<PAGE>
- --------------------------------------------------
COLONIAL CONNECTICUT TAX-EXEMPT FUND ANNUAL REPORT
- --------------------------------------------------
January 31,1999
[graphic omitted]
------------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
------------------------------
<PAGE>
COLONIAL CONNECTICUT TAX-EXEMPT FUND HIGHLIGHTS
FEBRUARY 1, 1998 - JANUARY 31,1999
PORTFOLIO MANAGER COMMENTARY: "The Fund was positioned for a declining
interest rate environment. Interest rates did decline modestly during parts
of the period, but varied considerably. While the lack of a strong market
direction restrained performance of the portfolio's more interest rate sensitive
bonds, Connecticut's strong economy, responsible fiscal management and
significant financial reserves supported the prices of many of the Fund's
holdings."
-- Gary Swayze
Colonial Connecticut Tax-Exempt Fund Performance
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
Inception dates 11/1/91 6/8/92 8/1/97
- --------------------------------------------------------------------------------
12-month distributions declared per share(1) $0.378 $0.317 $0.342
- --------------------------------------------------------------------------------
SEC yields on 1/31/99(2) 3.46% 2.88% 3.17%
- --------------------------------------------------------------------------------
Taxable-equivalent SEC yields(3) 6.00% 4.99% 5.50%
- --------------------------------------------------------------------------------
12-month total returns, assuming reinvestment 6.54% 5.73% 6.05%
of all distributions and no sales charge or
contingent deferred sales charge (CDSC)(4)
- --------------------------------------------------------------------------------
Net asset value per share on 1/31/99 $7.95 $7.95 $7.95
- --------------------------------------------------------------------------------
QUALITY BREAKDOWN(5) (as of 1/31/99) TOP FIVE SECTORS(5) (as of 1/31/99)
- ------------------------------------ -----------------------------------
AAA ..........................54.7% Local General Obligations ....21.5%
AA ...........................29.2% Hospitals ....................13.2%
A .............................9.3% State General Obligations ....12.1%
BBB ...........................1.5% Single Family .................8.1%
BB ............................0.6% Special Non-Property Tax. .....7.5%
Nonrated ......................1.8%
Short-Term Obligations ........2.9%
(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 or borne certain Fund expenses, the SEC yields
would have been 3.32% for Class A shares, 2.74% for Class B shares and 2.86%
for Class C shares.
(3) Taxable-equivalent SEC yields are based on the combined maximum effective
42.3% federal and Connecticut 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 waivers or reimbursements of Fund
expenses by the Advisor or its affiliates. Absent these waivers or
reimbursement arrangements, 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 Connecticut 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 Connecticut 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 Connecticut 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 Connecticut Tax-Exempt
Municipal Funds universe. The Fund (Class A shares) ranked in the first
quartile (3 out of 28 funds) for the one-year period, in the first quartile
(2 out of 22 funds) for the three-year period and in the first quartile (3
out of 13 funds) for the five-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 Connecticut 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 6.54% 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 5.94% 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.
CONNECTICUT'S ECONOMIC EXPANSION CONTINUED
Connecticut made good economic gains during the past year. Employment, retail
sales, housing permits and gross state product were up, and personal income
remained the highest in the nation. These conditions helped to increase the
amount of taxes collected and contributed to the state's robust fiscal health.
Progress was driven primarily by two regions. Fairfield County, in the state's
Southwestern corner, benefited from numerous Fortune 500 headquarters and an
expanding financial services and investment management sector. The Southeastern
region benefited from growth at the Mohegan Sun and Foxwoods casinos. Foxwoods
ranks as Connecticut's second largest employer, with nearly 12,000 employees. We
expect the state's fundamentals will remain sound and that its economic
expansion will continue in 1999. Gains may slow, however, as the economy
approaches full employment and growth in the financial services sector slows.
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 as many
issuers have already refinanced. Overall, lower supply combined with generally
positive expectations for the economic environment and state and local budget
surpluses 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.
<PAGE>
COLONIAL CONNECTICUT TAX-EXEMPT FUND'S INVESTMENT PERFORMANCE VS.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
Change in value of $10,000 from 11/1/91 - 1/31/99
CLASS A SHARES
Based on NAV and POP
AS OF DATE NAV POP LEHMAN
- ---------- ------- ------- -------
Oct 31, 91 $10,000 $10,000 $10,000
Nov 30, 91 9,983 9,509 10,028
Dec 31, 91 10,234 9,748 10,243
Jan 31, 92 10,231 9,745 10,266
Feb 29, 92 10,243 9,756 10,270
Mar 31, 92 10,211 9,726 10,274
Apr 30, 92 10,295 9,806 10,365
May 31, 92 10,465 9,968 10,487
Jun 30, 92 10,680 10,173 10,663
Jul 31, 92 10,999 10,476 10,983
Aug 31, 92 10,819 10,305 10,876
Sep 30, 92 10,875 10,359 10,947
Oct 31, 92 10,679 10,172 10,839
Nov 30, 92 11,019 10,496 11,033
Dec 31, 92 11,143 10,613 11,146
Jan 31, 93 11,290 10,753 11,276
Feb 28, 93 11,711 11,155 11,683
Mar 31, 93 11,600 11,049 11,560
Apr 30, 93 11,718 11,161 11,677
May 31, 93 11,790 11,230 11,742
Jun 30, 93 12,030 11,458 11,938
Jul 31, 93 12,052 11,480 11,954
Aug 31, 93 12,325 11,740 12,203
Sep 30, 93 12,490 11,896 12,342
Oct 31, 93 12,481 11,889 12,366
Nov 30, 93 12,346 11,760 12,257
Dec 31, 93 12,575 11,978 12,515
Jan 31, 94 12,678 12,076 12,658
Feb 28, 94 12,348 11,761 12,330
Mar 31, 94 11,774 11,215 11,828
Apr 30, 94 11,831 11,269 11,929
May 31, 94 11,954 11,387 12,032
Jun 30, 94 11,864 11,301 11,958
Jul 31, 94 12,119 11,544 12,178
Aug 31, 94 12,144 11,567 12,220
Sep 30, 94 11,921 11,354 12,041
Oct 31, 94 11,613 11,061 11,827
Nov 30, 94 11,285 10,749 11,613
Dec 31, 94 11,664 11,110 11,868
Jan 31, 95 12,062 11,489 12,208
Feb 28, 95 12,411 11,822 12,563
Mar 31, 95 12,539 11,943 12,707
Apr 30, 95 12,547 11,951 12,722
May 31, 95 12,847 12,237 13,128
Jun 30, 95 12,680 12,078 13,013
Jul 31, 95 12,723 12,118 13,136
Aug 31, 95 12,920 12,306 13,303
Sep 30, 95 13,030 12,411 13,387
Oct 31, 95 13,229 12,600 13,582
Nov 30, 95 13,481 12,841 13,807
Dec 31, 95 13,647 12,998 13,940
Jan 31, 96 13,723 13,071 14,045
Feb 29, 96 13,602 12,955 13,950
Mar 31, 96 13,408 12,771 13,772
Apr 30, 96 13,395 12,758 13,733
May 31, 96 13,399 12,763 13,728
Jun 30, 96 13,532 12,890 13,878
Jul 31, 96 13,665 13,016 14,003
Aug 31, 96 13,652 13,003 14,000
Sep 30, 96 13,824 13,167 14,196
Oct 31, 96 13,959 13,296 14,356
Nov 30, 96 14,208 13,533 14,619
Dec 31, 96 14,157 13,484 14,557
Jan 31, 97 14,200 13,526 14,585
Feb 28, 97 14,358 13,676 14,719
Mar 31, 97 14,192 13,518 14,522
Apr 30, 97 14,292 13,613 14,644
May 31, 97 14,489 13,800 14,865
Jun 30, 97 14,647 13,951 15,023
Jul 31, 97 15,001 14,288 15,439
Aug 31, 97 14,888 14,181 15,294
Sep 30, 97 15,068 14,352 15,476
Oct 31, 97 15,170 14,449 15,575
Nov 30, 97 15,253 14,528 15,667
Dec 31, 97 15,458 14,723 15,896
Jan 31, 98 15,621 14,879 16,059
Feb 28, 98 15,622 14,880 16,064
Mar 31, 98 15,624 14,881 16,079
Apr 30, 98 15,524 14,787 16,006
May 31, 98 15,788 15,038 16,259
Jun 30, 98 15,850 15,097 16,323
Jul 31, 98 13,852 15,099 16,364
Aug 31, 98 15,975 15,217 16,617
Sep 30, 98 16,243 15,472 16,824
Oct 31, 98 16,368 15,591 16,824
Nov 30, 98 16,349 15,572 16,883
Dec 31, 98 16,475 15,692 16,925
Jan 31, 99 16,642 15,852 17,127
VALUE OF A $10,000 INVESTMENT MADE ON 11/1/91
As of 1/31/99
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
NAV POP NAV W/CDSC NAV W/CDSC
- --------------------------------------------------------------------------------
$16,642 $15,852 $15,840 $15,840 $16,529 $16,529
AVERAGE ANNUAL TOTAL RETURNS
As of 1/31/99
CLASS A CLASS B CLASS C
INCEPTION 11/1/91 6/8/92 8/1/97
NAV POP NAV W/CDSC NAV W/CDSC
- --------------------------------------------------------------------------------
1 YEAR 6.54% 1.48% 5.73% 0.73% 6.05% 5.05%
5 YEARS 5.59 4.57 4.80 4.47 5.45 5.45
LIFE 7.27 6.55 6.54 6.54 7.17 7.17
- --------------------------------------------------------------------------------
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>
<TABLE>
INVESTMENT PORTFOLIO
JANUARY 31, 1999 (IN THOUSANDS)
<CAPTION>
MUNICIPAL BONDS - 96.3% PAR VALUE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 6.6%
EDUCATION - 5.9%
State Health & Educational
Facilities Authority:
Connecticut College, Series C1,
5.500% 7/1/27 $1,000 $ 1,059
Hopkins School, Series 1998-A,
4.750% 7/1/23 1,385 1,348
Trinity College, Series 1998-F,
5.500% 7/1/21 1,000 1,100
State University System Issue, Series-B,
5.250% 11/1/17 2,500 2,608
Quinnipiac College
4.700% 7/1/15 1,250 1,255
Yale University, Series 1992, IFRN,
8.542% 6/10/30 2,500 2,853
--------
10,223
--------
STUDENT LOAN - 0.7%
State Higher Education
Supplemental Loan Authority:
Series 1991-A,
7.200% 11/15/10 720 767
Series 1992-A,
6.375% 11/15/99 390 398
--------
1,165
--------
...........................................................................................
HEALTHCARE - 17.6%
HOSPITAL - 13.1%
State Health & Educational
Facilities Authority:
Bridgeport Hospital, Series A,
6.500% 7/1/12 1,000 1,094
Danbury Hospital, Series E,
6.500% 7/1/14 1,400 1,509
Hospital for Specialty Care, Series B,
5.375% 7/1/17 2,500 2,490
Norwalk Hospital, Series D,
6.250% 7/1/12 1,750 1,904
St. Francis Hospital & Medical Center, Series B,
6.125% 7/1/10 1,000 1,093
St. Mary's Hospital, Series E,
5.500% 7/1/13 1,440 1,533
St. Raphael Hospital:
Series E,
6.750% 7/1/13 1,400 1,516
Series 1992-F,
6.200% 7/1/14 750 817
Series 1992-G,
6.200% 7/1/14 225 245
Series 1993-H,
5.250% 7/1/09(a) 3,410 3,746
Waterbury Hospital,
7.000% 7/1/20(a) 4,450 4,734
William W. Backus Hospital, Series C,
6.000% 7/1/12 250 274
Yale-New Haven Hospital:
Series G,
6.500% 7/1/12 500 547
Series 1996-H,
5.500% 7/1/13 1,000 1,084
--------
22,586
--------
NURSING HOME - 4.5%
State Development Authority:
Clintonville Manor Realty, Inc.,
Series 1992,
6.750% 6/20/21 1,490 1,583
Duncaster Inc.,
Series 1992,
6.700% 9/1/07 500 550
6.750% 9/1/15 2,500 2,739
State Health & Educational
Facilities Authority:
Noble Horizons Project, Series 1993,
5.875% 11/1/12 640 688
Pope John Paul II Center for Health,
6.250% 11/1/13 2,000 2,245
--------
7,805
--------
...........................................................................................
HOUSING - 10.0%
MULTI-FAMILY - 2.0%
New Britain Housing Authority,
Nathan Hale Apartments:
Series 1992-A,
6.500% 7/1/02 85 90
Series 1992-B,
6.875% 7/1/24 2,590 2,754
Waterbury Nonprofit Housing Corp,
Fairmont Heights, Series 1993-A,
6.500% 1/1/26 600 631
--------
3,475
--------
SINGLE-FAMILY - 8.0%
State Housing Finance Authority:
Series 1990-B4,
7.300% 11/15/03 5 5
Series 1991-C1,
6.450% 11/15/11 1,325 1,419
Series 1991-C2,
6.700% 11/15/22 75 80
Series 1991-C,
6.600% 11/15/23 1,580 1,701
Series 1992-B,
6.700% 11/15/12 2,215 2,412
Series 1993-B,
5.650% 5/15/06 550 585
6.200% 5/15/12 5,000 5,328
Series C1,
6.350% 5/15/17 1,135 1,216
Series D-2,
5.600% 11/15/21 1,000 1,038
--------
13,784
--------
...........................................................................................
OTHER - 2.2%
REFUNDED/ESCROWED(b)
PR Commonwealth of Puerto Rico,
Series 1994,
6.500% 7/1/23 1,500 1,732
State Health & Educational
Facilities Authority:
Lutheran General Health Care System, Series 1989,
7.250% 7/1/04 135 148
New Britain Hospital, Series 1991-A,
7.750% 7/1/22 200 231
Stamford, Series 1995,
5.250% 3/15/14 590 644
Trinity College, Series C,
6.000% 7/1/12 1,000 1,100
--------
3,855
--------
...........................................................................................
OTHER REVENUE - 2.0%
INDUSTRIAL - 1.4%
State Development Authority,
Pfizer Inc. Project,
Series 1994,
7.000% 7/1/25 2,000 2,345
--------
PAPER PRODUCTS - 0.6%
Sprague,
International Paper Co. Project, Series A,
5.700% 10/1/21 1,000 1,026
--------
RESOURCE RECOVERY - 3.6%
DISPOSAL - 1.8%
State Development Authority,
Sewer Sludge Disposal Facilities,
Series 1996,
8.250% 12/1/06 1,250 1,436
State Disposal Facility,
Netco Waterbury Ltd.,
Series 1995,
9.375% 6/1/16 1,450 1,707
--------
3,143
--------
RESOURCE RECOVERY - 1.8%
Bristol Resource Recovery Facility
Operation Commitee,
Ogden Martin Systems, Inc., Series 1995,
6.500% 7/1/14 1,500 1,650
State Resource Recovery Authority,
American Re-Fuel Co.,
Series 1992-A,
6.450% 11/15/22 1,425 1,520
--------
3,170
--------
...........................................................................................
TAX-BACKED - 47.6%
LOCAL GENERAL OBLIGATIONS - 21.3%
Bethel,
6.500% 2/15/09 1,220 1,468
Bridgeport:
Series 1996-A,
6.500% 9/1/08 3,000 3,603
Series A,
6.250% 3/1/12 2,465 2,937
Danbury:
Series 1992,
5.625% 8/15/11 690 787
Series 1994:
4.500% 2/1/12 1,280 1,309
4.500% 2/1/13 1,280 1,299
East Haddam, Series 1991,
6.300% 6/15/09 260 283
Farmington, Series 1993:
5.700% 1/15/12 590 673
5.700% 1/15/13 570 649
Granby, Series 1993:
6.500% 4/1/09 200 240
6.550% 4/1/10 175 212
Griswold, Series 1992,
6.000% 4/15/09 410 447
Hamden, Series 1992:
6.000% 10/1/11 425 464
6.000% 10/1/12 425 464
Hartford County Metropolitan District:
5.625% 2/1/11 600 676
5.625% 2/1/12 600 677
5.625% 2/1/13 600 676
Series 1991,
6.200% 11/15/10 220 262
Series 1993,
5.200% 12/1/12 600 658
5.200% 12/1/13 500 546
Montville, Series 1993,
6.300% 3/1/12 335 401
New Britain:
Series 1992,
6.000% 2/1/08 400 461
Series 1993-A,
6.000% 10/1/12 2,000 2,344
Series 1993-B,
6.000% 3/1/12 1,000 1,167
North Branford:
6.200% 2/15/11 195 209
6.200% 2/15/12 225 241
Norwich, Series 1994:
5.750% 9/15/13 875 964
5.750% 9/15/14 870 949
Plainfield, Series 1992,
6.375% 8/1/11 500 550
Somers:
6.250% 1/15/08 270 289
6.000% 1/15/11 125 133
South Windsor, Series 1992,
6.200% 9/1/10 495 535
Stamford:
Series 1992,
6.125% 11/1/11 1,050 1,167
Series 1995,
5.250% 3/15/14 2,160 2,278
Series 1998,
5.250% 7/15/13 1,500 1,607
State Regional School District:
No. 14,
Series 1991,
6.100% 12/15/06 285 328
No. 5,
Series 1992,
6.300% 3/1/10 400 441
Series 1993,
5.600% 2/15/12 150 162
Town of Darien,
4.500% 8/1/18(c) 500 483
Torrington, Series 1992,
6.400% 5/15/10 750 824
Vernon, Series 1988,
7.100% 10/15/03 250 288
Waterbury, Series 1993,
5.375% 4/15/08 750 800
West Haven, Series 1993-B,
5.400% 6/1/10 705 744
Westbrook, Series 1992:
6.400% 3/15/09 630 754
6.300% 3/15/12 265 317
--------
36,766
--------
SPECIAL NON-PROPERTY TAX - 7.5%
PR Commonwealth of Puerto Rico
Highway & Transportation Authority,
Series W,
5.500% 7/1/09 1,110 1,252
Building Authority, Series B,
5.000% 7/1/13 1,000 1,052
State:
Series 1992-B,
6.125% 9/1/12 5,100 5,999
Series 1996-B,
6.000% 10/1/06 1,000 1,144
Series 1996-C,
6.000% 10/1/06 2,000 2,289
6.000% 10/1/09 1,000 1,128
--------
12,864
--------
SPECIAL PROPERTY TAX - 0.7%
State Special Assessment,
Second Injury Fund,
Series 1996-A,
6.000% 1/1/06 1,100 1,245
--------
STATE APPROPRIATED - 6.0%
PR Commonwealth of Puerto Rico
Public Buildings Authority,
Series 1993-M,
5.700% 7/1/16 3,300 3,491
State Certificates of Participation,
Middletown Courthouse Project:
6.250% 12/15/09 1,685 1,852
6.250% 12/15/10 750 825
6.250% 12/15/12 100 110
6.250% 12/15/13 850 934
State Development Authority,
Series 1993-A,
5.250% 11/15/11 750 816
State Health & Educational
Facilities Authority,
American Health Foundation/Windsor Project,
7.125% 11/1/24 2,000 2,380
--------
10,408
--------
STATE GENERAL OBLIGATIONS - 12.1%
PR Commonwealth of Puerto Rico:
Aqueduct & Sewer Authority,
Series 1995,
6.000% 7/1/07 2,750 3,167
Highway & Transportation Authority, Series X,
5.500% 7/1/13 3,000 3,367
Series 1998,
4.875% 7/1/23 1,500 1,497
State Government:
4.500% 10/15/16 1,000 980
Series A,
6.250% 5/15/06 1,000 1,154
Series 1990-B,
(d) 11/15/10 1,450 877
Series 1993-A,
5.600% 11/15/10 1,000 1,096
Series 1993-B,
5.400% 9/15/09 3,000 3,352
Series 1995-B,
5.375% 10/1/15 5,000 5,278
--------
20,768
--------
............................................................................................
UTILITY - 6.7%
INVESTOR OWNED - 0.6%
State Development Authority,
Connecticut Light & Power Co.,
Series 1993-B,
5.950% 9/1/28 1,000 1,008
--------
JOINT POWER AUTHORITY - 0.6%
State Municipal Electric Energy
Cooperative, Series 1996 A,
5.000% 1/1/09 1,040 1,113
--------
WATER & SEWER - 5.5%
South Central Regional Water Authority:
Series 11,
5.750% 8/1/12 2,000 2,176
State Clean Water Fund:
Series 1991,
7.000% 1/1/11 1,850 2,007
Series 1992,
6.125% 2/1/12 3,730 4,068
Series 1993,
5.875% 4/1/09 1,000 1,154
--------
9,405
--------
TOTAL INVESTMENTS (cost of $150,915)(e) 166,154
--------
SHORT-TERM OBLIGATIONS - 2.9%
- -------------------------------------------------------------------------------------------
VARIABLE SERIES DEMAND NOTES (f)
CA Health Facilities,
Sutter Health, Series A,
3.000% 3/1/20 200 200
CA Irvine Improvement Bond Act of 1915:
Series 1997:
3.000% 9/2/22 588 588
3.000% 9/2/22 200 200
Series 1998,
3.000% 9/2/23 1,600 1,600
CA Newport Beach:
Hoag Memorial Hospital, Series A,
3.100% 10/1/22 100 100
Hoag Memorial Presbyterian Hospital,
Series 1996-A,
3.100% 10/1/26 200 200
ID Health Facilities Authority,
St. Lukes Regional Medical Facility,
Series 1995,
3.200% 5/1/22 400 400
IL Development Finance Authority,
Ulich Children's Home Project,
2.750% 4/1/07 100 100
IL Educational Facilities Authority,
2.700% 12/1/25 130 130
IN Health Facilities Financing Authority:
Series 1990,
2.750% 12/1/10 100 100
MI Farmington Hills Hospital
Finance Authority,
Botsford General Hospital, Series 1991-B,
3.250% 2/15/16 100 100
MS Perry County,
Leaf River Forest Project,
3.150% 3/1/02 600 600
NM Farmington,
Arizona Public Service Co.,
Four Corners Project, Series 1994-B,
3.150% 9/1/24 200 200
NY City General Obligation
Series B,
3.300% 10/1/21 100 100
NY Energy Research & Development Authority:
Niagara Mohawk Power Corp.,
Series B,
3.250% 7/1/27 100 100
NY Long Island Power Authority,
Sub-Series 1998 5,
3.150% 5/1/33 100 100
Purdue University Revenues,
2.650% 7/1/19 100 100
--------
TOTAL SHORT-TERM OBLIGATIONS 4,918
--------
OTHER ASSETS & LIABILITIES, NET - 0.8% 1,364
- -------------------------------------------------------------------------------------------
NET ASSETS - 100.0% $172,436
--------
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------------------
(a) These securities, or a portion thereof, with a total market value of $536 are being
used to collateralize the delayed delivery purchases indicated in note (c) below.
(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) This security has been purchased on a delayed delivery basis for settlement at a future
date beyond customary settlement time.
(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 January 31, 1999.
Acronym Name
------- ----
IFRN Inverse Floating Rate Note
</TABLE>
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JANUARY 31, 1999
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $150,915) $166,154
Short-term obligations 4,918
--------
171,072
Receivable for:
Interest $2,077
Fund shares sold 227
Other 7 2,311
------ --------
Total Assets 173,383
LIABILITIES
Payable for:
Investments purchased 474
Fund shares repurchased 233
Distributions 210
Payable to Advisor 14
Accrued:
Deferred Trustees fees 4
Other 12
------
Total Liabilities 947
--------
NET ASSETS $172,436
--------
Net asset value & redemption price per share -
Class A ($83,156/10,466) $ 7.95(a)
--------
Maximum offering price per share - Class A
($7.95/0.9525) $ 8.35(b)
--------
Net asset value & offering price per share -
Class B ($87,947/11,068) $ 7.95(a)
--------
Net asset value & offering price per share -
Class C ($1,333/168) $ 7.95(a)
--------
COMPOSITION OF NET ASSETS
Capital paid in $162,499
Overdistributed net investment income (211)
Accumulated net realized loss (5,091)
Net unrealized appreciation 15,239
--------
$172,436
--------
(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 $9,061
EXPENSES
Management fee $ 830
Service fee 285
Distribution fee - Class B 636
Distribution fee - Class C 6
Transfer agent 246
Bookkeeping fee 67
Trustees fee 15
Audit fee 18
Legal fee 6
Custodian fee 1
Registration fee 14
Reports to shareholders 7
Other 16
------
Total expenses 2,147
Fees waived by the Advisor (225)
Fees waived by the Distributor - Class C (2) 1,920
------ ------
Net Investment Income 7,141
------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 561
Closed futures contracts 138
------
Net Realized Gain 699
Change in net unrealized appreciation (depreciation)
during the period on:
Investments 1,943
Open futures contracts (10)
------
Net Unrealized Appreciation 1,933
------
Net Gain 2,632
------
Increase in Net Assets from Operations $9,773
------
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 $ 7,141 $ 7,401
Net realized gain 699 435
Net unrealized appreciation 1,933 6,692
-------- --------
Net Increase from Operations 9,773 14,528
Distributions:
From net investment income - Class A (3,771) (3,900)
In excess of net investment income - Class A (110) (29)
From net investment income - Class B (3,337) (3,548)
In excess of net investment income - Class B (97) (26)
From net investment income - Class C (33) (7)
In excess of net investment income - Class C (1) (b)
-------- --------
2,424 7,018
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 9,765 9,611
Value of distributions reinvested - Class A 2,342 2,170
Cost of shares repurchased - Class A (10,158) (9,203)
-------- --------
1,949 2,578
-------- --------
Receipts for shares sold - Class B 12,745 9,466
Value of distributions reinvested - Class B 2,189 2,088
Cost of shares repurchased - Class B (12,593) (12,234)
-------- --------
2,341 (680)
-------- --------
Receipts for shares sold - Class C 841 494
Value of distributions reinvested - Class C 21 4
Cost of shares repurchased - Class C (25) (25)
-------- --------
837 473
-------- --------
Net Increase from Fund Share
Transactions 5,127 2,371
-------- --------
Total Increase 7,551 9,389
NET ASSETS
Beginning of period 164,885 155,496
-------- --------
End of period (net of overdistributed
net investment income of
$211 and $12, respectively) $172,436 $164,885
-------- --------
(a) Class C shares were initially offered on August 1, 1997.
(b) Rounds to less than one.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS - CONT.
Year Ended January 31
----------------------
1999 1998(a)
NUMBER OF FUND SHARES
Sold - Class A 1,246 1,262
Issued for distributions reinvested - Class A 299 285
Repurchased - Class A (1,299) (1,210)
-------- --------
246 337
-------- --------
Sold - Class B 1,625 1,239
Issued for distributions reinvested - Class B 280 275
Repurchased - Class B (1,610) (1,608)
-------- --------
295 (94)
-------- --------
Sold - Class C 107 64
Issued for distributions reinvested - Class C 3 (b)
Repurchased - Class C (3) (3)
-------- --------
107 61
-------- --------
(a) Class C shares were initially offered on August 1, 1997.
(b) Rounds to less than one.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999
NOTE 1. ACCOUNTING POLICIES
................................................................................
ORGANIZATION: Colonial Connecticut Tax Exempt Fund (the Fund), a series of
Colonial Trust V, is a non-diversified portfolio of a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company. The Fund's investment objective is to
seek as high a level of after-tax total return, as is consistent with prudent
risk, by pursuing current income exempt from federal and Connecticut state
personal income tax. The Fund also provides opportunities for long-term
appreciation from a portfolio primarily invested in investment grade municipal
bonds. The Fund may issue an unlimited number of shares. The Fund offers 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 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.
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.
Futures contracts are valued based on the difference between the last sale price
and the opening price of the contract.
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 Investors
Service Center, Inc. (the Transfer Agent), an affiliate of the Advisor, provides
shareholder services for a monthly fee equal to 0.13% annually of the Fund's
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.
During the year ended January 31, 1999, the Fund has been advised that the
Distributor retained net underwriting discounts of $28,511 on sales of the
Fund's Class A shares and received contingent deferred sales charges (CDSC) of
$2, $164,562 and $237 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 will 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 0.60% annually of the Fund's average net
assets.
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 $3,362 applied during the year ended January
31, 1999. The Fund could have invested 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: During the year ended January 31, 1999, purchases and sales
of investments, other than short-term obligations, were $11,491,622 and
$9,075,510 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 $15,343,696
Gross unrealized depreciation (104,751)
-----------
Net unrealized appreciation $15,238,945
===========
CAPITAL LOSS CARRYFORWARDS: At January 31, 1999, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
---------- ------------
2003 $ 554,000
2004 2,209,000
----------
$2,763,000
==========
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 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 during
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 20,937,416 shares of beneficial interest. The votes cast at the
Meeting were as follows:
AUTHORITY
FOR WITHHELD
--- --------
To Elect a Board of Trustees:
Robert J. Birnbaum 13,128,096 406,045
Tom Bleasdale 13,137,601 396,540
John Carberry 13,137,473 396,668
Lora S. Collins 13,134,119 400,022
James E. Grinnell 13,134,119 400,022
Richard W. Lowry 13,137,601 396,540
Salvatore Macera 13,121,076 413,065
William E. Mayer 13,133,469 400,672
James L. Moody, Jr 13,134,119 400,022
John J. Neuhauser 13,137,601 396,540
Thomas E. Stitzel 13,137,601 396,540
Robert L. Sullivan 13,133,341 400,800
Anne-Lee Verville 13,134,119 400,022
To amend fundamental investment policies regarding borrowing and lending.
FOR AGAINST ABSTAIN
--- ------- -------
10,071,899 285,810 731,540
To approve policies for a master fund/feeder fund structure.
FOR AGAINST ABSTAIN
--- ------- -------
9,974,032 344,419 770,801
<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 $ 7.830 $ 7.830 $7.830
------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income(a) 0.369 0.308 0.333(b)
Net realized and
unrealized gain 0.129 0.129 0.129
------- ------- ------
Total from Investment
Operations 0.498 0.437 0.462
------- ------- ------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.368) (0.309) (0.333)
In excess of net investment
income (0.010) (0.008) (0.009)
------- ------- ------
Total Distributions
Declared to Shareholders (0.378) (0.317) (0.342)
------- ------- ------
Net asset value -
End of period $ 7.950 $ 7.950 $7.950
------- ------- ------
Total return(c)(d) 6.54% 5.73% 6.05%
------- ------- ------
RATIOS TO AVERAGE NET ASSETS
Expenses (e) 0.77% 1.52% 1.22%(b)
Net investment income (e) 4.69% 3.94% 4.24%(b)
Fees and expenses waived
or borne by the
Advisor (e) 0.14% 0.14% 0.14%
Portfolio turnover 6% 6% 6%
Net assets at end
of period (000) $83,156 $87,947 $1,333
(a) Net of fees and expenses waived or borne by the Advisor which amounted to:
$ 0.011 $ 0.011 $0.011
(b) Net of fees waived by the Distributor which amounted to $ 0.024 per share
and 0.30%.
(c) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(d) Had the Advisor and Distributor not waived or reimbursed a portion of
expenses, total return would have been reduced.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited) 100% of the income distributions will
be treated as exempt income for federal income tax purposes.
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are as follows:
<CAPTION>
Year ended January 31
-----------------------------------------------------------------------------
1998 1997
Class A Class B Class C(b) Class A Class B
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.490 $ 7.490 $7.710 $ 7.630 $ 7.630
------- ------- ------ ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income(a) 0.385 0.328 0.173(c) 0.393 0.338
Net realized and
unrealized gain (loss) 0.344 0.344 0.124 (0.141) (0.141)
------- ------- ------ ------- -------
Total from Investment
Operations 0.729 0.672 0.297 0.252 0.197
------- ------- ------ ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net
investment income (0.386) (0.330) (0.177) (0.392) (0.337)
In excess of net
investment income (0.003) (0.002) -- -- --
------- ------- ------ ------- -------
Total Distributions
Declared to Shareholders (0.389) (0.332) (0.177) (0.392) (0.337)
------- ------- ------ ------- -------
Net asset value -
End of period $ 7.830 $ 7.830 $7.830 $ 7.490 $ 7.490
======= ======= ====== ======= =======
Total return(d)(e) 10.00% 9.19% 3.90%(f) 3.48% 2.71%
======= ======= ====== ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 0.62%(g) 1.37%(g) 1.09%(c)(g)(h) 0.59%(g) 1.34%(g)
Net investment
income 5.04%(g) 4.29%(g) 4.48%(c)(g)(h) 5.28%(g) 4.53%(g)
Fees and expenses waived
or borne by the
Advisor 0.29%(g) 0.29%(g) 0.28%(g)(h) 0.31%(g) 0.31%(g)
Portfolio turnover 12% 12% 12% 21% 21%
Net assets at end
of period (000) $80,035 $84,370 $ 480 $74,059 $81,437
(a) Net of fees and expenses waived or borne by the Advisor which amounted to:
$ 0.022 $ 0.022 $0.021 $ 0.023 $ 0.023
(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 $0.012 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 Advisor and Distributor not waived or reimbursed a portion of expenses, total return would have been
reduced.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout each period are as follows:
<CAPTION>
Year ended January 31
-------------------------------------------------------
1996 1995
Class A Class B Class A Class B
------- ------- ------- -------
<S> <C> <C> <C> <C>
$ 7.080 $ 7.080 $ 7.890 $ 7.890
------- ------- ------- -------
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%(g) 1.25%(g) 0.32% 1.07%
5.42%(g) 4.68%(g) 5.81% 5.06%
0.42%(g) 0.42%(g) 0.55% 0.55%
13% 13% 22% 22%
$80,039 $82,785 $74,616 $73,580
$ 0.031 $ 0.031 $ 0.039 $ 0.039
(f) Not annualized
(g) The benefits derived from custody credits and directed brokerage arrangements had no
impact. Prior year's ratios are net of benefits received, if any.
(h) Annualized
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST V AND THE SHAREHOLDERS OF
COLONIAL CONNECTICUT TAX-EXEMPT FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Connecticut Tax-Exempt
Fund (the "Fund") (a series of Colonial Trust V) at January 31, 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>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Connecticut Tax-Exempt Fund is:
Liberty Funds Services, 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
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 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 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 Distributor, Inc. (C)1999
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
CT-02/596G-0199 (3/99) 99/276
