<PAGE>
[COLONIAL LOGO]
CALIFORNIA TAX-EXEMPT FUND
ANNUAL REPORT
JANUARY 31, 1996
<PAGE>
COLONIAL CALIFORNIA TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1995 - JANUARY 31, 1996
INVESTMENT OBJECTIVE: Colonial California 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 California state 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-tax-free income
- Long-term appreciation
- Emphasis on quality
PORTFOLIO MANAGER COMMENTARY: "We have remained fully invested in municipal
bonds and are heartened by positive trends in the state's economy. Lower
interest rates, negligible inflation, and the slow growth economy should
continue to have a favorable impact on California's municipal market."
COLONIAL CALIFORNIA TAX-EXEMPT FUND PERFORMANCE
<TABLE>
<CAPTION>
Class A Class B
<S> <C> <C>
Inception dates 6/16/86 8/4/92
- -------------------------------------------------------------------------------
Distributions declared per share* $ 0.389 $ 0.335
- -------------------------------------------------------------------------------
SEC yields on 1/31/96** 4.37% 3.83%
- -------------------------------------------------------------------------------
Taxable-equivalent SEC yields*** 8.13% 7.12%
- -------------------------------------------------------------------------------
12-month total returns, assuming
reinvestment of all distributions and
no sales charge or contingent deferred
sales charge (CDSC) 15.78% 14.94%
- -------------------------------------------------------------------------------
Net asset value per share at 1/31/96 $ 7.54 $ 7.54
</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.
***Taxable-equivalent SEC yields are based on the maximum effective 46.2%
federal and California income tax rates.
<TABLE>
<CAPTION>
QUALITY BREAKDOWN
(as of 1/31/96)
<S> <C>
AAA .................... 58.2%
AA ..................... 9.2%
A ...................... 13.0%
BBB .................... 11.1%
Non-rated .............. 7.1%
Cash & Equivalents ..... 1.4%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SECTORS
(as of 1/31/96)
<S> <C>
Water & Sewer .......... 17.5%
Tax Allocation ......... 12.6%
Public Improvement ..... 11.6%
Refunded ............... 10.9%
General Obligations .... 9.1%
</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 MANAGER REPORT
WILLIAM LORING is a Vice President of Colonial Management Associates, Inc., and
Portfolio Manager of Colonial California Tax-Exempt Fund. He also manages four
other Colonial tax-exempt funds.
Q: HOW DID MUNICIPAL BONDS PERFORM DURING THE YEAR?
A: Municipal bonds had strong performance during the 12-month period. Early in
the year it became clear that the much talked about "soft landing" of the U.S.
economy had arrived, which created a positive environment for bonds. Slower
economic growth, low inflation and, most importantly, declining interest rates,
contributed to price increases in the fixed income markets. The only significant
negative factor was talk about tax reform, which had a greater effect on
municipal bonds than on other fixed income securities.
Q: WHAT WAS YOUR INVESTMENT STRATEGY DURING THE PERIOD?
A: We remained fully invested in municipal bonds. The relatively long duration
of the Fund's portfolio, ranging between 8 and 10 years, contributed to strong
performance. We extended duration during the first nine months of the year, and
then shortened up toward the end of the period to reduce our level of risk. We
also modified the quality mix during the year. On January 31, 1995 AAA-rated
holdings accounted for 49.9% of the portfolio and BBB bonds were 6.8%. By the
end of the period, we increased the percentage of AAA bonds to 58.2%, decreased
our AA and A holdings and increased BBB-rated bonds to 11.1%. The higher
yielding bonds added greater performance potential to the portfolio, while the
higher grade bonds helped limit risk. The percentage of non-rated bonds remained
constant, around 7%.
Q: HOW DID THE FUND PERFORM COMPARED TO THE LEHMAN MUNICIPAL BOND INDEX AND WHY?
A: The Fund outperformed the Lehman Municipal Bond Index, which is comprised of
long bonds representing a number of states, not just California. The Fund's
Class A shares returned 15.78% for the period while the Index returned 15.06%.
We attribute the Fund's strong performance to our position in long duration
securities and to declining interest rates.
Q: HOW WOULD YOU DESCRIBE THE MUNICIPAL MARKET IN CALIFORNIA?
A: We believe the worst may now be behind us in California. We are fairly
satisfied with the progress in the state's budget and are heartened by positive
trends in the economy. One example of our increased confidence is that we are
now buying selected California general obligation bonds. One year ago we felt
they posed an unnecessary risk.
Q: WHAT IS YOUR OUTLOOK FOR THE MUNICIPAL BOND MARKET?
A: For the short and intermediate term, we are cautiously optimistic. Lower
interest rates, negligible inflation and the slow growth economy should continue
to have a favorable impact on the municipal market, although we do
4
<PAGE>
not expect to see a repeat of last year's strong performance. The uncertainty
surrounding various tax-reform proposals has already been priced into the market
and can be viewed as a buying opportunity for investors willing to withstand
some price volatility. Going forward, we would expect to see a greater
percentage of total return derived from income rather than from price gains. We
believe that the Fund will continue to provide returns consistent with its
investment objective.
COLONIAL CALIFORNIA TAX-EXEMPT FUND'S INVESTMENT PERFORMANCE
Change in Value of $10,000 from 6/86 (inception) to 1/96
Based on Net Asset Value (NAV) and Maximum Offering Price (MOP) for Class A
Shares
<TABLE>
<CAPTION>
CCATEF pre-load load index
<S> <C> <C> <C>
6/86 10000 9525 10000
9/86 10464 9967 10537.2
12/86 10836 10321 10901.24
3/87 11122 10594 11165.7
6/87 10419 9924 10862.52
9/87 9879 9410 10592.54
12/87 10364 9872 11065.57
3/88 10823 10309 11446.21
6/88 11039 10515 11668.06
9/88 11339 10801 11967.37
12/88 11605 11054 12190.33
3/89 11757 11198 12271.1
6/89 12273 11690 12997.51
9/89 12307 11722 13006.36
12/89 12665 12063 13505.39
3/90 12745 12140 13565.7
6/90 12974 12358 13882.71
9/90 12998 12381 13890.46
12/90 13422 12785 14489.63
3/91 13691 13040 14817.15
6/91 14003 13338 15133.6
9/91 14483 13795 15317.77
12/91 14926 14217 16248.96
3/92 14994 14282 16297.65
6/92 15509 14773 16915.08
9/92 15818 15067 18338.04
12/92 16092 15328 17681.33
3/93 16633 15843 18338.04
6/93 17066 16255 18938.32
9/93 17564 16729 19578.43
12/93 17789 16944 19853.39
3/94 16741 15945 18763.48
6/94 16795 15997 18969.84
9/94 16898 16095 19100.4
12/94 16492 15708 18827.09
3/95 17834 16987 20157.66
6/95 18030 17173 20643.41
9/95 18481 17603 21236.49
12/95 19710 18744 22113.38
1/96 19793 18852 22280.46
</TABLE>
A $10,000 investment in Class B shares made on 8/92 (inception) at NAV would
have been valued at $12,131 on January 31, 1996. The same investment after
deducting the applicable contingent deferred sales charge (CDSC) would have
grown to $11,831 on January 31, 1996.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1995 (MOST RECENT QUARTER END)
- ------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
- ------------------------------------------------------------------------------
Inception 6/16/86 Inception 8/4/92
NAV MOP NAV W/CDSC
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year 19.52% 13.84% 18.64% 13.64%
- ------------------------------------------------------------------------------
5 years 7.99% 6.94% -- --
- ------------------------------------------------------------------------------
Since inception 7.39% 6.84% 5.72% 4.94%
- ------------------------------------------------------------------------------
</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 - 98.1% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
CERTIFICATES OF PARTICIPATION - 5.2%
Alameda County, Capital Projects, Series 1989,
(a) 06/15/14 $ 2,185 $ 776
Anderson Certificates of Participation,
7.900% 12/01/11 610 659
Bishop, Escalon & Lemoore Cities,
Certificates of Participation, Series 1991-A,
7.700% 05/01/11 700 751
Compton Certificates of Participation,
Civic Center Project, Series 1989-B,
7.500% 08/01/15 1,000 1,067
Fresno Unified School District, Certificates
of Participation, Phase Six, Series 1991-A,
7.200% 05/01/11 1,000 1,086
Los Angeles County, Certificates of
Participation, Series 1991, RIB (variable rate),
8.976% 05/01/15 1,000 1,026
Modesto, Community Center Project,
Series 1993-A,
5.000% 11/01/23 2,235 2,132
Nevada County, Certificates of Participation,
Western Nevada County Solid Waste
Management System, Series 1991,
7.500% 06/01/21 1,000 1,032
San Mateo County Board of Education,
Series 1991,
7.100% 05/01/21 750 792
Special Districts Finance Authority,
Certificates of Participation, Series 1988-A,
8.400% 07/01/05 1,775 1,941
Statewide Communities Development Corp.,
J. Paul Getty Trust Center,
5.000% 10/01/23 (b) 10,560 10,124
-------
21,386
-------
- --------------------------------------------------------------------------------
EDUCATION - 2.9%
Alum Rock Unified Elementary School
District, Series 1991:
(a) 09/01/11 1,925 715
(a) 09/01/12 1,565 536
(a) 09/01/14 1,000 294
</TABLE>
6
<PAGE>
Investment Portfolio/January 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Antioch Unified School District,
Series 1991-A:
(a) 07/01/11 (c) $ 5,175 $ 1,818
(a) 07/01/16 5,000 1,212
Benicia Unified School District,
Series 1994-C,
6.450% 06/01/19 3,870 4,281
University of California,
Series 1989-C,
5.000% 09/01/23 3,500 3,268
-------
12,124
-------
- --------------------------------------------------------------------------------
GENERAL OBLIGATIONS - 9.1%
Alum Rock Unified Elementary School
District, Series 1991,
(a) 09/01/15 1,825 499
Central Unified School District,
(a) 03/01/18 20,065 5,944
Grossmont Unified School District,
Capital Project, Series 1991,
(a) 11/15/06 (c) 4,500 2,632
PR Commonwealth of Puerto Rico,
Series 1995:
5.650% 07/01/15 1,000 1,057
6.500% 07/01/14 (d) 2,000 2,272
Rocklin, Unified School District,
Series 1991-C,
(a) 07/01/20 6,920 1,765
State of California:
5.125% 10/01/17 7,710 7,421
5.500% 04/01/12 (c) 2,770 2,839
5.750% 03/01/19 10,000 10,187
10.000% 02/01/10 2,000 2,932
-------
37,548
-------
- --------------------------------------------------------------------------------
HEALTH - 1.9%
HOSPITAL
Duarte, City of Hope National Medical Center,
Series 1993,
6.000% 04/01/08 500 503
San Bernadino County, Sisters of Charity,
Series 1991-A,
7.000% 07/01/21 500 551
State Health Facilities Financing Authority:
Catholic Healthcare West, Series 1994-A,
4.750% 07/01/19 (c) 2,000 1,810
</TABLE>
7
<PAGE>
Investment Portfolio/January 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
HEALTH - CONT.
Hospitals - cont.
Kaiser Permanente, Series 1993-C,
5.600% 05/01/33 $ 5,000 $ 4,862
-------
7,726
-------
- --------------------------------------------------------------------------------
HOUSING - 3.2%
MULTI-FAMILY - 0.1%
Santa Rosa, Chanate Lodge Projects,
Series 1992,
6.625% 12/01/02 360 364
-------
SINGLE-FAMILY - 3.1%
Delta County Home Mortgage Finance
Authority, Series 1992-A,
6.750% 12/01/25 3,000 3,067
PR Puerto Rico Housing Finance Corp.,
Series B,
7.650% 10/15/22 615 654
Southern California Home Financing Authority:
Series A,
7.625% 10/01/22 1,450 1,513
Series 1990-A,
7.625% 10/01/23 555 588
State Housing Finance Agency:
Series B,
8.600% 08/01/19 2,550 2,687
Series 1991-C,
7.450% 08/01/11 245 260
Series 1990-D,
7.750% 08/01/10 965 1,025
State Rural Home Mortgage Finance
Authority, Series 1995-B,
7.750% 09/01/27 2,500 2,925
Stockton, Mortgage-Backed Security
Program, Series 1990-A,
7.400% 08/01/05 40 42
-------
12,761
-------
- --------------------------------------------------------------------------------
MELLO - ROOS/1915 ACT - 4.8%
Alameda County, Marina Village
Assessment District, Series 1989-1,
7.650% 09/02/10 1,000 1,030
Carlsbad Unified School District, Community
Facility District No. 5, Series 1990,
7.650% 09/01/14 1,000 1,024
</TABLE>
8
<PAGE>
Investment Portfolio/January 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Carson, Series 1992,
7.375% 09/02/22 $ 980 $ 1,040
Corona Community Facility District,
Foothill Ranch, Series 1990 A-1,
8.350% 09/01/20 1,000 1,020
Costa Mesa Public Financing,
Series 1991-A,
7.100% 08/01/21 890 813
Elk Grove Unified School District,
Community Facilities District No. 1,
Series 1995,
6.500% 12/01/24 4,055 4,790
Fairfield Improvement Bond,
Series 1990,
8.000% 09/02/11 240 247
Folsom Willow Creek,
8.250% 12/01/06 400 422
Los Angeles County, Harbor Boulevard,
8.375% 09/02/18 1,000 1,031
Murrieta County Water District,
Series 1991,
8.300% 10/01/21 1,000 1,094
Placentia, Community Facilities District,
7.900% 09/01/15 1,000 928
Riverside Unified School District,
Community Facilities District No. 2,
Series 1993-A,
7.250% 09/01/18 1,000 1,033
Sacramento Unified School,
Community Facilities District No. 1,
Series B,
7.300% 09/01/13 1,760 1,923
Stockton Community Facilities District,
Series 2,
7.750% 08/01/15 1,000 1,051
West Covina Redevelopment Agency,
Community Facilities District No. 1,
Series 1989,
7.800% 09/01/22 1,000 1,049
Woodland East Main Street Assessment,
Series1990-1,
7.900% 09/02/15 1,450 1,494
-------
19,989
-------
- --------------------------------------------------------------------------------
PUBLIC FACILITIES IMPROVEMENT - 11.6%
Beverly Hills Public Financing Authority,
Series 1993-A,
5.650% 06/01/15 (b) 5,000 5,069
</TABLE>
9
<PAGE>
Investment Portfolio/January 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
PUBLIC FACILITIES IMPROVEMENT - CONT
Concord Redevelopment Agency,
Central Concord Project, Series 1988-3,
8.000% 07/01/18 $ 25 $ 28
Long Beach, Fleet Services Project,
Series 1992-A,
6.600% 05/01/14 2,000 2,090
Los Angeles County Public Works
Financing Authority,
5.000% 03/01/17 5,000 4,656
Oakland Refunding Revenue, Series 1988-A,
7.600% 08/01/21 1,995 2,190
PR Commonwealth of Puerto Rico,
Public Buildings Authority, Series 1993-M,
stepped coupon, (5.700% 07/01/98)
3.750% 07/01/16 (e) 2,250 2,160
Rancho Mirage Joint Powers
Financing Authority, Series 1991-A,
7.500% 04/01/17 455 490
Riverside Public Financing Authority,
Series 1991-A,
8.000% 02/01/18 410 432
San Jose Redevelopment Agency,
Series 1993,
5.000% 08/01/21 10,000 9,425
Santa Ana Financing Authority,
Police Holding Facility, Series 1994-A,
6.250% 07/01/18 6,035 6,804
State Public Capital Improvements
Financing Authority:
Series 1988-A,
8.500% 03/01/18 3,500 3,749
Series 1988-B,
8.100% 03/01/18 (c) 4,800 5,190
State Public Works Board:
Secretary of State & State Archives,
Series 1992-A,
6.500% 12/01/08 1,000 1,150
State Prisons, Series 1993-A,
5.250% 12/01/13 (b) 2,500 2,509
VI Virgin Islands Public Financing,
Series 1992-A,
7.250% 10/01/18 1,000 1,074
Watsonville Mammoth Lakes,
Series B,
7.875% 06/01/11 500 549
-------
47,565
-------
- --------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
Investment Portfolio/January 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PUBLIC INFRASTRUCTURE - 3.7%
Airports - 0.7%
Los Angeles International Airport,
Series 1995-D,
5.500% 05/15/15 $ 3,025 $ 3,033
-------
Turnpikes/Toll Roads/Bridges - 3.0%
Foothill Eastern Transportation Corridor
Agency, Series 1995-A,
5.000% 01/01/35 10,000 8,350
PR Commonwealth of Puerto Rico
Highway & Transportation Authority,
Series W,
5.500% 07/01/09 580 602
San Joaquin Hills Transportation
Corridor Agency, Series 1993,
(a) 01/01/20 15,400 3,407
-------
12,359
-------
- --------------------------------------------------------------------------------
REFUNDED/ESCROW/SPECIAL OBLIGATION (f) - 10.9%
Central School District,
San Bernadino County, Series A,
7.050% 05/01/16 750 847
Commerce Joint Powers Financing
Authority, Multiple Project Loans,
Series A,
8.000% 03/01/21 30 36
Desert Hospital, Series 1990,
8.100% 07/01/20 1,750 2,067
Empire Union School District,
Mello-Roos Financing, Series 1990-A,
7.400% 10/01/15 1,000 1,164
Fontana Public Financing Authority,
North Fontana Redevelopment, Series 1991-A,
7.750% 12/01/20 785 944
Glendora Public Financing Authority,
Series B,
7.625% 09/01/10 850 969
La Quinta Redevelopment Agency,
Series 1990,
8.400% 09/01/12 1,000 1,199
Local Government Power Authority,
Anaheim Redevelopment Agency,
Series 1986-A,
8.200% 09/01/15 4,500 5,057
Los Angeles Convention & Exhibit
Center, Series 1985,
9.000% 12/01/20 500 677
</TABLE>
11
<PAGE>
Investment Portfolio/January 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
REFUNDED/ESCROW/SPECIAL OBLIGATION (f) - CONT
Los Angeles County Transportation,
Metro Train, Series 1991-A,
6.900% 07/01/21 $ 1,000 $ 1,154
Los Angeles Department of Water &
Power:
Series 1986,
7.375% 04/15/24 40 41
Series 1988,
7.900% 05/01/28 2,340 2,586
Los Angeles Waste Water System,
Series 1991-A,
7.100% 02/01/21 400 443
Monterey Redevelopment Agency,
Series A:
9.250% 11/01/10 500 562
9.250% 11/01/11 250 282
9.250% 11/01/12 750 848
Moreno Valley Unified School District,
7.400% 09/01/16 20 24
Northern California Power Agency,
Hydroelectric Project No. 1,
Series 1986 B-2,
8.000% 07/01/24 1,750 1,918
Orange County Community Facility:
District Number 87-3 Mello-Roos,
7.800% 08/15/15 2,000 2,345
District 87-4, Series 1990-A,
8.000% 08/15/15 1,000 1,179
Pomona, Series 1990-B,
7.500% 08/01/23 1,000 1,289
PR Commonwealth of Puerto Rico,
Electric Power Authority:
Series 1989-N,
7.000% 07/01/07 635 709
Series 1991,
7.300% 07/01/20 1,200 1,386
Rancho Mirage Joint Powers
Financing Authority, Series 1991-A,
7.500% 04/01/17 1,545 1,812
Redbud Hospital District,
Series 1986,
7.900% 06/01/11 175 181
Riverside County, Series 1989-A,
7.800% 05/01/21 2,500 3,341
Riverside Public Financing Authority,
Series A,
8.000% 02/01/18 590 701
</TABLE>
12
<PAGE>
Investment Portfolio/January 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Rocklin, Stanford Ranch Community
Facilities District, Series 1990,
8.100% 11/01/15 $ 1,000 $ 1,188
Sacramento City Financing Authority,
Series 1991,
6.800% 11/01/20 2,500 2,888
State Educational Facilities Authority,
Westmont College, Series 1985-A,
9.200% 12/01/00 40 45
State Health Facilities Finance Authority:
Children's Hospital of Los Angeles,
Series 1991-A,
7.125% 06/01/21 2,000 2,325
Sisters of Providence,
8.375% 10/01/07 2,500 2,741
State Public Works,
University of California, Series 1990-A,
7.000% 09/01/15 1,625 1,859
-------
44,807
-------
- --------------------------------------------------------------------------------
SALES & EXCISE TAX - 1.7%
Los Angeles County Metropolitan
Transportation Authority,
Series 1995-A,
5.000% 07/01/25 5,000 4,731
Riverside County Transportation
Commission, Sales Tax Revenue,
Series A,
6.000% 06/01/09 (d) 2,000 2,200
-------
6,931
-------
- --------------------------------------------------------------------------------
SOLID WASTE - 2.9%
Miscellaneous Disposal
Pollution Control Financing Authority, North
California Recycling Center, Series 1991-A,
6.750% 07/01/17 1,000 1,000
Sacramento County Sanitation District
Financing Authority, Series 1993,
4.750% 12/01/23 12,000 10,860
-------
11,860
-------
- --------------------------------------------------------------------------------
TAX ALLOCATION - 12.6%
Brea Redevelopment Agency, Project AB,
Series 1993,
6.125% 08/01/13 2,920 3,124
Cerritos Public Financing Authority,
Los Coyotes Redevelopment Project,
Series 1993-A,
6.500% 11/01/23 2,000 2,325
</TABLE>
13
<PAGE>
Investment Portfolio/January 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
TAX ALLOCATION - CONT
Commerce Joint Powers Financing
Authority, Multiple Project Loans,
Series 1991-A,
8.000% 03/01/21 $ 970 $ 1,038
Contra Costa County Public Financing
Authority, Series 1992-A,
7.100% 08/01/22 1,000 1,059
Elk Grove Unified School District,
Community Facilities District No. 1,
Series 1995,
(a) 12/01/18 2,720 775
Elk Grove University School, District No. 1,
6.500% 12/01/08 1,000 1,155
Emeryville Public Finance Authority,
Emeryville Redevelopment, Series 1993-A,
6.500% 05/01/21 2,000 2,083
Folsom Redevelopment Agency, Central
Folsom Project Area, Series 1987-A,
8.600% 02/01/13 400 424
Glendora Public Financing Authority,
Series B,
7.625% 09/01/10 150 156
Los Angeles County Transportation
Authority, Series 1993-A,
5.000% 07/01/21 3,150 2,949
Moulton Niguel, Series 1993,
5.250% 09/01/13 (c) 11,000 10,849
Oakland Redevelopment Agency,
Central District Project, Series 1992,
5.500% 02/01/14 7,400 7,641
Pomona Public Financing Authority,
Southwest Pomona Redevelopment Project,
Series 1994-L,
5.750% 02/01/20 3,800 3,610
Richmond Joint Powers Financing
Authority, Series 1990-A,
7.700% 10/01/10 940 1,022
Santa Fe Springs Redevelopment Agency,
Consolidated Project, Series 1992-A,
6.400% 09/01/22 7,275 7,848
Santa Margarita, Series 1994-B,
7.250% 08/01/13 (c) 2,000 2,450
Seaside Redevelopment Agency,
Gateway Project, Series 1986,
8.500% 08/01/06 105 108
Soledad Redevelopment Agency, Series 1992,
7.400% 11/01/12 970 1,048
</TABLE>
14
<PAGE>
Investment Portfolio/January 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Torrance, Downtown Redevelopment
Project, Series 1992,
7.125% 09/01/21 $ 1,000 $ 1,056
Westminster Redevelopment Agency,
Project No. 1, Series 1993,
6.200% 08/01/23 1,000 995
-------
51,715
-------
- --------------------------------------------------------------------------------
UTILITY - 10.1%
Co-Generation - 1.6%
Sacramento Co-Generation Authority,
Procter & Gamble Project, Series 1995,
6.500% 07/01/21 6,500 6,719
-------
Joint Power Authority - 0.5%
Southern California Public Power Authority,
5.000% 07/01/15 2,150 2,053
-------
Municipal Electric - 8.0%
Colton Public Financing Authority,
Electric System Imports, Series 1995,
7.500% 10/01/20 3,000 3,060
Imperial Irrigation District, Electric
System Project, Series 1994,
6.000% 11/01/15 3,000 3,165
Los Angeles Department of
Water & Power, Series 1993-2,
5.000% 10/15/33 5,000 4,588
Northern California Power Agency,
Hydroelectric Project No. 1:
Series 1991-E,
7.150% 07/01/24 1,470 1,551
Series 1992-A,
5.500% 07/01/23 (c) 11,000 10,973
PR Puerto Rico Electric Power Authority:
Series 1989-N,
7.000% 07/01/07 365 397
Series 1989-O,
(a) 07/01/17 2,490 738
Reading Electric System,
RIB (variable rate), Series 1992-A,
8.801% 07/01/22 750 962
Sacramento Municipal Utilities District,
Series 1993-D,
5.250% 11/15/20 7,500 7,331
-------
32,765
-------
</TABLE>
15
<PAGE>
Investment Portfolio/January 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
WATER & SEWER - 17.5%
Contra Costa Water District, Series 1994-G,
5.500% 10/01/19 (c) $12,500 $12,578
Covina Water System Improvement Project,
Series 1991,
7.300% 04/01/16 1,000 1,059
Fresno Sewer Revenue,
Series 1993-A:
5.250% 09/01/19 4,000 3,990
6.000% 09/01/09 1,525 1,672
6.000% 09/01/10 1,420 1,548
Hemet Public Financing Authority,
Series 1992-A,
6.500% 02/01/12 1,500 1,558
Irvine Ranch Water District, Joint
Powers Agency, Series 1988-II,
8.250% 08/15/23 5,500 5,947
Los Angeles County Sanitation District
Finance Authority, Series 1993-A,
5.000% 10/01/23 14,300 13,442
Los Angeles Waste Water Systems,
Series 1993-D,
6.000% 11/01/14 1,545 1,630
Metropolitan Water District:
RIB (variable rate),
7.560% 08/05/22 2,000 2,132
Series 1995-A,
5.700% 07/01/11 2,000 2,082
Mojave Water Agency,
Morongo Basin Pipeline:
Series 1991,
6.950% 09/01/21 1,000 1,100
Series 1992,
6.600% 09/01/13 800 853
PR Puerto Rico Aqueduct & Sewer Authority:
Series 1995,
6.000% 07/01/09 1,250 1,352
Series 1995,
6.250% 07/01/13 2,750 3,028
San Diego Sewer Redevelopment, Series 1993,
5.000% 05/15/23 5,000 4,644
State Department Water Resources,
Central Valley Project:
Series J2,
6.125% 12/01/13 3,000 3,139
Series L,
5.500% 12/01/23 5,000 5,006
Tehachapi Water & Sewer District,
8.200% 11/01/20 2,000 2,233
</TABLE>
16
<PAGE>
Investment Portfolio/January 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Turlock Irrigation:
6.000% 01/01/11 (d) $ 1,000 $ 1,086
6.000% 01/01/12 (d) 500 542
Turlock Irrigation District, Series 1991,
7.300% 01/01/11 1,500 1,577
--------
72,198
--------
TOTAL MUNICIPAL BONDS (cost of $373,472) (g) 403,903
--------
SHORT-TERM OBLIGATIONS - 1.4%
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (h)
CA Honey Lake Power,
3.700% 09/01/18 100 100
CA State Health Facilities Financing
Authority, St. Francis Memorial Hospital,
Series B,
3.250% 11/01/19 1,800 1,800
NY New York City, Series D,
2.950% 02/01/20 2,000 2,000
NY State Energy Research & Development
Authority, Niagara Mohawk Project,
3.900% 12/01/23 1,800 1,800
--------
TOTAL SHORT-TERM OBLIGATIONS 5,700
--------
OTHER ASSETS & LIABILITIES, NET - 0.5% 1,903
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $411,506
--------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) These securities, or a portion thereof, with a total market value of $6,509
are being used to collateralize the delayed delivery purchases indicated
in note (d) below.
(c) These securities, or a portion thereof, with a total market value of $49,730
are being used to collateralize open futures contracts.
(d) These securities have been purchased on a delayed delivery basis for
settlement at a future date beyond the customary settlement time.
(e) Shown parenthetically is the interest rate to be paid and the date the Fund
will begin accruing this rate.
(f) The Fund has been informed that the issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment
of the interest and principal.
(g) Cost for federal income tax purposes is the same.
17
<PAGE>
NOTES TO INVESTMENT PORTFOLIO - CONT:
- --------------------------------------------------------------------------------
(h) 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.
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 bonds $365 March $109
</TABLE>
Acronym Name
RIB Residual Interest Bonds
See notes to financial statements.
18
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JANUARY 31, 1996
(in thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $373,472) $ 403,903
Short-term obligations 5,700
---------
409,603
Receivable for:
Investments sold $ 7,012
Interest 6,929
Fund shares sold 170
Other 21 14,132
-------- ---------
Total Assets 423,735
LIABILITIES
Payable for:
Investments purchased 9,333
Distributions 1,657
Fund shares repurchased 682
Variation margin on futures 91
Payable to custodian bank 435
Accrued:
Deferred Trustees fees 3
Other 28
--------
Total Liabilities 12,229
---------
NET ASSETS $ 411,506
---------
Net asset value & redemption price per share -
Class A ($304,581/40,391) $ 7.54(a)
---------
Maximum offering price per share - Class A
($7.54/0.9525) $ 7.92(b)
---------
Net asset value & offering price per share -
Class B ($106,925/14,180) $ 7.54
---------
COMPOSITION OF NET ASSETS
Capital paid in $ 389,569
Undistributed net investment income 28
Accumulated net realized loss (8,413)
Net unrealized appreciation (depreciation) on:
Investments 30,431
Open futures contracts (109)
---------
$ 411,506
---------
</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.
19
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1996
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $ 25,444
EXPENSES
Management fee $ 2,207
Service fee - Class A 371
Service fee - Class B 125
Distribution fee - Class B 778
Transfer agent 650
Bookkeeping fee 153
Trustees fee 30
Custodian fee 46
Audit fee 38
Legal fee 12
Registration fee 10
Reports to shareholders 12
Other 31
--------
4,463
Fees waived by the Adviser (51) 4,412
-------- --------
Net Investment Income 21,032
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 7,413
Closed futures contracts (8,154)
--------
Net Realized Loss (741)
Net unrealized appreciation during
the period on:
Investments 37,089
Open futures contracts 1,606
--------
Net Unrealized Appreciation 38,695
--------
Net Gain 37,954
--------
Net Increase in Net Assets from Operations $ 58,986
--------
</TABLE>
See notes to financial statements.
20
<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 $ 21,032 $ 24,886
Net realized loss (741) (5,120)
Net unrealized appreciation (depreciation) 38,695 (45,638)
--------- ---------
Net Increase (Decrease) from Operations 58,986 (25,872)
Distributions:
From net investment income - Class A (16,481) (19,603)
From net investment income - Class B (4,822) (5,218)
--------- ---------
37,683 (50,693)
--------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 15,423 22,581
Value of distributions reinvested - Class A 7,161 8,857
Cost of shares repurchased - Class A (48,031) (70,189)
--------- ---------
(25,447) (38,751)
--------- ---------
Receipts for shares sold - Class B 11,772 22,661
Value of distributions reinvested - Class B 2,530 2,741
Cost of shares repurchased - Class B (15,919) (19,636)
--------- ---------
(1,617) 5,766
--------- ---------
Net Decrease from Fund Share Transactions (27,064) (32,985)
--------- ---------
Total Increase (Decrease) 10,619 (83,678)
NET ASSETS
Beginning of period 400,887 484,565
--------- ---------
End of period (including undistributed
net investment income
of $28 and $257, respectively) $ 411,506 $ 400,887
--------- ---------
NUMBER OF FUND SHARES
Sold - Class A 2,147 3,184
Issued for distributions reinvested - Class A 995 1,265
Repurchased - Class A (6,670) (10,141)
--------- ---------
(3,528) (5,692)
--------- ---------
Sold - Class B 1,634 3,198
Issued for distributions reinvested - Class B 351 392
Repurchased - Class B (2,203) (2,845)
--------- ---------
(218) 745
--------- ---------
</TABLE>
See notes to financial statements.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1996
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial California Tax-Exempt Fund (the Fund), a series of
Colonial Trust V, is a 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 significant
accounting policies 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 sales 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 fee and 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 by the
service
22
<PAGE>
Notes to Financial Statements/January 31, 1996
- --------------------------------------------------------------------------------
fee applicable to both 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.
23
<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 $33,649 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $361,503 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay 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 0.80% annually of
the Fund's average net assets. Through July 31, 1995, the expense limit was
0.75% of the Fund's average net assets.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended January 31, 1996, purchases and sales
of investments, other than short-term obligations, were $189,225,728 and
$229,882,861, 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 $ 30,985,046
Gross unrealized depreciation (554,029)
------------
Net unrealized appreciation $ 30,431,017
------------
</TABLE>
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:
24
<PAGE>
Notes to Financial Statements/January 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year of Capital loss
expiration carryforward
-------------- -------------------
<S> <C>
1998 $ 421,000
1999 409,000
2003 4,419,000
----------
$5,249,000
----------
</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 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 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 amount recognized in the Fund's Statement of
Assets and Liabilities at any given time.
25
<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 1994
Class A Class B Class A Class B Class A Class B
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 6.870 $ 6.870 $ 7.660 $ 7.660 $ 7.350 $ 7.350
--------- --------- --------- --------- --------- ---------
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment
income (a) 0.388 0.334 0.413 0.360 0.434 0.378
Net realized and
unrealized gain (loss) 0.671 0.671 (0.791) (0.791) 0.315 0.315
--------- --------- --------- --------- --------- ---------
Total from Investment
Operations 1.059 1.005 (0.378) (0.431) 0.749 0.693
--------- --------- --------- --------- --------- ---------
<CAPTION>
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
<S> <C> <C> <C> <C> <C> <C>
From net
investment income (0.389) (0.335) (0.412) (0.359) (0.439) (0.383)
--------- --------- --------- --------- --------- ---------
Net asset value -
End of period $ 7.540 $ 7.540 $ 6.870 $ 6.870 $ 7.660 $ 7.660
--------- --------- --------- --------- --------- ---------
Total return(d)(e) 15.78% 14.94% (4.83)% (5.55)% 10.44% 9.63%
--------- --------- --------- --------- --------- ---------
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
<S> <C> <C> <C> <C> <C> <C>
Expenses 0.89%(g) 1.64%(g) 0.77% 1.52% 0.75% 1.50%
Net investment income 5.33%(g) 4.58%(g) 5.91% 5.16% 5.73% 4.98%
Fees and expenses
waived or borne
by the Adviser 0.01% 0.01% 0.06% 0.06% 0.08% 0.08%
Portfolio turnover 47% 47% 47% 47% 17% 17%
Net assets at end
of period (000) $ 304,581 $ 106,925 $ 301,912 $ 98,975 $ 379,987 $ 104,578
</TABLE>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
$0.001 $0.001 $0.004 $0.004 $0.006 $0.006
</TABLE>
(b) The Fund changed its fiscal year end from November 30 to January 31 in 1992.
(c) Class B shares were initially offered on August 4, 1992. Per share amounts
reflect activity from that date.
(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) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(h) Annualized.
26
<PAGE>
FINANCIAL HIGHLIGHTS - CONTINUED
<TABLE>
<CAPTION>
Two months
ended
January 31 (b) Year ended November 30
--------------------- -----------------------------------
1993 1992 1991
Class A Class B Class A Class B (c) Class A
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.270 $ 7.270 $ 7.150 $ 7.410 $ 6.940
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
<S> <C> <C> <C> <C> <C>
Net investment
income (a) 0.076 0.067 0.467 0.143 0.473
Net realized and
unrealized gain (loss) 0.081 0.081 0.109 (0.151) 0.211
--------- --------- --------- --------- ---------
Total from Investment
Operations 0.157 0.148 0.576 (0.008) 0.684
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
<S> <C> <C> <C> <C> <C>
From net
investment income (0.077) (0.068) (0.456) (0.132) (0.474)
--------- --------- --------- --------- ---------
Net asset value -
End of period $ 7.350 $ 7.350 $ 7.270 $ 7.270 $ 7.150
--------- --------- --------- --------- ---------
Total return(d)(e) 8.70% (f) 1.01% (f) 8.27% 1.94% (f) 10.18%
--------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS
<S> <C> <C> <C> <C> <C>
Expenses 0.65% (h) 1.40% (h) 0.71% 1.46% (h) 0.80%
Net investment income 6.29% (h) 5.54% (h) 6.44% 5.69% (h) 6.69%
Fees and expenses
waived or borne
by the Adviser 0.21% (h) 0.21% (h) 0.13% 0.13% (h) 0.05%
Portfolio turnover 19% (h) 19% (h) 12% 12% 11%
Net assets at end
of period (000) $ 337,409 $ 33,819 $ 324,012 $ 22,797 $ 295,459
</TABLE>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
<TABLE>
<S> <C> <C> <C> <C> <C>
$0.002 $0.002 $0.010 $0.010 $0.003
</TABLE>
(b) The Fund changed its fiscal year end from November 30 to January 31 in 1992.
(c) Class B shares were initially offered on August 4, 1992. Per share amounts
reflect activity from that date.
(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) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(h) Annualized.
- --------------------------------------------------------------------------------
Federal income tax information (unaudited)
All of the distributions will be treated as exempt income for federal income
tax purposes.
- --------------------------------------------------------------------------------
27
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST V AND THE SHAREHOLDERS OF
COLONIAL CALIFORNIA 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 California 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, and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
March 13, 1996
28
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial has one of the most extensive selections of shareholder services
available. Your financial adviser can help you arrange for any of these
services, or you can call Colonial directly at 1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50;
$25 for an IRA account.
FREE EXCHANGES*: Exchange all or part of your account into the same share class
of another Colonial fund, by phone or mail, as your needs change over time.
EASY ACCESS TO YOUR MONEY*: Make withdrawals from your account by phone, by mail
or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it to Colonial within one year, you can reinvest in any
Colonial fund of the same share class without any penalty or sales charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Colonial account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly, or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th of each month.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any
Colonial fund with a balance of $5,000 into the same share class of up to four
other Colonial funds. Minimum for each transfer is $100.
LOW COST IRAS: Choose from a broad range of retirement plans,
including IRAs.
* Redemptions and exchanges are made at the next determined net asset value
after the request is received by Colonial. Proceeds may be more or less than
your original cost. The exchange privilege may be terminated at any time.
Investors who purchase Class B or Class D shares (for applicable funds), or $1
million or more of Class A shares, may be subject to a contingent deferred sales
charge.
29
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
COLONIAL CUSTOMER CONNECTION - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
For fund prices, dividends, and capital gains information ........ press 1
For account information .......................................... press 2
To speak to a Colonial representative ............................ press 3
For yield and total return information ........................... press 4
For duplicate statements or new supply of checks ................. press 5
To order duplicate tax forms and year-end statements ............. press 6
(February through May)
To review your options at any time during your call .............. press *
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 am to 8:00 pm ET, and Saturdays from February through
mid-April, 10:00 am to 2:00 pm ET.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange, or sell shares by telephone, call Monday to Friday, 9:00
am to 8:00 pm ET. Transactions received after the close of the New York Stock
Exchange will receive the next business day's closing price.
COLONIAL LITERATURE DEPARTMENT - 1-800-248-2828
To request literature on any Colonial fund, call Monday to Friday, 8:30 am to
6:30 pm ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
30
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial California Tax-Exempt Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial California 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 California 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.
31
<PAGE>
[COLONIAL LOGO]
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
CA-02/841B-0196 (3/96)
Printed on recycled paper
