<PAGE>
[graphic omitted]
COLONIAL CALIFORNIA TAX-EXEMPT FUND ANNUAL REPORT
JANUARY 31, 1999
-------------------------------
NOT FDIC May Lose Value
Insured No Bank Guarantee
-------------------------------
<PAGE>
COLONIAL CALIFORNIA TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1998 - JANUARY 31, 1999
PORTFOLIO MANAGER COMMENTARY: "Interest rate volatility, low nominal interest
rates and a near-record level of supply created challenging conditions for
tax-exempt investors. Despite these hurdles, the Fund was well positioned. We
took advantage of declining interest rates and a strong California economy,
generating solid performance."
- Gary Swayze
COLONIAL CALIFORNIA TAX-EXEMPT FUND PERFORMANCE
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
Inception dates 6/16/86 8/4/92 8/1/97
- --------------------------------------------------------------------------------
12-month distributions declared per share (1) $0.455 $0.395 $0.419
- --------------------------------------------------------------------------------
SEC yields on 1/31/99 (2) 3.57% 2.99% 3.29%
- --------------------------------------------------------------------------------
Taxable-equivalent SEC yields (3) 6.52% 5.46% 6.01%
- --------------------------------------------------------------------------------
12-month total returns, assuming 6.23% 5.42% 5.74%(4)
reinvestment of all distributions and
no sales charge or contingent deferred
sales charge (CDSC)
- --------------------------------------------------------------------------------
Net asset value per share on 1/31/99 $7.73 $7.73 $7.73
- --------------------------------------------------------------------------------
QUALITY BREAKDOWN (as of 1/31/99)(5) TOP FIVE SECTORS (as of 1/31/99)(5)
- ------------------------------------ ------------------------------------
AAA 74.8% Local Appropriated 18.5%
AA 3.6% Special Property Tax 16.8%
A 2.5% Refunded/Escrowed 16.2%
BBB 10.1% Local General Obligations 8.4%
Nonrated 6.9% Water & Sewer 6.5%
Short-Term Obligations 2.1%
(1) A portion of the Fund's income may be subject to the alternative minimum
tax. The Fund may at times purchase tax-exempt securities at a discount.
Some or all of this discount may be included in the Fund's ordinary income,
and will be taxable when distributed.
(2) The 30-day SEC yields on January 31, 1999, reflect the portfolio's earning
power, net of expenses, and are expressed as an annualized percentage of the
public offering price at the end of the period. If the Advisor or its
affiliates had not waived certain expenses, the SEC yield would have been
2.98% for Class C shares.
(3) Taxable-equivalent SEC yields are based on the combined maximum effective
45.22% federal and California state income tax rate. This tax rate does not
reflect the phase out of exemptions or the reduction of otherwise allowable
deductions which occurs when Adjusted Gross Income exceeds certain levels.
(4) Performance results reflect any voluntary waiver of Fund expenses by the
Advisor or its affiliates. Absent this waiver, performance results would
have been lower.
(5) Quality and sector breakdowns are calculated as a percentage of total
investments, including short-term obligations. Because the Fund is actively
managed, there can be no guarantee the Fund will continue to maintain these
quality and sector breakdowns in the future.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Stephen E. Gibson]
I am pleased to present the annual report for Colonial California Tax-Exempt
Fund for the 12 months ended January 31, 1999.
The past 12 months were generally positive for bonds, although conditions varied
considerably as domestic and international events affected all sectors of the
bond market. Despite some economic uncertainty early in the year, the economy
continued to grow and inflation remained low, creating a positive climate for
bonds.
International events played a role in the strong U.S. bond market. The
economic turmoil in Asia that began in 1997 gradually spread to other
less-developed markets, most notably Russia and Latin America. During
periods of increased volatility, investors around the world sought the relative
quality and stability of U.S. Treasury bonds. Although demand for safety made
Treasurys the bond market's biggest winner, municipal bonds also benefited.
Colonial's disciplined bond fund management style and long-term investment
orientation served shareholders well during this volatile period, helping the
Fund outperform the majority of its peers over the past 12 months.1 For
investors seeking competitive levels of tax-free income and the potential for
long-term price appreciation, Colonial California Tax-Exempt Fund may
provide an attractive option.
The Portfolio Manager Report on the following pages will provide
you with more specific information on your Fund's performance and the market in
which your Fund invests. Thank you for choosing Colonial California Tax-Exempt
Fund and for giving us the opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
March 11, 1999
(1) Source: Lipper, Inc. Lipper rankings are based on the California Tax-Exempt
Municipal Funds universe. The Fund (Class A shares) ranked in the second
quartile (34 out of 107 funds) for the one-year period, in the second
quartile (29 out of 91 funds) for the three-year period, in the second
quartile (18 out of 63 funds) for the five-year period and in the third
quartile (24 out of 33 funds) for the ten-year period. 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.
Because economic and market conditions change frequently, there can be no
assurance that the trends discussed above or on the following pages will
continue.
<PAGE>
PORTFOLIO MANAGER REPORT
GARY SWAYZE is portfolio manager of Colonial California Tax-Exempt Fund and is a
senior vice president of Colonial Management Associates, Inc.
TAX-EXEMPT MARKET GENERATED MODEST GAINS
The period began on a positive note, with the U.S. economy strong and no clear
signs of inflation. Throughout the year a series of international crises were
manifested domestically, affecting both stock and bond prices. Instability in
Asia, Russia and Latin America contributed to an increase in the U.S. trade
deficit and concerns about corporate profitability. This fall, the Federal
Reserve Board lowered short-term interest rates three times in an effort to
renew investor confidence. Sentiment about how these events might impact the
U.S. economy in the long run shifted throughout the period, taking fixed-income
investors on a roller coaster ride through much of the year. Overall, bond
prices rose during the period.
Like the broader bond market, municipal bond prices were affected by global
events and interest rate volatility. In addition, the tax-exempt market
experienced a near-record level of issuance in 1998, as issuers took advantage
of lower interest rates to refinance existing debt and to finance new projects.
At times, the market found it difficult to absorb this supply.
FUND'S PERFORMANCE REFLECTS INVESTMENT STRATEGY
For the 12-month period, the Fund generated a total return of 6.23% for Class A
shares, based on net asset value. This compares favorably with the performance
of the Fund's Lipper competitive peer group, which averaged 5.89% for the same
time period. We attribute this performance to the Fund's investment strategy.
Our forecast for modest economic growth and low inflation led us to believe that
interest rates would decline. Since bond prices tend to rise when interest rates
fall, we emphasized bonds with a higher sensitivity to interest rate changes for
most of the year. These included noncallable bonds, which cannot be refinanced
at a lower rate of interest prior to maturity. The longer life span of these
bonds increases their sensitivity to changes in interest rates, often producing
attractive price gains when interest rates decline.
In the final months of the year, we targeted purchases in intermediate maturity
bonds with premium coupons, which were available at attractive prices. We
believe they offered relative value to investors and positioned the Fund well
for the market environment. We will continue to actively manage the portfolio in
search of other relative value opportunities.
CALIFORNIA ECONOMY AMONG THE NATION'S FASTEST GROWING
Employment growth was strong for the sixth straight year and unemployment
reached an eight-year low of 5.9% in 1998. Growth was particularly strong in
Southern California. For example, the "Inland Empire" of Riverside and San
Bernardino counties generated jobs at a fast pace as a result of its inexpensive
real estate, prime location for reaching markets in the Western U.S., and a
large labor pool. Furthermore, most employment was in sectors such as food
processing, metal products, warehousing and distribution - areas that are
relatively insulated from economic downturns. Silicon Valley also produced good
job and revenue growth, as the region's high-technology companies posted strong
performance. On the other hand, California's position as the nation's
second-largest Asian exporter had a negative effect, as overseas demand declined
significantly during 1998. The Asian crisis may reduce California's export
economy. However, we believe strong domestic consumer demand along with solid
growth in the construction, business service, entertainment and technology
sectors should enable the state's economic growth to continue, although perhaps
at a slower rate.
POSITIVE OUTLOOK FOR MUNICIPAL MARKET CONDITIONS
Looking ahead, inflation should remain low, as we expect productivity gains and
a worldwide surplus in manufacturing capacity to limit the potential for
substantial price increases. In the municipal market, we expect positive supply
and demand dynamics. We doubt total issuance will match 1998's near-record level
of $280 billion, partially because refinancing volume should slow down since
many issuers have already refinanced. Overall, lower supply combined with
generally positive expectations for the economic environment should have a
positive impact on municipal bond prices. However, as we end the eighth
consecutive year of economic expansion in the U.S., we will watch for events and
trends that could change our expectations and possibly lead us to alter our
investment strategy.
Recently, the Fund's shareholders approved a change in the Fund's fundamental
investment policy to re-classify from a diversified to a non-diversified fund.
We have no plans to change the Fund's broad diversification. However, this
modification gives the Fund opportunity to make large investments in the
securities of a single issuer if attractive opportunities present themselves.
<PAGE>
COLONIAL CALIFORNIA TAX-EXEMPT FUND'S INVESTMENT PERFORMANCE VS.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
Growth of $10,000 from 1/31/89-1/31/99
CLASS A SHARES
Based on NAV and POP
NAV POP LEHMAN
- --------------------------------------------------------------------------------
Jan 31, 89 $10,000 $10,000 $10,000
Mar 31, 89 9,957 9,484 9,862
Jun 30, 89 10,394 9,900 10,446
Sep 30, 89 10,423 9,928 10,453
Dec 31, 89 10,726 10,217 10,854
Mar 31, 90 10,794 10,281 10,903
Jun 30, 90 10,988 10,466 11,157
Sep 30, 90 11,009 10,486 11,164
Dec 31, 90 11,368 10,828 11,645
Mar 31, 91 11,595 11,044 11,908
Jun 30, 91 11,860 11,297 12,163
Sep 30, 91 12,266 11,683 12,636
Dec 31, 91 12,642 12,041 13,059
Mar 31, 92 12,699 12,096 13,098
Jun 30, 92 13,135 12,511 13,595
Sep 30, 92 13,397 12,761 13,956
Dec 31, 92 13,629 12,982 14,210
Mar 31, 93 14,087 13,418 14,738
Jun 30, 93 14,453 13,767 15,221
Sep 30, 93 14,875 14,169 15,735
Dec 31, 93 15,066 14,350 15,956
Mar 31, 94 14,178 13,505 15,080
Jun 30, 94 14,224 13,549 15,246
Sep 30, 94 14,311 13,632 15,351
Dec 31, 94 13,967 13,304 15,131
Mar 31, 95 15,104 14,387 16,201
Jun 30, 95 15,270 14,545 16,591
Sep 30, 95 15,652 14,909 17,068
Dec 31, 95 16,693 15,900 17,772
Mar 31, 96 16,324 15,548 17,558
Jun 30, 96 16,472 15,689 17,693
Sep 30, 96 16,924 16,120 18,098
Dec 31, 96 17,305 16,483 18,559
Mar 31, 97 17,151 16,337 18,515
Jun 30, 97 17,777 16,932 19,153
Sep 30, 97 18,384 17,511 19,730
Dec 31, 97 18,972 18,071 20,265
Mar 31, 98 19,119 18,211 20,499
Jun 30, 98 19,393 18,472 20,811
Sep 30, 98 19,935 18,988 21,450
Dec 31, 98 20,342 19,375 21,578
Jan 31, 99 20,365 19,398 21,835
VALUE OF A $10,000 INVESTMENT MADE ON 1/31/89
As of 1/31/99
- ----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
NAV POP NAV W/CDSC NAV W/CDSC
- ----------------------------------------------------------------------------
$20,365 $19,398 $19,404 $19,404 $20,226 $20,226
AVERAGE ANNUAL TOTAL RETURNS
As of 1/31/99
- ----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
INCEPTION 6/16/86 8/4/92 8/1/97
NAV POP NAV W/CDSC NAV W/CDSC
- ----------------------------------------------------------------------------
1 YEAR 6.23% 1.18% 5.42% 0.42% 5.74% 4.74%
- ----------------------------------------------------------------------------
5 YEARS 6.01 4.98 5.21 4.89 5.86 5.86
- ----------------------------------------------------------------------------
10 YEARS 7.37 6.85 6.85 6.85 7.30 7.30
- ----------------------------------------------------------------------------
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 contingent deferred sales charges (CDSC). Public
offering price (POP) returns include the maximum sales charge of 4.75% for Class
A shares. CDSC returns reflect the maximum charges of 5% for one year and 2% for
five years for Class B shares, and 1% for one year for Class C shares.
Performance results reflect any voluntary waivers or reimbursement of Fund
expenses by the Advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
Class B and Class C share (newer class shares) performance information includes
returns of the Fund's Class A shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. These Class A share
returns are not restated to reflect any expense differential (e.g., Rule 12b-1
fees) between Class A shares and the newer class shares. Had the expense
differential been reflected, the returns for periods prior to the inception of
the newer class shares would have been lower.
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 and do not incur fees or expenses. It is not
possible to invest directly in an index.
<PAGE>
INVESTMENT PORTFOLIO
JANUARY 31, 1999 (IN THOUSANDS)
MUNICIPAL BONDS - 97.4% PAR VALUE
- -------------------------------------------------------------------------------
EDUCATION - 2.1%
EDUCATION
State Educational Facilities Authority
Pooled College & University Project,
6.300% 04/01/21 $ 1,000 $ 1,090
Statewide Communities Development Authority,
Crossroads School for Arts & Sciences,
Series 1998,
6.000% 08/01/28 (g) 2,000 2,038
Statewide Communities Development Corp.,
J. Paul Getty Trust Center,
5.000% 10/01/23 4,250 4,250
--------
7,378
--------
...............................................................................
HEALTHCARE - 2.7%
HOSPITAL
Community Development,
St. Joe's Health Corp.,
5.250% 07/01/10 2,940 3,148
Contra Costa County,
Merrithew Memorial Hospital,
5.375% 11/01/17 2,000 2,089
Duarte, City of Hope Medical Center,
Series 1993,
6.000% 04/01/08 500 532
Hi-Desert Memorial Hospital,
5.500% 10/01/15 1,000 985
Riverside County Asset Leasing Corp.,
Riverside County Hospital Project, Series B,
5.700% 06/01/16 2,500 2,789
--------
9,543
--------
...............................................................................
HOUSING - 4.8%
ASSISTED LIVING/SENIOR - 0.4%
Abegskaton Gold River Lodge,
Series 1998,
6.375% 11/15/28 (g) 1,400 1,381
--------
MULTI-FAMILY - 0.1%
Santa Rosa, Chanate Lodge Project,
Series 1992,
6.625% 12/01/02 170 180
--------
SINGLE-FAMILY - 4.3%
Commonwealth of Puerto Rico Housing Finance Corp.,
Series B,
7.650% 10/15/22 260 274
Southern California Home Financing Authority:
Series A,
7.625% 10/01/22 830 857
Series 1990-A,
7.625% 10/01/23 345 361
State Housing Finance Agency:
Series A-1, Class I,
5.950% 08/01/16 3,000 3,203
Series 1990-D,
7.750% 08/01/10 320 336
Series 1997-B,
6.000% 08/01/16 1,600 1,712
State Rural Home Mortgage Finance Authority:
Series 1995-B,
7.750% 09/01/26 1,915 2,165
Series A-2,
7.000% 09/01/29 3,795 4,284
Series 1998 B-4,
5.750% 12/01/29 1,675 1,839
Stockton,
Series 1990-A,
7.400% 08/01/05 30 32
--------
15,063
--------
...............................................................................
OTHER - 17.1%
POOL/BOND BANK - 1.0%
State Public Capital Improvements
Financing Authority,
Joint Powers Agency, Series 1988-A,
8.500% 03/01/18 3,500 3,583
--------
REFUNDED/ESCROWED (A) - 16.1%
Carlsbad Unified School District,
Community Facility District No. 5,
Series 1990,
7.650% 09/01/14 1,000 1,047
Colton Public Financing Authority,
Series 1995,
7.500% 10/01/20 3,000 3,525
Commerce Joint Powers Financing Authority:
Multiple Project Loans,
Series A,
8.000% 03/01/21 30 33
Series 1991-A,
8.000% 03/01/21 970 1,079
Empire Union School District,
Mello-Roos Financing, Series 1990-A,
7.400% 10/01/15 1,000 1,088
Fontana Public Financing Authority,
North Fontana Redevelopment,
Series 1991-A,
7.750% 12/01/20 785 892
Fresno Unified School District, Phase VI,
Series 1991-A,
7.200% 05/01/11 1,000 1,103
Glendora Public Financing Authority,
Series-B,
7.625% 09/01/10 850 889
La Quinta Redevelopment Agency,
Series 1990,
8.400% 09/01/12 1,000 1,102
Los Angeles Convention & Exhibit Center,
Series 1985,
9.000% 12/01/20 500 660
Los Angeles County Transportation,
Metro Train Series 1991-A,
6.900% 07/01/21 1,000 1,105
Mojave Water Agency,
Morongo Basin Pipeline,
Series 1991,
6.950% 09/01/21 1,000 1,111
Moreno Valley Unified School District,
7.400% 09/01/16 20 22
Murrieta County Water District,
Series 1991,
8.300% 10/01/21 1,000 1,144
Orange County Community Facility,
District 87-4, Series 1990-A,
8.000% 08/15/15 1,000 1,091
Pomona, Series 1990-B,
7.500% 08/01/23 1,000 1,325
PR Commonwealth of Puerto Rico,
Series 1991,
7.300% 07/01/20 1,200 1,293
Rancho Mirage Joint Powers
Financing Authority,
Series 1991-A,
7.500% 04/01/17 1,545 1,708
Riverside County, Series 1989-A,
7.800% 05/01/21 2,500 3,398
Riverside Public Financing Authority,
Series-A,
8.000% 02/01/18 590 654
Rocklin, Stanford Ranch Community Facilities District,
Series 1990,
8.100% 11/01/15 1,000 1,101
Sacramento City Financing Authority,
Series 1991,
6.800% 11/01/20 2,500 2,783
Procter & Gamble Project,
Series 1995,
6.500% 07/01/21 6,500 7,598
Sacramento Unified School,
Community Facilities District No. 1,
Series B,
7.300% 09/01/13 1,760 2,027
San Joaquin Hills Transportation
Corridor Agency, Series 1993,
(b) 01/01/20 15,400 5,525
Santa Fe Springs Redevelopment Agency,
Consolidated Redevelopment Project,
Series 1992-A,
6.400% 09/01/22 4,585 5,129
Soledad Redevelopment Agency Project
Series 1992,
7.400% 11/01/12 915 1,056
State Health Facilities Financing Authority,
Children's Hospital of Los Angeles,
Series 1991-A,
7.125% 06/01/21 2,000 2,212
State Pollution Control Financing Authority,
North California Recycling Center, Series 1991-A,
6.750% 07/01/17 1,000 1,126
Stockton Community Facilities District,
Series 2,
7.750% 08/01/15 1,000 1,086
Virgin Islands Public Financing,
Series 1992-A,
7.250% 10/01/18 1,000 1,148
Watsonville Mammoth Lakes, Series B,
7.875% 06/01/11 500 560
Westminster Redevelopment Agency,
Project No. 1, Series 1993
6.200% 08/01/23 1,000 1,112
--------
56,732
--------
...............................................................................
TAX-BACKED - 55.9%
LOCAL APPROPRIATED - 18.4%
Alameda County, Capital Projects,
Series 1989,
(b) 06/15/14 2,185 1,052
Anaheim Public Financing Authority,
Series C,
6.000% 09/01/14 3,500 4,083
Anderson Water, Certificate of Participation,
7.900% 12/01/11 610 639
Bishop, Escalon & Lemoore Cities,
Series 1991-A,
7.700% 05/01/11 700 740
Compton Civic Center Project,
5.500% 09/01/15 3,000 3,080
Grossmont Unified High School District,
1991 Capital Projects,
(b) 11/15/06 4,500 3,283
Los Angeles Convention & Exhibition Authority,
Series 1993-A,
6.125% 08/15/11 5,000 5,915
Los Angeles County Public Works
Financing Authority, Series A,
5.250% 09/01/14 3,740 3,959
Modesto, Community Center Project,
Series 1993-A,
5.000% 11/01/23 2,235 2,299
Pasadena Civic Improvement Corp.,
Series 1996,
5.250% 02/01/16 3,020 3,152
Rancho Mirage Joint Powers
Financing Authority,
Civic Center, Series 1991-A,
7.500% 04/01/17 455 491
Riverside County, Historic Courthouse Project,
5.750% 11/01/17 2,255 2,482
San Mateo County:
Board of Education,
Series 1991,
7.100% 05/01/21 750 771
Joint Powers Authority,
Series A,
5.000% 07/15/15 (c) 1,000 1,023
Sacramento City Financing Authority,
Series A,
5.375% 11/01/14 4,000 4,373
Sacramento County, Public Facilities Project,
5.375% 02/01/19 6,000 6,262
Santa Ana Financing Authority,
Police Holding Facility, Series 1994-A,
6.250% 07/01/18 6,035 7,209
Santa Clara County Financing Authority,
Series A,
5.000% 11/15/17 3,500 3,570
Stanislaus County, Series A
5.250% 05/01/18 4,000 4,130
Tehachapi Water and Sewer District,
8.200% 11/01/20 2,000 2,137
Victor Elementary School District,
Series 1996,
6.450% 05/01/18 3,345 4,076
--------
64,726
--------
LOCAL GENERAL OBLIGATIONS - 8.3%
Benicia Unified School District,
Series 1994-C,
6.450% 06/01/19 3,870 4,499
Cabrillo Unified School District,
Series 1996-A,
(b) 08/01/15 3,000 1,360
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 7,802
East Whittier School City School District,
Series A,
5.750% 08/01/17 1,675 1,893
Fillmore Unified School District, Series A:
(b) 07/01/11 950 550
(b) 07/01/12 980 536
(b) 07/01/17 650 264
Franklin-McKinley School District,
Series A,
5.250% 07/01/16 1,705 1,784
Los Angeles Unified School District,
Series A,
5.000% 07/01/21 5,000 5,013
Rocklin Unified School District,
Series 1991-C,
(b) 07/01/20 6,920 2,362
Simi Valley Unified School District,
Series 1997,
5.250% 08/01/22 925 985
Whisman School District,
Series 1996 A:
(b) 08/01/15 1,595 734
(b) 08/01/16 1,645 716
--------
29,317
--------
SPECIAL NON-PROPERTY TAX - 2.1%
Commonwealth of Puerto Rico
Highway & Transportation Authority:
Series W,
5.500% 07/01/09 580 654
Series 1996 Y,
6.250% 07/01/12 3,000 3,609
Riverside County Transportation
Commission, Series 1996-A,
6.000% 06/01/09 (d) 2,000 2,334
San Diego Redevelopment Agency,
5.125% 09/01/13 (c) 800 846
--------
7,443
--------
SPECIAL PROPERTY TAX - 16.7%
Anaheim Public Financing Authority
Series A,
5.250% 02/01/18 3,000 3,111
Carson, Series 1992,
7.375% 09/02/22 935 1,006
Cerritos Public Financing Authority,
Los Coyotes Redevelopment Project,
Series 1993-A,
6.500% 11/01/23 2,000 2,489
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 1,096
Corona Community Facility District,
Foothill Ranch, Series 1990-A-1,
8.350% 09/01/20 1,000 1,021
Costa Mesa Public Financing,
Series 1991-A,
7.100% 08/01/21 890 947
Elk Grove Unified School District,
Community Facilities,
Series 1995:
(b) 12/01/18 2,720 1,019
6.500% 12/01/08 1,000 1,209
6.500% 12/01/24 4,055 5,062
La Mirada Redevelopment Agency,
Civic Theater Project, Series 1998,
5.700% 10/01/20 1,000 1,019
Los Angeles Community Redevelopment Agency,
Hollywood Redevelopment Project, Series 1998-C,
5.375% 07/01/18 1,665 1,798
Oakland Redevelopment Agency,
Central District Redevelopment Project, Series 1992,
5.500% 02/01/14 8,400 9,300
Rancho Cucamonga Redevelopment Agency,
Series 1996,
5.250% 09/01/16 4,000 4,184
Richmond Joint Powers Financing
Authority, Series 1990-A,
7.700% 10/01/10 870 936
Riverside County Public Financing Authority:
Series 1991-A,
8.000% 02/01/18 410 439
Redevelopment Projects, Series A,
5.250% 10/01/16 3,120 3,136
Riverside Unified School District,
Community Facilities District No. 2,
Series 1993-A,
7.250% 09/01/18 1,000 1,077
San Diego, Miramar Ranch North,
Series 1998,
5.375% 09/01/13 2,830 3,067
San Jose Redevelopment Agency,
Merged Area Redevelopment Project,
Series 1998,
5.000% 08/01/21 8,665 8,687
San Marcos Public Financing Authority,
5.800% 09/01/18 1,500 1,539
Santa Fe Springs Redevelopment Agency,
Consolidated Redevelopment Project,
Series 1992-A,
6.400% 09/01/22 2,690 2,968
Santa Margarita/Dana Point Authority,
Series 1994-B,
7.250% 08/01/13 2,000 2,606
Torrance Redevelopment Agency,
Downtown Redevelopment Project,
Series 1992,
7.125% 09/01/21 1,000 1,112
--------
58,854
--------
STATE APPROPRIATED - 5.8%
Commonwealth of Puerto Rico
Public Buildings Authority, Series 1993-M,
5.700% 07/01/16 2,250 2,380
State Public Works Board:
California State University,
5.250% 10/01/14 3,500 3,707
Department of Corrections Corcoran II Project,
Series 1996-A,
5.250% 01/01/21 4,000 4,086
Secretary of State & State Archives, Series 1992-A,
6.500% 12/01/08 (d) 1,000 1,209
State Prisons, Series 1993-A,
5.000% 12/01/19 6,000 6,196
Various State Prisons Projects, Series 1993-A,
5.250% 12/01/13 2,500 2,727
--------
20,305
--------
STATE GENERAL OBLIGATIONS - 4.6%
PR Commonwealth of Puerto Rico:
6.500% 07/01/14 2,000 2,451
Series 1995,
5.650% 07/01/15 1,000 1,134
Aqueduct & Sewer Authority,
6.000% 07/01/09 1,250 1,466
6.250% 07/01/13 2,750 3,305
State of California:
10.000% 02/01/10 (d) 2,000 3,005
5.500% 04/01/12 2,770 3,108
Series 1995,
10.000% 10/01/06 (d) 1,185 1,657
--------
16,126
--------
...............................................................................
TRANSPORTATION - 5.3%
AIRPORT - 2.5%
Los Angeles Department of Airports:
Los Angeles International Airport,
Series 1995-D,
5.500% 05/15/15 3,025 3,178
San Francisco City & County Airport Commission,
4.500% 05/01/18 2,310 2,229
Series 1998,
4.500% 05/01/26 3,500 3,295
--------
8,702
--------
TRANSPORTATION - 2.8%
Alameda Corridor Transportation,
4.750% 10/01/25 (c) 1,000 966
Los Angeles Harbor Department,
Series 1996-B,
5.375% 11/01/19 8,750 9,000
--------
9,966
--------
...............................................................................
UTILITY - 9.5%
INVESTOR OWNED - 0.9%
State Pollution Control Finance Authority,
San Diego Gas and Electric Co., Series 1996-A,
5.900% 06/01/14 2,650 3,058
--------
MUNICIPAL ELECTRIC - 2.2%
Commonwealth of Puerto Rico Electric
Power Authority:
Series 1989-N,
7.000% 07/01/07 365 376
Series 1989-O,
(b) 07/01/17 2,490 1,026
Reading Electric Systems,
IFRN (variable rate), Series 1992-A,
9.258% 07/08/22 750 1,010
Sacramento Municipal Utilities District:
Series 1993-G,
6.500% 09/01/13 1,500 1,838
Series K,
5.700% 07/01/17 1,500 1,684
Turlock Irrigation District,
Series 1996-A:
6.000% 01/01/11 1,000 1,166
6.000% 01/01/12 500 585
--------
7,685
--------
WATER & SEWER - 6.4%
Big Bear Lake, Series 1996,
6.000% 04/01/15 1,350 1,569
Compton, Sewer Revenue,
Series 1998,
5.375% 09/01/23 1,320 1,326
East Bay Municipal Utilities,
4.750% 06/01/21 2,000 1,946
Fresno, Series 1995-A:
6.000% 09/01/09 1,525 1,785
6.000% 09/01/10 1,420 1,663
Inglewood Redevelopment Agency,
5.250% 05/01/23 1,000 1,060
Los Angeles Waste Water,
4.000% 06/01/15 2,000 1,863
Metropolitan Water District of Southern California,
IFRN (variable rate),
8.483% 08/05/22 2,000 2,365
Mojave Water Agency, Morongo Basin Pipeline,
5.800% 09/01/22 4,000 4,329
San Diego County Water Authority,
Series 1997 A,
5.750% 05/01/11 2,100 2,416
Santa Maria, Series A,
(b) 08/01/14 2,000 964
State Department of Water Resources,
Central Valley Project, Series 1996-O,
4.750% 12/01/25 1,500 1,447
--------
22,733
--------
TOTAL INVESTMENTS (cost of $310,435)(e) 342,775
--------
SHORT-TERM OBLIGATIONS - 2.0%
- -------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (f)
CA Irvine Improvement Bond Act of 1915,
Series 1998,
3.000% 09/02/23 1,600 1,600
CA Irvine Ranch Water District,
3.000% 01/01/21 200 200
ID Health Facility Financing Authority,
2.700% 12/01/17 100 100
ID Portage Economic Development Revision,
Pedcor Investments, Series A,
2.850% 08/01/30 450 450
ID State Health Facilities Authority,
St. Lukes Regional Medical Facility,
Series 1995,
3.200% 05/01/22 4,280 4,280
MI Farmington Hills Hospital
Finance Authority,
Botsford General Hospital, Series 1991-B,
3.250% 02/15/16 100 100
NM Farmington, Arizona Public Service Co.,
Four Corners Project, Series 1994-B,
3.150% 09/01/24 200 200
NY Municipal Water and Sewer
Finance Authority,
Series 1995-A,
3.250% 06/15/25 100 100
NY New York City,
3.300% 10/01/20 200 200
--------
TOTAL SHORT-TERM OBLIGATIONS 7,230
--------
OTHER ASSETS & LIABILITIES, NET - 0.6% 2,019
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $352,024
========
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) 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.
(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) These securities, or a portion thereof, with a total market value of $3,662,
are being used to collateralize the delayed delivery purchase indicated in
note (c) above.
(e) Cost for federal income tax purposes is the same.
(f) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of January 31, 1999.
(g) These securities are exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
January 31, 1999, the value of these securities amounted to $3,419 or 0.97%
of net assets.
Acronym Name
------- ----
IFRN Inverse Floating Rate Note
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JANUARY 31, 1999
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $310,435) $342,775
Short-term obligations 7,230
--------
350,005
Receivable for:
Interest $ 5,437
Fund shares sold 422
Investments sold 212
Other 52 6,123
------- --------
Total Assets 356,128
LIABILITIES
Payable for:
Investments purchased 2,833
Fund shares repurchased 822
Distributions 436
Accrued:
Deferred Trustees fees 7
Other 6
-------
Total Liabilities 4,104
--------
NET ASSETS $352,024
========
Net asset value & redemption price per share -
Class A ($246,576/31,900) $7.73 (a)
========
Maximum offering price per share - Class A
($7.73/0.9525) $8.12 (b)
========
Net asset value & offering price per share -
Class B ($99,485/12,871) $7.73 (a)
========
Net asset value & offering price per share -
Class C ($5,963/771) $7.73 (a)
========
COMPOSITION OF NET ASSETS
Capital paid in $322,568
Overdistributed net investment income (456)
Accumulated net realized loss (2,428)
Net unrealized appreciation 32,340
--------
$352,024
========
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1999
(in thousands)
INVESTMENT INCOME
Interest $19,216
EXPENSES
Management fee $ 1,759
Service fee 542
Distribution fee - Class B 744
Distribution fee - Class C 26
Transfer agent 498
Bookkeeping fee 133
Audit fee 25
Trustees fee 17
Legal fee 4
Custodian fee 1
Registration fee 18
Reports to shareholders 10
Other 20
-------
Total expenses 3,797
Fees waived by the Distributor - Class C (10) 3,787
-------
-------
Net Investment Income 15,429
-------
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 3,737
Closed futures contracts 67
-------
Net Realized Gain 3,804
Change in net unrealized appreciation
during period on investments 1,288
-------
Net Gain 5,092
-------
Increase in Net Assets from Operations $20,521
=======
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended January 31
------------------------
INCREASE (DECREASE) IN NET ASSETS 1999 1998 (a)
Operations:
Net investment income $ 15,429 $ 16,823
Net realized gain 3,804 3,009
Net unrealized appreciation 1,288 17,005
-------- --------
Net Increase from Operations 20,521 36,837
Distributions:
From net investment income - Class A (11,411) (12,766)
In excess of net investment income - Class A (382) (22)
From net realized gains - Class A (2,411) (2,150)
In excess of net realized gains - Class A (520) (134)
From net investment income - Class B (3,802) (4,231)
In excess of net investment income - Class B (128) (7)
From net realized gains - Class B (966) (855)
In excess of net realized gains - Class B (208) (53)
From net investment income - Class C (142) (8)
In excess of net investment income - Class C (5) -
From net realized gains - Class C (45) (5)
In excess of net realized gains - Class C (10) -
-------- --------
491 16,606
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 12,511 17,872
Value of distributions reinvested - Class A 7,325 6,896
Cost of shares repurchased - Class A (29,404) (44,923)
-------- --------
(9,568) (20,155)
-------- --------
Receipts for shares sold - Class B 12,720 6,656
Value of distributions reinvested - Class B 3,076 2,880
Cost of shares repurchased - Class B (18,111) (13,410)
-------- --------
(2,315) (3,874)
-------- --------
Receipts for shares sold - Class C 5,520 631
Value of distributions reinvested - Class C 182 10
Cost of shares repurchased - Class C (341) (89)
-------- --------
5,361 552
-------- --------
Net Decrease from Fund Share Transactions (6,522) (23,477)
-------- --------
Total Decrease (6,031) (6,871)
NET ASSETS
Beginning of period 358,055 364,926
-------- --------
End of period (net of overdistributed
net investment income of $456 and
$7, respectively) $352,024 $358,055
======== ========
(a) Class C shares were initially offered on August 1, 1997.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
(in thousands) Year ended January 31
------------------------
NUMBER OF FUND SHARES 1999 1998 (a)
Sold - Class A 1,634 2,386
Issued for distributions reinvested - Class A 956 918
Repurchased - Class A (3,835) (5,994)
-------- --------
(1,245) (2,690)
-------- --------
Sold - Class B 1,658 889
Issued for distributions reinvested - Class B 402 383
Repurchased - Class B (2,359) (1,792)
-------- --------
(299) (520)
-------- --------
Sold - Class C 720 83
Issued for distributions reinvested - Class C 24 1
Repurchased - Class C (45) (12)
-------- --------
699 72
-------- --------
(a) Class C shares were initially offered on August 1, 1997.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999
NOTE 1. ACCOUNTING POLICIES
...............................................................................
ORGANIZATION: Colonial California Tax Exempt Fund (the Fund), a series of
Colonial Trust V, is a diversified portfolio of a Massachusetts business trust,
registered under the Investment Company Act of 1940, as amended as an open-end
management investment company. The Fund's investment objective is to seek as
high a level of after-tax total return, as is consistent with prudent risk, by
pursuing current income exempt from federal and California state personal income
tax 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 three classes of shares: Class A, Class B, and
Class C. Class A shares are sold with a front-end sales charge and a 1.00%
contingent deferred sales charge on redemptions made within eighteen months on
an original purchase of $1 million to $5 million. Class B shares 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 for
approximately eight years. Class C shares are subject to a contingent deferred
sales charge on redemptions made within one year after purchase and an annual
distribution fee.
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 for which market quotations are not readily available 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 and 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 and Class C distribution fees) 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 and Class C 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 and Class C shares
only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable and tax-exempt
income, no federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; market
discount is not accreted. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records distributions daily
and pays monthly.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
...............................................................................
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Advisor) is the
investment Advisor of the Fund and furnishes accounting and other services and
office facilities for a monthly fee based on the Fund's pro-rata portion of the
combined average net assets of the funds constituting Trust V as follows:
Average Net Assets Annual Fee Rate
------------------ ---------------
First $2 billion 0.50%
Over $2 billion 0.45%
BOOKKEEPING FEE: The Advisor 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: Liberty Funds Services, Inc., formerly Colonial Investor
Services Center, Inc. (the Transfer Agent), an affiliate of the Advisor,
provides shareholder services for a monthly fee equal to 0.13% annually of the
Funds average net assets and receives reimbursement for certain out-of-pocket
expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Funds
Distributor, Inc., formerly Liberty Financial Investments, Inc. (the
Distributor), a subsidiary of the Advisor, is the Fund's principal underwriter.
For the year ended January 31, 1999, the Fund has been advised that the
Distributor retained net underwriting discounts of $25,499 on sales of the
Fund's Class A shares and received contingent deferred sales charges (CDSC) of
none, $216,770, and $2,964 on Class A, Class B and Class C share redemptions,
respectively.
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 and Class C shares. The Distributor has voluntarily
agreed, until further notice, to waive a portion of the Class C share
distribution fee so that it does not exceed 0.45% annually. 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 Advisor has agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service and distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 0.80% annually of the Fund's average net
assets.
For the year ended January 31, 1999, 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 Advisor.
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.
The Fund has an agreement with its custodian bank under which custodian fees
were reduced by balance credits of $7,696 applied during the year ended January
31, 1999. The Fund could have reinvested a portion of the assets utilized in
connection with the expense offset arrangements in an income producing asset if
it had not entered into such an agreement.
NOTE 3. PORTFOLIO INFORMATION
...............................................................................
INVESTMENT ACTIVITY: For the year ended January 31, 1999, purchases and sales of
investments, other than short-term obligations, were $44,549,994 and
$55,575,920, respectively.
Unrealized appreciation (depreciation) at January 31, 1999, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $32,347,040
Gross unrealized depreciation (7,360)
-----------
Net unrealized appreciation $32,339,680
===========
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 Advisor 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 4. LINE OF CREDIT
...............................................................................
The Fund may borrow up to 33 1/3% 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 for the
year ended January 31, 1999.
NOTE 5. RESULTS OF SPECIAL SHAREHOLDER MEETING (UNAUDITED)
...............................................................................
On October 30, 1998, a Special Meeting of Shareholders of the Fund was held to
approve the following items, all as described in the proxy statement for the
meeting. On August 21, 1998, the record date for the Meeting, the Fund had
outstanding 45,765,301 shares of beneficial interest. The votes cast at the
meeting are as follows:
AUTHORITY
FOR WITHHELD
--- --------
To Elect a Board of Trustees:
Robert J. Birnbaum 24,938,046 909,769
Tom Bleasdale 24,937,186 910,629
John Carberry 24,929,493 918,322
Lora S. Collins 24,942,252 905,563
James E. Grinnell 24,942,252 905,563
Richard W. Lowry 24,942,252 905,563
Salvatore Macera 24,929,493 918,322
William E. Mayer 24,942,252 905,563
James L. Moody, Jr. 24,942,252 905,563
John J. Neuhauser 24,942,252 905,563
Thomas E. Stitzel 24,929,493 918,322
Robert L. Sullivan 24,938,046 909,769
Anne-Lee Verville 24,929,493 918,322
To amend fundamental investment policies regarding borrowing and lending.
FOR AGAINST ABSTAIN
--- ------- -------
19,151,607 1,000,525 1,693,172
To amend the fundamental investment policy regarding diversification.
FOR AGAINST ABSTAIN
--- ------- -------
19,273,442 816,874 1,754,989
To approve policies for a master fund/feeder fund structure.
FOR AGAINST ABSTAIN
--- ------- -------
19,080,769 928,760 1,835,773
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
Year ended January 31
-------------------------------------
1999
Class A Class B Class C
-------- ------- -------
Net asset value -
Beginning of period $ 7.720 $ 7.720 $7.720
-------- ------- ------
Net investment
income 0.354 0.294 0.318 (a)
Net realized and
unrealized gain 0.111 0.111 0.111
-------- ------- ------
Total from Investment
Operations 0.465 0.405 0.429
-------- ------- ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.352) (0.294) (0.317)
In excess of net investment
income (0.012) (0.010) (0.011)
From net realized gains (0.075) (0.075) (0.075)
In excess of net realized gains (0.016) (0.016) (0.016)
-------- ------- ------
Total Distributions
Declared to Shareholders (0.455) (0.395) (0.419)
-------- ------- ------
Net asset value -
End of period $ $7.730 $ 7.730 $7.730
======== ======= ======
Total return (d) 6.23% 5.42% 5.74% (e)
======== ======= ======
RATIOS TO AVERAGE NET ASSETS
Expenses (g) 0.86% 1.61% 1.31% (a)
Net investment
income (g) 4.60% 3.85% 4.15% (a)
Portfolio turnover 13% 13% 13%
Net assets at end
of period (000) $246,576 $99,485 $5,963
(a) Net of fees waived by the Distributor which amounted to $0.023 per share and
0.30%
(b) Class C shares were initially offered on August 1, 1997. Per share amounts
reflect activity from that date.
(c) Net of fees waived by the Distributor which amounted to $0.011 per share and
0.30%.
(d) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(e) Had the Distributor not waived a portion of expenses, total return would
have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(h) Annualized.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended January 31
- -------------------------------------------------------------------------------
1998 1997
Class A Class B Class C (b) Class A Class B
-------- --------- --------- --------- ---------
$ 7.370 $ 7.370 $ 7.660 $ 7.540 $ 7.540
-------- --------- --------- --------- ---------
0.366 0.310 0.164 (c) 0.386 0.331
0.426 0.426 0.132 (0.173) (0.173)
-------- --------- --------- --------- ---------
0.792 0.736 0.296 0.213 0.158
-------- --------- --------- --------- ---------
(0.369) (0.313) (0.167) (0.383) (0.328)
(0.004) (0.004) - - -
(0.068) (0.068) (0.069) - -
(0.001) (0.001) - - -
-------- --------- --------- --------- ---------
0.442 (0.386) (0.236) (0.383) (0.328)
-------- --------- --------- --------- ---------
$ 7.720 $ 7.720 $ 7.720 $ 7.370 $ 7.370
======== ========= ========= ========= =========
11.05% 10.23% 3.93% (e)(f) 2.98% 2.21%
======== ========= ========= ========= =========
0.87% 1.62% 1.32% (c)(h) 0.88% 1.63%
4.92% 4.17% 4.32% (c)(h) 5.23% 4.48%
31% 31% 31% 25% 25%
$255,838 $ 101,657 $ 101,657 $ 264,053 $ 100,873
- -------------------------------------------------------------------------------
Federal Income Tax information (unaudited) Approximately 99.50% of the income
distributions will be treated as exempt for federal income tax purposes.
For the fiscal year ended January 31, 1999 the Fund earned $ 3,332,514 of long
term capital gains of which none and $ 3,332,514 are 28% and 20% rate gains,
respectively.
Of the distribution declared daily in January and paid January
27, 1999, $56,210 (approximately $0.0012 per share) was derived from long term
capital gains.
- --------------------------------------------------------------------------------
<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> <C>
Net asset value -
Beginning of period $ 6.870 $ 6.870 $ 7.660 $ 7.660
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a) 0.388 0.334 0.413 0.360
Net realized and
unrealized (loss) 0.671 0.671 (0.791) (0.791)
-------- -------- -------- --------
Total from Investment
Operations 1.059 1.005 (0.378) (0.431)
-------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.389) (0.335) (0.412) (0.359)
-------- -------- -------- --------
Net asset value -
End of period $ 7.540 $ 7.540 $ 6.870 $ 6.870
======== ======== ======== ========
Total return (b)(c) 15.78% 14.94% (4.83)% (5.55)%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses 0.89% (d) 1.64% (d) 0.77% 1.52%
Net investment
income 5.33% (d) 4.58% (d) 5.91% 5.16%
Fees and expenses
waived or borne
by the Advisor 0.01% (d) 0.01% (d) 0.06% 0.06%
Portfolio turnover 47% 47% 47% 47%
Net assets at end
of period (000) $304,581 $106,925 $301,912 $ 98,975
(a) Net of fees and expenses waived or borne by the Advisor which amounted to:
$ 0.001 $ 0.001 $ 0.004 $ 0.004
(b) Total return at net asset value assuming all distributions reinvested and no initial
sales charge or contingent deferred sales charge.
(c) Had the Advisor 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 year's ratios are net of benefits received, if any.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST V AND THE SHAREHOLDERS OF COLONIAL CALIFORNIA
TAX-EXEMPT FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial California Tax-Exempt Fund
(the "Fund") (a series of Colonial Trust V) at January 31, 1999, the results of
its operations, the changes in its net assets and the financial highlights for
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and the financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of portfolio positions at January 31, 1999 by correspondence with
the custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 11, 1999
<PAGE>
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale or exchange, you
receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
LIBERTY FINANCIAL INVESTMENTS INVESTOR OPPORTUNITIES: Mailed with your quarterly
account statements, this newsletter highlights timely investment strategies,
portfolio manager commentary and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Your Fund 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 us 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 fund distributed by Liberty Funds Distributor, Inc. 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 within one year, you can reinvest in any fund distributed by
Liberty Funds Distributor 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 Fund 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
processing 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 fund
with a balance of $5,000 into the same share class of up to four other funds
distributed by Liberty Funds Distributor. Minimum for each transfer is $100.
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 the Transfer Agent. 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 US
BY PHONE OR BY MAIL
BY TELEPHONE
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 service 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.
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 fund distributed by Liberty Funds Distributor,
Inc., call Monday to Friday, 8:30 a.m. to 6:30 p.m. ET.
BY MAIL
LIBERTY FUNDS SERVICES, 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:
Liberty Funds Services, 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
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 and the most recent
copy of the Liberty Funds Distributor, Inc. Performance Update.
*Effective October 1, 1998, Colonial Investors Service Center, Inc. - the
Transfer Agent for Colonial, Crabbe Huson, Newport Funds and Stein Roe Advisor
Funds - changed its name to Liberty Funds Services, Inc.
<PAGE>
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (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, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
[logo] L I B E R T Y
COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
Liberty Funds Distriburtor, Inc. (C)1999
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
CA-02/597G-0199 (3/99) 99/278
