<PAGE> 1
COLONIAL CALIFORNIA TAX-EXEMPT FUND SEMIANNUAL REPORT
JULY 31, 1999
[PICTURE OF BUILDING]
<PAGE> 2
COLONIAL CALIFORNIA TAX-EXEMPT FUND
TABLE OF CONTENTS
1 HIGHLIGHTS
2 PORTFOLIO MANAGER'S REPORT
4 PERFORMANCE
5 PORTFOLIO OF INVESTMENTS
11 FINANCIAL STATEMENTS
14 NOTES TO FINANCIAL STATEMENTS
17 FINANCIAL HIGHLIGHTS
Not FDIC Insured
May Lose Value
No Bank Guarantee
[PICTURE OF STEPHEN GIBSON]
PRESIDENT'S MESSAGE
Dear Shareholder:
During the six months ended July 31, 1999, the bond market experienced
significant volatility. Over the period, the yield on 30-year Treasury bonds
increased almost a full percentage point in response to investors' fears that
strong economic growth in the U.S., in concert with stabilizing economies
overseas, would result in higher inflation. Interest rates rose on all types of
fixed-income investments, which resulted in falling bond prices. Fortunately,
tax-exempt bonds lost less value than Treasurys as prices fell.
Despite these challenging conditions, the Fund outperformed its peer group
average for the past six months, extending its one-, three- and five-year track
record into the top half of its Lipper category.(1) Although past performance
cannot predict future results, it is important to maintain a long-term
perspective when making investment decisions.
The following report will provide you with more specific information about your
Fund's performance and the strategies employed during the period. As always, we
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
September 14, 1999
(1) Lipper, Inc., a widely respected data provider in the industry, calculates
an average total return for mutual funds with similar investment objectives
as the Fund. The total return calculated for the Lipper California
Municipal Debt Funds category was negative 2.69% for the six months ended
July 31, 1999. The Fund's Class A shares were ranked in the second quartile
for the six-month period (49 out of 108), in the second quartile for the 1
year (27 out of 104), in the second quartile for the three years (30 out of
90), in the second quartile for the 5 years (21 out of 70) and in the third
quartile for 10 years (24 out of 34). Rankings do not include sales
charges. Performance for different share classes will vary with fees
associated with each class. Past performance cannot predict future results.
Because economic and market conditions change frequently, there can be no
assurance that the trends described in this report will continue or come to
pass.
<PAGE> 3
HIGHLIGHTS
- - INTEREST RATE VOLATILITY CHALLENGED BOND MARKET INVESTORS.
Long-term interest rates rose more than three-quarters of a percentage
point to 6.1% between February and the end of July in response to fears
that strong economic growth in the U.S. and signs of increased growth
worldwide could cause higher inflation.
- - FEDERAL RESERVE BOARD PREEMPTIVELY RAISED SHORT-TERM RATES.
Midway through the period, Federal Reserve Board policy makers switched
from a neutral stance to one biased towards raising interest rates, causing
bond prices to fall further. As expected, the Board acted in June,
increasing short-term interest rates by one-quarter point in a preemptive
strike against inflation.
- - TAX-EXEMPT BONDS OUTPERFORMED TREASURYS AS INTEREST RATES ROSE.
Within the municipal bond market, prices fell in sympathy with the Treasury
market during the period. However, higher yields generated increased demand
for tax-exempt bonds. With supply low, municipal bonds outperformed
Treasurys, losing less of their market value as interest rates rose.
TREASURY VS. MUNICIPAL BOND PERFORMANCE
CHANGE IN VALUE OF $10,000 FROM 1/31/99 - 7/31/99
[LINE CHART]
<TABLE>
<CAPTION>
30-Year Treasury Bond Municipal Bond
--------------------- --------------
<S> <C> <C>
1/31/99 10,000 10,000
2/28/99 9,290 9,956
3/31/99 9,250 9,970
4/30/99 9,217 9,995
5/31/99 9,075 9,937
6/30/99 8,899 9,794
7/31/99 8,805 9,829
</TABLE>
Performance of the 30-year Treasury bond is illustrated by the Salomon 30-Year
Treasury Bond Index, a broad-based, unmanaged index that tracks the performance
of the 30-Year on-the-run Treasury market. Performance of municipal bonds is
illustrated by the Lehman Bothers Municipal Bond Index, 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.
NET ASSET VALUE PER SHARE ON 7/31/99
<TABLE>
<S> <C>
Class A $7.34
- --------------------------
Class B $7.34
- --------------------------
Class C $7.34
- --------------------------
</TABLE>
DISTRIBUTIONS DECLARED PER SHARE FROM 2/1/99 TO 7/31/99
<TABLE>
<S> <C>
Class A $0.188
- --------------------------
Class B $0.159
- --------------------------
Class C $0.170
- --------------------------
</TABLE>
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 is taxable
when distributed.
30-DAY SEC YIELDS ON 7/31/99
<TABLE>
<S> <C>
Class A 4.08%
- --------------------------
Class B 3.52%
- --------------------------
Class C 3.83%
- --------------------------
</TABLE>
30-day SEC yields reflect the portfolio's earning power net of expenses,
expressed as an annualized percentage of the public offering price per share. If
the Advisor or its affiliates had not borne certain expenses, the SEC yield
would have been 3.53% for Class C shares.
TAXABLE-EQUIVALENT SEC YIELDS ON 7/31/99
<TABLE>
<S> <C>
Class A 7.45%
- --------------------------
Class B 6.43%
- --------------------------
Class C 6.99%
- --------------------------
</TABLE>
Taxable-equivalent SEC yields are based on the combined maximum effective 45.2%
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.
1
<PAGE> 4
SEMIANNUAL REPORT: COLONIAL CALIFORNIA TAX-EXEMPT FUND
PORTFOLIO MANAGER'S REPORT
QUALITY BREAKDOWN
AS OF 7/31/99
<TABLE>
<S> <C>
AAA 72.7%
- -----------------------------
AA 3.3%
- -----------------------------
A 2.4%
- -----------------------------
BBB 11.7%
- -----------------------------
Non-rated 8.7%
- -----------------------------
Short-term
obligations 1.2%
- -----------------------------
</TABLE>
Quality breakdowns are calculated as a percentage of total investments,
including short-term obligations. Ratings shown in the Quality Breakdowns
represent the highest rating assigned to a particular bond by one of the
following respected rating agencies: Standard & Poor's, Moody's or Fitch.
Because the Fund is actively managed, there can be no guarantee the Fund will
continue to maintain this quality breakdown in the future.
BOUGHT
LADERA COMMUNITY
FACILITIES DISTRICT
We added Capistrano Unified School District (0.90% of net assets), which
finances the development of infrastructure in Ladera Ranch, a new planned
community in Southern Orange County. We believe the bond represents potential
growth as the community continues to develop.
MARKET VOLATILITY PROMPTED DEFENSIVE STRATEGIES
As the period began, the Fund was structured to take advantage of declining
interest rates. However, during the past six months a series of government
reports detailing the economy's strength caused investors to become concerned
about inflation and potentially higher interest rates -- both negatives for bond
prices. To offset rising interest rates, we took steps to cushion the Fund's
share price. As the economy grew strongly throughout the first part of the
period, we reduced the Fund's sensitivity to the negative impact of rising
interest rates.
TOTAL RETURN CUSHIONED BY DEFENSIVE MEASURES
During the six-month period, the Fund's Class A shares generated a total return
of negative 2.64%, without a sales charge. The Fund's returns were in line with
the Lipper peer group average of negative 2.69%. We attribute this performance
to the defensive measures taken during the period as well as the strength of
certain bonds in the Fund's portfolio.
CALIFORNIA'S STRONG ECONOMY PRESENTED OPPORTUNITIES
During the period, California's economy was thriving, with particularly strong
growth in Southern California. Not only have the traditional high-tech, business
service and entertainment industries prospered, but the region has also enjoyed
a low-tech boom in Riverside and San Bernardino counties. Industry sectors that
require sizable facilities, such as warehousing and distribution and food
processing, have found affordable sites, a large, local labor pool and good
access to many western U.S. markets. Conversely, weak Asian economies have had
an adverse impact on high-tech manufacturing and related industries. However,
stabilizing conditions in Asia suggest that export business activity may be
poised to improve. California's economic revival has presented the portfolio
with a number of yield-oriented investment opportunities in special tax-backed
real estate development projects. These projects generally consist of unimproved
real estate to be developed into residential communities and/or mixed-use
non-residential and retail facilities. A number of the Fund's holdings in this
sector have benefited from a demand for housing stock that has far exceeded the
available supply.
2
<PAGE> 5
FAVORABLE LONG-TERM MARKET OUTLOOK
We have a favorable long-term market outlook. Although we expect continued
interest rate volatility and some increase in rates over the next few months, we
believe that the Federal Reserve Board's proactive approach should have a
positive long-term effect on the bond market by reducing economic growth to a
sustainable level and keeping inflation in check. These conditions should create
a more favorable long-term environment for fixed-income securities, including
municipal bonds, and we expect to actively manage the portfolio's interest rate
sensitivity as market conditions warrant. Our outlook for California's economy
also remains favorable, as it continues to benefit from the rapidly-growing
high- and low-technology sectors.
/S/ GARY SWAYZE
GARY SWAYZE is portfolio manager of Colonial California Tax-Exempt Fund and is a
senior vice president of Colonial Management Associates, Inc. (CMA).
CHANGE IN TOP FIVE
SECTOR BREAKDOWNS
7/31/99 VS. 1/31/99
<TABLE>
<CAPTION>
7/31/99 1/31/99
<S> <C> <C>
REFUNDED/ESCROWED 17.8% 16.2%
LOCAL APPROPRIATED 17.8% 18.5%
SPECIAL PROPERTY TAX 16.8% 16.8%
LOCAL GENERAL OBLIGATIONS 7.5% 8.4%
STATE GENERAL OBLIGATIONS 6.2% 4.6%
</TABLE>
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 this breakdown in the future.
HELD
RIVERSIDE COUNTY PUBLIC
FINANCING AUTHORITY
SAN MARCOS PUBLIC
FINANCING AUTHORITY
Several of the Fund's holdings are expected to benefit from continued growth in
the state's housing sector. These include Riverside County Public Financing
Authority and San Marcos Public Financing Authority (0.20% and 0.45% of net
assets, respectively.)
3
<PAGE> 6
PERFORMANCE INFORMATION
AVERAGE ANNUAL TOTAL RETURNS AS OF 7/31/99
<TABLE>
<CAPTION>
Share Class A B C
Inception 6/16/86 8/4/92 8/1/97
- --------------------------------------------------------------------------------------------------------------------------------
Without With Sales Without With Sales Without With Sales
Sales Charge Charge Sales Charge Charge Sales Charge Charge
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6 months
(cumulative return) (2.64)% (7.27)% (3.01)% (7.76)% (2.86)% (3.81)%
- --------------------------------------------------------------------------------------------------------------------------------
1 year 2.06 (2.79) 1.30 (3.53) 1.60 0.64
- --------------------------------------------------------------------------------------------------------------------------------
5 years 6.49 5.46 5.70 5.37 6.30 6.30
- --------------------------------------------------------------------------------------------------------------------------------
10 years 6.55 6.03 6.00 6.00 6.45 6.45
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/99
<TABLE>
<CAPTION>
Share Class A B C
- ---------------------------------------------------------------------------------------------------------------------------------
Without With Sales Without With Sales Without With Sales
Sales Charge Charge Sales Charge Charge Sales Charge Charge
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year 1.88% (2.96)% 1.09% (3.71)% 1.41% 0.44%
- ---------------------------------------------------------------------------------------------------------------------------------
5 years 6.79 5.76 6.00 5.68 6.60 6.60
- ---------------------------------------------------------------------------------------------------------------------------------
10 years 6.63 6.12 6.08 6.08 6.54 6.54
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Past performance cannot predict future investment results. Returns and value of
an investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. The "with sales charge" returns include
the maximum 4.75% charge for Class A shares and the maximum applicable
contingent deferred sales charge of 5% for both six months and one year, 2% for
five years for Class B shares, and 1% for both six months and 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 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 were 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 the periods prior to the inception
of the newer class shares would have been lower.
4
<PAGE> 7
INVESTMENT PORTFOLIO
July 31, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 97.7% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
EDUCATION - 0.9%
EDUCATION
State Educational Facilities Authority,
Pooled College & University Project,
6.300% 04/01/21 $1,000 $1,045
Statewide Communities Development
Authority, Crossroads School for Arts
& Sciences, Series 1998,
6.000% 08/01/28 1,970 1,935
------
2,980
------
- --------------------------------------------------------------------------------
HEALTHCARE - 3.7%
LIFECARE - 1.1%
Abag Finance Authority for Nonprofit
Corps., Channing House, Series 1999,
5.375% 02/15/19 1,700 1,620
Riverside County Air Force Village
West, Inc.,
5.750% 05/15/19 2,000 1,974
------
3,594
------
HOSPITAL - 2.6%
Communities Development,
St. Joe's Health Corp.,
5.250% 07/01/10 2,940 2,957
Contra Costa County,
Merrithew Memorial Hospital,
5.375% 11/01/17 2,000 2,006
Hi-Desert Memorial Health Care District,
Series 1998,
5.500% 10/01/15 1,000 950
Riverside County Asset Leasing Corp.,
Riverside County Hospital Project,
Series B,
5.700% 06/01/16 2,500 2,615
------
8,528
------
- --------------------------------------------------------------------------------
HOUSING - 4.8%
ASSISTED LIVING/SENIOR - 0.4%
Abegskaton Gold River Lodge,
Series 1998,
6.375% 11/15/28 1,400 1,386
------
MULTI-FAMILY - 0.1%
Santa Rosa, Chanate Lodge Project,
Series 1992,
6.625% 12/01/02 155 161
---
SINGLE-FAMILY - 4.3%
PR Commonwealth of Puerto Rico
Housing, Finance Corp., Series B,
7.650% 10/15/22 180 187
Southern California Home
Financing Authority:
Series A,
7.625% 10/01/22 $ 735 $ 758
Series 1990-A,
7.625% 10/01/23 280 290
State Housing Finance Agency:
Series A-1, Class I,
5.950% 08/01/16 3,000 3,121
Series 1990-D,
7.750% 08/01/10 320 332
Series 1997-B,
6.000% 08/01/16 1,600 1,668
State Rural Home Mortgage
Finance Authority:
Series 1995-B,
7.750% 09/01/26 1,360 1,485
Series A-2,
7.000% 09/01/29 3,795 4,193
Series 1998 B-4,
6.350% 12/01/29 1,625 1,729
Stockton,
Series 1990-A,
7.400% 08/01/05 30 31
------
13,794
------
- --------------------------------------------------------------------------------
OTHER - 18.7%
POOL/BOND BANK - 1.1%
State Public Capital Improvements
Financing Authority,
Joint Powers Agency,
Series 1988-A,
8.500% 03/01/18 3,500 3,564
------
REFUNDED/ESCROWED(a) - 17.6%
Colton Public Financing Authority,
Series 1995,
7.500% 10/01/20 3,000 3,397
Commerce Joint Powers Financing
Authority, Multiple Project Loans,
Series A,
8.000% 03/01/21 1,000 1,080
Duarte City of Hope National
Medical Center,
Series 1993,
6.000% 04/01/08 500 539
Empire Union School District,
Mello-Roos Financing,
Series 1990-A,
7.400% 10/01/15 1,000 1,063
</TABLE>
5
<PAGE> 8
INVESTMENT PORTFOLIO CONTINUED
July 31, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
MUNICIPAL BONDS (CONTINUED) PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
OTHER - (CONTINUED)
REFUNDED/ESCROWED - (CONTINUED)
Fontana Public Financing Authority,
North Fontana Redevelopment,
Series 1991-A,
7.750% 12/01/20 $ 785 $ 866
Fresno Unified School District, Phase VI,
Series 1991-A,
7.200% 05/01/11 1,000 1,075
La Quinta Redevelopment Agency,
Series 1990,
8.400% 09/01/12 1,000 1,071
Los Angeles Convention & Exhibit Center,
Series 1985,
9.000% 12/01/20 500 629
Los Angeles County Transportation,
Metro Train,
Series 1991-A,
6.900% 07/01/21 1,000 1,075
Mojave Water Agency,
Morongo Basin Pipeline,
Series 1991,
6.950% 09/01/21 1,000 1,080
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 1,108
Orange County Community Facility,
District 87-4, Series 1990-A,
8.000% 08/15/15 1,000 1,066
Pomona, Series 1990-B,
7.500% 08/01/23 1,000 1,247
PR Commonwealth of Puerto Rico,
Series 1991,
7.300% 07/01/20 1,200 1,265
Rancho Mirage Joint Powers
Financing Authority,
Series 1991-A,
7.500% 04/01/17 1,545 1,664
Riverside County, Series 1989-A,
7.800% 05/01/21 2,500 3,230
Riverside Public Financing Authority,
Series A,
8.000% 02/01/18 590 636
Riverside Unified School District,
Community Facilities District No. 2,
Series 1993-A,
7.250% 09/01/18 1,000 1,109
Rocklin, Stanford Ranch Community
Facilities District,
Series 1990,
8.100% 11/01/15 $1,000 $1,073
Sacramento City Financing Authority:
Series 1991,
6.800% 11/01/20 2,500 2,704
Procter & Gamble Project,
Series 1995,
6.500% 07/01/21 6,500 7,304
Sacremento Unified School,
Community Facilities District No. 1,
Series B,
7.300% 09/01/13 1,760 1,970
San Joaquin Hills Transportation
Corridor Agency,
Series 1993,
(b) 01/01/20 15,400 5,036
Santa Fe Springs Redevelopment Agency,
Consolidated Redevelopment Project,
Series 1992-A,
6.400% 09/01/22 4,585 4,989
Soledad Redevelopment Agency Project,
Series 1992,
7.400% 11/01/12 915 1,025
State Health Facilities Financing Authority,
Children's Hospital of Los Angeles,
Series 1991-A,
7.125% 06/01/21 2,000 2,152
State Pollution Control Financing Authority,
North California Recycling Center,
Series 1991-A,
6.750% 07/01/17 1,000 1,086
Stockton Community Facilities District,
Series 2,
7.750% 08/01/15 1,000 1,061
Torrance Redevelopment Agency,
Downtown Redevelopment Project,
Series 1992,
7.125% 09/01/21 1,000 1,083
VI Virgin Islands Public Financing,
Series 1992-A,
7.250% 10/01/18 1,000 1,109
</TABLE>
6
<PAGE> 9
INVESTMENT PORTFOLIO CONTINUED
July 31, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Watsonville Mammoth Lakes,
Series B,
7.875% 06/01/11 $ 500 $ 544
Westminster Redevelopment Agency,
Project No. 1,
Series 1993,
6.200% 08/01/23 1,000 1,081
Whisman School District,
Series 1996-A:
(b) 08/01/15 1,595 680
(b) 08/01/16 1,645 659
-------
56,778
-------
- --------------------------------------------------------------------------------
OTHER REVENUE - 1.1%
HOTELS
Sacramento City Financing Authority,
Sacramento Convention Center,
Series 1999-A,
6.250% 01/01/30 3,500 3,426
-------
- --------------------------------------------------------------------------------
TAX-BACKED - 54.7%
LOCAL APPROPRIATED - 17.6%
Alameda County, Capital Projects,
Series 1989,
(b) 06/15/14 2,185 989
Anaheim Public Financing Authority,
Series C,
6.000% 09/01/14 3,500 3,840
Anderson Water, Certificate
of Participation,
7.900% 12/01/11 610 630
Bishop, Escalon & Lemoore Cities,
Series 1991-A,
7.700% 05/01/11 700 732
Compton, Civic Center Project,
5.500% 09/01/15 3,000 2,934
Grossmont Unified High School District,
1991 Capital Projects,
(b) 11/15/06 4,500 3,235
Los Angeles Convention &
Exhibition Authority,
Series 1993-A,
6.125% 08/15/11 5,000 5,528
Los Angeles County Public Works
Financing Authority,
Series A,
5.250% 09/01/14 3,740 3,753
Modesto, Community Center Project,
Series 1993-A,
5.000% 11/01/23 2,235 2,132
Pasadena Civic Improvement Corp.,
Series 1996,
5.250% 02/01/16 $3,020 $ 3,000
Rancho Mirage Joint Powers
Financing Authority,
Civic Center, Series 1991-A,
7.500% 04/01/17 455 481
Riverside County, Historic
Courthouse Project,
5.750% 11/01/17 2,255 2,354
Sacramento City Financing Authority,
Series A,
5.375% 11/01/14 4,000 4,107
Sacramento County, Public
Facilities Project,
5.375% 02/01/19 6,000 5,989
San Mateo County Joint Powers Authority,
Series A,
5.000% 07/15/15 1,000 976
Santa Ana Financing Authority,
Police Holding Facility,
Series 1994-A,
6.250% 07/01/18 6,035 6,753
Santa Clara County Financing Authority,
Series A,
5.000% 11/15/17 3,500 3,374
Tehachapi Water and Sewer District,
8.200% 11/01/20 2,000 2,090
Victor Elementary School District,
Series 1996,
6.450% 05/01/18 3,345 3,820
-------
56,717
-------
LOCAL GENERAL OBLIGATIONS - 7.4%
Benicia Unified School District,
Series 1994-C,
6.450% 06/01/19 3,870 4,337
Cabrillo Unified School District,
Series 1996-A,
(b) 08/01/15 3,000 1,271
Central School District,
San Bernardino County,
Series A,
7.050% 05/01/16 750 796
Central Unified School District,
(b) 03/01/18 20,065 7,228
East Whittier School City School District,
Series A,
5.750% 08/01/17 1,675 1,770
</TABLE>
7
<PAGE> 10
INVESTMENT PORTFOLIO CONTINUED
July 31, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
MUNICIPAL BONDS (CONTINUED) PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
TAX-BACKED - (CONTINUED)
LOCAL GENERAL OBLIGATIONS - (CONTINUED)
Fillmore Unified School District, Series A:
(b) 07/01/11 $ 950 $ 516
(b) 07/01/12 980 501
(b) 07/01/17 650 245
Franklin-McKinley School District,
Series A,
5.250% 07/01/16 1,705 1,697
Golden West School Financing Authority,
Series 1999-A,
(b) 08/01/12 1,925 976
Rocklin Unified School District,
Series 1991-C,
(b) 07/01/20 6,920 2,166
Sanger Unified School District,
Series 1999,
5.350% 08/01/15 1,500 1,537
Simi Valley Unified School District,
Series 1997,
5.250% 08/01/22 925 915
-------
23,955
-------
SPECIAL NON-PROPERTY TAX - 2.2%
PR Commonwealth of Puerto Rico
Highway & Transportation Authority:
Series W,
5.500% 07/01/09 580 614
Series 1996-Y,
6.250% 07/01/12 3,000 3,360
Riverside County Transportation
Commission,
Series 1996-A,
6.000% 06/01/09 2,000 2,191
San Diego Redevelopment Agency,
Series 1999-A,
5.125% 09/01/13 800 798
-------
6,963
-------
SPECIAL PROPERTY TAX - 16.6%
Anaheim Public Financing Authority
Series A,
5.250% 02/01/18 3,000 2,965
Capistrano Unified School District,
Ladera Community Facilities
District No. 98-2,
Series 1999,
5.750% 09/01/29 3,000 2,891
Carson, Series 1992,
7.375% 09/02/22 920 973
Cerritos Public Financing Authority
Los Coyotes Redevelopment Project,
Series 1993-A,
6.500% 11/01/23 $2,000 $2,313
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 1,083
Costa Mesa Public Financing,
Series 1991-A,
7.100% 08/01/21 890 930
Elk Grove Unified School District,
Community Facilities,
Series 1995:
(b) 12/01/18 2,720 940
6.500% 12/01/08 1,000 1,136
6.500% 12/01/24 4,055 4,697
La Mirada Redevelopment Agency,
Civic Theater Project,
Series 1998,
5.700% 10/01/20 1,000 976
Los Angeles Community
Redevelopment Agency,
Hollywood Redevelopment Project,
Series 1998-C,
5.375% 07/01/18 1,665 1,684
Marin Emergency Radio Authority:
5.000% 08/15/11 1,015 1,016
5.000% 08/15/13 1,335 1,319
Oakland Redevelopment Agency,
Central District Redevelopment
Project, Series 1992,
5.500% 02/01/14 8,400 8,750
Rancho Cucamonga Redevelopment
Agency, Series 1996,
5.250% 09/01/16 4,000 3,973
Richmond Joint Powers Financing
Authority, Series 1990-A,
7.700% 10/01/10 870 914
Riverside County Public
Financing Authority:
Series 1991-A,
8.000% 02/01/18 410 431
Redevelopment Projects,
Series A,
5.250% 10/01/16 3,120 2,951
</TABLE>
8
<PAGE> 11
INVESTMENT PORTFOLIO CONTINUED
July 31, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
San Clemente Assessment Escrow,
6.050% 09/02/28 $1,000 $ 990
San Diego, Miramar Ranch North,
Series 1998,
5.375% 09/01/13 2,830 2,888
San Jose Redevelopment Agency,
Merged Area Redevelopment Project,
Series 1998,
5.000% 08/01/21 3,000 2,817
San Marcos Public Financing Authority,
5.800% 09/01/18 1,500 1,466
Santa Fe Springs Redevelopment Agency,
Consolidated Redevelopment Project,
Series 1992-A,
6.400% 09/01/22 2,690 2,885
Santa Margarita/Dana Point Authority,
Series 1994-B,
7.250% 08/01/13 2,000 2,440
-------
53,454
-------
STATE APPROPRIATED - 4.7%
PR Commonwealth of Puerto Rico,
Public Building Authority,
Series 1993-M,
5.700% 07/01/16 2,250 2,305
State Public Works Board:
California State University,
5.250% 10/01/14 3,500 3,500
Secretary of State & State Archives,
Series 1992-A,
6.500% 12/01/08 1,000 1,136
State Prisons,
Series 1993-A,
5.000% 12/01/19 6,000 5,792
Various State Prisons Projects,
Series 1993-A,
5.250% 12/01/13 2,500 2,553
-------
15,286
-------
STATE GENERAL OBLIGATIONS - 6.2%
PR Commonwealth of Puerto Rico:
6.500% 07/01/14 2,000 2,294
Series 1995,
5.650% 07/01/15 1,000 1,052
Series 1998,
4.500% 07/01/23 2,000 1,738
Aqueduct & Sewer Authority:
6.000% 07/01/09 1,250 1,371
6.250% 07/01/13 2,750 3,083
State of California:
5.500% 04/01/12 (c) $2,770 $2,904
10.000% 02/01/10 (c) 2,000 2,820
Series 1995,
10.000% 10/01/06 (c) 1,185 1,580
Series 1998,
4.500% 12/01/24 (c) 3,500 2,990
-------
19,832
-------
- --------------------------------------------------------------------------------
TRANSPORTATION - 4.9%
AIRPORT - 1.6%
Los Angeles Department of Airports:
Los Angeles International Airport,
Series 1995-D,
5.500% 05/15/15 3,025 3,059
San Francisco City & County
Airport Commission,
4.500% 05/01/18 2,310 2,049
-------
5,108
-------
TOLL FACILITIES - 0.6%
Foothill Eastern Transportation,
5.375% 01/15/14 (d) 2,000 2,035
-------
TRANSPORTATION - 2.7%
Los Angeles Habor Department,
Series 1996-B,
5.375% 11/01/19 8,750 8,575
-------
- --------------------------------------------------------------------------------
UTILITY - 8.9%
INVESTOR OWNED - 1.2%
State Pollution Control Financing Authority:
San Diego Gas & Electric Co.,
Series 1996-A,
5.900% 06/01/14 2,650 2,877
Southern California Edison Company,
5.550% 09/01/31 (d) 1,000 990
-------
3,867
-------
MUNICIPAL ELECTRIC - 2.1%
PR Commonwealth of Puerto Rico
Electric Power Authority,
Series 1989-O,
(b) 07/01/17 2,490 937
Reading Electric Systems,
Series 1992-A, IFRN (variable rate),
9.339% 07/08/22 750 912
Sacramento Municipal Utilities District:
Series 1993-G,
6.500% 09/01/13 1,500 1,722
Series K,
5.700% 07/01/17 1,500 1,583
</TABLE>
9
<PAGE> 12
INVESTMENT PORTFOLIO CONTINUED
July 31, 1999 (Unaudited)
(In thousands)
<TABLE>
MUNICIPAL BONDS (CONTINUED) PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
UTILITY - (CONTINUED)
MUNICIPAL ELECTRIC - (CONTINUED)
Turlock Irrigation District,
Series 1996-A:
6.000% 01/01/11 $1,000 $ 1,094
6.000% 01/01/12 500 547
--------
6,795
--------
WATER & SEWER - 5.6%
Big Bear Lake, Series 1996,
6.000% 04/01/15 1,350 1,477
Compton, Sewer Revenue,
Series 1998,
5.375% 09/01/23 1,320 1,230
Fresno, Series 1995-A:
6.000% 09/01/09 1,525 1,674
6.000% 09/01/10 1,420 1,560
Inglewood Redevelopment Agency,
5.250% 05/01/23 1,000 984
Los Angeles Waste Water
4.000% 06/01/15 2,000 1,702
Metropolitan Water District of Southern
California, IFRN (variable rate),
7.680% 08/05/22 2,000 2,275
Mojave Water Agency, Morongo
Basin Pipeline,
5.800% 09/01/22 4,000 4,111
San Diego County Water Authority,
Series 1997-A,
5.750% 05/01/11 2,100 2,248
Santa Maria, Series A,
(b) 08/01/14 2,000 902
--------
18,163
--------
TOTAL MUNICIPAL BONDS
(cost of $ 301,685)(e) 314,961
--------
- --------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS - 1.2%
VARIABLE RATE DEMAND NOTES (f)
AZ Pinal County Industrial Development
Authority, Newmont Mining Corp.,
Series 1984-A,
3.500% 12/01/09 100 100
CA Irvine Improvement Bond Act of 1915,
Series 1998,
3.300% 09/02/23 1,363 1,363
CA Irvine Ranch Water District,
3.300% 01/01/21 200 200
CA State Health Financing Authority,
Sutter Health,
Series A,
3.300% 03/01/20 200 200
FL Pinellas County Health
Facilities Authority,
Series 1985,
3.500% 12/01/15 $ 200 $ 200
IA State Finance Authority,
Burlington Medical Center,
Series 1997,
3.200% 06/01/27 200 200
IN Portage Economic Development
Revision, Pedcor Investments,
Series A,
3.200% 08/01/30 450 450
IN State Hospital Equipment
Finance Authority,
Series A,
3.150% 12/01/15 200 200
NY Municipal Water and Sewer,
Finance Authority,
Series 1995-A,
3.500% 06/15/25 200 200
NY Niagara Mohawk Series 1985-A,
3.500% 07/01/15 100 100
WA State Health Care Facilities Authority,
Fred Hutchinson Cancer Research Center,
Series 1996,
3.500% 01/01/23 700 700
--------
TOTAL SHORT-TERM OBLIGATIONS 3,913
--------
OTHER ASSETS & LIABILITIES, NET 1.1% 3,642
- --------------------------------------------------------------------------------
NET ASSETS 100% $322,516
--------
</TABLE>
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) These securities, or a portion thereof, with a total market value of
$10,316, are being used to collateralize the delayed delivery purchases
indicated in note (d) below and open futures contracts.
(d) These securities have been purchased on a delayed delivery basis for
settlement at a future date beyond the customary settlement time.
(e) Cost for federal income tax purposes is the same.
(f) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of July 31, 1999.
Long future contracts open at July 31, 1999:
<TABLE>
<CAPTION>
PAR VALUE UNREALIZED
COVERED BY EXPIRATION APPRECIATION
TYPE CONTRACTS MONTH AT 07/31/99
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Treasury Note $5,100 September $3
</TABLE>
<TABLE>
<CAPTION>
Acronym Name
------- ----
<S> <C>
IFRN Inverse Floating Rate Note
</TABLE>
See notes to financial statements.
10
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1999 (Unaudited)
(In thousands except for per share amounts and footnotes)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $301,685) $314,961
Short-term obligations 3,913
--------
318,874
Receivable for:
Interest $5,235
Investments sold 3,926
Fund shares sold 125
Other 11 9,297
------- --------
Total Assets 328,171
LIABILITIES
Due to the custodian bank 818
Payable for:
Investments purchased 3,044
Fund shares repurchased 1,132
Distributions 433
Variation margin on futures 11
Accrued:
Deferred Trustees fees 8
Other 209
-------
Total Liabilities 5,655
--------
NET ASSETS $322,516
========
CLASS A
Net asset value & redemption price
per share ($223,758/30,502) $ 7.34(a)
========
Maximum offering price per share
($7.34/0.9525) $ 7.71(b)
========
CLASS B
Net asset value & offering price
per share ($90,925/12,395) $ 7.34(a)
========
CLASS C
Net asset value & offering price
per share ($7,833/1,068) $ 7.34(a)
========
COMPOSITION OF NET ASSETS
Capital paid in $310,708
Overdistributed net investment income (385)
Accumulated net realized loss (1,086)
Net unrealized appreciation on:
Investments 13,276
Open futures contracts 3
--------
$322,516
========
</TABLE>
(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.
STATEMENT OF OPERATIONS
For the Six Months Ended July 31, 1999 (Unaudited)
(In thousands)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest $ 9,219
EXPENSES
Management fee $ 846
Service fee 276
Distribution fee -- Class B 359
Distribution fee -- Class C 25
Transfer agent fee 254
Bookkeeping fee 64
Audit fee 14
Trustees fee 12
Legal fee 4
Custodian fee 1
Registration fee 6
Reports to shareholders 6
Other 28
---------
Total expenses 1,895
Fees waived by the
Distributor -- Class C (10) 1,885
--------- ----------
Net Investment Income 7,334
----------
NET REALIZED & UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 1,673
Closed futures contracts 418
---------
Net Realized Gain 2,091
Net change in unrealized appreciation/depreciation
during the period on:
Investments (19,064)
Open futures contracts 3
---------
Net Change in Unrealized
Appreciation/Depreciation (19,061)
----------
Net Loss (16,970)
----------
Decrease in Net Assets from Operations $ (9,636)
==========
</TABLE>
See notes to financial statements.
11
<PAGE> 14
STATEMENT OF CHANGES IN NET ASSETS
(In thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
JULY 31, JANUARY 31,
1999 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 7,334 $ 15,429
Net realized gain 2,091 3,804
Net change in unrealized appreciation/depreciation (19,061) 1,288
--------- ---------
Net Increase (Decrease) from Operations (9,636) 20,521
Distributions:
From net investment income -- Class A (5,324) (11,411)
In excess of net investment income -- Class A -- (382)
From net realized gains -- Class A (521) (2,411)
In excess of net realized gains -- Class A -- (520)
From net investment income -- Class B (1,802) (3,802)
In excess of net investment income -- Class B -- (128)
From net realized gains -- Class B (211) (966)
In excess of net realized gains -- Class -- (208)
From net investment income -- Class C (137) (142)
In excess of net investment income -- Class C -- (5)
From net realized gains -- Class C (17) (45)
In excess of net realized gains -- Class C -- (10)
--------- ---------
(17,648) 491
--------- ---------
Fund Share Transactions:
Receipts for shares sold -- Class A 6,985 12,511
Value of distributions reinvested -- Class A 2,810 7,325
Cost of shares repurchased -- Class A (20,320) (29,404)
--------- ---------
(10,525) (9,568)
--------- ---------
Receipts for shares sold -- Class B 5,381 12,720
Value of distributions reinvested -- Class B 1,047 3,076
Cost of shares repurchased -- Class B (9,991) (18,111)
--------- ---------
(3,563) (2,315)
--------- ---------
Receipts for shares sold -- Class C 3,058 5,520
Value of distributions reinvested -- Class C 108 182
Cost of shares repurchased -- Class C (938) (341)
--------- ---------
2,228 5,361
--------- ---------
Net Decrease from Fund
Share Transactions (11,860) (6,522)
--------- ---------
Total Decrease (29,508) (6,031)
NET ASSETS
Beginning of period 352,024 358,055
--------- ---------
End of period (net of overdistributed
net investment income of $385 and
$456, respectively) $ 322,516 $ 352,024
========= =========
</TABLE>
See notes to financial statements.
12
<PAGE> 15
STATEMENT OF CHANGES IN NET ASSETS CONTINUED
(In thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED YEAR ENDED
JULY 31, JANUARY 31,
1999 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
NUMBER OF FUND SHARES
Sold -- Class A 924 1,634
Issued for distributions reinvested -- Class A 374 956
Repurchased -- Class A (2,696) (3,835)
------ ------
(1,398) (1,245)
------ ------
Sold -- Class B 712 1,658
Issued for distributions reinvested -- Class B 139 402
Repurchased -- Class B (1,327) (2,359)
------ ------
(476) (299)
------ ------
Sold -- Class C 406 720
Issued for distributions reinvested -- Class C 14 24
Repurchased -- Class C (123) (45)
------ ------
297 699
------ ------
</TABLE>
See notes to financial statements.
13
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
July 31, 1999 (Unaudited)
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of management of Colonial California Tax-Exempt Fund (the Fund),
a series of Liberty Funds Trust V (formerly Colonial Trust V), the accompanying
financial statements contain all normal and recurring adjustments necessary for
the fair presentation of the financial position of the Fund at July 31, 1999,
and the results of its operations, the changes in its net assets and the
financial highlights for the six months then ended.
NOTE 2. ACCOUNTING POLICIES
ORGANIZATION:
The Fund is a diversified portfolio of a Massachusetts business trust,
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Fund's investment objective is to seek as
high a level of after-tax total return, as is consistent with prudent risk, by
pursuing current income exempt from federal and California state personal income
tax and opportunities for long-term appreciation from a portfolio primarily
invested in investment grade municipal bonds. The Fund may issue an unlimited
number of shares. The Fund offers three classes of shares: Class A, Class B and
Class C. Class A shares are sold with a front-end sales charge. A 1.00%
contingent deferred sales charge is assessed 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.
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),
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.
14
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS CONTINUED
July 31, 1999 (Unaudited)
NOTE 3. 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:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS ANNUAL FEE RATE
- --------------------------------------------------------------------------------
<S> <C>
First $2 billion 0.50%
Over $2 billion 0.45%
</TABLE>
BOOKKEEPING FEE:
The Advisor provides bookkeeping and pricing services for a monthly fee equal to
$27,000 annually plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT FEE:
Liberty Funds Services, 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. (the Distributor), a subsidiary of the Advisor,
is the Fund's principal underwriter. For the six months ended July 31, 1999, the
Fund has been advised that the Distributor retained net underwriting discounts
of $108,389 on sales of the Fund's Class A shares and received contingent
deferred sales charges (CDSC) of $1,978, $1,192,821 and $17,896 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:
<TABLE>
<CAPTION>
VALUATION OF SHARES
OUTSTANDING ON THE 20TH OF
EACH MONTH WHICH WERE ISSUED ANNUAL FEE RATE
- --------------------------------------------------------------------------------
<S> <C>
Prior to November 30, 1994 0.10%
On or after December 1, 1994 0.25%
</TABLE>
The CDSC and the fees received from the 12b-1 plan
are used principally as repayment to the Distributor for amounts paid by the
Distributor to dealers who sold such shares.
EXPENSE LIMITS:
The 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 six months ended July 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 the custodian bank under which custodian fees
were reduced by balance credits of $1,143 applied during the six months ended
July 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 4. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY:
For the six months ended July 31, 1999, purchases and sales of investments,
other than short-term obligations, were $23,864,150 and $31,258,663,
respectively.
Unrealized appreciation (depreciation) at July 31, 1999, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $15,264,404
Gross unrealized depreciation (1,988,197)
-----------
Net unrealized appreciation $13,276,207
===========
</TABLE>
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
15
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS CONTINUED
July 31, 1999 (Unaudited)
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 5. 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
six months ended July 31, 1999.
16
<PAGE> 19
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JULY 31, 1999
-------------------------------------------------
CLASS A CLASS B CLASS C
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.730 $ 7.730 $ 7.730
------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.172 0.143 0.154(a)
Net realized and unrealized loss (0.374) (0.374) (0.374)
------------ ------------ ------------
Total from Investment Operations (0.202) (0.231) (0.220)
------------ ------------ ------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.171) (0.142) (0.153)
From net realized gains (0.017) (0.017) (0.017)
------------ ------------ ------------
Total Distributions Declared to Shareholders (0.188) (0.159) (0.170)
------------ ------------ ------------
NET ASSET VALUE END OF PERIOD $ 7.340 $ 7.340 $ 7.340
============ ============ ============
Total return (b)(c) (2.64)% (3.01)% (2.86)%(d)
============ ============ ============
RATIOS TO AVERAGE NET ASSETS:
Expenses (e)(f) 0.89% 1.64% 1.34%(a)
Net investment income (e)(f) 4.56% 3.81% 4.11%(a)
Portfolio turnover (c) 7% 7% 7%
Net assets at end of period (000) $ 223,758 $ 90,925 $ 7,833
</TABLE>
(a) Net of fees waived by the Distributor which amounted to $0.011 per share
and 0.30%.
(b) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(c) Not annualized.
(d) Had the Distributor not waived a portion of expenses, total return would
have been reduced.
(e) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(f) Annualized.
17
<PAGE> 20
FINANCIAL HIGHLIGHTS CONTINUED
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
----------------------------------------------------------------------------------
1999 1998
----------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C (B)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.720 $ 7.720 $ 7.720 $ 7.370 $ 7.370 $ 7.660
-------- -------- -------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.354 0.294 0.318(a) 0.366 0.310 0.164(c)
Net realized and unrealized gain (loss) 0.111 0.111 0.111 0.426 0.426 0.132
-------- -------- -------- --------- --------- --------
Total from Investment Operations 0.465 0.405 0.429 0.792 0.736 0.296
-------- -------- -------- --------- --------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.352) (0.294) (0.317) (0.369) (0.313) (0.167)
In excess of net investment income (0.012) (0.010) (0.011) (0.004) (0.004) --
From net realized gains (0.075) (0.075) (0.075) (0.068) (0.068) (0.069)
In excess of net realized gains (0.016) (0.016) (0.016) (0.001) (0.001) --
-------- -------- -------- --------- --------- --------
Total Distributions Declared to Shareholders (0.455) (0.395) (0.419) (0.442) (0.386) (0.236)
-------- -------- -------- --------- --------- --------
NET ASSET VALUE, END OF PERIOD $ 7.730 $ 7.730 $ 7.730 $ 7.720 $ 7.720 $ 7.720
======== ======== ======== ========= ========= ========
Total return (d) 6.23% 5.42% 5.74%(e) 11.05% 10.23% 3.93%(e)(f)
======== ======== ======== ========= ========= ========
RATIOS TO AVERAGE NET ASSETS
Expenses (g) 0.86% 1.61% 1.31%(a) 0.87% 1.62% 1.32%(c)(h)
Net investment income (g) 4.60% 3.85% 4.15%(a) 4.92% 4.17% 4.32%(c)(h)
Portfolio turnover 13% 13% 13% 31% 31% 31%
Net assets at end of period (000) $246,576 $ 99,485 $ 5,963 $ 255,838 $ 101,657 $ 560
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31
------------------------
1997
------------------------
CLASS A CLASS B
- --------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.540 $ 7.540
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.386 0.331
Net realized and unrealized gain (loss) (0.173) (0.173)
--------- ---------
Total from Investment Operations 0.213 0.158
--------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.383) (0.328)
In excess of net investment income -- --
From net realized gains -- --
In excess of net realized gains -- --
--------- ---------
Total Distributions Declared to Shareholders (0.383) (0.328)
--------- ---------
NET ASSET VALUE, END OF PERIOD $ 7.370 $ 7.370
========= =========
Total return (d) 2.98% 2.21%
========= =========
RATIOS TO AVERAGE NET ASSETS
Expenses (g) 0.88% 1.63%
Net investment income (g) 5.23% 4.48%
Portfolio turnover 25% 25%
Net assets at end of period (000) $ 264,053 $ 100,873
</TABLE>
(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.
18
<PAGE> 21
FINANCIAL HIGHLIGHTS CONTINUED
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 gain (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
</TABLE>
(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.
19
<PAGE> 22
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<PAGE> 23
TRUSTEES & TRANSFER AGENT
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 V. 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)
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
The 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 with the most recent copy of
the Liberty Funds Distributor, Inc. Performance Update.
<PAGE> 24
CHOOSE LIBERTY
Because no single investment manager can be all things to all investors.(SM)
LIBERTY
[COLONIAL MANAGEMENT ASSOCIATES, INC. LOGO]
COLONIAL HAS LONG BEEN A RECOGNIZED LEADER IN FIXED-INCOME INVESTING. IN
ADDITION, COLONIAL HAS DISTINGUISHED ITSELF WITH BOTH A TRADITIONAL VALUE AND A
MORE CONTEMPORARY APPROACH TO EQUITY INVESTING.
[CRABBE HUSON LOGO]
CRABBE HUSON'S CONTRARIAN INVESTMENT STYLE SEEKS LONG-TERM PERFORMANCE BY
INVESTING IN STOCKS FROM HIGH-QUALITY, OUT-OF-FAVOR COMPANIES. THIS RISK-AVERSE
STRATEGY CAPITALIZES ON THE POTENTIAL OF THESE COMPANIES TO REGAIN MARKET
POPULARITY.
[LIBERTY ASSET MANAGEMENT COMPANY LOGO]
LAMCO BRINGS INSTITUTIONAL MONEY MANAGEMENT TO INDIVIDUAL INVESTORS THROUGH A
DISCIPLINED MULTI-MANAGER INVESTMENT PROCESS THAT SEEKS TO DELIVER CONSISTENT
LONG-TERM RETURNS.
[NEWPORT FUND MANAGEMENT LOGO]
A LEADER IN ASIAN INVESTING(TM), NEWPORT HAS AN UNPARALLELED KNOWLEDGE OF ASIAN
ECONOMIES, BUSINESS AND CULTURE.
[STEIN ROE & FARNHAM INVESTMENT MANAGEMENT LOGO]
STEIN ROE'S GROWTH MANAGEMENT STYLE EMPHASIZES COMPANIES WITH THE ABILITY TO
CREATE, MAINTAIN AND GROW EARNINGS IN DIFFERENT MARKET ENVIRONMENTS.
BOSTON - CHICAGO - NEW YORK - PORTLAND - SAN FRANCISCO
That's why each of these affiliated managers has excelled in a particular
investment style. These managers not only specialize in a distinct investment
style, they hold a passion for their style along with a demonstrated track
record.
Each of these managers is a member of the Liberty Financial Companies (NYSE: L),
a diversified asset accumulation and management organization with over $62.7
billion in assets under management for more than 1.7 million investors. Many of
the affiliated managers' products are offered by prospectus through Liberty
Funds Distributor, Inc.
Ask your financial advisor to help you develop an investment strategy that
blends the complementary disciplines of different managers into a well-balanced
program tailored to your goals.
COLONIAL CALIFORNIA TAX-EXEMPT FUND SEMIANNUAL REPORT
[LIBERTY FUNDS LOGO]
ALL-STAR - COLONIAL - CRABBE HUSON - NEWPORT - STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. (C) 1999
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
www.libertyfunds.com
BULK RATE
U.S. POSTAGE
PAID
HOLLISTON, MA
PERMIT NO. 20
CA-03/560H-0899 (9/99) 99/1107
