<PAGE>
COLONIAL
NEW YORK TAX-EXEMPT FUND
[GRAPHIC]
ANNUAL REPORT
JANUARY 31, 1996
<PAGE>
- --------------------------------------------------------------------------------
COLONIAL NEW YORK TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1995 - JANUARY 31, 1996
INVESTMENT OBJECTIVE: Colonial New York Tax-Exempt 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 New York state and city personal income tax. The
Fund also provides opportunities for long-term appreciation from a portfolio
primarily invested in investment grade municipal bonds.
THE FUND IS DESIGNED TO OFFER:
- High monthly double- or triple-tax-free income
- Long-term appreciation
- Emphasis on quality
PORTFOLIO MANAGER COMMENTARY: "Local economic and fiscal problems in New York
City have weakened the state's economy. We have been careful in our portfolio
selection and continue to shy away from New York City general obligation bonds."
COLONIAL NEW YORK TAX-EXEMPT FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
Inception dates 9/26/86 8/4/92
Distributions declared per share* $ 0.407 $ 0.355
SEC yields on 1/31/96** 4.74% 4.22%
Taxable-equivalent SEC yields*** 8.93% 7.95%
12-month total returns, assuming
reinvestment of all distributions and
no sales charge or contingent deferred
sales charge (CDSC) 14.99% 14.15%
Net asset value per share at 1/31/96 $ 7.25 $ 7.25
</TABLE>
*A portion of the Fund's income may be subject to the alternative minimum tax.
**The 30-day SEC yields on January 31, 1996 reflect the portfolio's earning
power, net of expenses, expressed as an annualized percentage of the maximum
offering price per share at the end of the period. If the Adviser had not waived
or borne certain Fund expenses, SEC yields would have been lower; the yield for
Class A shares would have been 4.44% and the yield for Class B shares would have
been 3.91%.
***Taxable-equivalent SEC yields are based on the maximum effective 46.9%
federal and New York state and city income tax rates.
<TABLE>
<CAPTION>
QUALITY BREAKDOWN TOP FIVE SECTORS
(as of 1/31/96) (as of 1/31/96)
<S> <C>
AAA.......23.2% Non-rated..5.2% Education.................21.1%
AA........11.2% Cash & Public Improvement........12.4%
A.........25.4% Equivs.....1.7% Transportation............11.8%
BBB.......32.6% Municipal Electric.........8.8%
BB.........0.7% Tax Allocation.............8.7%
</TABLE>
Because the Fund is actively managed, quality and sector weightings will change.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO]
I am pleased to present your Fund's annual report for the period ended January
31, 1996. First, however, I would like to extend my thanks to President John A.
McNeice, Jr., who is retiring this month after a career with Colonial that
spanned 40 years. We look forward to his continued involvement on the executive
committee of the board of directors at our parent company, Liberty Financial
Companies, Inc.
In my new position, I will direct Colonial's focus on the delivery of superior
investment performance over the long term. To achieve this mission, we will
continue to seek the optimal combination of talented people and effective
investment disciplines.
The receipt of your annual report is a good time to reflect on market conditions
and the performance of your Fund during the past 12 months. Falling interest
rates and minimal inflation helped the economy grow at a comfortable pace in
1995 and created a positive environment for fixed income and municipal
investments. After a difficult 1994, investors who stayed the course during 1995
were amply rewarded.
We expect slow growth and low inflation to continue in 1996, and believe that
further reductions in interest rates may take place later in the year. In the
following pages you'll find detailed information on your Fund's performance as
well as an in-depth discussion with the portfolio manager.
I am enthusiastic about -- and dedicated to achieving -- Colonial's mission of
providing you with competitive investment returns. In my new role, I look
forward to communicating with you regarding your Colonial investment. We
appreciate the opportunity to help you meet your investment goals.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
March 13, 1996
Because market conditions change frequently, there can be no assurance that the
trends described here will continue, come to pass, or affect Fund performance.
- --------------------------------------------------------------------------------
3
<PAGE>
PORTFOLIO MANAGEMENT REPORT
ROBERT WAAS is a Vice President of Colonial Management Associates, Inc., and
Portfolio Manager of Colonial New York Tax-Exempt Fund and five other Colonial
tax-exempt funds.
Q: HOW DID THE FUND PERFORM RELATIVE TO THE LEHMAN BROTHERS MUNICIPAL
BOND INDEX AND WHY?
A: The Fund earned an impressive total return of 14.99% at net asset value for
Class A shares. That compared to total returns of 14.11% for the average New
York municipal debt fund tracked by Lipper Analytical Services, Inc.* However,
the Fund slightly underperformed the Lehman Municipal Bond Index, which is
comprised of long bonds representing a number of states, not just New York. The
Index posted a return of 15.06%. The difference is attributable to the Fund's
narrower range of investments.
The Fund's strong performance is a result of the portfolio's position in
discount and non-callable bonds. Over 59% of the holdings were invested in
discount bonds, including non-callable bonds, which produced strong gains for
the Fund. These securities thrive when interest rates decline because they are
safe from early redemptions.
Q: WHAT INFLUENCED THE FUND'S STRONG PERFORMANCE DURING THE PERIOD?
A: It was a combination of a favorable economic backdrop and a well-targeted
portfolio. Interest rates dropped significantly in 1995, as the economy slowed
and the threat of inflation subsided. In anticipation of this scenario, we
purchased discount and non-callable bonds, which are very sensitive to interest
rate declines and enhance the potential for price appreciation. Of course, such
strategies carry more downside risk when interest rates rise.
Q: WHAT ARE THE FUND'S LARGEST SECTORS?
A: Education bonds continue to be our sector of choice. Most of these issues are
New York State appropriated debt, which we think represents solid value. Other
sectors we are emphasizing include public improvement revenue bonds and
transportation. New York City is struggling with tough local economic and fiscal
problems, so we have continued to shy away from New York City general obligation
bonds.
Q: HAS THE PORTFOLIO'S COMPOSTION CHANGED?
A: Later in the period, we shifted to shorter maturities, in the 15- to 20-year
range, since the incremental yield associated with longer bonds was too small to
compensate for the higher risk. We also believe that non-callable and discount
bonds will continue to outperform as the bond rally matures.
*Lipper Analytical Services, Inc. is an independent research organization;
rankings vary over time and do not reflect the effects of sales charges.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
We will begin selling these securities when we think they are at their peak --
in exchange for higher-coupon bonds that are less volatile and can help enhance
the Fund's yield.
Q: WHAT IS YOUR OUTLOOK FOR 1996?
A: Given the most recent price declines, we believe the bond market has already
discounted stronger economic growth and higher inflation expectations. We are,
therefore, cautiously optimistic about our interest rate outlook going forward.
Additionally, the fear of tax reform is beginning to subside and municipal bonds
are well positioned to outperform taxable securities.
COLONIAL NEW YORK TAX-EXEMPT FUND'S INVESTMENT PERFORMANCE
Change in Value of $10,000 from 9/86 (inception) to 1/96
Based on Net Asset Value (NAV) and Maximum Offering Price (MOP) for
Class A Shares
<TABLE>
<CAPTION>
LABEL A B C
LABEL CNYTEF PRELOAD POSTLOAD LEHMAN
<S> <C> <C> <C>
9/86 10000 95254 10000
10/86 10159 9677 10173
11/86 10305 9816 10374
12/86 10268 9780 10345
1/87 10484 9986 10657
2/87 10542 10042 10710
3/87 10530 10030 10596
4/87 9647 9189 10064
5/87 9474 9024 10015
6/87 9798 9333 10309
7/87 9918 9447 10414
8/87 9952 9479 10437
9/87 9356 8912 10052
10/87 9311 8869 10088
11/87 9569 9114 10351
12/87 9797 9332 10501
1/88 10227 9741 10876
2/88 10301 9811 10991
3/88 10126 9645 10863
4/88 10169 9686 10945
5/88 10165 9682 10913
6/88 10347 9855 11073
7/88 10386 9893 11145
8/88 10442 9946 11155
9/88 10626 10122 11357
10/88 10828 10314 11557
11/88 10723 10214 11451
12/88 10862 10346 11568
1/89 11034 10510 11808
2/89 10960 10439 11673
3/89 10935 10415 11645
4/89 11126 10598 11922
5/89 11252 10717 12169
6/89 11412 10870 12334
7/89 11488 10943 12503
8/89 11361 10821 12380
9/89 11369 10829 12343
10/89 11429 10886 12494
11/89 11576 11026 12712
12/89 11693 11138 12817
1/90 11584 11034 12756
2/90 11685 11130 12870
3/90 11663 11109 12874
4/90 11572 11022 12781
5/90 11838 11275 13060
6/90 11962 11394 13175
7/90 12178 11599 13369
8/90 11975 11406 13175
9/90 11918 11352 13182
10/90 12063 11490 13422
11/90 12246 11664 13691
12/90 12317 11732 13751
1/91 12444 11853 13936
2/91 12516 11921 14057
3/91 12568 11971 14062
4/91 12793 12186 14250
5/91 12886 12274 14676
6/91 12863 12252 14362
7/91 13033 12414 14537
8/91 13205 12578 14728
9/91 12476 12836 14921
10/91 13630 12982 15055
11/91 13685 13035 15097
12/91 13880 13221 15420
1/92 13795 13140 15456
2/92 13851 13193 15461
3/92 139063 13246 15467
4/92 14023 13357 15604
5/92 14202 13528 15788
6/92 14465 13778 16053
7/92 14895 14188 16534
8/92 14723 14023 16373
9/92 14822 14118 16480
10/92 14606 13912 16318
11/92 14897 14189 16610
12/92 15059 14344 16780
1/93 15244 14520 16975
2/93 15796 15045 17589
3/93 15637 14894 17403
4/93 15781 15031 17578
5/93 15926 15170 17677
6/93 16176 15408 17973
7/93 16141 15374 17996
8/93 16503 15719 18371
9/93 16690 15897 18580
10/93 16699 15906 18616
11/93 16551 15764 18451
12/93 16898 16095 18841
1/94 17067 16256 19056
2/94 16623 15833 18563
3/94 15832 15080 17807
4/94 15889 18134 17958
5/94 16036 15274 18113
6/94 15906 15150 18003
7/94 16243 15471 18333
8/94 16370 15592 19396
9/94 16004 15244 18126
10/94 15615 14874 17805
11/94 15078 14362 17482
12/94 15568 14829 17867
1/95 16157 15389 18378
2/95 16678 15885 18912
3/95 16859 16058 19130
4/95 16871 16070 19152
5/95 17397 16571 19763
6/95 17012 16204 19591
7/95 17148 16334 19776
8/95 17380 16554 20027
9/95 17462 16633 20154
10/95 17822 16975 20447
11/95 18258 17391 20786
12/95 18469 17592 20986
1/96 18579 17696 21144
</TABLE>
A $10,000 investment in Class B shares made on 8/92 (inception) at NAV would
have been valued at $12,182 on January 31, 1996. The same investment after
deducting the applicable contingent deferred sales charge (CDSC) would have
grown to $11,882 on January 31, 1996.
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1995 (MOST RECENT QUARTER END)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
Inception 9/26/86 Inception 8/4/92
NAV MOP NAV w/CDSC
- ---------------------------------------------------------------
<C> <C> <C> <C> <C>
1 YEAR 18.63% 13.00% 17.76% 12.76%
- ---------------------------------------------------------------
5 YEARS 8.44% 7.39% -- --
- ---------------------------------------------------------------
SINCE INCEPTION 6.84% 6.28% 5.79% 5.02%
- ---------------------------------------------------------------
</TABLE>
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. The performance of the
Index does not reflect fees or expenses associated with an actual investment.
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. NAV return does not include sales charges
or CDSC. MOP return includes the maximum sales charge of 4.75%. The CDSC return
reflects the maximum charge of 5.00% for one year and 3.00% since inception. If
the Adviser had not waived or borne certain Fund expenses, total returns would
have been lower.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
5
- --------------------------------------------------------------------------------
<PAGE>
INVESTMENT PORTFOLIO
JANUARY 31, 1996 (IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 97.5% PAR VALUE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EDUCATION - 21.2%
Monroe County Industrial
Development Agency, Roberts
Wesleyan College,
7.400% 09/01/11 $ 750 $ 828
State Dormitory Authority:
City University System:
Series 1990-C,
7.500% 07/01/10 1,500 1,798
Series 1993-A:
5.750% 07/01/13 1,000 1,011
6.000% 07/01/20 2,000 2,085
Series 1995-A,
5.625% 07/01/16 5,000 5,025
State University System:
Series 1985-A,
7.800% 12/01/05 185 199
Series 1993-A:
5.250% 05/15/21 5,320 4,996
5.375% 05/15/16 3,000 2,843
Series 1995-A,
6.500% 05/15/06 3,000 3,285
University of New York,
Series 1990 B,
7.500% 05/15/11 1,000 1,205
---------
23,275
---------
- ------------------------------------------------------------------------------------------
HEALTH - 3.3%
HOSPITAL - 1.7%
State Certificate of Participation,
Office of Mental Health,
8.300% 09/01/12 1,000 1,074
State Medical Care Facilities
Finance Agency,
Vassar Brothers Hospital,
Series 1987-A,
8.250% 11/01/13 740 790
---------
1,864
---------
Human Services Providers - 1.4%
State Medical Care Facilities
Finance Agency:
Series 1987-A,
8.875% 08/15/07 270 293
Series 1990-B,
7.875% 08/15/08 250 285
</TABLE>
6
<PAGE>
<TABLE>
Investment Portfolio/January 31, 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Series 1991-D,
7.400% 02/15/18 $ 820 $ 917
---------
1,495
---------
NURSING HOME - 0.2%
State Dormitory Authority,
Menorah Campus, Series 1991-A,
7.400% 02/01/31 245 277
---------
- ------------------------------------------------------------------------------------------
HOUSING - 7.6%
MULTI-FAMILY - 5.2%
Hudson Housing Development Corp.,
Providence Hall-Schuyler
Court Project,
Series 1992-A,
6.500% 01/01/22 750 782
New York City Housing Development
Corp., Multi-family Housing,
Series 1993-A,
6.550% 10/01/15 1,500 1,558
Nyack Housing Assistance Corp.,
Nyack Plaza Apartments,
7.375% 06/01/21(a) 1,375 1,385
State Housing Finance Agency,
Multi-family Housing,
Series 1989-B,
7.550% 11/01/29(b) 235 249
New York City, Series 1990-A,
8.000% 11/01/08 250 284
Yorktown Housing Corp.,
Beaveridge Apartments,
7.375% 06/01/21(a) 1,447 1,457
---------
5,715
---------
SINGLE-FAMILY - 2.4%
State Mortgage Finance Agency:
Series BB-2,
7.950% 10/01/15 570 596
Series EE-1,
8.050% 04/01/16 825 891
Series MM-1,
7.950% 10/01/21 1,000 1,085
Series 10-A,
8.100% 04/01/14 105 111
---------
2,683
---------
- ------------------------------------------------------------------------------------------
MANUFACTURING - 5.5%
CHEMICALS - 1.1%
Monroe County Industrial
Development Agency,
Yorkmill Realty,
9.500% 12/01/06 1,145 1,192
---------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/January 31, 1996
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING - CONT.
Machinery & Computer Chips - 0.6%
Monroe County Industrial Development
Agency, Accede Mold & Tool Co.,
10.750% 11/01/07 $ 590 $ 621
---------
PAPER PRODUCTS - 0.9%
New York City Industrial
Development Agency,
Visy Paper, Inc., Series 1995,
7.950% 01/01/28 1,000 1,024
---------
POLLUTION CONTROL REVENUE - 2.9%
Onondaga County Industrial
Development Authority, Bristol-Myers
Squibb Co., Series 1994,
5.750% 03/01/24 (b) 3,000 3,210
---------
- ------------------------------------------------------------------------------------------
PUBLIC FACILITIES IMPROVEMENT - 12.4%
Albany Parking Authority, Green and
Hudson Garage Project, Series 1991-A,
7.150% 09/15/16 250 270
New York City Industrial
Development Agency, United States
Tennis Association,
Tennis Center Project,
6.375% 11/15/14 (b) 1,500 1,625
State Dormitory Authority,
Suffolk County
Future Income Growth,
Series 1991-A,
9.500% 04/15/14 1,000 1,169
State Urban Development Corp.,
Correctional Facilities:
Series 4,
5.375% 01/01/23 5,000 4,725
Series 1993-A,
5.500% 01/01/14 3,000 2,966
Series 1995,
5.750% 04/01/12 1,750 1,783
Triborough Bridge & Tunnel
Authority, Javits Convention
Center Project, Series E,
7.250% 01/01/10 1,000 1,154
---------
13,692
---------
- ------------------------------------------------------------------------------------------
PUBLIC INFRASTRUCTURE - 5.5%
Turnpike/Toll Road/Bridge - 5.5%
Triborough Bridge & Tunnel Authority:
Series A,
4.750% 01/01/19 1,500 1,378
</TABLE>
8
<PAGE>
<TABLE>
Investment Portfolio/January 31, 1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series L:
8.000% 01/01/07 $ 1,000 $1,087
8.125% 01/01/12 1,100 1,199
Series Y,
6.000% 01/01/12 1,750 1,927
Series 1993 B,
(c) 01/01/21 2,000 520
---------
6,111
---------
- ---------------------------------------------------------------------------------------------------------------------
REFUNDED/ESCROW/SPECIAL OBLIGATION (d) - 1.8%
State Dormitory Authority, State
University of New York, Series 1991-A,
7.250% 05/15/18 (b) 1,000 1,185
State Medical Care Facilities
Finance Agency, Series 1990-B,
7.875% 08/15/08 225 265
Syracuse Industrial Development
Authority, Parking Facilities,
Series 1990-A,
7.700% 06/01/15 500 568
---------
2,018
---------
- ---------------------------------------------------------------------------------------------------------------------
SERVICES - 1.1%
Business Services
United Nations Development Corp.,
Series 1992-A,
6.000% 07/01/07 1,125 1,212
---------
- ---------------------------------------------------------------------------------------------------------------------
SOLID WASTE - 1.2%
Miscellaneous Disposal - 0.7%
St. Lawrence County Solid Waste
Disposal Authority, Series 1987,
8.875% 01/01/08 750 792
---------
Resource Recovery - 0.5%
Babylon Industrial Development
Agency, Ogden Martin Systems,
Series 1985-B,
8.500% 01/01/19 495 561
---------
- ---------------------------------------------------------------------------------------------------------------------
TAX ALLOCATION - 8.7%
State Energy Research & Development
Authority, Series 1993-B, RIB, (variable rate),
8.528% 04/01/20 1,500 1,727
State Local Government Assistance:
Series 1993 C,
5.500% 04/01/17 2,000 2,033
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/January 31, 1996
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TAX ALLOCATION - CONT.
Series 1993 E:
5.000% 04/01/21 $ 5,000 $ 4,713
6.000% 04/01/14 1,000 1,091
---------
9,564
---------
- ------------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 13.8%
AIR TRANSPORTATION - 2.0%
New York City Industrial
Development Agency, American
Airlines,
6.900% 08/01/24 2,000 2,153
---------
TRANSPORTATION - 11.8%
Metropolitan Transportation Authority,
Transportation Facilities:
Series O:
5.500% 07/01/17 3,200 3,124
5.750% 07/01/13 4,000 4,045
Series 7:
(c) 07/01/14 8,430 2,929
4.750% 07/01/19 1,000 876
State Port Authority, Series 1985,
5.375% 03/01/28 2,000 2,015
---------
12,989
---------
- ------------------------------------------------------------------------------------------
UTILITY - 12.5%
INVESTOR OWNED - 3.7%
State Energy Research & Development
Authority, Brooklyn Gas Co.:
Series 1989-A,
6.750% 02/01/24 3,000 3,233
Series 1991-B, RIB, (variable rate),
9.949% 07/15/26 700 882
---------
4,115
---------
MUNICIPAL ELECTRIC - 8.8%
State Energy Research &
Development Authority, Consolidated
Edison Project:
5.250% 08/15/20(b) 4,000 3,915
Series 1991-A,
7.500% 01/01/26 500 548
Series 1992-A,
6.750% 01/15/27(b) 5,000 5,281
---------
9,744
---------
</TABLE>
10
<PAGE>
<TABLE>
Investment Portfolio/January 31, 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C>
WATER & SEWER - 2.9%
State Environmental Facilities
Corp., Series 1990-A,
7.500% 06/15/12 $ 1,000 $ 1,130
Suffolk County Water Authority,
Series 1992 B,
5.625% 06/01/16(b) 2,000 2,035
---------
3,165
---------
TOTAL MUNICIPAL BONDS (cost of $97,737)(e) 107,472
---------
SHORT-TERM OBLIGATIONS - 1.7%
----------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (f)
New York City,
Series C,
3.850% 10/01/23 1,000 1,000
New York City Municipal Water,
Series 1995 A,
3.800% 06/15/25 700 700
State,
Series 1994 A4,
3.750% 08/01/21 200 200
---------
TOTAL SHORT-TERM OBLIGATIONS 1,900
---------
OTHER ASSETS & LIABILITIES, NET - 0.8% 928
----------------------------------------------------------------------------------------
NET ASSETS - 100.0% $ 110,300
---------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) Security is exempt from registration under Rule 144A of the Securities Act
of 1993. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At year end, the
value of these securities amounted to $2,842 or 2.6% of net assets.
(b) These securities, or a portion thereof, with a total market value of
$15,838, are being used to collateralize open futures contracts.
(c) Zero coupon bond.
(d) 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.
(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 January 31, 1996.
11
<PAGE>
Investment Portfolio/January 31, 1996
- -------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO: - CONT.
- -------------------------------------------------------------------------------
Short futures contracts open at January 31, 1996:
<TABLE>
<CAPTION>
Par value Unrealized
covered by Expiration depreciation
Type contracts month at 1/31/96
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Municipal bond $ 10,100 March $ 21
</TABLE>
<TABLE>
<CAPTION>
Acronym Name
------- ----
<S> <C>
RIB Residual Interest Bond
</TABLE>
See notes to financial statements.
12
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JANUARY 31, 1996
<TABLE>
<CAPTION>
(in thousands except for per share amounts and footnotes)
ASSETS
<S> <C> <C>
Investments at value (cost $97,737) $ 107,472
Short-term obligations 1,900
-----------
109,372
Receivable for:
Interest $ 1,327
Fund shares sold 192
Expense reimbursement
due from Adviser 3
Other 70 1,592
---------- ----------
Total Assets 110,964
LIABILITIES
Payable for:
Distributions 470
Fund shares repurchased 160
Variation margin on futures 25
Accrued:
Deferred Trustees fees 2
Other 7
----------
Total Liabilities 664
----------
NET ASSETS $ 110,300
----------
Net asset value & redemption price per share -
Class A ($56,795/7,839) $ 7.25
----------
Maximum offering price per share - Class A
($7.25/0.9525) $ 7.61(a)
----------
Net asset value & offering price per share -
Class B ($53,505/7,384) $ 7.25(b)
----------
COMPOSITION OF NET ASSETS
Capital paid in $ 106,133
Undistributed net investment income 120
Accumulated net realized loss (5,667)
Net unrealized appreciation (depreciation) on:
Investments 9,735
Open futures contracts (21)
----------
$ 110,300
----------
</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.
See notes to financial statements.
13
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1996
<TABLE>
<CAPTION>
(in thousands)
INVESTMENT INCOME
<S> <C> <C>
Interest $ 6,616
EXPENSES
Management fee $ 566
Service fee - Class A 72
Service fee - Class B 64
Distribution fee - Class B 370
Transfer agent 169
Bookkeeping fee 46
Trustees fee 15
Custodian fee 8
Audit fee 32
Legal fee 6
Registration fee 7
Reports to shareholders 5
Other 14
----------
1,374
Fees waived by the Adviser (395) 979
---------- ---------
Net Investment Income 5,637
---------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO
POSITIONS
Net realized gain (loss) on:
Investments 1,116
Closed futures contracts (3,021)
----------
Net Realized Loss (1,905)
Net unrealized appreciation (depreciation) during
the period on:
Investments 10,108
Open futures contracts 416
----------
Net Unrealized Appreciation 10,524
---------
Net Gain 8,619
---------
Net Increase in Net Assets from Operations $ 14,256
---------
</TABLE>
See notes to financial statements.
14
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(in thousands) Year ended January 31
-----------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
<S> <C> <C>
Operations:
Net investment income $ 5,637 $ 5,998
Net realized loss (1,905) (3,374)
Net unrealized appreciation (depreciation) 10,524 (9,199)
--------- ---------
Net Increase (Decrease) from Operations 14,256 (6,575)
Distributions:
From net investment income - Class A (3,241) (3,470)
From net investment income - Class B (2,495) (2,334)
--------- ---------
8,520 (12,379)
--------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 8,444 7,297
Value of distributions reinvested - Class A 1,635 1,733
Cost of shares repurchased - Class A (11,130) (12,138)
--------- ---------
(1,051) (3,108)
--------- ---------
Receipts for shares sold - Class B 11,109 9,456
Value of distributions reinvested - Class B 1,431 1,395
Cost of shares repurchased - Class B (6,197) (7,464)
--------- ---------
6,343 3,387
--------- ---------
Net Increase from Fund Share Transactions 5,292 279
--------- ---------
Total Increase (Decrease) 13,812 (12,100)
NET ASSETS
Beginning of period 96,488 108,588
--------- ---------
End of period (including undistributed net
investment income of $120 and $199,
respectively) $ 110,300 $ 96,488
--------- ---------
NUMBER OF FUND SHARES
Sold - Class A 1,214 1,059
Issued for distributions reinvested - Class A 234 254
Repurchased - Class A (1,597) (1,792)
--------- ---------
(149) (479)
--------- ---------
Sold - Class B 1,599 1,373
Issued for distributions reinvested - Class B 205 205
Repurchased - Class B (886) (1,117)
--------- ---------
918 461
--------- ---------
</TABLE>
See notes to financial statements.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1996
NOTE 1. ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
ORGANIZATION: Colonial New York Tax-Exempt Fund (the Fund), a series of Colonial
Trust V, is a non-diversified portfolio of a Massachusetts business trust,
registered under the Investment Company Act of 1940, as amended, as an open-end,
management investment company. The Fund's investment objective is to seek as
high a level of after-tax total return, as is consistent with prudent risk. 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies that are consistently followed by the Fund in
the preparation of its financial statements.
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, sold or mature.
Cost is determined and gains (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 A and Class B service fees and 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 A and 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
16
<PAGE>
Notes to Financial Statements/January 31, 1996
- -------------------------------------------------------------------------------
by the service fee applicable to Class A and Class B and 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. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
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 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>
Effective January 1, 1996 the management fee applicable to the Trust is being
reduced based on the following schedule for the first $1 billion in combined
average net assets:
<TABLE>
<CAPTION>
Cumulative Annualized
Effective Date Reduction
--------------------------------- ---------------------
<S> <C>
January 1, 1996 0.0125%
April 1, 1996 0.0250%
July 1, 1996 0.0375%
October 1, 1996 0.0500%
</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.
17
<PAGE>
Notes to Financial Statements/January 31, 1996
- -------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- -------------------------------------------------------------------------------
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 year ended January 31, 1996, the Fund has been
advised that the Distributor retained net underwriting discounts of $23,142 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $155,723 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 Fund's 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: Effective August 1, 1995, 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 0.50% annually of the
Fund's average net assets. Through July 31, 1995, the expense limit was 0.40% 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
- -------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended January 31, 1996, purchases
and sales of investments, other than short-term obligations, were $43,100,700
and $39,817,408, respectively.
Unrealized appreciation (depreciation) at January 31, 1996, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $9,740,596
Gross unrealized depreciation (5,610)
----------
Net unrealized appreciation $9,734,986
==========
</TABLE>
18
<PAGE>
Notes to Financial Statements/January 31, 1996
- -------------------------------------------------------------------------------
CAPITAL LOSS CARRYFORWARDS: At January 31, 1996, 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>
1997 228,000
1998 26,000
1999 37,000
2003 187,000
2004 3,211,000
-----------
$ 3,689,000
===========
</TABLE>
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 may invest in municipal and Treasury bond futures contracts and
purchase and write options on futures. The Fund will invest in these instruments
to hedge against the effects of changes in value of portfolio securities due to
anticipated changes in interest rates and/or market conditions, for duration
management, or when the transactions are economically appropriate to the
reduction of risk inherent in the management of the Fund and not for trading
purposes. The use of futures contracts and options involves certain risks, which
include (1) imperfect correlation between the price movement of the instruments
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 instrument 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 amount recognized in the Fund's Statement of
Assets and Liabilities at any given time.
19
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each
period are as follows:
<TABLE>
<CAPTION>
Year ended January 31
--------------------------------------------------------------
1996 1995
Class A Class B Class A Class B
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 6.680 $ 6.680 $ 7.500 $ 7.500
----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.401 0.349 0.427 0.376
Net realized and
unrealized gain (loss) 0.576 0.576 (0.834) (0.834)
----------- ----------- ----------- -----------
Total from Investment
Operations 0.977 0.925 (0.407) (0.458)
----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.407) (0.355) (0.413) (0.362)
From capital paid in -- -- -- --
----------- ----------- ----------- -----------
Total Distributions
Declared to Shareholders (0.407) (0.355) (0.413) (0.362)
----------- ----------- ----------- -----------
Net asset value -
End of period $ 7.250 $ 7.250 $ 6.680 $ 6.680
=========== =========== =========== ===========
Total return (c)(d) 14.99% 14.15% (5.32)% (6.04)%
=========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS
Expenses 0.58(f) 1.33(f) 0.42% 1.17%
Net investment income 5.72(f) 4.97(f) 6.25% 5.50%
Fees and expenses waived
or borne by the adviser 0.38% 0.38% 0.46% 0.46%
Portfolio turnover 39% 39% 65% 65%
Net assets at end
of period (000) $ 56,795 $ 53,505 $ 53,322 $ 43,166
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
(a) Net of fees and expenses
waived or borne by the
Adviser which amounted to... $ 0.026 $ 0.026 $ 0.032 $ 0.032
</TABLE>
(b) Class B shares were initially offered on August 4, 1992. Per share amounts
reflect activity from that date.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Adviser not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(g) Annualized.
20
<PAGE>
FINANCIAL HIGHLIGHTS - CONTINUED
<TABLE>
<CAPTION>
Year ended January 31
-------------------------------------------------------------------------------
1994 1993 1992
Class A Class B Class A Class B (b) Class A
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value - $ 7.090 $ 7.090 $ 6.840 $ 7.130 $ 6.600
Beginning of period ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS: 0.421 0.368 0.438 0.182 0.453
Net investment income (a)
Net realized and 0.407 0.407 0.260 (0.029) 0.242
unrealized gain (loss) ----------- ----------- ----------- ----------- -----------
Total from Investment 0.828 0.775 0.698 0.153 0.695
Operations ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: (0.418) (0.365) (0.445) (0.190) (0.455)
From net investment income -- -- (0.003) (0.003) --
From capital paid in ----------- ----------- ----------- ----------- -----------
Total Distributions (0.418) (0.365) (0.448) (0.193) (0.455)
Declared to Shareholders ----------- ----------- ----------- ----------- -----------
Net asset value - $ 7.500 $ 7.500 $ 7.090 $ 7.090 $ 6.840
End of period ----------- ----------- ----------- ----------- -----------
11.95% 11.14% 10.50% 1.16%(e) 10.86%
Total return (c)(d) ----------- ----------- ----------- ----------- -----------
RATIOS TO AVERAGE NET ASSETS 0.62% 1.37% 0.96% 1.71%(g) 1.00%
Expenses 5.68% 4.93% 6.25% 5.50%(g) 6.71%
Net investment income
Fees and expenses waived 0.29% 0.29% 0.06% 0.06%(g) 0.14%
or borne by the adviser 25% 25% 7% 7% 17%
Portfolio turnover
Net assets at end $ 63,527 $ 45,061 $ 53,779 $ 14,743 $ 40,233
of period (000)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
(a) Net of fees and expenses... $ 0.021 $ 0.021 $ 0.004 $ 0.001 $ 0.009
waived or borne by the
Adviser which amounted to
</TABLE>
- -------------
Federal income tax information (unaudited)
All of the distributions will be treated as exempt income for federal income
tax purposes.
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST V AND THE SHAREHOLDERS OF
COLONIAL NEW YORK 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 New York Tax-Exempt Fund
(a series of Colonial Trust V) at January 31, 1996, 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, 1996 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
March 13, 1996
22
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial New York Tax-Exempt Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial New York 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.
This report has been prepared for shareholders of Colonial New York 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.
23
<PAGE>
[LOGO] COLONIAL
MUTUAL FUNDS
Mutual Funds for
Planned Portfolios
- --------------------------------------------------------------------------------
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)
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
-----------------------------------
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
-----------------------------------
COLONIAL INVESTMENT SERVICES, INC., Distributor (C) 1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
NY-02/848B-0196 (3/96)
- --------------------------------------------------------------------------------
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