<PAGE>
[graphic omitted]
COLONIAL
CALIFORNIA TAX-EXEMPT FUND
[Graphic Omitted]
SEMIANNUAL REPORT
JULY 31, 1997
--------------------------------
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
--------------------------------
<PAGE>
COLONIAL CALIFORNIA TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1997 - JULY 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 and
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: "As the investment environment for bonds improved
over the period, a strategic shift towards more interest rate sensitive bonds
yielded positive results. We will continue to invest primarily in high quality
municipal bonds that provide the most potential for long-term appreciation."
- William Loring
COLONIAL CALIFORNIA TAX-EXEMPT FUND PERFORMANCE
Class A Class B
Inception dates 6/16/86 8/4/92
- --------------------------------------------------------------------------------
Distributions declared per share(1) $0.189 $0.162
- --------------------------------------------------------------------------------
SEC yields on 7/31/97(2) 4.21% 3.67%
- --------------------------------------------------------------------------------
Taxable-equivalent SEC yields(3) 7.83% 6.83%
- --------------------------------------------------------------------------------
Six-month total returns, assuming 6.62% 6.22%
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
- --------------------------------------------------------------------------------
Net asset value per share on 7/31/97 $7.66 $7.66
(1) A portion of the Fund's income may be subject to the alternative minimum
tax.
(2) The 30-day SEC yields on July 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.
(3) Taxable-equivalent SEC yields are based on the combined maximum effective
46.24% 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 7/31/97)
- ---------------------------------
AAA ................. 76.4%
AA .................. 2.4%
A ................... 4.9%
BBB ................. 8.5%
Non-rated ........... 6.9%
Cash & Equivalents .. 0.9%
Top Five Sectors (as of 7/31/97)
- ---------------------------------
Local Appropriated ... 20.0%
Tax Allocation ....... 12.8%
Refunded ............. 12.8%
General Obligations .. 11.2%
Water & Sewer ........ 7.7%
Because the Fund is actively managed, quality and sector weightings will change.
Quality breakdown and sector allocation are based upon total net assets.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
- ---------------------------
[Photo of Harold W. Cogger]
- ---------------------------
I am pleased to present the semiannual report for Colonial California Tax-Exempt
Fund. This report reflects on the investment environment for the six months
ended July 31, 1997.
The national economy continued to grow during the past six months. A firm job
market buoyed consumer confidence, resulting in strong retail, auto and housing
sales during the first quarter of 1997. The Federal Reserve Board raised
short-term interest rates in March for the first time in two years in response
to growing concern about future wage and price inflation. As interest rates
rose, bond prices declined.
Bond prices recovered during the second half of the period as consumer spending
declined, dampening investors' fears of potential inflation. At the same time,
industrial production, corporate capital spending and consumer income levels
continued to expand while inflation remained very low. This indicates that while
economic growth has slowed, the economy is still on track to post gains for 1997
and carry the current economic expansion into its eighth year.
Investments in municipal bonds continued to outperform some alternative
fixed-income investments, including Treasury bonds. A low supply of new
municipal issues combined with strong demand helped support tax-exempt bond
prices. Municipal bond prices also received a boost as the final balanced budget
agreement emerged from Congress. However, the investment environment for
municipal bonds was not without challenge. The yield advantage for investing in
lower quality municipal bonds continued to be historically low. This, combined
with tight supply, created higher prices and lower yields for many new
investments.
The long-term benefits of investing in any municipal bond fund include tax-free
income and the opportunity to diversify your fixed-income portfolio. Colonial
California Tax-Exempt Fund continues to offer you competitive tax-free income
and long-term total return as well as an opportunity to participate in
California's economic revival.
As always, we thank you for the opportunity to help meet your investment goals.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
September 11, 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.
<PAGE>
PORTFOLIO MANAGER REPORT
WILLIAM LORING is portfolio manager of Colonial California Tax-Exempt Fund and
is vice president of Colonial Management Associates, Inc.
INVESTMENT ENVIRONMENT REFLECTS CHANGING ECONOMIC CONDITIONS
A series of economic reports near the beginning of the period suggested a
stronger pace of economic growth than had been expected. The economy's healthy
rate of growth during the first quarter of 1997 sparked fears of potential
inflation, a negative for bonds. As a result, bond prices declined. The Federal
Reserve Board raised short-term interest rates in March and bond prices declined
further. By April, bond prices began to recover as decreased consumer spending
on autos, homes and retail goods restrained the pace of economic growth.
Bond prices were higher at the end of July as the final budget accord emerged.
This agreement by Congress to balance the budget indicates that the nation's
budget deficit should decline and the Government would need to borrow less
money. This should have a positive impact on long-term interest rates and,
therefore, on bond prices.
FUND INCREASES ITS SENSITIVITY TO INTEREST RATES
The Fund's investment strategy reflected the changes in the economic
environment. The portfolio was structured defensively at the beginning of the
period with a relatively low sensitivity to changes in interest rates.
Significant holdings of bonds with shorter maturities and bonds with higher
coupons helped to reduce price declines when interest rates rose during the
first half of the period. When interest rates are rising, short maturity bonds
have smaller price declines and high coupon bonds produce a greater level of
income, helping to stabilize the Fund's asset value.
During April and May, economic reports suggested a slowdown in economic growth
with continued low inflation, creating a positive environment for fixed-income
investments. We increased the Fund's average maturity by selling shorter
maturity bonds and purchasing longer maturity bonds. These bonds are more
sensitive to interest rate changes and generated larger price gains as rates
fell during the last three months of the period.
These strategies had a positive impact on performance. The Fund's Class A shares
posted a total return of 6.62% for the period, based on the net asset value,
outperforming the Lehman Brothers Municipal Bond Index. The Index posted a total
return of 5.86% for the period. In addition, the Fund's performance placed it in
the second quartile of California tax-exempt funds for the period as measured by
Lipper Analytical Services, Inc.*
POSITIVE EXPECTATIONS FOR CALIFORNIA'S ECONOMY CONTINUED
The California economy continued to expand. Personal income, home sales, job
creation, business incorporations and exports are all up significantly since the
State's 1992 recession. The economy has moved away from the defense and
aerospace dependency of the early 1990s. It is now more diversified and growth
oriented as the entertainment, high technology, business services and multimedia
industries are fueling the State's comeback. Increased income tax revenues and
financial flexibility are a few signs of California's economic revival.
We continued to monitor Proposition 218, passed in November 1996. This
initiative mandated that all tax-raising measures be subjected to voter
approval. We were careful to avoid investing in those sectors that we thought
would negatively affect Fund performance -- particularly special assessment and
tax-allocation bonds. We believe that investing in insured bonds is one way to
insulate the portfolio from potential fall-out from the Proposition.
We also held existing positions in California electric utility bonds that we
believe offer good potential price gains. Deregulation and competition in the
utility industry have created uncertainty nationwide, and utility bond prices
have declined. However, in California, utilities are on the leading edge of the
deregulatory wave. Several of the State's utilities have already diversified
their businesses, cut costs and made other strategic changes that position them
well for the competitive environment ahead.
INCREASING YOUR TOTAL RETURN
With the strong economy producing the lowest inflation and unemployment in a
generation, interest rates have been decreasing over the last few months. If
this trend continues, its effect will be reflected in smaller dividend checks.
With inflation under control, current dividends continue to outpace the
inflation rate, and remain a reliable source of tax-exempt income. The goal of
the Fund is to increase shareholders' total return, so while interest rates have
gone down, and dividends are likely to follow, the net asset value per share of
the Fund has been increasing. We will continue to invest primarily in high
quality municipal bonds that provide the most potential for long-term
appreciation.
*Source: Lipper Analytical Services, Inc. Lipper rankings are based on the
Lipper California Tax-Exempt Municipal Fund universe. The Fund's ranking for the
six-month period is in the top quartile (rated 35 out of 109 funds). The Fund
ranked in the second quartile for 1 year (rated 32 out of 102 funds), third
quartile for 5 years (rated 33 out of 51 funds) and third quartile for 10 years
(rated 22 out of 30 funds). Rankings do not include any sales charges.
Performance for different share classes will vary with fees associated with each
class. Past performance cannot guarantee future results.
<PAGE>
COLONIAL CALIFORNIA TAX-EXEMPT FUND'S INVESTMENT PERFORMANCE
Change in Value of $10,000 from 7/31/87 to 7/31/97
Based on NAV and MOP for Class A Shares
CCATEF NAV MOP Lehman
- ------ -------- -------- -----
Jul 31, 87 10000 9525 10000
Oct 31, 87 9335.573 8892.134 9687
Jan 31, 88 10366.68 9874.26 10444
Apr 30, 88 10387.51 9894.105 10510
Jul 31, 88 10593.87 10090.66 10703
Oct 31, 88 10990.3 10468.26 11098
Jan 31, 89 11279.71 10743.92 11339
Apr 30, 89 11411.05 10869.03 11449
Jul 31, 89 11857.16 11293.94 12006
Oct 31, 89 11841.2 11278.74 11998
Jan 31, 90 12015.02 11444.31 12250
Apr 30, 90 12072.36 11498.92 12273
Jul 31, 90 12574.78 11977.48 12838
Oct 31, 90 12546.75 11950.78 12888
Jan 31, 91 12968.96 12352.93 13382
Apr 30, 91 13246.86 12617.63 13684
Jul 31, 91 13529.39 12886.74 13959
Oct 31, 91 13990.18 13325.65 14457
Jan 31, 92 14294.01 13615.04 14842
Apr 30, 92 14439.11 13753.26 14984
Jul 31, 92 15220.61 14497.63 15877
Oct 31, 92 14921.26 14212.5 15670
Jan 31, 93 15537.77 14799.72 16301
Apr 30, 93 16013.7 15253.05 16880
Jul 31, 93 16294.39 15520.4 17281
Oct 31, 93 16836.62 16036.88 17876
Jan 31, 94 17160.38 16345.26 18299
Apr 30, 94 16070.85 15307.48 17245
Jul 31, 94 16330.12 15554.44 17605
Oct 31, 94 15781.91 15032.27 17097
Jan 31, 95 16330.26 15554.57 17648
Apr 30, 95 17020.89 16212.4 18392
Jul 31, 95 17303.84 16481.9 18991
Oct 31, 95 18102.59 17242.72 19634
Jan 31, 96 18908.19 18010.05 20305
Apr 30, 96 18366.48 17494.07 19853
Jul 31, 96 18771.44 17879.8 20244
Oct 31, 96 19275.42 18359.84 20754
Jan 31, 97 19471.45 18546.56 21085
Apr 30, 97 19483.12 18557.67 21170
Jul 31, 97 20759.72 19773.64 22319
A $10,000 investment in Class B shares made on 8/4/92 (inception) at NAV would
have been valued at $13,171 on 7/31/97. The same investment after deducting the
applicable contingent deferred sales charge (CDSC) would have grown to $12,971
on 7/31/97.
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 June 30, 1997 (most recent quarter end)
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
INCEPTION 6/16/86 8/4/92
NAV MOP NAV w/CDSC
- --------------------------------------------------------------------------------
1 year 7.93% 2.80% 7.13% 2.13%
- --------------------------------------------------------------------------------
5 years 6.24 5.21 -- --
- --------------------------------------------------------------------------------
10 years 7.26 6.74 -- --
- --------------------------------------------------------------------------------
Since inception 6.96 6.49 5.04 4.70
- --------------------------------------------------------------------------------
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 (contingent deferred sales charges). 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.
As of August 1, 1997, the Fund began offering Class C shares.
<PAGE>
INVESTMENT PORTFOLIO
<TABLE>
JULY 31, 1997 (UNAUDITED, IN THOUSANDS)
MUNICIPAL BONDS - 98.5% PAR VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
EDUCATION - 9.7%
EDUCATION - 3.1%
Southern California College of Optometry,
6.300% 04/01/21 $ 1,000 $ 1,066
Statewide Communities Development Corp.,
J. Paul Getty Trust Center,
5.000% 10/01/23(a) 10,560 10,098
---------
11,164
---------
LOCAL GENERAL OBLIGATIONS - 6.6%
Benicia Unified School District,
Series 1994-C,
6.450% 06/01/19 3,870 4,315
Cabrillo Unified School District,
Series 1996-A,
(b) 08/01/15 3,000 1,174
Central School District,
San Bernardino County, Series A,
7.050% 05/01/16 750 819
Central Unified School District,
(b) 03/01/18 20,065 6,722
Fillmore Unified School District:
(b) 07/01/11 950 475
(b) 07/01/12 980 461
(b) 07/01/17 650 226
Franklin-Mckinley School District,
5.250% 07/01/16 1,705 1,722
Los Angeles Unified School District,
5.000% 07/01/21 5,000 4,844
Rocklin, Unified School District,
Series 1991-C,
(b) 07/01/20 6,920 2,050
Whisman School District,
Series 1996-A:
(b) 08/01/15 1,595 624
(b) 08/01/16 1,645 605
---------
24,037
---------
.................................................................................
HEALTHCARE - 2.2%
HOSPITAL
Contra Costa County,
Merrithew Memorial Hospital,
5.375% 11/01/17 2,000 2,015
Duarte, City of Hope National Medical Center,
Series 1993,
6.000% 04/01/08 500 523
Riverside Hospital Lease Corp.,
5.700% 06/(c)16 2,500 2,625
Rancho Mirage Financing Authority,
Eisenhower Medical Center, Series 1997-A,
5.250% 07/01/17 1,000 1,001
State Health Facilities Financing Authority,
Catholic Healthcare West, Series 1994-A,
4.750% 07/01/19 2,000 1,850
---------
8,014
---------
.................................................................................
HOUSING - 5.8%
MULTI-FAMILY - 0.1%
Santa Rosa, Chanate Lodge Project,
Series 1992,
6.625% 12/01/02 285 291
---------
SINGLE-FAMILY - 5.7%
Delta County Home Mortgage Finance
Authority, Series 1992-A,
6.750% 12/01/25 3,000 3,165
PR Commonwealth of Puerto Rico Housing
Finance Corporation, Series B,
7.650% 10/15/22 495 524
Southern California Home Financing Authority:
Series A,
7.625% 10/01/22 1,105 1,164
Series 1990-A,
7.625% 10/01/23 475 504
State Housing Finance Agency:
Series B,
8.600% 08/01/19 2,445 2,537
Series 1990-D,
7.750% 08/01/10 635 675
Series 1991-C,
7.450% 08/01/11 65 69
Series 1997-B,
6.000% 08/01/16 1,600 1,656
Series A-1, Class I,
5.950% 08/01/16 3,000 3,094
State Rural Home Mortgage Finance Authority:
Series A-3,
6.250% 09/01/29 4,000 4,540
Series 1995-B,
7.750% 09/01/26 2,375 2,772
Stockton, Series 1990-A,
7.400% 08/01/05 40 43
---------
20,743
---------
................................................................................
OTHER - 33.8%
LOCAL APPROPRIATED - 20.0%
Anaheim Lease Public Improvement,
6.000% 09/01/14 (a) 3,500 3,907
Alameda County, Capital Projects,
Series 1989,
(b) 06/15/14 2,185 915
Anderson Certificate of Participation,
7.900% 12/01/11 610 655
Bishop, Escalon & Lemoore Cities,
Series 1991-A,
7.700% 05/01/11 700 751
Fresno Unified School District,
Phase VI, Series 1991-A,
7.200% 05/01/11 1,000 1,076
Grossmont Unified High School District,
1991 Capital Projects,
(b) 11/15/06 4,500 2,948
Los Angeles Convention & Exhibition
Authority, Series 1993-A,
6.125% 08/15/11 (a) 5,000 5,750
Los Angeles County Public Works
Financing Authority:
5.125% 06/01/17 2,480 2,465
5.250% 09/01/14 3,740 3,791
Modesto, Community Center Project,
Series 1993-A,
5.000% 11/01/23 2,235 2,179
Pasadena Civic Improvement Corp.,
Series 1996,
5.250% 02/01/16 3,020 3,046
Riverside County Courthouse,
5.750% 11/01/17 2,255 2,359
Rancho Mirage Joint Powers, Financing
Authority, Civic Center, Series 1991-A,
7.500% 04/01/17 455 491
Sacramento County Public Building,
5.375% 02/01/19 6,000 6,023
Sacramento County, Public Facilities Project,
Series 1996,
5.000% 02/01/13 3,680 3,685
San Diego Jail Certificate of Participation,
5.000% 10/01/17 1,250 1,222
San Francisco Building Authority,
San Francisco Civic Center Complex,
Series 1996-A:
5.250% 12/01/16 6,500 6,484
5.250% 12/01/21 1,810 1,799
San Mateo County Board of Education,
Series 1991,
7.100% 05/01/21 750 789
Santa Ana Financing Authority,
Police Holding Facility, Series 1994-A,
6.250% 07/01/18 6,035 6,895
Stanislaus.County,
5.250% 05/01/18 8,650 8,693
Tehachapi Water & Sewer District,
8.200% 11/01/20 2,000 2,187
Victor Elementary School District,
Series 1996,
6.450% 05/01/18 3,345 3,930
Watsonville Mammoth Lakes,
Series B,
7.875% 06/01/11 500 574
---------
72,614
---------
PUBLIC INFRASTRUCTURE - 1.0%
State Public Capital Improvements
Financing Authority,
Joint Powers Agency, Series 1988-A,
8.500% 03/01/18 3,500 3,637
---------
REFUNDED/ESCROW/SPECIAL OBLIGATION (d) - 12.8%
Alameda County, Marina Village
Assessment District, Series 1989-1,
7.650% 09/02/10 1,000 1,033
Alum Rock Unified Elementary School
District,
(b) 09/01/15 1,825 579
Colton Public Financing Authority,
Series 1995,
7.500% 10/01/20 3,000 3,548
Commerce Joint Powers Financing
Authority, Multiple Project Loans, Series A,
8.000% 03/01/21 30 34
Desert Hospital, Certificate of
Participation, Series 1990,
8.100% 07/01/20 1,750 1,980
Empire Union School District,
Mello-Roos Financing, Series 1990-A,
7.400% 10/01/15 1,000 1,120
Fontana Public Financing Authority,
North Fontana Redevelopment, Series 1991-A,
7.750% 12/01/20 785 913
Glendora Public Financing Authority,
Series B,
7.625% 09/01/10 850 929
La Quinta Redevelopment Agency,
Series 1990,
8.400% 09/01/12 1,000 1,145
Local Government Power Authority,
Anaheim Redevelopment Agency,
Series 1986-A,
8.200% 09/01/15 4,500 4,802
Los Angeles Convention & Exhibit,
Center, Series 1985,
9.000% 12/01/20 500 663
Los Angeles County Transportation,
Metro Train Series 1991-A,
6.900% 07/01/21 1,000 1,121
Los Angeles Waste Water System,
Series 1991-A,
7.100% 02/01/21 400 427
Mojave Water Agency,
Morongo Basin Pipeline, Series 1991,
6.950% 09/01/21 1,000 1,126
Moreno Valley Unified School District,
7.400% 09/01/16 20 23
Murrieta County Water District,
Series 1991,
8.300% 10/01/21 1,000 1,176
Northern California Power Agency,
Hydroelectric Project No. 1, Series 1986-B-2,
8.000% 07/01/24 1,750 1,819
Orange County Community Facility:
District 87-4, Series 1990-A,
8.000% 08/15/15 1,000 1,131
District Number 87-3, Mello-Roos,
7.800% 08/15/15 2,000 2,250
Pomona, Series 1990-B,
7.500% 08/01/23 1,000 1,303
PR Commonwealth of Puerto Rico:
Series 1991,
7.300% 07/01/20 1,200 1,331
Series 1989-N,
7.000% 07/01/07 635 680
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 3,281
Riverside Public Financing Authority,
Series A:
8.000% 02/01/18 590 676
8.000% 02/01/18 410 431
Rocklin, Stanford Ranch Community Facilities
District, Series 1990,
8.100% 11/01/15 1,000 1,139
Sacramento City Financing Authority,
Series 1991,
6.800% 11/01/20 2,500 2,813
San Bernardino, Sisters of Charity of the
Incarnate Word, Series 1991-A,
7.000% 07/01/21 500 561
State Educational Facilities Authority,
Westmont College, Series 1985-A,
9.200% 12/01/00 40 42
State Health Facilities Financing Authority,
Children's Hospital of Los Angeles, Series 1991-A
7.125% 06/01/21 2,000 2,252
State Pollution Control, Financing Authority,
North California Recycling Center, Series 1991-A,
6.750% 07/01/17 1,000 1,135
State Public Works Board,
University of California, Series 1990-A,
7.000% 09/01/15 1,625 1,795
Turlock Irrigation District,
1991 Improvement Project, Series 1991,
7.300% 01/01/11 1,500 1,552
---------
46,558
---------
.................................................................................
OTHER REVENUE - 4.9%
STATE APPROPRIATED
PR Commonwealth of Puerto Rico
Public Buildings Authority, Series 1993-M,
stepped coupon, (5.700% 07/01/98),
3.750% 07/01/16 (e) 2,250 2,256
PR Public Building Authority,
5.000% 07/01/16 2,000 1,968
State Public Works Board:
Secretary of State & State Archives, Series 1992-A,
6.500% 12/01/08 $ 1,000 $ 1,180
Various State Prisons Projects, Series 1993-A,
5.250% 12/01/13 2,500 2,615
State Prisons, Series 1993-A,
5.000% 12/01/19 6,000 5,895
Department of Corrections Corcoran II Project,
Series 1996-A,
5.250% 01/01/21 (a)(f) 4,000 4,005
---------
17,919
---------
.................................................................................
TAX-BACKED - 24.0%
STATE GENERAL OBLIGATIONS - 4.6%
PR Commonwealth of Puerto Rico:
6.000% 07/01/09 1,250 1,397
6.250% 07/01/13 2,750 3,169
6.500% 07/01/14 2,000 2,373
Series 1995,
5.650% 07/01/15 1,000 1,086
State of California:
5.500% 04/01/12 2,770 2,964
10.000% 02/01/10 2,000 2,960
Series 1995,
10.000% 10/01/06 1,185 1,676
VI Virgin Islands Public Financing,
Series 1992-A,
7.250% 10/01/18 1,000 1,100
---------
16,725
---------
MELLO-ROOS/1915 ACT - 4.1%
Carlsbad Unified School District,
Community Facility District No. 5, Series 1990,
7.650% 09/01/14 1,000 1,050
Carson, Series 1992,
7.375% 09/02/22 965 1,037
Corona Community Facility District,
Foothill Ranch, Series 1990-A1,
8.350% 09/01/20 1,000 1,021
Elk Grove Unified School District,
Community Facilities, Series 1995:
(b) 12/01/18 2,720 874
6.500% 12/01/08 1,000 1,180
6.500% 12/01/24 4,055 4,836
Fairfield, Series 1990,
8.000% 09/02/11 225 232
Folsom Willow Creek,
8.250% 12/01/06 $ 400 $ 414
Riverside Unified School District, Community
Facilities District No. 2, Series 1993-A,
7.250% 09/01/18 1,000 1,048
Sacramento Unified School,
Community Facilities District No. 1, Series B,
7.300% 09/01/13 1,760 2,050
Stockton Community Facilities District,
Series 2,
7.750% 08/01/15 1,000 1,053
---------
14,795
---------
SALES & EXCISE TAX - 2.5%
Los Angeles County Metropolitan
Transportation Authority, Series 1995-A,
5.000% 07/01/25 3,000 2,899
PR Commonwealth of Puerto Rico
Highway & Transportation Authority:
Series W,
5.500% 07/01/09 580 622
Series 1996-Y,
6.250% 07/01/12 3,000 3,453
Riverside County Transportation
Commission, Series 1996-A,
6.000% 06/01/09 2,000 2,260
---------
9,234
---------
TAX ALLOCATION - 12.8%
Anaheim Public Finance Authority Revenue,
5.250% 02/01/18 3,000 3,023
Cerritos Public Financing Authority,
Los Coyotes Redevelopment Project,
Series 1993-A,
6.500% 11/01/23 2,000 2,393
Commerce Joint Powers Financing
Authority, Series 1991-A,
8.000% 03/01/21 970 1,031
Concord Redevelopment Agency,
Central Concord Project, Series 1988-3,
8.000% 07/01/18 25 26
Contra Costa County Public Financing
Authority, Series 1992-A,
7.100% 08/01/22 1,000 1,095
Costa Mesa Public Financing,
Series 1991-A,
7.100% 08/01/21 890 931
Folsom Redevelopment Agency, Central
Folsom Redevelopment Project, Series 1987-A,
8.600% 02/01/13 400 417
Glendora Public Financing Authority,
Series B,
7.625% 09/01/10 150 156
Oakland Redevelopment Agency, Central
District Redevelopment Project, Series 1992,
5.500% 02/01/14 8,400 8,935
Rancho Cucamonga Redevelopment Agency,
Series 1996,
5.250% 09/01/16 4,000 4,055
Richmond Joint Powers Financing
Authority, Series 1990-A,
7.700% 10/01/10 870 958
San Jose Redevelopment Agency, Merged
Area Redevelopment Project, Series 1993,
5.000% 08/01/21 10,000 9,625
Santa Fe Springs Redevelopment Agency,
Consolidated Redevelopment Project,
Series 1992-A,
6.400% 09/01/22 7,275 7,993
Santa Margarita/Dana Point Authority,
Series 1994-B,
7.250% 08/01/13 2,000 2,510
Soledad Redevelopment Project,
Series 1992,
7.400% 11/01/12 955 1,037
Torrance Redevelopment Agency,
Downtown Redevelopment Project, Series 1992,
7.125% 09/01/21 1,000 1,075
Westminster Redevelopment Agency,
Project No. 1, Series 1993,
6.200% 08/01/23 1,000 1,028
---------
46,288
---------
................................................................................
TRANSPORTATION - 4.5%
AIRPORT - 0.9%
Los Angeles Department of Airports,
Los Angeles International Airport,
Series 1995-D,
5.500% 05/15/15 3,025 3,086
---------
TRANSPORTATION - 2.4%
Los Angeles Harbor Department,
Series 1996-B,
5.375% 11/01/19 8,750 8,739
---------
TURNPIKE/TOLLROAD/BRIDGE - 1.2%
San Joaquin Hills Transportation
Corridor Agency, Series 1993,
(b) 01/01/20 $ 15,400 $ 4,370
---------
.................................................................................
UTILITY - 13.6%
INDIVIDUAL POWER PRODUCER - 1.9%
Sacramento Cogeneration Authority,
Procter & Gamble Project, Series 1995,
6.500% 07/01/21 6,500 7,012
---------
INVESTOR OWNED - 1.4%
State Pollution Control Finance Authority,
San Diego Gas & Electric Co., Series 1996-A,
5.900% 06/01/14 4,650 5,068
---------
MUNICIPAL ELECTRIC - 2.6%
PR Commonwealth of Puerto Rico Electric
Power Authority:
Series 1989-O,
(b) 07/01/17 2,490 865
Series 1989-N,
7.000% 07/01/07 365 387
Reading Electric Systems,
RIB (variable rate), Series 1992-A,
8.467% 07/01/22 750 1,012
Sacramento Municipal Utilities District:
5.125% 07/01/22 3,700 3,645
Series 1993-G,
6.500% 09/01/13 1,500 1,758
Turlock Irrigation District,
Series 1996-A:
6.000% 01/01/11 1,000 1,121
6.000% 01/01/12 500 557
---------
9,345
---------
WATER & SEWER - 7.7%
Big Bear Lake, Series 1996,
6.000% 04/01/15 1,350 1,502
Central Coast Water Authority,
State Water Project Regional Facilities,
Series 1996-A,
5.000% 10/01/22 7,000 6,773
Contra Costa Water District,
Series 1994-G,
5.000% 10/01/24 7,500 7,256
Fresno, Series 1995-A:
6.000% 09/01/09 1,525 1,727
6.000% 09/01/10 1,420 1,605
Mojave Water Agency Morongo Basin,
5.800% 09/01/22 4,000 4,205
Metropolitan Water District,
RIB (variable rate),
7.905% 08/05/22 2,000 2,163
State Department of Water Resources,
Central Valley Project, Series 1996-O,
4.750% 12/01/25 2,750 2,543
---------
27,774
---------
TOTAL MUNICIPAL BONDS (cost of $330,012) 357,413
---------
OPTIONS - 0.0% CONTRACTS
- ---------------------------------------------------------------------------------
September 1997 Treasury Bond Put,
Strike price 109, expiration 08/23/97
(cost of $79) 200 3
---------
TOTAL INVESTMENTS (cost of $330,091) (g) 357,416
---------
SHORT-TERM OBLIGATIONS - 0.8% PAR
- ---------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (h)
CA Health Facility Financing Authority,
3.500% 03/01/20 $ 200 200
CA Irvine Ranch Water District,
3.500% 01/01/21 600 600
FL Pinellas County Health Facilities
Authority, Series 1985,
3.700% 12/01/15 600 600
MI Farmington Hills Hospital Finance
Authority, Botsford General Hospital,
Series 1991 B,
3.700% 02/15/16 600 600
NY State Energy Research & Development
Authority, Niagara Mohawk Power Corp.,
Series B,
3.750% 07/01/27 1,100 1,100
---------
TOTAL SHORT-TERM OBLIGATIONS 3,100
---------
OTHER ASSETS & LIABILITIES, NET - 0.7% 2,523
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $363,039
========
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) These securities, or a portion thereof, with a total market value
of $18,812 are being used to collateralize open futures contracts.
(b) Zero coupon bond.
(c) This security has been purchased on a delayed delivery basis for
settlement at a future date beyond the customary settlement time.
(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) Shown parenthetically is the interest rate to be paid and the date
the Fund will begin accruing this rate.
(f) This security, or a portion thereof, with a total market value of
$2,910 is being used to collateralize the delayed delivery purchase
indicated in note (c) above.
(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 July 31, 1997.
Short futures contracts open at July 31, 1997:
Par value Unrealized
covered by Expiration depreciation
Type contracts month at 07/31/97
- -----------------------------------------------------------------------------------------------------
Municipal Bond $10,600 September $ 10
Municipal Bond $2,900 December 448
------
$ 458
======
Acronym Name
------------------ ---------------------------
RIB Residual Interest Bonds
</TABLE>
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JULY 31, 1997 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $330,091) $357,416
Short-term obligations 3,100
--------
360,516
Receivable for:
Interest $ 5,857
Investments sold 1,526
Fund shares sold 178
Other 13 7,574
-------- --------
Total Assets 368,090
LIABILITIES
Payable for:
Investments purchased 2,646
Distributions 1,486
Fund shares repurchased 636
Variation margin on futures 14
Accrued:
Deferred Trustees fees 5
Other 264
--------
Total Liabilities 5,051
--------
NET ASSETS $363,039
========
Net asset value & redemption price per share -
Class A ($260,476/34,002) $7.66
======
Maximum offering price per share - Class A
($7.66/0.9525) $8.04(a)
========
Net asset value & offering price per share -
Class B ($102,563/13,389) $7.66(b)
========
COMPOSITION OF NET ASSETS
Capital paid in $336,582
Undistributed net investment income 127
Accumulated net realized loss (537)
Net unrealized appreciation (depreciation) on:
Investments 27,325
Open futures contracts (458)
--------
$363,039
========
(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 SIX MONTHS ENDED JULY 31, 1997
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Interest $ 10,651
EXPENSES
Management fee $ 898
Service fee 258
Distribution fee - Class B 375
Transfer agent 245
Bookkeeping fee 68
Audit fee 24
Trustees fee 11
Legal fee 6
Custodian fee 5
Registration fee 12
Reports to shareholders 10
Other 35 1,947
------- --------
Net Investment Income 8,704
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 2,200
Closed futures contracts (888)
-------
Net Realized Gain 1,312
Net unrealized appreciation (depreciation) during
the period on:
Investments 13,602
Open futures contracts (782)
-------
Net Unrealized Appreciation 12,820
--------
Net Gain 14,132
--------
Net Increase in Net Assets from Operations $ 22,836
========
See notes to financial statements.
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
(Unaudited)
Six months Year
ended ended
(in thousands) July 31 January 31
----------- ----------
1997 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 8,704 $ 19,010
Net realized gain 1,312 6,801
Net unrealized appreciation (depreciation) 12,820 (16,275)
-------- --------
Net Increase from Operations 22,836 9,536
Distributions:
From net investment income - Class A (6,640) (14,448)
From net investment income - Class B (2,188) (4,590)
-------- --------
14,008 (9,502)
Fund Share Transactions:
Receipts for shares sold - Class A 14,077 12,231
Value of distributions reinvested - Class A 2,887 6,314
Cost of shares repurchased - Class A (30,630) (52,020)
-------- --------
(13,666) (33,475)
-------- --------
Receipts for shares sold - Class B 3,706 11,308
Value of distributions reinvested - Class B 1,139 2,375
Cost of shares repurchased - Class B (7,074) (17,286)
-------- --------
(2,229) (3,603)
-------- --------
Net Decrease from Fund Share Transactions (15,895) (37,078)
-------- --------
Total Decrease (1,887) (46,580)
NET ASSETS
Beginning of period 364,926 411,506
-------- --------
End of period (including undistributed
net investment income of $127 and
$182, respectively) $363,039 $364,926
======== ========
NUMBER OF FUND SHARES
Sold - Class A 1,888 1,669
Issued for distributions reinvested - Class A 392 860
Repurchased - Class A (4,113) (7,085)
-------- --------
(1,833) (4,556)
-------- --------
Sold - Class B 502 1,544
Issued for distributions reinvested - Class B 154 323
Repurchased - Class B (957) (2,357)
-------- --------
(301) (490)
-------- --------
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
...............................................................................
In the opinion of management of Colonial California Tax-Exempt Fund, (the Fund),
a series of Colonial Trust V, the accompanying financial statements contain all
normal and recurring adjustments necessary for the fair presentation of the
financial position of the Fund at July 31, 1997, and the results of its
operations, the changes in its net assets and the financial highlights for the
six months then ended.
NOTE 2. ACCOUNTING POLICIES
................................................................................
ORGANIZATION: The Fund 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 and 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 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 3. FEES AND COMPENSATION PAID TO AFFILIATES
................................................................................
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is the
investment Adviser of the Fund and furnishes accounting and other services and
office facilities for a monthly fee based on each Fund's pro-rata portion of the
combined average net assets of Trust V as follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $2 billion 0.50%
Over $2 billion 0.45%
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 Funds 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 Funds
principal underwriter. During the six months ended July 31, 1997, the Fund has
been advised that the Distributor retained net underwriting discounts of $12,057
on sales of the Funds Class A shares and received contingent deferred sales
charges (CDSC) of $122,012 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 six months ended July 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 Funds 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
Funds assets.
NOTE 4. PORTFOLIO INFORMATION
................................................................................
INVESTMENT ACTIVITY: During the six months ended July 31, 1997, purchases and
sales of investments, other than short-term obligations, were $81,771,522 and
$95,948,010, respectively.
Unrealized appreciation (depreciation) at July 31, 1997, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $ 27,414,865
Gross unrealized depreciation (89,700)
-------------
Net unrealized appreciation $ 27,325,165
=============
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 recognized in the Fund's
Statement of Assets and Liabilities at any given time.
NOTE 5. 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 six months ended July 31, 1997.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected data for a share of each class outstanding throughout each period are as follows:
(Unaudited)
Six months Year
ended ended
July 31 January 31
----------------------- -----------------------
1997 1997
Class A Class B Class A Class B
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $ 7.370 $ 7.370 $ 7.540 $ 7.540
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.188 0.161 0.386 0.331
Net realized and unrealized gain (loss) 0.291 0.291 (0.173) (0.173)
-------- -------- -------- --------
Total from Investment Operations 0.479 0.452 0.213 0.158
-------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.189) (0.162) (0.383) (0.328)
-------- -------- -------- --------
Net asset value - End of period $ 7.660 $ 7.660 $ 7.370 $ 7.370
======== ======== ======== ========
Total return(b)(c) 6.62%(d) 6.22%(d) 2.98% 2.21%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses 0.87%(e)(f) 1.62%(e)(f) 0.88%(e) 1.63%(e)
Net investment income 5.05%(e)(f) 4.30%(e)(f) 5.23%(e) 4.48%(e)
Fees and expenses waived or borne
by the Adviser -- -- -- --
Portfolio turnover 23%(d) 23%(d) 25% 25%
Net assets at end of period (000) $260,476 $102,563 $264,053 $100,873
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ - $ - $ - $ -
(b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or
contingent deferred sales charge.
(c) Had the Adviser not waived or reimbursed a portion of expenses, total return would have been reduced.
(d) Not annualized.
(e) The benefits derived from custody credits and directed brokerage arrangements had no impact. Prior
years' ratios are net of benefits received, if any.
(f) Annualized.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended January 31
- --------------------------------------------------------------------------
1996 1995 1994
Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- -------
$ 6.870 $ 6.870 $ 7.660 $ 7.660 $ 7.350 $ 7.350
- -------- -------- -------- -------- -------- --------
0.388 0.334 0.413 0.036 0.434 0.378
0.671 0.671 (0.791) (0.791) 0.315 0.315
- -------- -------- -------- -------- -------- --------
1.059 1.005 (0.378) (0.431) 0.749 0.693
- -------- -------- -------- -------- -------- --------
(0.389) (0.335) (0.412) (0.359) (0.439) (0.383)
- -------- -------- -------- -------- -------- --------
$ 7.540 $ 7.540 $ 6.870 $ 6.870 $ 7.660 $ 7.600
======== ======== ======== ======== ======== ========
15.78% 14.94% (4.83)% (5.55)% 10.44% 9.63%
======== ======== ======== ======== ======== ========
0.89%(e) 1.64%(e) 0.77% 1.52% 0.75% 1.50%
5.33%(e) 4.58 (e) 5.91% 5.16% 5.73% 4.98%
0.01%(e) 0.01%(e) 0.06% 0.06% 0.08% 0.08%
47% 47% 47% 47% 17% 17%
$304,581 $106,925 $301,912 $ 98,975 $379,987 $104,578
$ 0.001 $ 0.001 $ 0.004 $ 0.004 $ 0.006 $ 0.006
<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>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Colonial has one of the most extensive selections of shareholder services
available. Your financial advisor 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(1): 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(1): 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 calendar day of each month unless the 10th falls on a
non-business day or the first business day of the week. If this occurs, the
payable date will be the previous business day. Dividends and capital gains 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.
COLONIAL RETIREMENT PLANS: Choose from a broad range of retirement plans,
including IRAs.
(1) 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
C shares, or $1 million or more of Class A shares, may be subject to a
contingent deferred sales charge.
<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>
[Graphic omitted] 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.
Retired (formerly Chairman of the Board and 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
Retired Partner, Peat Marwick Main & Co. (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-03/980D-0797 M (9/97)
