<PAGE>
[COLONIAL LOGO]
COLONIAL
CONNECTICUT
TAX-EXEMPT FUND
SEMIANNUAL REPORT
JULY 31, 1997
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
<PAGE>
- --------------------------------------------------------------------------------
COLONIAL CONNECTICUT TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1997 - JULY 31, 1997
INVESTMENT OBJECTIVE: Colonial Connecticut Tax-Exempt Fund seeks as high a level
of after-tax total return, as is consistent with prudent risk, by pursuing
current income exempt from federal and Connecticut state personal income tax.
The Fund also provides opportunities for long-term appreciation from a portfolio
primarily invested in investment grade municipal bonds.
THE FUND IS DESIGNED TO OFFER:
x High monthly double tax-free income
x Long-term appreciation
x Diversification
x Emphasis on quality
PORTFOLIO MANAGER COMMENTARY: "Connecticut's growing economy, and the Fund's
focus on high quality bonds, led to good returns to shareholders over the last
six months. As we foresee no major changes in the state's economy or our
strategy, we believe this level of performance should continue into early 1998."
-- Maureen Newman
COLONIAL CONNECTICUT TAX-EXEMPT FUND PERFORMANCE
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
Inception dates 11/1/91 6/8/92
Distributions declared per share(1) $ 0.195 $ 0.167
SEC yields on 7/31/97(2) 4.47% 3.93%
Taxable-equivalent SEC yields(3) 7.75% 6.81%
Six-month total returns, assuming reinvestment 5.64% 5.24%
of all distributions and no sales charge or
contingent deferred sales charge (CDSC)
Net asset value per share on 7/31/97 $ 7.71 $ 7.71
</TABLE>
(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. If the Advisor
had not waived or borne certain Fund expenses, SEC yields would have been
4.18% for Class A shares and 3.63% for Class B shares.
(3) Taxable-equivalent SEC yield is based on the maximum effective 42.3% federal
and Connecticut income tax rates.
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)
<TABLE>
<S> <C>
AAA .................................................. 52.3%
AA ................................................... 32.1%
A .................................................... 10.0%
BBB .................................................. 0.1%
Non rated ............................................ 2.0%
Cash & Equivalents ................................... 3.5%
</TABLE>
TOP FIVE SECTORS (as of 7/31/97)
<TABLE>
<S> <C>
General Obligations .................................. 30.9%
Hospitals ............................................ 12.4%
Housing .............................................. 11.9%
Sales & Excise Tax ................................... 6.7%
Nursing Homes ........................................ 6.2%
</TABLE>
Because the Fund is actively managed, quality and sector weightings will change.
Quality breakdown and sector allocation are based upon total net assets.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
I am pleased to present the semiannual report for Colonial
Connecticut Tax-Exempt Fund. This report reflects on the
investment environment for the six months ended July 31, 1997.
[PICTURE OF
The national economy continued to grow during the past six HAROLD W. COGGER]
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 down, the economy is still on track to post gains for
1997 and carry the current economic expansion into its eighth year.
Municipal bond prices continued to outperform Treasury prices. A low supply of
new municipal issues combined with strong demand helped support these 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 condition,
in combination 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
Connecticut Tax-Exempt Fund continues to offer you competitive tax-free income
and long-term total return potential as well as an opportunity to participate in
Connecticut'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 15, 1997
Because market conditions change frequently, there can be no assurance that the
trends described in this report will continue, come to pass or affect Fund
performance.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER REPORT
MAUREEN NEWMAN is portfolio manager of Colonial Connecticut Tax-Exempt Fund.
Ms. Newman is Vice President of Colonial Management Associates, Inc. and is
the Manager of Tax-Exempt Credit Research.
STRONG RETURNS DESPITE A VOLATILE MARKET
For the six months ended July 31, 1997, the total return for Class A shares,
based on net asset value, was 5.64%. In comparison, the average Connecticut
municipal bond fund as measured by Lipper Analytical Services, Inc. was 5.46%.
The Fund's benchmark, the Lehman Brothers Municipal Bond Index, had a total
return of 5.86%.
Bonds were negatively affected early in the period by the Federal Reserve
Board's decision to raise short-term interest rates, but the bond market rallied
in July as economic reports continued to show no signs of increased inflation.
The Fund's strong performance was achieved by taking advantage of market
momentum and identifying sectors of the market that were undervalued.
AIMING FOR STRONG PERFORMANCE IN ALL MARKETS
During the period, we continued to pursue our strategy of increasing the
percentage of non-callable bonds in the Fund. These bonds, which cannot be
redeemed by the issuer until the maturity date, tend to hold their value in both
up and down markets. We also focused on purchasing bonds with shorter
maturities, which are less sensitive to rising interest rates. With the yield
difference between longer maturity and shorter maturity bonds relatively small,
the Fund achieved that lower volatility without sacrificing much in terms of
yield. As continued good news on the inflation front led to a bond market rally
in July, we sold some issues we had purchased at a discount but were now
approaching their par values. This enabled us to purchase other undervalued
bonds we believe show potential for long-term appreciation.
A STRONGER CONNECTICUT ECONOMY
While Connecticut was one of the last states in the northeast to emerge from the
recession of the early '90s, its economy is now showing signs of strength. The
State's two large casinos are creating many jobs, although average salaries
there are lower than those jobs that were eliminated by the defense and
insurance industries. The southwestern corner of the state near New York City is
also benefiting from the bull market on Wall Street. State and local
governments remain fiscally sound. The State is reducing its gasoline tax,
which provides security for the State's Special Tax Revenue Bonds. It is
unlikely that the tax cut will have a significant impact on the credit quality
of those bonds.
A FAVORABLE INVESTMENT ENVIRONMENT AHEAD
We expect few major changes in the Connecticut economy over the next six months.
Inflation appears to be under control. While the economic growth rate could slow
down somewhat, the State should continue its recovery.
INCREASING YOUR TOTAL RETURN
With the balanced economy producing low inflation and low unemployment, interest
rates have been going down over the last few months, and the value of
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
bonds has been increasing. Some of you may have noticed the effect of this
reflected recently in smaller dividend checks. With inflation under control,
current dividends continue to outpace the inflation rate, and remain a source of
tax-exempt income. The goal of the Fund is to increase shareholders' total
return, so while interest rates and dividends have declined, the net asset value
per share of the Fund has been increasing. We will continue to invest primarily
in investment grade municipal bonds that provide what we believe have the most
potential for tax-free income and long-term appreciation.
COLONIAL CONNECTICUT TAX-EXEMPT FUND INVESTMENT PERFORMANCE
Change in Value of $10,000 from 11/1/91 to 7/31/97
Based on NAV and MOP for Class A Shares
<TABLE>
Label CCTTEF NAV MOP Lehman
<S> <C> <C> <C> <C>
1 Nov 1, 91 10000 9525 10000
2 Nov 30, 91 9983.269 9509.063 10028
3 Dec 31, 91 10234.13 9748.008 10243
4 Jan 31, 92 10231.45 9745.454 10266
5 Feb 29, 92 10242.98 9756.441 10270
6 Mar 31, 92 10211.13 9726.103 10274
7 Apr 30, 92 10294.55 9805.555 10365
8 May 31, 92 10465.23 9968.135 10487
9 Jun 30, 92 10679.9 10172.61 10663
10 Jul 31, 92 10998.62 10476.19 10983
11 Aug 31, 92 10819.25 10305.33 10876
12 Sep 30, 92 10875.26 10358.68 10947
13 Oct 31, 92 10679.02 10171.77 10839
14 Nov 30, 92 11019.16 10495.75 11033
15 Dec 31, 92 11142.69 10613.42 11146
16 Jan 31, 93 11289.62 10753.37 11276
17 Feb 28, 93 11710.94 11154.67 11683
18 Mar 31, 93 11599.56 11048.58 11560
19 Apr 30, 93 11717.56 11160.97 11677
20 May 31, 93 11789.89 11229.87 11742
21 Jun 30, 93 12029.65 11458.25 11938
22 Jul 31, 93 12052.33 11479.85 11954
23 Aug 31, 93 12325.28 11739.83 12203
24 Sep 30, 93 12489.59 11896.33 12342
25 Oct 31, 93 12481.48 11888.61 12366
26 Nov 30, 93 12345.97 11759.54 12257
27 Dec 31, 93 12575.37 11978.04 12515
28 Jan 31, 94 12677.9 12075.7 12658
29 Feb 28, 94 12347.91 11761.38 12330
30 Mar 31, 94 11774.29 11215.01 11828
31 Apr 30, 94 11831.21 11269.23 11929
32 May 31, 94 11954.43 11386.59 12032
33 Jun 30, 94 11864.36 11300.8 11958
34 Jul 31, 94 12119.42 11543.75 12178
35 Aug 31, 94 12144.3 11567.44 12220
36 Sep 30, 94 11920.68 11354.44 12041
37 Oct 31, 94 11613.01 11061.4 11827
38 Nov 30, 94 11284.82 10748.79 11613
39 Dec 31, 94 11664.35 11110.3 11868
40 Jan 31, 95 12062.11 11489.16 12208
41 Feb 28, 95 12411.37 11821.83 12563
42 Mar 31, 95 12538.66 11943.07 12707
43 Apr 30, 95 12546.65 11950.68 12722
44 May 31, 95 12847.07 12236.83 13128
45 Jun 30, 95 12680.42 12078.1 13013
46 Jul 31, 95 12722.8 12118.46 13136
47 Aug 31, 95 12919.81 12306.12 13303
48 Sep 30, 95 13029.77 12410.86 13387
49 Oct 31, 95 13228.61 12600.25 13582
50 Nov 30, 95 13481.36 12841 13807
51 Dec 31, 95 13646.64 12998.43 13940
52 Jan 31, 96 13723.09 13071.24 14045
53 Feb 29, 96 13601.55 12955.48 13950
54 Mar 31, 96 13407.56 12770.7 13772
55 Apr 30, 96 13394.54 12758.3 13733
56 May 31, 96 13399.19 12762.73 13728
57 Jun 30, 96 13532.41 12889.62 13878
58 Jul 31, 96 13665.42 13016.31 14003
59 Aug 31, 96 13651.92 13003.45 14000
60 Sep 30, 96 13823.51 13166.9 14196
61 Oct 31, 96 13958.61 13295.57 14356
62 Nov 30, 96 14207.63 13532.77 14619
63 Dec 31, 96 14156.81 13484.36 14557
64 Jan 31, 97 14200.14 13525.63 14585
65 Feb 28, 97 14357.66 13675.67 14719
66 Mar 31, 97 14192 13517.88 14522
67 Apr 30, 97 14292.33 13613.44 14644
68 May 31, 97 14488.68 13800.47 14865
69 Jun 30, 97 14647.13 13951.39 15023
70 Jul 31, 97 15000.33 14287.81 15439
</TABLE>
A $10,000 investment in Class B shares made on June 8, 1992 (inception) at NAV
would have been valued at $13,780 on July 31, 1997. The same investment after
deducting the applicable contingent deferred sales charge (CDSC) would have
grown to $13,680 on July 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 June 30, 1997 (Most Recent Quarter End)
<TABLE>
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES
INCEPTION 11/1/91 6/8/92
NAV MOP NAV w/CDSC
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 YEAR 8.24% 3.10% 7.44% 2.44%
- --------------------------------------------------------------------------------
5 YEARS 6.52 5.49 5.73 5.41
- --------------------------------------------------------------------------------
SINCE INCEPTION 6.97 6.05 6.05 5.73
- --------------------------------------------------------------------------------
</TABLE>
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charges or CDSC. Maximum offering price (MOP) returns include the
maximum sales charge of 4.75%. The CDSC return reflects the maximum charge of 5%
for one year and 2% since inception.
On August 1, 1997, the Fund began offering Class C shares.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
- --------------------------------------------------------------------------------
5
<PAGE>
INVESTMENT PORTFOLIO
JULY 31, 1997 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 95.6% PAR VALUE
==========================================================================================
<S> <C> <C> <C> <C>
EDUCATION - 5.6%
EDUCATION - 4.8%
CT State Health & Educational
Facilities Authority:
Choate Rosemary Hall,
5.000% 07/01/17 $ 500 $ 496
Connecticut College, Series C1,
5.250% 11/01/17 2,500 2,541
5.500% 07/01/27 1,000 1,019
Trinity College, Series C,
6.000% 07/01/12 1,000 1,058
Yale University,
RIB (variable rate), Series 1992,
7.822% 06/10/30 2,500 2,691
------
7,805
------
STUDENT LOAN - 0.8%
CT State Higher Education
Supplemental Loan Authority:
Series 1991-A,
7.200% 11/15/10 790 846
Series 1992-A,
6.375% 11/15/99 435 453
------
1,299
------
- ------------------------------------------------------------------------------------------
HEALTHCARE - 18.6%
HOSPITAL - 12.4%
CT State Health & Educational
Facilities Authority:
Bridgeport Hospital, Series A,
6.500% 07/01/12 1,000 1,094
Danbury Hospital, Series E,
6.500% 07/01/14 1,400 1,502
New Britain Hospital, Series 1991-A,
7.750% 07/01/22 200 219
Norwalk Hospital, Series D,
6.250% 07/01/12 1,750 1,877
St. Francis Hospital & Medical Center, Series B,
6.125% 07/01/10 1,000 1,070
St. Mary's Hospital,
5.500% 07/01/13 1,440 1,465
</TABLE>
6
<PAGE>
Investment Portfolio/July 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
St. Raphael Hospital:
Series E,
6.750% 07/01/13 $ 1,400 $ 1,523
Series 1992-F,
6.200% 07/01/14 750 798
Series 1992-G,
6.200% 07/01/14 225 239
Series 1993-H,
5.250% 07/01/09(a) 3,410 3,576
Waterbury Hospital,
7.000% 07/01/20 4,450 4,817
The William W. Backus Hospital, Series C,
6.000% 07/01/12 250 259
Yale-New Haven Hospital:
Series G,
6.500% 07/01/12 500 546
Series 1996-H,
5.500% 07/01/13 1,000 1,036
-------
20,021
-------
NURSING HOME - 6.2%
CT State Development Authority,
Clintonville Manor Realty, Inc.:
Series 1992,
6.750% 06/20/21 1,490 1,572
Duncaster Inc.,
Series 1992:
6.700% 09/01/07 500 546
6.750% 09/01/15 2,500 2,697
CT State Health & Educational
Facilities Authority:
American Health Foundation/Windsor Project,
7.125% 11/01/24 2,000 2,315
Noble Horizons Project, Series 1993,
5.875% 11/01/12 640 671
Pope John Paul II Center for Health,
6.250% 11/01/13 2,000 2,172
-------
9,973
-------
- -----------------------------------------------------------------------------------------------
HOUSING - 11.9%
MULTI-FAMILY - 2.2%
Waterbury Nonprofit Housing Corp,
Fairmont Heights,
Series 1993-A,
6.500% 01/01/26 600 631
</TABLE>
7
<PAGE>
Investment Portfolio/July 31, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
==============================================================================================
<S> <C> <C> <C> <C>
HOUSING - CONT.
MULTI-FAMILY - CONT.
New Britain Housing Authority,
Nathan Hale Apartments:
Series 1992-A,
6.500% 07/01/02 $ 115 123
Series 1992-B,
6.875% 07/01/24 2,590 2,755
------
3,509
------
SINGLE-FAMILY - 9.7%
CT State Housing Finance Authority:
Series B2,
6.750% 05/15/22 1,965 2,098
Series 1990-B4,
7.300% 11/15/03 225 237
Series 1991-C1,
6.450% 11/15/11 1,325 1,394
Series 1991-C2,
6.700% 11/15/22 90 95
Series 1991-C,
6.600% 11/15/23 1,580 1,681
Series 1992-B,
6.700% 11/15/12 2,275 2,448
Series 1993-B:
5.650% 05/15/06 550 581
6.200% 05/15/12 5,000 5,231
Sub-Series C1,
6.350% 05/15/17 1,245 1,326
Series 1994-D, Sub-Series D1,
6.625% 05/15/24 500 536
------
15,627
------
- ---------------------------------------------------------------------------------------------
OTHER - 2.4%
REFUNDED/ESCROW/SPECIAL OBLIGATIONS (b)
CT State Health & Educational
Facilities Authority:
Lutheran General Health Care System, Series 1989,
7.250% 07/01/04(a) 155 172
Lawrence & Memorial Hospitals, Series C,
6.250% 07/01/22 400 443
State of Connecticut,
Series 1991-B,
6.250% 10/01/09 2,500 2,747
</TABLE>
8
<PAGE>
Investment Portfolio/July 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Stratford,
Series 1992,
7.300% 03/01/12 $ 500 $ 560
------
3,922
------
- ---------------------------------------------------------------------------------------------
OTHER REVENUE - 1.4%
MANUFACTURING
CT State Development Authority,
Pfizer Inc. Project,
Series 1994,
7.000% 07/01/25 2,000 2,298
------
- ---------------------------------------------------------------------------------------------
RESOURCE RECOVERY - 5.6%
MISCELLANEOUS DISPOSAL - 2.0%
CT State Development
Authority,
Sewer Sludge Disposal Facilities,
Series 1996,
8.250% 12/01/06 1,500 1,558
CT State Disposal Facility,
Netco Waterbury Ltd.,
Series 1995,
9.375% 06/01/16 1,500 1,691
------
3,249
------
RESOURCE RECOVERY - 3.6%
Bristol Resource Recovery Facility
Operation Commitee,
Ogden Martin Systems, Inc., Series 1995,
6.500% 07/01/14 1,500 1,637
CT State Resource Recovery Authority,
American Ref-Fuel Co.:
Series 1988-A,
8.000% 11/15/15 2,500 2,675
Series 1992-A,
6.450% 11/15/22 1,425 1,512
------
5,824
------
- ---------------------------------------------------------------------------------------------
TAX-BACKED - 43.7%
LOCAL GENERAL OBLIGATIONS - 21.6%
Bethel,
6.500% 02/15/09 1,220 1,424
Bridgeport:
6.250% 03/01/12 2,465 2,770
Series 1996-A,
6.500% 09/01/08(a) 3,000 3,465
</TABLE>
9
<PAGE>
Investment Portfolio/July 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
===============================================================================================
<S> <C> <C> <C> <C>
TAX-BACKED - CONT.
LOCAL GENERAL OBLIGATIONS - CONT.
Danbury:
Series 1992,
5.625% 08/15/11 $ 690 $ 738
Series 1994:
4.500% 02/01/12 1,280 1,213
4.500% 02/01/13 1,280 1,203
East Haddam, Series 1991,
6.300% 06/15/09 260 277
Farmington, Series 1993:
5.700% 01/15/12 590 648
5.700% 01/15/13 570 625
Granby, Series 1993:
6.500% 04/01/09 200 232
6.550% 04/01/10 175 204
Griswold, Series 1992,
6.000% 04/15/09 410 439
Hamden, Series:
6.000% 10/01/11 425 453
6.000% 10/01/12 425 452
Hartford County Metropolitan
District:
Series 1991,
6.200% 11/15/10 220 252
Series 1993:
5.200% 12/01/12 600 624
5.200% 12/01/13 500 518
City of Hartford:
5.625% 02/01/11 600 646
5.625% 02/01/12 600 645
5.625% 02/01/13 600 644
Montville, Series 1993,
6.300% 03/01/12 335 385
New Britain:
Series 1992,
6.000% 02/01/08 400 444
Series 1993-A,
6.000% 10/01/12 2,000 2,243
Series 1993-B,
6.000% 03/01/12 1,000 1,118
North Branford:
6.200% 02/15/11 195 206
6.200% 02/15/12 225 239
</TABLE>
10
<PAGE>
Investment Portfolio/July 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Norwich, Series 1994:
5.750% 09/15/13 $ 875 $ 924
5.750% 09/15/14 870 919
Plainfield, Series 1992,
6.375% 08/01/11 500 543
Regional School District No. 14,
Series 1991,
6.100% 12/15/06 285 315
Regional School District No. 5:
Series 1992,
6.300% 03/01/10 400 431
Series 1993,
5.600% 02/15/12 150 157
Somers:
6.000% 01/15/11 125 132
6.250% 01/15/08 270 289
South Windsor,
Series 1992,
6.200% 09/01/10 495 528
Stamford:
Series 1992,
6.125% 11/01/11 1,050 1,134
Series 1995,
5.250% 03/15/14 2,750 2,822
Torrington, Series 1992,
6.400% 05/15/10 750 812
Vernon, Series 1988,
7.100% 10/15/03 250 287
Waterbury, Series 1993,
5.375% 04/15/08 750 784
West Haven, Series 1993-B,
5.400% 06/01/10 705 723
Westbrook, Series 1992:
6.300% 03/15/12 265 301
6.400% 03/15/09 630 718
Windham, Series 1996,
5.000% 06/15/16 1,000 1,000
-------
34,926
-------
SALES & EXCISE TAX - 6.7%
CT State Special Tax:
Series 1992-B
6.125% 09/01/12 4,600 5,209
Series 1996-B,
6.000% 10/01/06(a) 1,000 1,112
</TABLE>
11
<PAGE>
Investment Portfolio/July 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
=============================================================================================
<S> <C> <C> <C> <C>
TAX-BACKED - CONT
SALES & EXCISE TAX - CONT
CT State Special Tax:
Series 1996-C,
6.000% 10/01/06(a) $2,000 $ 2,225
Transportation Infrastructure,
Series 1994-B,
6.000% 10/01/09 1,000 1,084
PR Commonwealth of Puerto Rico
Highway & Transportation Authority,
Series-W,
5.500% 07/01/09 1,110 1,190
-------
10,820
-------
SPECIAL ASSESSMENT - 0.7%
CT State Special Assessment,
Second Injury Fund,
Series 1996-A,
6.000% 01/01/06(a) 1,100 1,211
-------
STATE APPROPRIATED - 5.4%
CT State Certificates of Participation,
Middletown Courthouse Project:
6.250% 12/15/09 1,685 1,824
6.250% 12/15/10 750 812
6.250% 12/15/12 100 108
6.250% 12/15/13 850 916
CT State Development Authority,
Series 1993-A,
5.250% 11/15/11 750 764
PR Commonwealth of Puerto Rico
Public Buildings Authority, Series 1993-M:
5.000% 07/01/13 1,000 1,001
stepped coupon, (5.700% 07/01/98),
3.750% 07/01/16(c) 3,300 3,308
-------
8,733
-------
STATE GENERAL OBLIGATIONS - 9.3%
State of Connecticut:
Series 1990-B,
(d) 11/15/10 1,950 1,014
Series 1993-A,
5.600% 11/15/10 1,000 1,048
</TABLE>
12
<PAGE>
Investment Portfolio/July 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Series 1993-B,
5.400% 09/15/09 $3,000 $ 3,180
Series 1995-B,
5.375% 10/01/15 5,000 5,106
PR Commonwealth of Puerto Rico
Aqueduct & Sewer Authority,
Series 1995,
6.000% 07/01/07(a) 2,750 3,076
PR Commonwealth of Puerto Rico,
Series 1994,
6.500% 07/01/23 1,500 1,641
--------
15,065
--------
- -----------------------------------------------------------------------------------------------
UTILITY - 6.4%
JOINT POWER AUTHORITY - 0.7%
CT State Municipal Electric Energy
Cooperative,
Series 1996-A,
5.000% 01/01/09 1,040 1,062
--------
WATER & SEWER - 5.7%
South Central Regional Water Authority,
Series 11,
5.750% 08/01/12 2,000 2,115
CT State Clean Water Fund:
Series 1991,
7.000% 01/01/11 1,850 2,051
Series 1992,
6.125% 02/01/12 3,730 3,963
Series 1993,
5.875% 04/01/09 1,000 1,109
--------
9,238
--------
TOTAL MUNICIPAL BONDS (cost of $143,700)(e) 154,582
--------
SHORT-TERM OBLIGATIONS - 3.5%
===============================================================================================
VARIABLE RATE DEMAND NOTES (f)
FL Pinellas County Health Facilities
Authority,
Series 1985,
3.700% 12/01/15 600 600
IN Portage Economic Development Revenue
3.750% 08/01/30 200 200
</TABLE>
13
<PAGE>
Investment Portfolio/July 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - CONT. PAR VALUE
============================================================================================
<S> <C> <C> <C> <C>
VARIABLE RATE DEMAND NOTES (f) - CONT
MA State Health & Educational
Facilities Authority,
Series 1985-D,
3.650% 01/01/35 $ 300 $ 300
MI Farmington Hills Hospital
Finance Authority,
Botsford General Hospital, Series 1991-B,
3.700% 02/15/16 1,400 1,400
MI Flint Hospital Building Authority,
Hurley Medical Center,
Series 1995-B,
3.650% 07/01/15 2,600 2,600
NC Craven County Industrial Facilities &
Pollution Control Financing Authority,
John Hancock Resource Recovery, Inc., Series C,
3.800% 05/01/11 200 200
NY State,
Series 1994-B4,
3.600% 08/15/22 300 300
--------
TOTAL SHORT-TERM OBLIGATIONS 5,600
--------
OTHER ASSETS & LIABILITIES, NET - 0.9% 1,516
============================================================================================
NET ASSETS - 100.0% $161,698
========
NOTES TO INVESTMENT PORTFOLIO:
============================================================================================
</TABLE>
(a) These securities, or a portion thereof, with a total market value of
$13,625 are being used to collateralize open futures contracts.
(b) 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.
(c) Shown parenthetically is the interest rate to be paid and the date the Fund
will begin accruing this rate.
(d) Zero coupon bond.
(e) Cost for federal income tax purposes is the same.
(f) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of July 31, 1997.
14
<PAGE>
Investment Portfolio/July 31, 1997
- --------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO - CONT.
================================================================================
Short futures contracts open at July 31, 1997:
<TABLE>
<CAPTION>
Par value Unrealized
covered Expiration depreciation
Type by contracts month at 07/31/97
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Municipal Bond $7,500 September $ 296
Municipal Bond $2,000 December 6
-----
$ 302
=====
Acronym Name
----------------- -----------------------
RIB Residual Interest Bonds
</TABLE>
See note to financial statements.
15
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JULY 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
(in thousands except for per share amounts and footnotes)
ASSETS
<S> <C> <C>
Investments at value (cost $143,700) $ 154,582
Short-term obligations 5,600
---------
160,182
Receivable for:
Interest $ 2,120
Investment sold 153
Fund shares sold 165
Other 351 2,789
------- ---------
Total Assets 162,971
LIABILITIES
Payable for:
Investment purchased 301
Distributions 619
Fund shares repurchased 329
Variation margin on futures 10
Payable to Adviser 2
Accrued:
Deferred Trustees fees 3
Other 9
-------
Total Liabilities 1,273
---------
NET ASSETS $ 161,698
=========
Net asset value & redemption price per share -
Class A ($79,423/10,302) $ 7.71
=========
Maximum offering price per share - Class A
($7.71/0.9525) $ 8.09(a)
=========
Net asset value & offering price per share -
Class B ($82,275/10,672) $ 7.71(b)
=========
COMPOSITION OF NET ASSETS
Capital paid in $ 156,752
Undistributed net investment income 67
Accumulated net realized loss (5,700)
Net unrealized appreciation (depreciation) on:
Investments 10,881
Open futures contracts (302)
---------
$ 161,698
=========
</TABLE>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
16
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JULY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
(in thousands)
INVESTMENT INCOME
<S> <C> <C>
Interest $ 4,488
EXPENSES
Management fee $ 389
Service fee 122
Distribution fee - Class B 304
Transfer agent 120
Bookkeeping fee 32
Trustees fee 11
Custodian fee 2
Audit fee 10
Legal fee 2
Registration fee 8
Reports to shareholders 4
Other 7
-------
1,011
Fees waived by the Adviser (235) 776
------- -------
Net Investment Income 3,712
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain
on:
Investments 402
Closed futures contracts 123
-------
Net Realized Gain 525
Net unrealized appreciation (depreciation) during
the period on:
Investments 4,531
Open futures contracts (566)
-------
Net Unrealized Appreciation 3,965
-------
Net Gain 4,490
-------
Net Increase in Net Assets from Operations $ 8,202
=======
</TABLE>
See notes to financial statements.
17
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months
(in thousands) ended Year ended
INCREASE (DECREASE) IN NET ASSETS July 31 January 31
=========== ===========
Operations: 1997 1997
<S> <C> <C>
Net investment income $ 3,712 $ 7,618
Net realized gain 525 569
Net unrealized appreciation (depreciation) 3,965 (3,468)
----------- -----------
Net Increase from Operations 8,202 4,719
Distributions:
From net investment income - Class A (1,935) (3,952)
From net investment income - Class B (1,807) (3,680)
----------- -----------
4,460 (2,913)
----------- -----------
Fund Share Transactions:
Receipts for shares sold - Class A 6,999 8,326
Value of distributions reinvested - Class A 1,097 2,258
Cost of shares repurchased - Class A (4,885) (15,080)
----------- -----------
3,211 (4,496)
----------- -----------
Receipts for shares sold - Class B 3,636 9,762
Value of distributions reinvested - Class B 1,053 2,159
Cost of shares repurchased - Class B (6,158) (11,840)
----------- -----------
(1,469) 81
----------- -----------
Net Increase (Decrease) from Fund Share
Transactions 1,742 (4,415)
----------- -----------
Total Increase (Decrease) 6,202 (7,328)
NET ASSETS
Beginning of period 155,496 162,824
----------- -----------
End of period (including undistributed net
investment income of $67 and $54,
respectively) $ 161,698 $ 155,496
=========== ===========
NUMBER OF FUND SHARES
Sold - Class A 923 1,122
Issued for distributions reinvested - Class A 146 303
Repurchased - Class A (650) (2,038)
----------- -----------
419 (613)
----------- -----------
Sold - Class B 483 1,316
Issued for distributions reinvested - Class B 140 290
Repurchased - Class B (818) (1,596)
----------- -----------
(195) 10
----------- -----------
</TABLE>
See notes to financial statements.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In the opinion of management of Colonial Connecticut 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 non-diversified portfolio of a Massachusetts
business trust, registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company. The Fund's investment objective is
to seek as high a level of after-tax total return, as is consistent with prudent
risk, by pursuing current income exempt from federal and Connecticut state
personal income tax 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.
19
<PAGE>
Notes to Financial Statements/July 31, 1997
- --------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
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) and 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:
<TABLE>
<CAPTION>
Average Net Assets Annual Fee Rate
------------------ ---------------
<S> <C>
First $2 billion 0.50%
Over $2 billion 0.45%
</TABLE>
20
<PAGE>
Notes to Financial Statements/July 31, 1997
- --------------------------------------------------------------------------------
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 six months ended July 31, 1997, the Fund has
been advised that the Distributor retained net underwriting discounts of $16,251
on sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $97,510 on Class B share redemptions.
The Fund has adopted a 12b-1 plan which requires the payment of a distribution
fee to the Distributor equal to 0.75% annually of the Fund's average net assets
attributable to Class B shares. The plan also requires the payment of a service
fee to the Distributor as follows:
<TABLE>
<CAPTION>
Valuation of shares Annual
outstanding on the 20th of Fee
each month which were issued Rate
---------------------------- ----
<S> <C>
Prior to November 30, 1994 0.10%
On or after December 1, 1994 0.25%
</TABLE>
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service and distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 0.45% annually of the Fund's average net
assets.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
21
<PAGE>
Notes to Financial Statements/July 31, 1997
- --------------------------------------------------------------------------------
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 $12,158,901 and
$13,907,477, respectively.
Unrealized appreciation (depreciation) at July 31, 1997, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 10,954,816
Gross unrealized depreciation (73,469)
------------
Net unrealized appreciation $ 10,881,347
============
</TABLE>
CAPITAL LOSS CARRYFORWARDS: At January 31, 1997, capital loss carrryforwards,
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
<TABLE>
<CAPTION>
Year of Capital loss
expiration carryforward
---------- ------------
<S> <C>
2003 $ 1,928,000
2004 2,209,000
------------
$ 4,137,000
============
</TABLE>
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
OTHER: There are certain risks arising from geographic concentration in any
state. Certain revenue or tax related events in a state may impair the ability
of certain issuers of municipal securities to pay principal and interest on
their obligations.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
The Fund may 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
22
<PAGE>
Notes to Financial Statements/July 31, 1997
- --------------------------------------------------------------------------------
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.
23
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six months
ended Year 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 $ 7.490 $ 7.490 $ 7.630 $ 7.630
----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income(a) 0.195 0.167 0.393 0.338
Net realized and
unrealized gain (loss) 0.220 0.220 (0.141) (0.141)
----------- ----------- ----------- -----------
Total from Investment
Operations 0.415 0.387 0.252 0.197
----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.195) (0.167) (0.392) (0.337)
From net realized
gains -- -- -- --
----------- ----------- ----------- -----------
Total Distributions
Declared to Shareholders (0.195) (0.167) (0.392) (0.337)
----------- ----------- ----------- -----------
Net asset value -
End of period $ 7.710 $ 7.710 $ 7.49 $ 7.490
=========== =========== =========== ===========
Total return(b)(c) 5.64% 5.24% 3.48% 2.71%
=========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS
Expenses (d) 0.61% 1.36% 0.59% 1.34%
Net investment
income (d) 5.16% 4.41% 5.28% 4.53%
Fees and expenses waived
or borne by the
Adviser (d) 0.30% 0.30% 0.31% 0.31%
Portfolio turnover 8% 8% 21% 21%
Net assets at end
of period (000) $ 79,423 $ 82,275 $ 74,059 $ 81,437
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.011 $ 0.011 $ 0.023 $ 0.023
(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>
24
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended January 31
===========================================================
1996 1995
Class A Class B Class A Class B
----------- ----------- ----------- -----------
<S> <C> <C> <C>
$ 7.080 $ 7.080 $ 7.890 $ 7.890
----------- ----------- ----------- ----------- (b)
0.400 0.345 0.418 0.363
0.552 0.552 (0.809) (0.809)
----------- ----------- ----------- -----------
0.952 0.897 (0.391) (0.446)
----------- ----------- ----------- -----------
(0.402) (0.347) (0.418) (0.363)
-- -- (0.001) (0.001)
----------- ----------- ----------- -----------
(0.402) (0.347) (0.419) (0.364)
----------- ----------- ----------- -----------
$ 7.630 $ 7.630 $ 7.080 $ 7.080
=========== =========== =========== ===========
13.77% 12.93% (4.85)% (5.57)%
=========== =========== =========== ===========
0.51% 1.25% 0.32% 1.07%
5.42% 4.68% 5.81% 5.06%
0.42% 0.42% 0.55% 0.55%
13% 13% 22% 22%
$ 80,039 $ 82,785 $ 74,616 $ 73,580
$ 0.031 $ 0.031 $ 0.039 $ 0.039
</TABLE>
25
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended January 31
===========================================================
1994 1993
Class A Class B Class A Class B (b)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.420 $ 7.420 $ 7.190 $ 7.200
----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.429 0.372 0.449 0.256
Net realized and
unrealized gain (loss) 0.465 0.465 0.270 0.257
----------- ----------- ----------- -----------
Total from Investment
Operations 0.894 0.837 0.719 0.513
----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.424) (0.367) (0.452) (0.256)
In excess of net
investment income -- -- (0.002) (0.002)
From net realized gains -- -- (0.021) (0.021)
In excess of net
realized gains -- -- (0.014) (0.014)
----------- ----------- ----------- -----------
Total Distributions
Declared to Shareholders (0.424) (0.367) (0.489) (0.293)
----------- ----------- ----------- -----------
Net asset value -
End of period $ 7.890 $ 7.890 $ 7.420 $ 7.420
=========== =========== =========== ===========
Total return(c)(d) 12.30% 11.49% 10.34% 7.23(e)
=========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS
Expenses 0.22% 0.97% -- 0.75(f)
Net investment income 5.48% 4.73% 6.00% 5.25(f)
Fees and expenses waived
or borne by the Adviser 0.65% 0.65% 0.90% 0.90(f)
Portfolio turnover 5% 5% 4% 4%
Net assets at end
of period (000) $ 91,436 $ 71,791 $ 63,126 $ 27,839
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.051 $ 0.051 $ 0.067 $ 0.042
(b) Class B shares were initially offered on June 8, 1992. Per share amounts
reflect activity from that date.
(c) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(d) Had the Adviser not waived or reimbursed a portion of expenses, total
return would have been reduced.
(e) Not annualized.
(f) Annualized.
</TABLE>
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Connecticut Tax-Exempt Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Colonial Connecticut Tax-Exempt Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call
Colonial at 1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Connecticut
Tax-Exempt Fund. This report may also be used as sales literature when preceded
or accompanied by the current prospectus which provides details of sales
charges, investment objectives, and operating policies of the Fund.
27
<PAGE>
[COLONIAL MUTUAL FUNDS LOGO]
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
CT-03/981D-0797 M (9/97)
- --------------------------------------------------------------------------------
