEMENT OF OPERATIONS (UNAUDITED)
Six months ended July 31, 1995
(in thousands)
- -------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest....................................................... $ 4,681
--------
EXPENSES
Management fee........................................ $ 423
Service fee........................................... 94
Distribution fee - Class B............................ 292
Transfer agent........................................ 126
Bookkeeping fee....................................... 32
Trustees fees......................................... 7
Custodian fee......................................... 4
Audit fee............................................. 15
Legal fee............................................. 4
Registration fees..................................... 18
Reports to shareholders............................... 4
Amortization of deferred
organization expense................................. 2
Other................................................. 9
-------
1,030
Fees waived by the adviser............................ (409) 621
------- --------
Net investment income.................................. 4,060
--------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized loss on:
Investments......................................... (187)
Closed futures contracts............................ (2,688)
-------
Net realized loss......................................... (2,875)
Net unrealized appreciation
during the period on:
Investments.................................... 6,264
Open futures contracts......................... 567
-------
Net unrealized appreciation.................................. 6,831
--------
Net gain............................................... 3,956
--------
Net increase in net assets from
operations.................................................. $ 8,016
========
</TABLE>
See notes to financial statements.
6
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
(unaudited)
Six months Year
ended ended
July 31 January 31
---------------- ----------
1995 1995
---------------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................... $ 4,060 $ 8,394
Net realized loss......................................... (2,875) (2,357)
Net unrealized appreciation (depreciation)................ 6,831 (15,133)
-------- --------
Net increase (decrease) from operations............. 8,016 (9,096)
Distributions
From net investment income - Class A...................... (2,227) (4,752)
From net investment income - Class B...................... (1,913) (3,634)
From net realized gains - Class A......................... -- (12)
From net realized gains - Class B......................... -- (9)
-------- --------
3,876 (17,503)
-------- --------
Fund share transactions
Receipts for shares sold - Class A........................ 7,340 9,992
Value of distributions reinvested - Class A............... 1,309 2,706
Cost of shares repurchased - Class A...................... (6,571) (19,845)
-------- --------
2,078 (7,147)
-------- --------
Receipts for shares sold - Class B........................ 6,435 16,129
Value of distributions reinvested - Class B............... 1,161 2,236
Cost of shares repurchased - Class B...................... (4,171) (8,746)
-------- --------
3,425 9,619
-------- --------
Net increase from Fund share transactions........... 5,503 2,472
-------- --------
Total increase (decrease)........................... 9,379 (15,031)
NET ASSETS
Beginning of period....................................... 148,196 163,227
-------- --------
End of period (including undistributed
net investment income of $19 and $91, respectively)...... $157,575 $148,196
======== ========
NUMBER OF FUND SHARES
Sold - Class A............................................ 1,008 1,375
Issued for distributions reinvested - Class A............. 180 376
Repurchased - Class A..................................... (899) (2,800)
-------- --------
289 (1,049)
-------- --------
Sold - Class B............................................ 882 2,223
Issued for distributions reinvested - Class B............. 159 311
Repurchased - Class B..................................... (570) (1,240)
-------- --------
471 1,294
-------- --------
</TABLE>
See notes to financial statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of management of Colonial Connecticut 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-ended management investment company. The Fund may issue an unlimited number
of shares. The Fund offers Class A shares sold with a front-end sales charge
and Class B shares which are subject to an annual distribution fee and a
contingent deferred sales charge. Class B shares will convert to Class A shares
when they have been outstanding approximately eight years. The following
significant accounting policies are consistently followed by the Fund in the
preparation of its financial statements and conform to generally accepted
accounting principles.
- --------------------------------------------------------------------------------
SECURITY VALUATION AND TRANSACTIONS
Debt securities generally are valued by a pricing service based upon market
transactions for normal, institutional-size trading units of similar securities.
When management deems it appropriate, an over-the-counter or exchange bid
quotation is used.
Futures contracts are valued based on the difference between the last sale
price and the opening price of the contract.
Options are valued at the last reported sale price, or in the absence of a
sale, the mean between the last quoted bid and asking price.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued at
fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased or sold.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This
may increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
- --------------------------------------------------------------------------------
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS
All income, expenses (other than the Class B distribution fee), realized
and unrealized gains (losses) are allocated to each class proportionately on a
daily basis for purposes of determining the net asset value of each class.
Class B per share data and ratios are calculated by adjusting the expense
and net investment income per share data and ratios for the Fund for the entire
period by the distribution fee applicable to Class B shares only.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES
Consistent with the Fund's policy to qualify as a regulated investment
company and to distribute all of its taxable and tax-exempt income, no federal
income tax has been accrued.
- --------------------------------------------------------------------------------
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.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
The amount and character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles.
- --------------------------------------------------------------------------------
DEFERRED ORGANIZATION EXPENSES
The Fund incurred $17,793 of expenses in connection with its organization,
initial registration with the Securities and Exchange Commission and with
various states, and the initial public offering of its shares. These expenses
were deferred and are being amortized on a straight-line basis over five years.
- --------------------------------------------------------------------------------
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE
Colonial Management Associates, Inc. (the Adviser) is the investment
adviser of the Fund and furnishes accounting and other services and office
facilities for a monthly fee based on each Fund's pro-rata portion of the
combined average net assets of Trust V as follows:
<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
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 $21,336 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $85,042 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. The plan also requires the payment of a
service fee to the Distributor as follows:
<TABLE>
<CAPTION>
Valuation of shares Annual
outstanding on the 20th of Fee
each month which were issued Rate
---------------------------- ------
<S> <C>
Prior to November 30, 1994.................................. 0.10%
On or after December 1, 1994................................ 0.25%
</TABLE>
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
- --------------------------------------------------------------------------------
EXPENSE LIMITS
The 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 0.30% annually of the Fund's average net assets.
Effective August 1, 1995, and until further notice, the expense limit
changed to 0.45% 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.
- --------------------------------------------------------------------------------
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE 4. PORTFOLIO INFORMATION
During the six months ended July 31, 1995, purchases and sales of
investments, other than short-term obligations, were $9,373,204 and $7,461,376,
respectively.
Unrealized appreciation (depreciation) at July 31, 1995, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation.............................. $ 4,274,666
Gross unrealized depreciation.............................. $(1,943,668)
-----------
Net unrealized appreciation............................. $ 2,330,998
===========
</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:
<TABLE>
<CAPTION>
Year of Capital loss
expiration carryforward
---------- -------------
<S> <C>
2003......................................... $2,374,000
</TABLE>
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized
gains, it is unlikely that such gains would be distributed since they may be
taxable to shareholders as ordinary income.
- --------------------------------------------------------------------------------
OTHER
There are certain risks arising from geographic concentration in any
state. Certain revenue or tax related events in a state may impair the ability
of certain issuers of municipal securities to pay principal and interest on
their obligations.
The Fund may focus its investments in certain industries, subjecting it
to greater risk than a fund that is more diversified.
The Fund sells municipal and Treasury bond futures contracts to manage
overall portfolio interest rate exposure and not for trading purposes. The
use of futures contracts involves certain risks, which include (1) imperfect
correlation between the price movement of the contracts and the underlying
securities, (2) inability to close out positions due to different trading
hours, or the temporary absence of a liquid market, for either the contract
or the underlying securities, or (3) an inaccurate prediction by the Adviser
of the future direction of interest rates. Any of these risks may involve
amounts exceeding the initial or variation margin recorded in the Fund's
Statement of Assets and Liabilities at any given time.
- --------------------------------------------------------------------------------
NOTE 5. RESULTS OF SPECIAL SHAREHOLDERS MEETING
On February 15, 1995, a special meeting of shareholders was held and a new
Management Agreement between the Trust and Colonial Management Associates, Inc.
was approved that became effective upon the completion of the merger of The
Colonial Group, Inc. and Apple Merger Corporation, a subsidiary of Liberty
Financial Companies, Inc. on March 24, 1995. Of the shares of beneficial
interest outstanding on December 9, 1994, 13,230,386 voted for the new
Management Agreement, 153,820 voted against and 596,285 abstained. Of the
shares of beneficial interest outstanding that abstained, 74,014 represented
broker non-votes.
- --------------------------------------------------------------------------------
10
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are as follows:
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
JULY 31 JANUARY 31
----------------------- --------------------
1995 1995
----------------------- --------------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value - Beginning
of period................................... $ 7.080 $ 7.080 $ 7.890 $ 7.890
------- ------- ------- -------
Income (loss) from investment operations:
Net investment income (a)................... 0.203 0.175 0.418 0.363
Net realized and
unrealized gain (loss) on investments..... 0.184 0.184 (0.809) (0.809)
------- ------- ------- -------
Total from investment operations........ 0.387 0.359 (0.391) (0.446)
------- ------- ------- -------
Less distributions declared to shareholders:
From net investment income.................. (0.207) (0.179) (0.418) (0.363)
From net realized gains..................... -- -- (0.001) (0.001)
------- ------- ------- -------
Total distributions declared to
shareholders.............................. (0.207) (0.179) (0.419) (0.364)
------- ------- ------- -------
Net asset value - End of period................ $ 7.260 $ 7.260 $ 7.080 $ 7.080
======= ======= ======= =======
Total return(b)(c)............................. 5.48%(d) 5.08%(d) (4.85)% (5.57)%
======= ======= ======= =======
Ratios to average net assets
Expenses.................................... 0.42%(e)(f) 1.17%(e)(f) 0.32%(e) 1.07%(e)
Net investment income....................... 5.55%(f) 4.80%(f) 5.81% 5.06%
Fees and expenses waived
or borne by the adviser................... 0.52%(f) 0.52%(f) 0.55% 0.55%
Portfolio turnover............................. 10%(f) 10%(f) 22% 22%
Net assets at end of period (000).............. $78,656 $78,919 $74,616 $73,580
(a) Net of fees and expenses waived or
borne by the Adviser which
amounted to............................... $ 0.019 $ 0.019 $ 0.039 $ 0.039
</TABLE>
(b) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(c) Had the Adviser 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.
11
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONTINUED
Selected data for a share of each class outstanding throughout each period are as follows:
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
PERIOD ENDED
YEAR ENDED JANUARY 31 JANUARY 31
------------------------------------- ------------
1994 1993 1992
----------------- ----------------- -------
CLASS A CLASS B CLASS A CLASS B(B) CLASS A(C)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning
of period.................................................... $ 7.420 $ 7.420 $ 7.190 $ 7.200 $ 7.140
------- ------- ------- ------- -------
Income from investment operations:
Net investment income (a).................................... 0.429 0.372 0.449 0.256 0.118
Net realized and
unrealized gain on investments............................. 0.465 0.465 0.270 0.257 0.046
------- ------- ------- ------- -------
Total from investment operations......................... 0.894 0.837 0.719 0.513 0.164
------- ------- ------- ------- -------
Less distributions declared to shareholders:
From net investment income................................... (0.424) (0.367) (0.452) (0.256) (0.114)
In excess of net investment
income..................................................... -- -- (0.002) (0.002) --
From net realized gains...................................... -- -- (0.021) (0.021) --
In excess of net realized gains.............................. -- -- (0.014) (0.014) --
------- ------- ------- ------- -------
Total distributions declared to
shareholders........................................... (0.424) (0.367) (0.489) (0.293) (0.114)
------- ------- ------- ------- -------
Net asset value - End of period................................ $ 7.890 $ 7.890 $ 7.420 $ 7.420 $ 7.190
------- ------- ------- ------- -------
Total return(d)(e)............................................. 12.30% 11.49% 10.34% 7.23%(f) 2.31%(f)
------- ------- ------- ------- -------
Ratios to average net assets
Expenses..................................................... 0.22% 0.97% -- 0.75%(g) --
Net investment income........................................ 5.48% 4.73% 6.00% 5.25%(g) 4.68%(g)
Fees and expenses waived
or borne by the adviser.................................... 0.65% 0.65% 0.90% 0.90% 1.32%(g)
Portfolio turnover............................................. 5% 5% 4% 4% 53%(g)
Net assets at end of period (000).............................. $91,436 $71,791 $63,126 $27,839 $12,349
(a) Net of fees and expenses waived or
borne by the Adviser which
amounted to............................................... $ 0.051 $ 0.051 $ 0.067 $ 0.042 $ 0.033
</TABLE>
(b) Class B shares were initially offered on June 8, 1992. Per share amounts
reflect activity from that date.
(c) The Fund commenced investment operations on November 1, 1991.
(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.
12
<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
13
<PAGE>
- --------------------------------------------------------------------------------
ABOUT OUR COVER...
[GRAPHIC]
The symbol on the cover of this Report represents the Fund's primary
investment focus on municipal bonds.
- --------------------------------------------------------------------------------
Colonial Connecticut 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 Connecticut
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.
14
<PAGE>
THIS PAGE LEFT BLANK INTENTIONALLY
<PAGE>
[LOGO]
COLONIAL
MUTUAL FUNDS
[GRAPHIC]
COLONIAL
CONNECTICUT
TAX-EXEMPT FUND
- -------------------------------------------------------
SEMIANNUAL REPORT
JULY 31, 1995
[LOGO]
COLONIAL
MUTUAL FUNDS
[LOGO] Printed on recycled paper
COLONIAL INVESTMENT SERVICES, INC. (C)1995
One Financial Center, Boston, Massachusetts 02111-2621
CT-03/197B-0795
