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[logo]
COLONIAL
CALIFORNIA TAX-EXEMPT FUND
[graphic omitted]
ANNUAL REPORT
JANUARY 31, 1997
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NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
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COLONIAL CALIFORNIA TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1996 - JANUARY 31, 1997
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:
[x] High monthly double-tax-free income
[x] Long-term appreciation
[x] Emphasis on quality
PORTFOLIO MANAGER COMMENTARY: "Many favorable developments in the California
economy have resulted in a positive long-term outlook for the State's municipal
bond market. A combination of increased demand and continued low supply of bonds
suggest a favorable environment for California municipal bonds."
- William Loring
COLONIAL CALIFORNIA TAX-EXEMPT FUND PERFORMANCE
CLASS A CLASS B
Inception dates 6/16/86 8/4/92
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Distributions declared per share* $0.383 $0.328
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SEC yields on 1/31/97** 4.52% 3.99%
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Taxable-equivalent SEC yields*** 8.41% 7.42%
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12-month total returns, assuming reinvestment 2.98% 2.21%
of all distributions and no sales charge or
contingent deferred sales charge (CDSC)
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Net asset value per share on 1/31/97 $7.37 $7.37
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*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.
***Taxable-equivalent SEC yields are based on the maximum effective 46.2%
federal and California income tax rates.
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.
QUALITY BREAKDOWN (as of 1/31/97) TOP FIVE SECTORS (as of 1/31/97)
- -------------------------------------- -------------------------------------
AAA ........................... 59.0% Water & Sewer ................ 13.7%
AA ............................ 7.6% Tax Allocation ................ 12.7%
A ............................. 11.8% Refunded ...................... 12.1%
BBB ........................... 12.7% Public Facilities Improvement.. 7.3%
Non-rated ..................... 7.7% Justice & Public Order ........ 5.0%
Cash & Equivalents ............ 1.2%
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.
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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 provides information on the investment environment
of the past 12 months and on the performance of your Fund.
[photo of Harold W. Cogger]
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 the 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 economy.
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.
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PORTFOLIO MANAGER REPORT
WILLIAM LORING is portfolio manager of the Colonial California Tax-Exempt Fund
and is vice president of Colonial Management Associates, Inc.
Q. WHAT WAS YOUR INVESTMENT STRATEGY DURING THE PAST 12 MONTHS?
A. During the first half of the period we pursued a defensive strategy designed
to protect the net asset value and lower the overall risk of the portfolio in a
rising interest rate environment. The Fund benefited from this strategy as
reports of stronger than expected economic conditions caused interest rates to
increase over the first six months of the Fund's fiscal year. During the second
half of the period, a slowdown in the economy reduced investors' fear of
inflation, interest rates began to decline, and the environment for fixed income
investments became more appealing. We began to modestly increase the portfolio's
effective average maturity to increase the Fund's sensitivity to changes in
interest rates. This strategy worked well until the end of December when once
again, stronger than expected economic indicators caused interest rates to rise.
As a result, in January we brought the Fund back to a less optimistic position
to limit losses and preserve assets.
Q. WHAT WAS THE INVESTMENT ENVIRONMENT FOR CALIFORNIA BONDS DURING THE PERIOD?
A. The State of California's economy continued to post gains during the past
twelve months as job growth led the nation, exports increased dramatically and
tax revenue collections strengthened. We strategically increased our investment
in the State's general obligation bonds early in the year and shareholders
benefited from the strong returns generated by these securities. A healthy
outlook was maintained for the State's economy based on improved financial
flexibility, a lessening dependence on the cyclical defense and aerospace
industries, and favorable prospects for future growth.
In November, the State's voters passed Proposition 218, an event that may affect
certain California municipal bonds. This initiative mandates that all
tax-raising measures be subjected to a two-thirds majority voter approval. The
uncertainty generated by this measure has limited issuance of certain types of
special assessment and tax allocation bonds in the State, but as of January 31,
1997 has not had any significant impact on the Fund as it is currently
positioned. We will continue to monitor the situation closely, as we anticipate
that there may be some negative impact on the credit quality of certain
municipalities. We believe that our focus on bonds that are backed by a
dedicated revenue stream and/or voter-approved state sales tax allocations
should insulate the portfolio from much of the uncertainty resulting from this
measure.
Q. WHAT IS YOUR MARKET OUTLOOK FOR 1997?
A. We believe that we will continue to see conflicting economic indicators, with
comparatively strong numbers followed by comparatively weak numbers. As a
result, the long Treasury bond market should continue to trade in an interest
rate range between 6.50% and 7.00%. While inflation levels remain low, even in
the face of certain strong economic conditions, we believe that the Federal
Reserve Board may move to increase interest rates based on the extremely tight
labor market. Their fear is that the current low level of unemployment may lead
to increased wage levels and thus higher prices for goods and services that
would ignite a round of inflationary pressures, a negative for bond prices.
Uncertainty regarding the Fed's potential action, a lack of clear economic
trends and a market driven more by technical rather than fundamental factors is
leading us to maintain a neutral position.
COLONIAL CALIFORNIA TAX-EXEMPT FUND'S INVESTMENT PERFORMANCE
Change in Value of $10,000 from 1/31/87 to 1/31/97
Based on NAV and MOP for Class A Shares
NAV MOP LEHMAN
Jan 31, 87 10,000.00 9,525.00 10,000
Apr 30, 87 9,313.095 8,870.723 9,444
Jul 31, 87 9,436.317 8,988.093 9,771
Oct 31, 87 8,809.344 8,390.90 9,466
Jan 31, 88 9,782.325 9,317.665 10,205
Apr 30, 88 9,801.986 9,336.392 10,270
Jul 31, 88 9,996.711 9,521.867 10,458
Oct 31, 88 10,370.79 9,878.181 10,884
Jan 31, 89 10,643.89 10,138.30 11,080
Apr 30, 89 10,767.83 10,256.36 11,187
Jul 31, 89 11,188.79 10,657.32 11,732
Oct 31, 89 11,173.73 10,642.98 11,724
Jan 31, 90 11,337.76 10,799.21 11,970
Apr 30, 90 11,391.86 10,850.75 11,993
Jul 31, 90 11,865.96 11,302.33 12,545
Oct 31, 90 11,839.51 11,277.13 12,594
Jan 31, 91 12,237.92 11,656.62 13,076
Apr 30, 91 12,500.16 11,906.40 13,371
Jul 31, 91 12,766.76 12,160.34 13,640
Oct 31, 91 13,201.58 12,574.50 14,126
Jan 31, 92 13,488.28 12,847.59 14,502
Apr 30, 92 13,625.21 12,978.01 14,642
Jul 31, 92 14,362.65 13,680.43 15,514
Oct 31, 92 14,080.18 13,411.37 15,311
Jan 31, 93 14,661.93 13,965.49 15,928
Apr 30, 93 15,111.04 14,393.26 16,494
Jul 31, 93 15,375.90 14,645.55 16,886
Oct 31, 93 15,887.56 15,132.91 17,468
Jan 31, 94 16,193.08 15,423.91 17,881
Apr 30, 94 15,164.96 14,444.63 16,850
Jul 31, 94 15,409.62 14,677.66 17,202
Oct 31, 94 14,892.31 14,184.93 16,707
Jan 31, 95 15,409.75 14,677.79 17,245
Apr 30, 95 16,061.45 15,298.53 17,971
Jul 31, 95 16,328.45 15,552.85 18,557
Oct 31, 95 17,082.18 16,270.78 19,186
Jan 31, 96 17,842.37 16,994.86 19,840
Apr 30, 96 17,331.19 16,507.96 19,399
Jul 31, 96 17,713.33 16,871.95 19,781
Oct 31, 96 18,188.90 17,324.93 20,279
Jan 31, 97 18,373.99 17,501.22 20,603
A $10,000 investment in Class B shares made on August 4, 1992 (inception) at NAV
would have been valued at $12,400 on January 31, 1997. The same investment after
deducting the applicable contingent deferred sales charge (CDSC) would have
grown to $12,201 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.
AVERAGE ANNUAL TOTAL RETURNS
As of December 31, 1996 (Most Recent Quarter End)
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CLASS A SHARES CLASS B SHARES
INCEPTION 6/16/86 8/4/92
NAV MOP NAV W/CDSC
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1 YEAR 3.67% (1.26)% 2.89% (2.03)%
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5 YEARS 6.48% 5.45% -- --
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10 YEARS 6.55% 6.03% -- --
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SINCE INCEPTION 7.03% 6.53% 5.07% 4.68%
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Past performance cannot predict future results. Return and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charges or CDSC. Maximum offering price (MOP) returns include the
maximum sales charge of 4.75%. The CDSC returns reflect the maximum charge of 5%
for one year and 2% since inception.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
<PAGE>
INVESTMENT PORTFOLIO
JANUARY 31, 1997 (IN THOUSANDS)
MUNICIPAL BONDS - 97.3% PAR VALUE
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EDUCATION - 8.2%
Education - 2.9%
Antioch Unified School District,
School Sites Acquisition, Series 1991-A:
(a) 07/01/11 $ 3,690 $ 1,370
(a) 07/01/16 3,565 913
Fresno Unified School District,
Phase VI, Series 1991-A,
7.200% 05/01/11 1,000 1,064
Grossmont Unified High School District,
1991 Capital Projects,
(a) 11/15/06 4,500 2,723
San Mateo County Board of Education,
Series 1991,
7.100% 05/01/21 750 780
Victor Elementary School District,
Series 1996,
6.450% 05/01/18 3,345 3,717
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10,567
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SCHOOL DISTRICT GENERAL OBLIGATIONS - 5.3%
Alum Rock Unified Elementary School
District,
(a) 09/01/15 1,825 559
Benicia Unified School District,
Series 1994-C,
6.450% 06/01/19 3,870 4,165
Cabrillo Unified School District,
Series 1996-A,
(a) 08/01/15 3,000 1,031
Central School District,
San Bernardino County, Series A,
7.050% 05/01/16 750 815
Central Unified School District,
(a) 03/01/18 20,065 5,869
Encinitas Unified School District,
Series 1996,
(a) 08/01/21 3,810 924
Manhattan Beach Unified School
District, Series 1996-A,
(a) 09/01/07 1,970 1,133
Oakland Refunding,
Series 1988-A,
7.600% 08/01/21 1,995 2,127
Rocklin Unified School District, Series 1991-C
(a) 07/01/20 6,920 1,774
Whisman School District,
Series 1996-A,
(a) 08/01/15 1,595 542
(a) 08/01/16 1,645 528
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19,467
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HEALTHCARE - 2.2%
HOSPITAL
Duarte, City of Hope National Center,
Series 1993,
6.000% 04/01/08 500 503
Rancho Mirage Financing Authority,
Eisenhower Medical Center, Series 1997-A,
5.250% 07/(b)17 1,000 946
State Health Facilities Financing Authority:
Catholic Healthcare West, Series 1994-A,
4.750% 07/01/19 2,000 1,737
Kaiser Permanente, Series 1993-C,
5.600% 05/01/33 5,000 4,762
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7,948
--------
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HOUSING - 3.8%
MULTI-FAMILY - 0.1%
Santa Rosa, Chanate Lodge Projects,
Series 1992,
6.625% 12/01/02 310 311
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SINGLE-FAMILY - 3.7%
Delta County Home Mortgage Finance
Authority, Series 1992-A,
6.750% 12/01/25 3,000 3,101
PR Commonwealth of Puerto Rico Housing
Finance Corporation, Series B,
7.650% 10/15/22 545 572
Southern California Home Financing Authority:
Series A,
7.625% 10/01/22 1,205 1,268
Series 1990-A,
7.625% 10/01/23 535 563
Series B,
8.600% 08/01/19 2,470 2,569
Series 1990-D,
7.750% 08/01/10 720 761
Series 1991-C,
7.450% 08/01/11 120 127
Series 1997-B,
6.000% 08/01/16 1,600 1,602
State Rural Home Mortgage Finance
Authority, Series 1995-B,
7.750% 09/01/26 2,390 2,736
Stockton, Mortgage-Backed Security
Program, Series 1990-A,
7.400% 08/01/05 40 42
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13,341
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JUSTICE & PUBLIC ORDER - 5.0%
Santa Ana Financing Authority,
Police Holding Facility, Series 1994-A,
6.250% 07/01/18 6,035 6,601
State Public Works Board:
Department of Corrections Corcoran II Project,
Series 1996-A,
5.250% 01/01/21 (c)(d) 4,000 3,765
State Prisons, Series 1993-A:
5.000% 12/01/19 6,000 5,535
5.250% 12/01/13 2,500 2,431
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18,332
--------
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OTHER REVENUE - 1.5%
Los Angeles Convention & Exhibition
Authority, Series 1993-A,
6.125% 08/15/11 (d) 5,000 5,413
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PUBLIC FACILITIES IMPROVEMENTS - 7.3%
Alameda County, Capital Projects,
Series 1989,
(a) 06/15/14 2,185 781
Long Beach, Fleet Services Project,
Series 1992-A,
6.600% 05/01/14 2,000 2,055
Modesto, Community Center Project,
Series 1993-A,
5.000% 11/01/23 2,235 2,051
Pasadena Civic Improvement Corp.,
Series 1996,
5.250% 02/01/16 3,020 2,907
PR Commonwealth of Puerto Rico
Public Buildings Authority, Series 1993-M,
stepped coupon, (5.700% 7/01/98)
3.750% 07/01/16 (e) 2,250 2,095
Rancho Mirage Joint Powers
Financing Authority, Series 1991-A,
7.500% 04/01/17 455 484
Sacramento County,
Public Facilities Project, Series 1996,
5.000% 02/01/13 3,680 3,450
State Public Works Board:
Secretary of State & State Archives,
J. Paul Getty Trust Center,
5.000% 10/01/23 (d) 10,560 9,491
Series 1992-A,
6.500% 12/01/08 1,000 1,133
State Special Districts Finance
Authority, Series 1988-A,
8.400% 07/01/05 1,670 1,772
Watsonville Mammoth Lakes, Series-B,
7.875% 06/01/11 500 539
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26,758
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PUBLIC INFRASTRUCTURE - 5.6%
Bishop, Escalon & Lemoore Cities, Series 1991-A
7.700% 05/01/11 700 739
Compton, Civic Center Project,
Series 1989-B,
7.500% 08/01/15 1,000 1,046
Irvine Ranch Water District Joint
Powers Agency, Series 1988 II,
8.250% 08/15/23 5,500 5,803
San Francisco Building Authority,
San Francisco Civic Center Complex, Series 1996-A,
5.250% 12/01/16 4,250 4,039
State Public Capital Improvements
Financing Authority,
Joint Powers Agency, Series 1988-A,
8.500% 03/01/18 3,500 3,652
Series 1988-B,
8.100% 03/01/18 (d) 4,725 4,958
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20,237
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REFUNDED/ESCROW/SPECIAL OBLIGATION (f) - 12.1%
Alum Rock Unified Elementary School
District, Series 1991:
(a) 09/01/11 1,925 792
(a) 09/01/12 1,565 596
(a) 09/01/14 1,000 329
Commerce Joint Powers Financing
Authority, Multiple Project Loans,
Series A,
8.000% 03/01/21 30 34
Desert Hospital, Series 1990,
8.100% 07/01/20 1,750 1,988
Empire Union School District,
Mello-Roos Financing, Series 1990-A,
7.400% 10/01/15 1,000 1,125
Fontana Public Financing Authority,
North Fontana Redevelopment, Series 1991-A,
7.750% 12/01/20 785 910
Glendora Public Financing Authority,
Series B,
7.625% 09/01/10 850 940
La Quinta Redevelopment Agency,
Series 1990,
8.400% 09/01/12 1,000 1,151
Local Government Power Authority,
Anaheim Redevelopment Agency,
Series 1986-A,
8.200% 09/01/15 4,500 4,893
Los Angeles Convention & Exhibit
Center, Series 1985,
9.000% 12/01/20 500 649
Los Angeles County Transportation,
Metro Train Series 1991-A,
6.900% 07/01/21 1,000 1,118
Los Angeles Waste Water System,
Series 1991-A,
7.100% 02/01/21 400 432
Mojave Water Agency,
Morongo Basin Pipeline, Series 1991,
6.950% 09/01/21 1,000 1,124
Monterey Redevelopment Agency,
Series A:
9.250% 11/01/10 500 537
9.250% 11/01/11 250 269
9.250% 11/01/12 750 809
Moreno Valley Unified School District,
7.400% 09/01/16 20 23
Northern California Power Agency,
Hydroelectric Project No. 1,
Series 1986-B 2,
8.000% 07/01/24 1,750 1,853
Orange County Community Facility:
District Number 87-3, Mello-Roos,
7.800% 08/15/15 2,000 2,260
District 87-4, Series 1990-A
8.000% 08/15/15 1,000 1,135
Placentia, Community Facilities District,
7.900% 09/01/15 1,000 1,111
Pomona, Series 1990-B,
7.500% 08/01/23 1,000 1,235
PR Commonwealth of Puerto Rico,
Electric Power Authority:
Series 1989-N,
7.000% 07/01/07 635 687
Series 1991
7.300% 07/01/20 1,200 1,335
Rancho Mirage Joint Powers
Financing Authority, Series 1991-A,
7.500% 04/01/17 1,545 1,748
Riverside County, Series 1989-A,
7.800% 05/01/21 2,500 3,144
Riverside Public Financing Authority,
Series A,
8.000% 02/01/18 590 676
Rocklin, Stanford Ranch Community
Facilities District, Series 1990,
8.100% 11/01/15 1,000 1,144
Sacramento City Financing Authority,
Series 1991,
6.800% 11/01/20 2,500 2,800
San Bernardino, Sisters of Charity
of the Incarnate Word, Series 1991-A,
7.000% 07/01/21 500 558
State Educational Facilities Authority,
Westmont College, Series 1985-A,
9.200% 12/01/00 40 43
State Health Facilities Financing Authority,
Children's Hospital of Los Angeles, Series 1991-A
7.125% 06/01/21 2,000 2,250
State Public Works Board,
University of California, Series 1990-A,
7.000% 09/01/15 1,625 1,800
Turlock Irrigation District,
1991 Improvement Project, Series 1991,
7.300% 01/01/11 1,500 1,582
West Covina Redevelopment Agency,
Community Facilities District No. 1, Series 1989,
7.800% 09/01/22 1,000 1,109
--------
44,189
--------
- -------------------------------------------------------------------------------
RESOURCE RECOVERY - 0.6%
LANDFILL - 0.3%
Nevada County
Western Nevada County Solid Waste
Management System, Series 1991,
7.500% 06/01/21 1,000 1,016
--------
RECYCLING - 0.3%
Pollution Control Financing Authority, North
California Recycling Center, Series 1991-A,
6.750% 07/01/17 1,000 1,124
--------
- -------------------------------------------------------------------------------
TAX-BACKED - 25.5%
GENERAL OBLIGATIONS - 5.2%
PR Commonwealth of Puerto Rico:
Series 1995,
5.650% 07/01/15 1,000 1,029
Series 1996,
6.500% 07/01/14 2,000 2,223
State of California:
5.125% 10/01/17 (d) 7,710 7,170
5.500% 04/01/12 2,770 2,798
10.000% 02/01/10 2,000 2,870
Series 1995,
10.000% 10/01/06 1,185 1,634
Virgin Islands Public Financing,
Series 1992-A,
7.250% 10/01/18 1,000 1,062
--------
18,786
--------
MELLO-ROOS/1915 ACT - 4.7%
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. 1, Series 1990,
7.650% 09/01/14 1,000 1,035
Carson, Series 1992,
7.375% 09/02/22 965 1,005
Corona Community Facility District,
Foothill Ranch, Series 1990 A-1,
8.350% 09/01/20 1,000 1,020
Elk Grove Unified School District:
Community Facilities, Series 1995,
(a) 12/01/18 2,720 762
6.500% 12/01/08 1,000 1,133
6.500% 12/01/24 4,055 4,567
Fairfield Improvement Bond,
Series 1990,
8.000% 09/02/11 235 242
Folsom Willow Creek,
8.250% 12/01/06 400 416
Los Angeles County, Harbor Boulevard,
8.375% 09/02/18 1,000 1,034
Murrieta County Water District,
Series 1991,
8.300% 10/01/21 1,000 1,058
Riverside Unified School District,
Community Facilities District No. 2,
Series 1993-A,
7.250% 09/01/18 1,000 1,012
Sacramento Unified School,
Community Facilities District No. 1,
Series B,
7.300% 09/01/13 1,760 1,894
Stockton Community Facilities District,
Series 2,
7.750% 08/01/15 1,000 1,033
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17,241
--------
SALES & EXCISE TAX - 2.9%
Los Angeles County Metropolitan
Transportation Authority, Series 1995 A,
5.000% 07/01/25 5,000 4,475
PR Commonwealth of Puerto Rico
Highway & Transportation Authority:
Series W,
5.500% 07/01/09 580 596
Series 1996-Y,
6.250% 07/01/12 3,000 3,281
Riverside County Transportation
Commission, Series 1996-A,
6.000% 06/01/09 2,000 2,173
--------
10,525
--------
TAX ALLOCATION - 12.7%
Cerritos Public Financing Authority,
Los Coyotes Redevelopment Project,
Series 1993-A,
6.500% 11/01/23 2,000 2,248
Commerce Joint Powers Financing
Authority, Series 1991-A,
8.000% 03/01/21 970 1,021
Concord Redevelopment Agency,
Central Concord Project,
Series 1988-3,
8.000% 07/01/18 25 27
Contra Costa County Public Financing
Authority, Series 1992-A,
7.100% 08/01/22 1,000 1,068
Costa Mesa Public Financing,
Series 1991-A,
7.100% 08/01/21 890 918
Emeryville Public Finance Authority
Emeryville Redevelopment, Series 1993-A,
6.500% 05/01/21 2,000 2,075
Folsom Redevelopment Agency, Central
Folsom Project Area, Series 1987-A,
8.600% 02/01/13 400 415
Glendora Public Financing Authority,
Series B,
7.625% 09/01/10 150 154
Oakland Redevelopment Agency,
Central District Project, Series 1992,
5.500% 02/01/14 7,400 7,400
Pomona Public Financing Authority,
Southwest Pomona Redevelopment Project,
Series 1994-L,
5.750% 02/01/20 3,800 3,672
Rancho Cucamonga Redevelopment Agency,
Series 1996,
5.250% 09/01/16 4,000 3,835
Richmond Joint Powers Financing
Authority, Series 1990-A,
7.700% 10/01/10 925 985
Riverside Public Financing
Authority, Series 1991-A,
8.000% 02/01/18 410 424
San Jose Redevelopment Agency,
Merged Area Redevelopment Project,
Series 1993,
5.000% 08/01/21 10,000 8,963
Santa Fe Springs Redevelopment Agency,
Consolidated Project, Series 1992-A,
6.400% 09/01/22 7,275 7,721
Santa Margarita, Series 1994-B,
7.250% 08/01/13 (d) 2,000 2,400
Seaside Redevelopment Agency,
Gateway Project,
Series 1986,
8.500% 08/01/06 105 106
Soledad Redevelopment Agency, Series 1992,
7.400% 11/01/12 955 1,013
Torrance Downtown Redevelopment,
Project, Series 1992,
7.125% 09/01/21 1,000 1,048
Westminster Redevelopment Agency,
Project No. 1, Series 1993,
6.200% 08/01/23 1,000 988
--------
46,481
--------
- -------------------------------------------------------------------------------
TRANSPORTATION - 5.9%
AIRPORT - 0.8%
Los Angeles Department of Airports,
Series 1995-D,
5.500% 05/15/15 3,025 2,938
--------
TRANSPORTATION - 1.8%
Los Angeles Harbor Department,
Series 1996-B,
5.375% 11/01/15 6,890 6,554
--------
TURNPIKE/TOLLROAD/BRIDGE - 3.3%
Foothill/Eastern Transportation Corridor
Agency, Series 1995-A,
5.000% 01/01/35 10,000 8,463
San Joaquin Hills Transportation
Corridor Agency, Series 1993,
(a) 01/01/20 15,400 3,696
--------
12,159
--------
- -------------------------------------------------------------------------------
UTILITY - 19.6%
INDIVIDUAL POWER PRODUCER - 1.9%
Sacramento Cogeneration Authority,
Procter & Gamble Project, Series 1995,
6.500% 07/01/21 6,500 6,687
--------
INVESTOR OWNED - 1.3%
State Pollution Control Finance Authority,
San Diego Gas & Electric Co., Series 1996-A,
5.900% 06/01/14 4,650 4,842
--------
JOINT POWER AUTHORITY - 0.4%
Northern California Power Agency,
Hydroelectric Project No. 1,
Series E,
7.150% 07/01/24 1,460 1,528
--------
MUNICIPAL ELECTRIC - 2.3%
Colton Public Financing Authority,
Electric System Imports, Series 1995,
7.500% 10/01/20 3,000 3,109
Commonwealth of Puerto Rico Electric
Power Authority:
Series 1989-O,
(a) 07/01/17 2,490 750
Series 1989-N,
7.000% 07/01/07 365 388
Reading Electric System,
RIB (variable rate), Series 1992-A,
8.994% 07/01/22 750 891
Sacramento Municipal Utilities District,
Series 1993-G,
6.500% 09/01/13 1,500 1,678
Turlock Irrigation District,
Series 1996-A,
6.000% 01/01/11 1,000 1,067
Series 1996-A,
6.000% 01/01/12 500 536
--------
8,419
--------
WATER & SEWER - 13.7%
Anderson Water C.O.P.
7.900% 12/01/11 610 647
Big Bear Lake, Series 1996,
6.000% 04/01/15 1,350 1,434
Central Coast Water Authority,
State Water Project Regional Facilities,
Series 1996-A,
5.000% 10/01/22 5,000 4,531
Contra Costa Water District, Series 1994-G
5.000% 10/01/24 7,500 6,825
Covina Water System Improvement Project,
Series 1991,
7.300% 04/01/16 1,000 1,054
East Bay Municipal Utilities District,
Wastewater Treatment Project,
Sub-Series 1996:
5.000% 06/01/15 7,500 6,985
5.000% 06/01/16 1,000 924
Fresno Sewer Revenue:
Series 1995-A,
6.000% 09/01/09 1,525 1,651
6.000% 09/01/10 1,420 1,530
Hemet Public Financing Authority,
Series 1992-A,
6.500% 02/01/12 1,500 1,526
Metropolitan Water District ,
RIB (variable rate)
7.661% 08/05/22 2,000 2,035
PR Puerto Rico Aqueduct & Sewer Authority,
Series 1995:
6.000% 07/01/09 1,250 1,344
6.250% 07/01/13 2,750 2,980
Sacramento County Sanitation District
Financing Authority, Series 1993,
4.750% 12/01/23 9,000 7,605
San Diego Sewer Redevelopment, Series 1993,
5.000% 05/15/23 5,000 4,393
State Department of Water Resources,
Central Valley Project, Series 1996-O,
4.750% 12/01/25 2,750 2,345
Tehachapi Water & Sewer District,
8.200% 11/01/20 2,000 2,175
--------
49,984
--------
TOTAL MUNICIPAL BONDS (cost of $341,000) 354,847
--------
OPTIONS - 0.0% CONTRACTS VALUE
----------------------------------------------------------------------------
March 1997 Treasury Bond Put,
Strike price 110, Expiration 02/22/97
(cost of $251 ) 239 127
--------
TOTAL INVESTMENTS (cost of $341,251) (g) 354,974
--------
SHORT-TERM OBLIGATIONS - 1.3% PAR
----------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (h)
Irvine Ranch Water District,
3.600% 01/01/21 2,700 2,700
Newport Beach Hoag Hospital,
3.650% 10/01/22 2,000 2,000
--------
TOTAL SHORT-TERM OBLIGATIONS 4,700
--------
OTHER ASSETS & LIABILITIES, NET - 1.4% 5,252
----------------------------------------------------------------------------
NET ASSETS - 100.0% $364,926
========
NOTES TO INVESTMENT PORTFOLIO:
-------------------------------------------------------------------------
(a) Zero coupon bond.
(b) This security has been purchased on a delayed delivery basis for
settlement at a future date beyond the customary settlement time.
(c) This security, or a portion thereof, with a total market value of $1,041
is being used to collateralize the delayed delivery purchase indicated in
note (b) above.
(d) These securities, or a portion thereof, with a total market value of
$25,108 are being used to collateralize open futures contracts.
(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 each 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.
(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, 1997.
<PAGE>
Short futures contracts open at January 31, 1997:
Par value Unrealized
covered by Expiration appreciation
Type contracts month at 01/31/97
------------------------------------------------------------------------
Municipal Bond $ 20,000 March $ 324
Acronym Name
---------- -----------------------------
RIB Residual Interest Bonds
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JANUARY 31, 1997
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $341,251) $354,974
Short-term obligations 4,700
--------
359,674
Receivable for:
Interest $ 5,932
Investments sold 5,512
Fund shares sold 915
Other 43 12,402
------------ --------
Total Assets 372,076
LIABILITIES
Payable for:
Investments purchased 5,026
Distributions 1,515
Fund shares repurchased 412
Variation margin on futures 175
Accrued:
Deferred Trustees fees 4
Other 18
-----------
Total Liabilities 7,150
--------
NET ASSETS $364,926
========
Net asset value & redemption price per share -
Class A ($264,053 / 35,835) $7.37
========
Maximum offering price per share - Class A
($7.37 / 0.9525) $7.74 (a)
========
Net asset value & offering price per share -
Class B ($100,873 / 13,690) $7.37 (b)
========
COMPOSITION OF NET ASSETS
Capital paid in $352,481
Undistributed net investment income 182
Accumulated net realized (1,784)
loss
Net unrealized appreciation on:
Investments 13,723
Open futures contracts 324
--------
$364,926
========
(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.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1997
(in thousands)
INVESTMENT INCOME
Interest $ 23,099
EXPENSES
Management fee $ 1,939
Service fee 516
Distribution fee - Class B 768
Transfer agent 591
Bookkeeping fee 142
Audit fee 33
Trustees fee 31
Legal fee 19
Custodian fee 11
Registration fee 8
Reports to shareholders 4
Other 27 4,089
---------- --------
Net Investment Income 19,010
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 5,312
Closed futures contracts 1,489
----------
Net Realized Gain 6,801
Net unrealized appreciation (depreciation)
during the period on:
Investments (16,708)
Open futures contracts 433
----------
Net Unrealized Depreciation (16,275)
--------
Net Loss (9,474)
--------
Net Increase in Net Assets from Operations $ 9,536
========
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended January 31
---------------------------
INCREASE (DECREASE) IN NET ASSETS 1997 1996
Operations:
Net investment income $ 19,010 $ 21,032
Net realized gain (loss) 6,801 (741)
Net unrealized appreciation (depreciation) (16,275) 38,695
--------- ---------
Net Increase from Operations 9,536 58,986
Distributions:
From net investment income - Class A (14,448) (16,481)
From net investment income - Class B (4,590) (4,822)
--------- ---------
(9,502) 37,683
--------- ---------
Fund Share Transactions:
Receipts for shares sold - Class A 12,231 15,423
Value of distributions reinvested - Class A 6,314 7,161
Cost of shares repurchased - Class A (52,020) (48,031)
--------- ---------
(33,475) (25,447)
--------- ---------
Receipts for shares sold - Class B 11,308 11,772
Value of distributions reinvested - Class B 2,375 2,530
Cost of shares repurchased - Class B (17,286) (15,919)
--------- ---------
(3,603) (1,617)
--------- ---------
Net Decrease from Fund Share Transactions (37,078) (27,064)
--------- ---------
Total Increase (Decrease) (46,580) 10,619
NET ASSETS
Beginning of period 411,506 400,887
--------- ---------
End of period (including undistributed
net investment income of $182 and
$28, respectively) $ 364,926 $ 411,506
========= =========
NUMBER OF FUND SHARES
Sold - Class A 1,669 2,147
Issued for distributions reinvested - Class A 860 995
Repurchased - Class A (7,085) (6,670)
--------- ---------
(4,556) (3,528)
--------- ---------
Sold - Class B 1,544 1,634
Issued for distributions reinvested - Class B 323 351
Repurchased - Class B (2,357) (2,203)
--------- ---------
(490) (218)
--------- ---------
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997
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, 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 may
issue an unlimited number of shares. The Fund offers Class A shares sold with a
front-end sales charge and Class B shares which are subject to an annual
distribution fee and a contingent deferred sales charge. Class B shares will
convert to Class A shares when they have been outstanding approximately eight
years.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies that are consistently followed by the Fund in
the preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Debt securities generally are valued by a
pricing service based upon market transactions for normal, institutional-size
trading units of similar securities. When management deems it appropriate, an
over-the-counter or exchange bid quotation is used.
Futures contracts are valued based on the difference between the last sale price
and the opening price of the contract.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and asking price.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued at fair
value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class 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.
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:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $1 billion 0.55%
Next $1 billion 0.50%
Over $2 billion 0.45%
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:
Effective Date Cumulative Annualized Reduction
-------------- -------------------------------
January 1, 1996 0.0125%
April 1, 1996 0.0250%
July 1, 1996 0.0375%
October 1, 1996 0.0500%
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 $31,601 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $317,022 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:
Valuation of shares Annual
outstanding on the 20th of Fee
each month which were issued Rate
---------------------------- ----
Prior to November 30, 1994 0.10%
On or after December 1, 1994 0.25%
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service and distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 0.80% annually of the Fund's average net
assets.
For the year ended January 31, 1997, the Fund's operating expenses did not
exceed the 0.80% expense limit.
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 $92,656,558 and
$131,838,971, respectively.
Unrealized appreciation (depreciation) at January 31, 1997, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $ 15,939,437
Gross unrealized depreciation (2,216,242)
------------
Net unrealized appreciation $ 13,723,195
============
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 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.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<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 $ 7.540 $ 7.540 $ 6.870 $ 6.870
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a) 0.386 0.331 0.388 0.334
Net realized and
unrealized gain (loss) (0.173) (0.173) 0.671 0.671
--------- --------- --------- ---------
Total from Investment
Operations 0.213 0.158 1.059 1.005
--------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.383) (0.328) (0.389) (0.335)
--------- --------- --------- ---------
Net asset value -
End of period $ 7.370 $ 7.370 $ 7.540 $ 7.540
========= ========= ========= =========
Total return(b)(c) 2.98% 2.21% 15.78% 14.94%
========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS
Expenses (d) 0.88% 1.63% 0.89% 1.64%
Net investment
income (d) 5.23% 4.48% 5.33% 4.58%
Fees and expenses
waived or borne
by the Adviser (d) - - 0.01% 0.01%
Portfolio turnover 25% 25% 47% 47%
Net assets at end
of period (000) $ 264,053 $ 100,873 $ 304,581 $ 106,925
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ - $ - $ 0.001 $ 0.001
(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>
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended January 31
----------------------------------------------------------------
1995 1994
Class A Class B Class A Class B
--------- --------- --------- ---------
$ 7.660 $ 7.660 $ 7.350 $ 7.350
--------- --------- --------- ---------
0.413 0.036 0.434 0.378
(0.791) (0.791) 0.315 0.315
--------- --------- --------- ---------
(0.378) (0.431) 0.749 0.693
--------- --------- --------- ---------
(0.412) (0.359) (0.439) (0.383)
--------- --------- --------- ---------
$ 6.870 $ 6.870 $ 7.660 $ 7.660
========= ========= ========= =========
(4.83)% (5.55)% 10.44% 9.63%
========= ========= ========= =========
0.77% 1.52% 0.75% 1.50%
5.91% 5.16% 5.73% 4.98%
0.06% 0.06% 0.08% 0.08%
47% 47% 17% 17%
$ 301,912 $ 98,975 $ 379,987 $ 104,578
$ 0.004 $ 0.004 $ 0.006 $ 0.006
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
All of the income distributions will be treated as exempt income for
federal income tax purposes.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
<TABLE>
<CAPTION>
Two months Year
ended ended
January 31(b) November 30
------------------------------ -------------------------------
1993 1992
Class A Class B Class A Class B (c)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.270 $ 7.270 $ 7.150 $ 7.410
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a) 0.076 0.067 0.467 0.143
Net realized and
unrealized gain (loss) 0.081 0.081 0.109 (0.151)
--------- --------- --------- ---------
Total from Investment
Operations 0.157 0.148 0.576 (0.008)
--------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.077) (0.068) (0.456) (0.132)
--------- --------- --------- ---------
Net asset value -
End of period $ 7.350 $ 7.350 $ 7.270 $ 7.270
========= ========= ========= =========
Total return(d)(e) 8.70%(f) 1.01%(f) 8.27% 1.94%(f)
========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS
Expenses 0.65%(g) 1.40%(g) 0.71% 1.46%(g)
Net investment
income 6.29%(g) 5.54%(g) 6.44% 5.69%(g)
Fees and expenses
waived or borne
by the Adviser 0.21%(g) 0.21%(g) 0.13% 0.13%(g)
Portfolio turnover 19%(g) 19%(g) 12% 12%
Net assets at end
of period (000) $ 337,409 $ 33,819 $ 324,012 $ 22,797
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.002 $ 0.002 $ 0.010 $ 0.010
(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) Annualized
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO 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
(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
<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 on
most funds; $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.
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. Dividends and capital must be reinvested.
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.
Exchanges are not available on all funds. 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.
<PAGE>
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
Colonial account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale, or exchange, you
receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
COLONIAL SHAREHOLDER NEWS: Mailed with your quarterly account statements, this
newsletter highlights timely investment strategies, portfolio manager
commentary, and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
<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 a.m. to 8:00 p.m. ET, and Saturdays from February through
mid-April, 10:00 a.m. to 2:00 p.m. ET.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange, or sell shares by telephone, call Monday to Friday, 9:00
a.m. to 7:00 p.m. ET. Transactions received after the close of the New York
Stock Exchange will receive the next business day's closing price.
LITERATURE - 1-800-426-3750
To request literature on any Colonial fund, call Monday to Friday, 8:30 a.m. to
6:30 p.m. ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
<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
Colonial at 1-800-426-3750 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.
<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(C) 1997
A Liberty Financial Company (NYSE: L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
CA-02/407D-0197 M (3/97)
