<PAGE>
[ LOGO ]
COLONIAL
CONNECTICUT
TAX-EXEMPT FUND
----------------------------
ANNUAL REPORT
JANUARY 31, 1997
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
----------------------------
<PAGE>
COLONIAL CONNECTICUT TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1996 - JANUARY 31, 1997
INVESTMENT OBJECTIVE: Colonial Connecticut 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 Connecticut 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:
[X] High monthly double tax-free income
[X] Long-term appreciation
[X] Diversification
[X] Emphasis on quality
PORTFOLIO MANAGER COMMENTARY: "Expectations regarding the strength of the
economy shifted throughout the course of the year, resulting in high levels of
volatility for fixed-income investments. However, Connecticut's high wealth
levels combined with the portfolio's relatively low sensitivity to interest
rates and focus on high quality investments, positions the Fund defensively,
while protecting shareholders' asset values." - Maureen Newman
<TABLE>
COLONIAL CONNECTICUT TAX-EXEMPT FUND PERFORMANCE
<CAPTION>
CLASS A CLASS B
Inception dates 11/1/91 6/8/92
- --------------------------------------------------------------------------------
<S> <C> <C>
Distributions declared per share* $0.392 $0.337
- --------------------------------------------------------------------------------
SEC yields on 1/31/97** 4.73% 4.21%
- --------------------------------------------------------------------------------
Taxable-equivalent SEC yields*** 8.20% 7.30%
- --------------------------------------------------------------------------------
12-month total returns, assuming reinvestment 3.48% 2.71%
of all distributions and no sales charge or
contingent deferred sales charge (CDSC)
- --------------------------------------------------------------------------------
Net asset value per share on 1/31/97 $7.49 $7.49
*A portion of the Fund's income may be subject to the alternative minimum tax.
**The 30-day SEC yields on January 31, 1997 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 4.43% for
Class A shares and 3.89% for Class B shares.
***Taxable-equivalent SEC yield is based on the maximum effective 42.3% federal
and Connecticut income tax rates.
</TABLE>
<TABLE>
The Fund may at times purchase tax-exempt securities at a discount, and some or
all of this discount may be included in the Fund's ordinary income which will be
taxable when distributed.
<CAPTION>
QUALITY BREAKDOWN (as of 1/31/97) TOP FIVE SECTORS (as of 1/31/97)
- --------------------------------- --------------------------------
<S> <C> <C> <C>
AAA.........................52.6% General Oblications........26.3%
AA..........................33.0% Hospitals..................14.4%
A...........................10.2% Housing....................12.3%
BBB......................... 1.1% Water & Sewer.............. 7.7%
Non rated................... 2.1% Sales & Excise Tax......... 6.6%
Cash & Equivalents.......... 1.0%
</TABLE>
Because the Fund is actively managed, quality and sector weightings will change.
Quality breakdown and sector allocation are based upon total net assets. Sector
classifications used on this page are based upon Colonial's defined criteria as
used in the investment process. Industry sectors in the following financial
statements are based upon the standard industrial classifications (SIC) as
published by the U.S. Office of Management and Budget.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
I am pleased to present your Fund's annual report for
the fiscal year ended January 31, 1997. This report [PHOTO]
provides information on the investment environment
of the past 12 months and on the performance of
your Fund.
Long-term interest rates were volatile during the period. Signs that economic
growth was easing during the third quarter of 1996 led to a bond market rally
and declining interest rates. However, interest rates climbed once again during
December and January 1997 in response to accelerating economic activity.
Examples include a surge in construction and a sharp improvement in the trade
balance. Despite continued low levels of inflation, the Federal Reserve Board
characterized factors holding down prices as "temporary" and made clear its
willingness to strike against future anticipated inflation. This stance suggests
rising interest rates ahead.
Tax-exempt bonds outperformed Treasurys during most of the period, as a
result of low supply and narrowing yield spreads. Fundamentals remain positive
and state credit quality has generally improved, reflecting in part increased
tax revenue collections generated by a stronger company.
In the domestic stock market a focus on large capitalization stocks carried
market indexes to several record highs. European markets continued to experience
declining interest rates and inflation levels, conditions that may prevail until
economic activity in these nations increases.
Our economic expectations for 1997 are relatively bright and include growth at a
moderate, more sustainable rate than we saw during 1996. However, we expect
inflation adjusted interest rates to remain relatively high until questions
regarding both the Federal Reserve's monetary policy and Federal budget
negotiations are resolved.
The following report provides you with specific information on your Fund's
performance and insights from your portfolio manager. As always, we thank you
for the opportunity to help you meet your investment goals through the Colonial
family of funds.
Respectfully,
/s/ Harold W. Cogger
- ----------------------------
Harold W. Cogger
President
March 12, 1997
Because market conditions change frequently, there can be no assurance that the
trends described in this report will continue, come to pass or affect Fund
performance.
3
<PAGE>
PORTFOLIO MANAGER REPORT
MAUREEN NEWMAN is portfolio manager of Colonial Connecticut Tax-Exempt Fund. Ms.
Newman is Vice President of Colonial Management Associates, Inc. and is the
Manager of Tax-Exempt Credit Research.
Q. WHAT WAS THE FUND'S STRATEGY DURING THE PAST 12 MONTHS?
A. Our strategy was generally conservative over the period with two main
objectives. First, we focused on shortening the maturity of the portfolio to
reduce the Fund's sensitivity to interest rates. Bonds with shorter maturities
experience smaller price declines when interest rates rise, as they did during
much of the period. We also increased our investments in higher coupon, premium
bonds. These bonds are generally less interest rate sensitive than bonds that
sell at or below their face value. Second, we concentrated on increasing our
holdings of bonds with higher ratings, particularly AAA-rated insured bonds.
This strategy was used in response to a decline in the relative yield advantage
of lower quality bonds compared to higher quality bonds. We believe that there
is greater Value in owning high quality bonds at this time.
Q. WHAT FACTORS CONTRIBUTED TO PERFORMANCE DURING THE PERIOD?
A. The biggest factor was the volatile investment environment during the first
half of the period. Stronger than expected economic reports sent long-term
interest rates up in January and July. The increase in interest rates had a
negative effect on performance. However, the portfolio's large proportion of
less interest rate sensitive, intermediate maturity, non-callable bonds helped
to cushion the negative impact.
Q. HOW IS THE STATE'S ECONOMY FARING?
A. Connecticut has not benefited from the strong economy as much as some of its
New England neighbors. While the State's December unemployment rate of 5.2% is
around the national level, it has been climbing since July. In addition,
restructuring in Connecticut's banking sector followed closely on the heels of
reorganization in the defense and insurance industries. This contributed to
continued reduction in employment opportunities. The relatively weak economy may
have ignited a move to reduce the State's motor vehicle fuel tax. A portion of
this tax provides security for the State's Special Tax Revenue bonds. During the
second half of the year, a number of bills were filed to lower this tax, a move
that could reduce the bonds' security and negatively affect their credit
quality. The Fund is underweighted in these bonds and approximately half of its
Special Tax Revenue bonds are insured.
Q. WHAT IS YOUR OUTLOOK FOR THE MONTHS AHEAD?
A. We believe that inflation has remained in check in spite of the economy's
strength, partially due to gains in productivity and a strong dollar.
Productivity gains help to reduce employers' labor costs, while a strong dollar
lowers the cost of imported goods and relieves some pressure on domestic
production capacity by reducing the demand for U.S. exports. While we do not
4
<PAGE>
believe we will see significant price pressure in the months ahead, we are
monitoring both the dollar and wage levels closely. A weakening dollar and/or
rising wages could indicate a potential acceleration in the inflation rate - a
negative for bond prices. As a result, we continue to hold a cautious outlook on
the economy and interest rates. We will maintain the portfolio's conservative
structure until a clearer trend emerges.
COLONIAL CONNECTICUT TAX-EXEMPT FUND INVESTMENT PERFORMANCE
Change in Value of $10,000 from 11/1/91 to 1/31/97
Based on NAV and MOP for Class A Shares
<TABLE>
<CAPTION>
Label A B C
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Label CCTTEF NAV MOP Lehman
1 Oct 31, 91 10000 9525 10000
2 Nov 30, 91 9983.269 9509.063 10028
3 Dec 31, 91 10234.13 9748.008 10243
4 Jan 31, 92 10231.45 9745.454 10266
5 Feb 29, 92 10242.98 9756.441 10270
6 Mar 31, 92 10211.13 9726.103 10274
7 Apr 30, 92 10294.55 9805.555 10365
8 May 31, 92 10465.23 9968.135 10487
9 Jun 30, 92 10679.9 10172.61 10663
10 Jul 31, 92 10998.62 10476.19 10983
11 Aug 31, 92 10819.25 10305.33 10876
12 Sep 30, 92 10875.26 10358.68 10947
13 Oct 31, 92 10679.02 10171.77 10839
14 Nov 30, 92 11019.16 10495.75 11033
15 Dec 31, 92 11142.69 10613.42 11146
16 Jan 31, 93 11289.62 10753.37 11276
17 Feb 28, 93 11710.94 11154.67 11683
18 Mar 31, 93 11599.56 11048.58 11560
19 Apr 30, 93 11717.56 11160.97 11677
20 May 31, 93 11789.89 11229.87 11742
21 Jun 30, 93 12029.65 11458.25 11938
22 Jul 31, 93 12052.33 11479.85 11954
23 Aug 31, 93 12325.28 11739.83 12203
24 Sep 30, 93 12489.59 11869.33 12342
25 Oct 31, 93 12481.48 11888.61 12366
26 Nov 30, 93 12345.97 11759.54 12257
27 Dec 31, 93 12575.37 11978.04 12515
28 Jan 31, 94 12677.9 12075.7 12658
29 Feb 28, 94 12347.91 11761.38 12330
30 Mar 31, 94 11774.29 11215.01 11828
31 Apr 30, 94 11831.21 11269.23 11929
32 May 31, 94 11954.43 11386.59 12032
33 Jun 30, 94 11864.36 11300.8 11958
34 Jul 31, 94 12119.42 11543.75 12178
35 Aug 31, 94 12144.3 11567.44 12220
36 Sep 30, 94 11920.68 11354.44 12041
37 Oct 31, 94 11613.01 11061.4 11827
38 Nov 30, 94 11284.82 10748.79 11613
39 Dec 31, 94 11664.35 11110.3 11868
40 Jan 31, 95 12062.11 11489.16 12208
41 Feb 28, 95 12411.37 11821.83 12563
42 Mar 31, 95 12538.66 11943.07 12707
43 Apr 30, 95 12546.65 11950.68 12722
44 May 31, 95 12847.07 12236.83 13128
45 Jun 30, 95 12680.42 12078.1 13013
46 Jul 31, 95 12722.8 12118.46 13136
47 Aug 31, 95 12919.81 12306.12 13303
48 Sep 30, 95 13029.77 12410.86 13387
49 Oct 31, 95 13228.61 12600.25 13582
50 Nov 30, 95 13481.36 12841 13807
51 Dec 31, 95 13646.64 12998.43 13940
52 Jan 31, 96 13723.09 13071.24 14045
53 Feb 29, 96 13601.55 12955.48 13950
54 Mar 31, 96 13407.56 12770.7 13772
55 Apr 30, 96 13394.54 12758.3 13733
56 May 31, 96 13399.19 12762.73 13728
57 Jun 30, 96 13532.41 12889.62 13878
58 Jul 31, 96 13665.42 13016.31 14003
59 Aug 31, 97 13651.92 13003.45 14000
60 Sep 30, 97 13823.51 13166.9 14196
61 Oct 31, 97 13958.61 13295.57 14356
62 Nov 30, 97 14207.63 13532.77 14619
63 Dec 31, 97 14156.81 13484.36 14557
64 Jan 31, 97 14200.22 13525.71 14585
</TABLE>
A $10,000 investment in Class B shares made on June 8, 1992 (inception) at NAV
would have been valued at $13,094 on January 31, 1997. The same investment after
deducting the applicable contingent deferred sales charge (CDSC) would have
grown to $12,894 on January 31, 1997.
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indexes are not investments, do not incur fees or expenses and it is not
possible to invest in an index.
<TABLE>
AVERAGE ANNUAL TOTAL RETURNS
As of December 31, 1996 (Most Recent Quarter End)
<CAPTION>
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
INCEPTION 11/1/91 6/8/92
NAV MOP NAV MOP
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 YEAR 3.74% (1.19)% 2.97% (1.95)%
- --------------------------------------------------------------------------------
5 YEARS 6.70% 5.67% - -
- --------------------------------------------------------------------------------
SINCE INCEPTION 6.95% 5.95% 6.02% 5.66%
- --------------------------------------------------------------------------------
</TABLE>
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charges or CDSC. Maximum offering price (MOP) returns include the
maximum sales charge of 4.75%. The CDSC return reflects the maximum charge of
5% for one year and 2% 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>
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
JANUARY 31, 1997 (IN THOUSANDS)
<CAPTION>
MUNICIPAL BONDS - 97.4% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 7.5%
EDUCATION - 6.0%
State Health & Educational
Facilities Authority:
Connecticut College, Series C1,
5.500% 07/01/27 $1,000 $ 961
Kent School, Series 1995-B,
5.400% 07/01/23 1,300 1,242
The Taft School, Series 1993-B,
5.400% 07/01/20 1,750 1,614
Trinity College, Series C,
6.000% 07/01/12 1,000 1,028
University of New Haven, Series 1996-D,
6.625% 07/01/16 1,500 1,508
Yale University:
Series K,
6.375% 07/01/13 500 510
Series 1992, RIB (variable rate),
7.845% 06/10/30 2,500 2,516
------
9,379
------
SCHOOL DISTRICT GENERAL OBLIGATIONS - 0.6%
State Regional School District No. 5:
Series 1992,
6.300% 03/01/10 400 423
Series 1993,
5.600% 02/15/12 150 152
State Regional School District No. 14,
Series 1991,
6.100% 12/15/06 285 307
------
882
------
STUDENT LOAN - 0.9%
State Higher Education
Supplemental Loan Authority:
Series 1991-A,
7.200% 11/15/10 815 861
Series 1992-A,
6.375% 11/15/99 445 462
------
1,323
------
- --------------------------------------------------------------------------------
GENERAL OBLIGATION - 25.7%
Bridgeport, Series 1996-A,
6.500% 09/01/08 3,000 3,345
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/January 31, 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brookfield, Series 1992:
6.000% 09/15/09 $ 240 $ 258
6.000% 09/15/10 235 251
City of Hartford:
5.625% 02/01/11 600 610
5.625% 02/01/12 600 609
5.625% 02/01/13 600 610
Series 1991,
6.200% 11/15/10 220 240
Series 1993:
5.200% 12/01/12 600 584
5.200% 12/01/13 500 484
Danbury:
Series 1992,
5.625% 08/15/11 690 706
Series 1994:
4.500% 02/01/12 1,280 1,146
4.500% 02/01/13 1,280 1,134
East Haddam, Series 1991,
6.300% 06/15/09 260 273
Farmington, Series 1993:
5.700% 01/15/12 590 611
5.700% 01/15/13 570 588
Granby, Series 1993:
6.500% 04/01/09 200 224
6.550% 04/01/10 175 196
Griswold, Series 1992,
6.000% 04/15/09 410 430
Groton, Series Lot A,
5.750% 01/15/07 (a) 285 297
Hamden, Series 1992:
6.000% 10/01/11 425 443
6.000% 10/01/12 425 444
Montville, Series 1993,
6.300% 03/01/12 335 366
New Britain:
Series 1992,
6.000% 02/01/08 400 428
Series 1993-A,
6.000% 10/01/12 2,000 2,138
Series 1993-B,
6.000% 03/01/12 1,000 1,068
North Branford:
6.200% 02/15/11 195 204
6.200% 02/15/12 225 235
</TABLE>
7
<PAGE>
<TABLE>
Investment Portfolio/January 31, 1997
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 97.4% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GENERAL OBLIGATIONS - CONT.
Norwich, Series 1994:
5.750% 09/15/13 $ 875 $ 895
5.750% 09/15/14 870 890
Plainfield, Series 1992,
6.375% 08/01/11 500 534
PR Commonwealth of Puerto Rico,
Series 1994,
6.500% 07/01/23 1,500 1,598
Somers:
6.000% 01/15/11 125 130
6.250% 01/15/08 270 286
South Windsor, Series 1992,
6.200% 09/01/10 495 519
Stamford:
Series 1992,
6.125% 11/01/11 1,050 1,110
Series 1995,
5.250% 03/15/14 2,750 2,705
State:
Series 1990-B, (b) 11/15/10 1,950 931
Series 1993-A,
5.600% 11/15/10 1,000 1,015
Series 1993-B,
5.400% 09/15/09 3,000 3,049
Series 1995-B,
5.375% 10/01/15 5,000 4,919
Torrington, Series 1992,
6.400% 05/15/10 750 796
Vernon, Series 1988,
7.100% 10/15/03 250 284
Waterbury, Series 1993,
5.375% 04/15/08 750 760
West Haven, Series 1993-B,
5.400% 06/01/10 705 703
Westbrook, Series 1992:
6.400% 03/15/09 630 691
6.300% 03/15/12 265 288
------ -------
40,025
-------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/January 31, 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HEALTHCARE - 20.6%
HOSPITALS - 14.4%
State Health & Educational
Facilities Authority:
Bridgeport Hospital, Series A,
6.500% 07/01/12 $1,000 $ 1,069
Danbury Hospital, Series E,
6.500% 07/01/14 1,400 1,479
New Britain Hospital, Series 1991-A,
7.750% 07/01/22 200 214
Norwalk Hospital, Series D,
6.250% 07/01/12 1,750 1,829
St. Francis Medical Center:
Series B,
6.125% 07/01/10 1,000 1,045
Series 1993-C,
5.000% 07/01/13 (a) 4,500 4,247
St. Raphael Hospital:
Series E,
6.750% 07/01/13 1,400 1,503
Series 1992-F,
6.200% 07/01/14 750 777
Series 1992-G,
6.200% 07/01/14 225 233
Series 1993-H,
5.250% 07/01/09 (a) 3,410 3,423
Waterbury Hospital,
7.000% 07/01/20 4,450 4,773
William W. Backus Hospital, Series C,
6.000% 07/01/12 250 250
Yale-New Haven Hospital:
Series G,
6.500% 07/01/12 500 534
Series 1996-H,
5.500% 07/01/13 1,000 996
-------
22,372
-------
NURSING HOMES - 6.2%
State Development Authority:
Clintonville Manor Realty, Inc.,
Series 1992,
6.750% 06/20/21 1,490 1,546
Duncaster Inc.,
Series 1992:
6.700% 09/01/07 500 536
6.750% 09/01/15 2,500 2,628
</TABLE>
9
<PAGE>
<TABLE>
Investment Portfolio/January 31, 1997
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 97.4% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HEALTHCARE - CONT.
NURSING HOMES - Cont.
State Health & Educational
Facilities Authority:
AHF/Windsor Nursing Home Project,
7.125% 11/01/24 $2,000 $ 2,247
Noble Horizons Nursing Home Project, Series 1993,
5.875% 11/01/12 640 646
Pope John Paul II Center for Health,
6.250% 11/01/13 2,000 2,090
-------
9,693
-------
- --------------------------------------------------------------------------------
HOUSING - 12.3%
MULTI-FAMILY - 2.2%
New Britain Housing Authority,
Nathan Hale Apartments:
Series 1992-A,
6.500% 07/01/02 120 127
Series 1992-B,
6.875% 07/01/24 2,590 2,713
Waterbury Nonprofit Housing Corp,
Fairmont Heights, Series 1993-A,
6.500% 01/01/26 600 619
------
3,459
------
SINGLE-FAMILY - 10.1%
State Housing Finance Authority:
Series B-2,
6.750% 05/15/22 2,010 2,085
Series 1990 B-4,
7.300% 11/15/03 225 236
Series 1991 C-1,
6.450% 11/15/11 1,325 1,362
Series 1991 C-2,
6.700% 11/15/22 95 97
Series 1991-C,
6.600% 11/15/23 1,580 1,641
Series 1992-B,
6.700% 11/15/12 2,585 2,727
Series 1993-B:
5.650% 05/15/06 550 567
6.200% 05/15/12 5,000 5,106
Sub-Series C-1,
6.350% 05/15/17 1,250 1,291
Series 1994-D, Sub-Series D-1,
6.625% 05/15/24 500 523
-------
15,635
-------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/January 31, 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OTHER REVENUE - 1.4%
MANUFACTURING
State Development Authority,
Pfizer Inc. Project,
Series 1994,
7.000% 07/01/25 $2,000 $2,225
------
- --------------------------------------------------------------------------------
PUBLIC FACILITIES IMPROVEMENT - 4.3%
PR Commonwealth of Puerto Rico
Public Buildings Authority, Series 1993-M,
stepped coupon, (5.700% 07/01/98)
3.750% 07/01/16 (c) 3,300 3,073
State Certificates of Participation,
Middletown Courthouse Project:
6.250% 12/15/09 (a) 1,685 1,795
6.250% 12/15/10 750 798
6.250% 12/15/12 100 105
6.250% 12/15/13 850 891
------
6,662
------
- -----------------------------------------------------------------------------
PUBLIC INFRASTRUCTURE - 0.5%
State Development Authority,
Series 1993-A,
5.250% 11/15/11 750 730
------
- -----------------------------------------------------------------------------
REFUNDED/ESCROW/SPECIAL OBLIGATIONS (d) - 2.5%
State Health & Educational
Facilities Authority:
Lawrence & Memorial Hospitals, Series C,
6.250% 07/01/22 400 438
Lutheran General Health Care System, Series 1989,
7.250% 07/01/04 (a) 170 191
State Special Tax Obligation Revenue,
Series 1991-B,
6.250% 10/01/09 2,500 2,728
Stratford, General Obligation,
Series 1992,
7.300% 03/01/12 500 560
------
3,917
------
- -----------------------------------------------------------------------------
RESOURCE RECOVERY - 5.8%
MISCELLANEOUS DISPOSAL - 2.1%
State Development Authority,
Sewer Sludge Disposal Facilities,
Series 1996,
8.250% 12/01/06 1,500 1,523
</TABLE>
11
<PAGE>
<TABLE>
Investment Portfolio/January 31, 1997
<CAPTION>
- ---------------------------------------------------------------------------
MUNICIPAL BONDS - 97.4% PAR VALUE
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RESOURCE RECOVERY - CONT.
MISCELLANEOUS DISPOSAL - Cont.
State Disposal Facility,
Netco Waterbury Ltd.,
Series 1995,
9.375% 06/01/16 $1,500 $ 1,663
-------
3,186
-------
- ---------------------------------------------------------------------------
RESOURCE RECOVERY - 3.7%
Bristol Resource Recovery Facility
Operation Committee,
Ogden Martin Systems, Inc., Series 1995,
6.500% 07/01/14 1,500 1,573
State Resource Recovery Authority,
American Ref-Fuel Co.:
Series 1988-A,
8.000% 11/15/15 2,500 2,691
Series 1992-A,
6.450% 11/15/22 1,425 1,471
-------
5,735
-------
- ---------------------------------------------------------------------------
TAX-BACKED - 7.4%
SALES & EXCISE TAX - 6.6%
PR Commonwealth of Puerto Rico
Highway & Transportation Authority,
Series W,
5.500% 07/01/09 1,110 1,141
State:
Series 1992-B
6.125% 09/01/12 4,600 4,922
Series 1996-B,
6.000% 10/01/06 (a) 1,000 1,081
Series 1996-C,
6.000% 10/01/06 (a) 2,000 2,165
State Special Tax Obligation,
Transportation Infrastructure,
Series 1994-B,
6.000% 10/01/09 1,000 1,058
-------
10,367
-------
- ---------------------------------------------------------------------------
SPECIAL ASSESSMENT - 0.8%
State, Second Injury Fund,
Series 1996-A,
6.000% 01/01/06 (a) 1,100 1,181
-------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/January 31, 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITY - 9.4%
JOINT POWER AUTHORITY - 1.7%
State Municipal Electric Energy
Cooperative,
Series 1996-A:
5.000% 01/01/09 $1,040 $ 1,023
5.000% 01/01/13 1,640 1,566
--------
2,589
--------
WATER & SEWER - 7.7%
PR Commonwealth of Puerto Rico
Aqueduct & Sewer Authority,
Series 1995,
6.000% 07/01/07 2,750 2,998
South Central Regional Water Authority,
Series 11,
5.750% 08/01/12 2,000 2,048
State Clean Water Fund:
Series 1991,
7.000% 01/01/11 1,850 2,049
Series 1992,
6.125% 02/01/12 3,730 3,874
Series 1993,
5.875% 04/01/09 1,000 1,067
--------
12,036
--------
TOTAL INVESTMENTS (cost of $145,046)(e) 151,396
--------
SHORT-TERM OBLIGATIONS - 1.0%
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (f)
FL Pinellas County Health Facilities
Authority,
Series 1985,
3.700% 12/01/15 100 100
MI Flint Hospital Building Authority,
Hurley Medical Center,
Series 1995-B,
3.500% 07/01/15 500 500
MS Perry County,
Leaf River Forest Project,
3.650% 03/01/02 100 100
</TABLE>
13
<PAGE>
<TABLE>
Investment Portfolio/January 31, 1997
<CAPTION>
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VARIABLE RATE DEMAND NOTES - CONT.
NY Niagara Mohawk Series 1985-A,
3.750% 07/01/15 $500 $ 500
State Energy Research & Development
Authority, New York State Energy &
Gas Corp., Series D,
3.650% 10/01/29 400 400
--------
TOTAL SHORT-TERM OBLIGATIONS 1,600
--------
OTHER ASSETS & LIABILITIES, NET - 1.6% 2,500
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $155,496
========
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) These securities, or a portion thereof, with a total market value of
$13,908, are being used to collateralize open futures contracts.
(b) Zero coupon bond.
(c) Shown parenthetically is the interest rate to be paid and the date the Fund
will begin accruing this rate.
(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, 1997.
<CAPTION>
Short futures contracts open at January 31, 1997:
Par value Unrealized
covered Expiration appreciation
Type by contracts month at 01/31/97
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Treasury Bond $10,500 March $264
Acronym Name
- ------------- ----------------------------
RIB Residual Interest Bond
</TABLE>
See notes to financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS & LIABILITIES
JANUARY 31, 1997
(in thousands except for per share amounts and footnotes)
ASSETS
<S> <C> <C>
Investments at value (cost $145,046) $151,396
Short-term obligations 1,600
--------
152,996
Receivable for:
Interest $2,019
Investments sold 1,183
Fund shares sold 256
Other 58 3,516
------ --------
Total Assets 156,512
LIABILITIES
Payable for:
Distributions 635
Fund shares repurchased 242
Variation margin on futures 92
Payable to Adviser 32
Accrued:
Deferred Trustees fees 2
Other 13
------
Total Liabilities 1,016
--------
NET ASSETS $155,496
========
Net asset value & redemption price per share -
Class A ($74,059/9,883) $7.49
========
Maximum offering price per share - Class A
($7.49/0.9525) $7.86(a)
========
Net asset value & offering price per share -
Class B ($81,437/10,867) $7.49(b)
========
COMPOSITION OF NET ASSETS
Capital paid in $155,011
Undistributed net investment income 54
Accumulated net realized loss (6,183)
Net unrealized appreciation on:
Investments 6,350
Open futures contracts 264
--------
$155,496
========
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less
any applicable contingent deferred sales charge.
</TABLE>
See notes to financial statements.
15
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1997
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $ 9,154
EXPENSES
Management fee $ 799
Service fee 226
Distribution fee - Class B 609
Transfer agent 245
Bookkeeping fee 64
Trustees fee 22
Custodian fee 5
Audit fee 23
Legal fee 5
Registration fee 10
Reports to shareholders 8
Amortization of deferred
organization expenses 3
Other 8
------
2,027
Fees waived by the Adviser (491) 1,536
------ -------
Net Investment Income 7,618
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 321
Closed futures contracts 248
------
Net Realized Gain 569
Net unrealized appreciation (depreciation) during
the period on:
Investments (3,778)
Open futures contracts 310
------
Net Unrealized Depreciation (3,468)
-------
Net Loss (2,899)
-------
Net Increase in Net Assets from Operations $ 4,719
=======
</TABLE>
See notes to financial statements.
16
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
(in thousands) Year ended January 31
-----------------------
INCREASE (DECREASE) IN NET ASSETS 1997 1996
<S> <C> <C>
Operations:
Net investment income $ 7,618 $ 7,991
Net realized gain (loss) 569 (2,937)
Net unrealized appreciation (depreciation) (3,468) 14,582
-------- --------
Net Increase from Operations 4,719 19,636
Distributions:
From net investment income - Class A (3,952) (4,306)
From net investment income - Class B (3,680) (3,736)
-------- --------
(2,913) 11,594
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 8,326 12,024
Value of distributions reinvested - Class A 2,258 2,577
Cost of shares repurchased - Class A (15,080) (14,939)
-------- --------
(4,496) (338)
-------- --------
Receipts for shares sold - Class B 9,762 10,077
Value of distributions reinvested - Class B 2,159 2,318
Cost of shares repurchased - Class B (11,840) (9,023)
-------- --------
81 3,372
-------- --------
Net Increase (Decrease) from Fund Share
Transactions (4,415) 3,034
-------- --------
Total Increase (Decrease) (7,328) 14,628
NET ASSETS
Beginning of period 162,824 148,196
-------- --------
End of period (including undistributed
net investment income of $54 and $52,
respectively) $155,496 $162,824
======== ========
NUMBER OF FUND SHARES
Sold - Class A 1,122 1,635
Issued for distributions reinvested - Class A 303 350
Repurchased - Class A (2,038) (2,028)
-------- --------
(613) (43)
-------- --------
Sold - Class B 1,316 1,370
Issued for distributions reinvested - Class B 290 315
Repurchased - Class B (1,596) (1,221)
-------- --------
10 464
-------- --------
</TABLE>
See notes to financial statements.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Connecticut 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, by pursuing current income exempt from federal and Connecticut 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 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
18
<PAGE>
Notes to Financial Statements/January 31, 1997
- --------------------------------------------------------------------------------
may increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B distribution fee), realized and unrealized
gains (losses), are allocated to each class proportionately on a daily basis for
purposes of determining the net asset value of each class.
Class B per share data and ratios are calculated by adjusting the expense and
net investment income per share data and ratios for the Fund for the entire
period by the annualized 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.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred $17,793 of expenses in
connection with its organization, initial registration with the Securities and
Exchange Commission and with various states, and the initial public offering of
its shares. These expenses were deferred and were amortized on a straight-line
basis over five years.
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>
19
<PAGE>
Notes to Financial Statements/January 31, 1997
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
Effective January 1, 1996, the above management fee applicable to the Trust was
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 FEE: 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
reimbursement for certain out of pocket expenses.
Effective January 1, 1997 and continuing through calendar year 1997, the
Transfer Agent fee will be reduced by 0.01% in cumulative monthly increments,
resulting in a decrease in the fee from 0.14% to 0.13% annually.
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, 1997, the Fund has been
advised that the Distributor retained net underwriting discounts of $31,273 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $221,781 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: 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
20
<PAGE>
Notes to Financial Statements/January 31, 1997
- --------------------------------------------------------------------------------
extraordinary expenses, if any) exceed 0.45% annually of the Fund's average
net assets.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended January 31, 1997, purchases and sales
of investments, other than short-term obligations were $32,129,008 and
$37,169,184, respectively.
Unrealized appreciation (depreciation) at January 31, 1997, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $6,736,099
Gross unrealized depreciation (386,139)
-----------
Net unrealized appreciation $6,349,960
===========
<CAPTION>
CAPITAL LOSS CARRYFORWARDS: At January 31, 1997, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
---------- ------------
<S> <C>
2003 $1,933,000
2004 2,209,000
---- ----------
$4,142,000
==========
</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.
21
<PAGE>
Notes to Financial Statements/January 31, 1997
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION - CONT.
- --------------------------------------------------------------------------------
The Fund may purchase or sell 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 the 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 a position 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 variation margin recorded in the Fund's Statement
of Assets and Liabilities at any given time.
NOTE 4. LINE OF CREDIT
- --------------------------------------------------------------------------------
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the year ended January 31, 1997.
22
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<CAPTION>
Year ended January 31
------------------------------------------------
1997 1996
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.630 $ 7.630 $ 7.080 $ 7.080
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income(a) 0.393 0.338 0.400 0.345
Net realized and
unrealized gain (loss) (0.141) (0.141) 0.552 0.552
------- ------- ------- -------
Total from Investment
Operations 0.252 0.197 0.952 0.897
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.392) (0.337) (0.402) (0.347)
Net asset value -
End of period $ 7.490 $ 7.490 $ 7.630 $ 7.630
======= ======= ======= =======
Total return(b)(c) 3.48% 2.71% 13.77% 12.93%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses (d) 0.59% 1.34% 0.51% 1.25%
Net investment
income (d) 5.28% 4.53% 5.42% 4.68%
Fees and expenses waived
or borne by the
Adviser (d) 0.31% 0.31% 0.42% 0.42%
Portfolio turnover 21% 21% 13% 13%
Net assets at end
of period (000) $74,059 $81,437 $80,039 $82,785
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.023 $ 0.023 $ 0.031 $ 0.031
(b) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(c) Had the Adviser not waived or reimbursed a portion of expenses, total return
would have been reduced.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
</TABLE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
All of the distributions will be treated as exempt income for
federal income tax purposes.
- --------------------------------------------------------------------------------
23
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
<CAPTION>
Year ended January 31
------------------------------------------------
1995 1994
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.890 $ 7.890 $ 7.420 $ 7.420
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.418 0.363 0.429 0.372
Net realized and
unrealized gain (loss) (0.809) (0.809) 0.465 0.465
------- ------- ------- -------
Total from Investment
Operations (0.391) (0.446) 0.894 0.837
------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.418) (0.363) (0.424) (0.367)
In excess of net
investment income -- -- -- --
From net realized gains (0.001) (0.001) -- --
In excess of net
realized gains -- -- -- --
------- ------- ------- -------
Total Distributions
Declared to Shareholders (0.419) (0.364) (0.424) (0.367)
------- ------- ------- -------
Net asset value -
End of period $ 7.080 $ 7.080 $ 7.890 $ 7.890
======= ======= ======= =======
Total return(c)(d) (4.85)% (5.57)% 12.30% 11.49%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 0.32% 1.07% 0.22% 0.97%
Net investment income 5.81% 5.06% 5.48% 4.73%
Fees and expenses waived
or borne by the Adviser 0.55% 0.55% 0.65% 0.65%
Portfolio turnover 22% 22% 5% 5%
Net assets at end
of period (000) $74,616 $73,580 $91,436 $71,791
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.039 $ 0.039 $ 0.051 $ 0.051
(b) Class B shares were initially offered on June 8, 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) Annualized.
</TABLE>
24
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONT.
<CAPTION>
Year ended January 31
---------------------
1993
Class A Class B (b)
------- -------
<S> <C>
$ 7.190 $ 7.200
------- -------
0.449 0.256
0.270 0.257
------- -------
0.719 0.513
------- -------
(0.452) (0.256)
(0.002) (0.002)
(0.021) (0.021)
(0.014) (0.014)
------- -------
(0.489) (0.293)
------- -------
$ 7.420 $ 7.420
======= =======
10.34% 7.23%(e)
======= =======
-- 0.75%(f)
6.00% 5.25%(f)
0.90% 0.90%(f)
4% 4%
$63,126 $27,839
$ 0.067 $ 0.042
</TABLE>
25
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST V AND THE SHAREHOLDERS OF COLONIAL CONNECTICUT
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 Connecticut Tax-Exempt
Fund (the "Fund") (a series of Colonial Trust V) at January 31, 1997, 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, 1997 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 12, 1997
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Connecticut Tax-Exempt Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Connecticut Tax-Exempt Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call
Colonial at 1-800-426-3750 and additional reports will be send to you.
This report has been prepared for shareholders of Colonial Connecticut
Tax-Exempt Fund. This report may also be used as sales literature when preceded
or accompanied by the current prospectus which provides details of sales
charges, investment objectives, and operating policies of the Fund.
27
<PAGE>
[ LOGO ] COLONIAL
MUTUAL FUNDS
Mutual Funds for
Planned Portfolios
- --------------------------------------------------------------------------------
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore
Bank & Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (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
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS 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
COLONIAL INVESTMENT SERVICES, INC., Distributor[Copy Rights] 1997
A Liberty Financial Company (NYSE: L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
CT-02/390D-0197 M (3/97)
- --------------------------------------------------------------------------------
