December 1, 1998
STEIN ROE ADVISOR
TAX-MANAGED GROWTH FUND
CLASS Z SHARES
PROSPECTUS
BEFORE YOU INVEST
Colonial Management Associates, Inc. (Administrator) and your full-service
financial advisor want you to understand both the risks and benefits of mutual
fund investing.
While mutual funds offer significant opportunities and are professionally
managed, they also carry risk including possible loss of principal. Unlike
savings accounts and certificates of deposit, mutual funds are not insured or
guaranteed by any financial institution or government agency.
Please consult your full-service financial advisor to determine how investing in
this mutual fund may suit your unique needs, time horizon and risk tolerance.
Stein Roe Advisor Tax-Managed Growth Fund (Fund), a diversified portfolio of
Colonial Trust I (Trust), an open-end management investment company, seeks to
maximize long-term capital growth while reducing shareholder exposure to taxes.
The Fund is managed by Stein Roe & Farnham Incorporated (Advisor), an affiliate
of the Administrator and successor to an investment advisory business that was
founded in 1932.
The Fund currently is structured as a traditional mutual fund investing in
individual securities but may in the future be converted to a master/feeder
structure. Under a master/feeder structure, the Fund would seek to achieve its
objective by investing all of its assets in another open-end management
investment company managed by the Advisor and having substantially the same
objective and investment policies as the Fund. Shareholders of the Fund would be
notified but would not have an opportunity to vote on such conversion.
This Prospectus explains concisely what you should know before investing in
Class Z shares of the Fund. Read it carefully and retain it for future
reference. More detailed information about the Fund is in the February 28, 1998
Statement of Additional Information, as revised December 1, 1998 which has been
filed with the Securities and Exchange Commission and is obtainable free of
charge by calling the Administrator at 1-800-426-3750.
The Statement of Additional Information is incorporated by reference in (which
means it is considered to be a part of) this Prospectus.
The following eligible institutional investors may purchase Class Z shares:
(i) any retirement plan with aggregate assets of at least $5 million at the time
of purchase of Class Z shares and which purchases shares directly from Liberty
Funds Distributor, Inc. (Distributor) or through a third party broker-dealer;
(ii) any insurance company, trust company or bank purchasing shares for its own
account; and (iii) any endowment, investment company or foundation. In addition,
Class Z shares may be purchased directly or by exchange by any (i) investors who
were Class I shareholders of the SoGen International Fund, SoGen Overseas Fund
or SoGen Gold Fund as of the reorganization of these funds into Colonial Trust
II and (ii) clients of investment advisory affiliates of the Distributor,
provided that these clients meet certain criteria established by the Distributor
and its affiliates.
Contents Page
Summary of Expenses 2
The Fund's Financial History 3
The Fund's Investment Objective 4
How the Fund Pursues its Objective
and Certain Risk Factors 4
How the Fund Measures its Performance 5
How the Fund is Managed 6
Year 2000 6
How the Fund Values its Shares 7
Distributions and Taxes 7
How to Buy Shares 7
How to Sell Shares 8
How to Exchange Shares 8
Telephone Transactions 8
Organization and History 9
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NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE
- ----------------------------- ------------------------------
The SEC maintains a Web site (http://www.sec.gov) that contains the Statement of
Additional Information, materials that are incorporated by reference into this
Prospectus and the Statement of Additional Information, and other information
regarding the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF EXPENSES
Expenses are one of several factors to consider when investing in the Fund. The
following tables summarize your maximum transaction costs and your annual
expenses for an investment in the Class Z shares of the Fund. See "How the Fund
is Managed" for a more complete description of the Fund's various costs and
expenses.
Shareholder Transaction Expenses (1)(2)
Maximum Initial Sales Charge Imposed on a Purchase
(as a % of offering price) 0.00%
Maximum Contingent Deferred Sales Charge
(as a % of offering price) 0.00%
(1) For accounts less than $1,000 an annual fee of $10 may be deducted. See
"How to Buy Shares."
(2) Redemption proceeds exceeding $500 sent via federal funds wire will be
subject to a $7.50 charge per transaction.
Annual Operating Expenses (as a % of average net assets)
Management and administration fees(after fee waiver)(3) 0.03%
12b-1 fees 0.00%
Other expenses (3) 1.22%
----
Total operating expenses(after fee waiver)(3) 1.25%
====
(3) Total expenses, excluding brokerage, interest taxes and extraordinary
expenses, are, until further notice, voluntarily limited by the
Administrator and the Advisor to 1.25% of the first $100 million of average
net assets, and 1.50% of average net assets over $100 million. Absent such
expense limitation, "Management and administration fees" would be 1.00% and
"Total operating expenses" would be 2.22%. Other expenses are estimated
based on Class A share expenses.
Example
The following Example shows the cumulative transaction and operating expenses
attributable to a hypothetical $1,000 investment in Class Z shares of the Fund
for the periods specified, assuming a 5% annual return with or without
redemption at period end. The 5% return and expenses used in this Example should
not be considered indicative of actual or expected Fund performance or expenses,
both of which will vary:
1 year $ 13
3 years $ 40
5 years $ 69
10 years $151
<PAGE>
THE FUND'S FINANCIAL HISTORY
The following financial highlights for a share outstanding throughout the period
ending October 31, 1997, have been derived from the Fund's 1997 Annual Report
and have been audited by PricewaterhouseCoopers LLP, independent accountants.
Their unqualified report is included in the Fund's 1997 Annual Report and is
incorporated by reference into the Statement of Additional Information. The
information presented is for other classes of shares offered by the Fund. As of
April 30, 1998, no Class Z shares had been issued. Information regarding the
Fund's Class E, F, G and H shares is included in the Fund's Annual and
Semiannual Report.
<TABLE>
<CAPTION>
--------------------------------------------------------------- -----------------------------
Class A Class B Class C (b)
--------------------------------------------------------------- -----------------------------
(Unaudited) Period (Unaudited) Period (Unaudited) Period
Six months ended ended Six months ended ended Six months ended ended
April 30 October 31 April 30 October 31 April 30 October 31
1998 1997(c) 1998 1997(c) 1998 1997(c)
------------------------------- ------------------------------ -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $12.040 $10.080 $11.960 $10.080 $11.960 $10.080
-------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a)(d) (0.017) 0.040 (0.066) (0.032) (0.066) (0.032)
Net realized and unrealized gain 2.167 1.920 2.156 1.912 2.146 1.912
------ ------ ------ ------ ------ -----
Total from Investment Operations 2.150 1.960 2.090 1.880 2.080 1.880
------ ------ ------ ------ ------ -----
Net asset value - End of period $14.190 $12.040 $14.050 $11.960 $14.040 $11.960
======== ======== ======== ======== ======== =======
Total return (e)(f)(g) 17.86% 19.44% 17.47% 18.65% 17.39% 18.65%
------ ------ ------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses (h)(i) 1.50% 1.50% 2.25% 2.25% 2.25% 2.25%
Net investment income (loss) (h)(i) (0.26)% 0.39% (1.01)% (0.36)% (1.01)% (0.36)%
Fees and expenses waived or borne by
the Advisor/Administrator (h)(i) 0.10% 0.98% 0.10% 0.98% 0.10% 0.98%
Portfolio turnover (g) 15% 51% 15% 51% 15% 51%
Net assets at end of period (000) $35,095 $17,142 $82,123 $38,452 $14,288 $5,923
(a) Net of fees and expenses waived or borne by the Advisor/Administrator which
amounted to: $0.006 $0.096 $0.006 $0.096 $0.006 $0.096
</TABLE>
(b) Effective July 1, 1997, Class D shares were redesignated Class C shares.
(c) The Fund commenced investment operations on December 16, 1996. The activity
shown is from the effective date of registration (December 30, 1996) with
the Securities and Exchange Commission
(d) Per share data was calculated using average shares outstanding during the
period.
(e) Total return at net asset value assuming no initial sales charge or
contingent deferred sales charge.
(f) Had the Advisor/Administrator not waived or reimbursed a portion of
expenses, total return would have been reduced.
(g) Not annualized.
(h) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(i) Annualized.
Further performance information is contained in the Fund's Annual Report to
shareholders, which may be obtained without charge by calling 1-800-426-3750.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
The Fund seeks to maximize long-term capital growth while reducing shareholder
exposure to taxes.
HOW THE FUND PURSUES ITS OBJECTIVE AND CERTAIN RISK FACTORS
The Fund invests primarily (at least 65% of its assets) in common stocks of
large and medium capitalization companies (i.e., companies with at least $1
billion in equity market capitalization) believed by the Advisor to have above
average earnings growth prospects. The Advisor uses fundamental research
analysis and valuation techniques in order to identify potential investments for
the Fund. Up to 35% of the Fund's total assets may be invested in a combination
of (i) common stocks or American Depositary Receipts (receipts issued in the
U.S. by banks or trust companies evidencing ownership of underlying foreign
securities) of non-U.S. companies and (ii) common stocks of small capitalization
companies (i.e., companies with equity market capitalizations of less than $1
billion).
While the Fund's overriding objective is long-term capital growth, the Advisor
may use certain investment techniques designed to reduce the payment by the Fund
of taxable distributions to shareholders and thereby reduce the impact of taxes
on shareholder returns. Such techniques will be used only if, in the Advisor's
judgment, there will not be a materially negative impact on the Fund's pre-tax
total return. Such techniques may include, among others, (i) purchasing low or
non-dividend paying stocks; (ii) low portfolio turnover, which helps to minimize
the realization and distribution of taxable capital gains; (iii) deferring the
sale of a security until the realized gain would qualify as a long-term capital
gain rather than short-term; (iv) selling securities that have declined in value
to offset gains realized on the sale of other securities; and (v) when selling a
portion of a holding, selling those securities with a higher cost basis first.
The use of such techniques will not eliminate the payment by the Fund of taxable
distributions. The Administrator has retained the professional services firm of
PricewaterhouseCoopers LLP to provide tax consulting services.
Foreign Investments. The Fund may invest up to 35% of its total assets in
foreign securities including American Depositary Receipts. Investments in
foreign securities have special risks related to political, economic and legal
conditions outside of the U.S. As a result, the prices of such securities may
fluctuate substantially more than the prices of securities of issuers based in
the U.S. Special risks associated with foreign securities include the
possibility of unfavorable currency exchange rates, the existence of less liquid
markets, the unavailability of reliable information about issuers, the existence
(or potential imposition) of exchange control regulations (including currency
blockage), and political and economic instability, among others. In addition,
transactions in foreign securities may be more costly due to currency conversion
costs and higher brokerage and custodial costs. See "How the Fund Pursues its
Objective and Certain Risk Factors--Foreign Currency Transactions; Index and
Interest Rate Futures; Options" in this Prospectus and "Foreign Securities" and
"Foreign Currency Transactions" in the Statement of Additional Information for
more information about foreign investments.
Foreign Currency Transactions; Index and Interest Rate Futures; Options. In
connection with its investments in foreign securities, the Fund may (i) purchase
and sell foreign currencies on a spot or forward basis, (ii) enter into foreign
currency futures contracts, (iii) write both put and call options on foreign
currency futures contracts, and (iv) purchase and write both call and put
options on foreign currencies. Such transactions may be entered into (i) to lock
in a particular foreign exchange rate pending settlement of a purchase or sale
of a foreign security or pending the receipt of interest, principal or dividend
payments on a foreign security held by the Fund, or (ii) to hedge against a
decline in the value, in U.S. dollars or in another currency, of a foreign
currency in which securities held by the Fund are denominated.
In addition, the Fund may (i) enter into index and interest rate futures
contracts, (ii) write put and call options on such futures contracts, (iii)
purchase and write both call and put options on securities and indexes, and (iv)
purchase other types of forward or investment contracts linked to individual
securities, indexes or other benchmarks. The Fund may write a call or put option
on a security only if the option is covered.
A futures contract creates an obligation by the seller to deliver and the buyer
to take delivery of a type of instrument at the time and in the amount specified
in the contract. A sale of a futures contract can be terminated in advance of
the specified delivery date by subsequently purchasing a similar contract; a
purchase of a futures contract can be terminated by a subsequent sale. Gain or
loss on a contract generally is realized upon such termination.
An option generally gives the option holder the right, but not the obligation,
to purchase or sell prior to the option's specified expiration date. If the
option expires unexercised, the holder will lose any amount it paid to acquire
the option.
Transactions in futures, options and similar investments may not achieve the
goal of hedging to the extent there is an imperfect correlation between the
price movements of the contracts and of the underlying asset or benchmark. In
addition, because futures positions may require low margin deposits, the use of
futures contracts involves a high degree of leverage and may result in losses in
excess of the amount of the margin deposit. Finally, if the Advisor's prediction
on interest rates, stock market movements or other market factors is inaccurate,
the Fund may be worse off than if it had not engaged in such transactions.
See the Statement of Additional Information for information relating to the
Fund's obligations in entering into such transactions.
Small Companies. The smaller, less well established companies in which the Fund
may invest may offer greater opportunities for capital appreciation than larger,
better established companies, but may also involve certain special risks. Such
companies often have limited product lines, markets or financial resources and
depend heavily on a small management group. Their securities may trade less
frequently, in smaller volumes, and fluctuate more sharply in value than
exchange listed securities of larger companies.
Securities Loans. The Fund may make loans (a) through lending of securities, (b)
through the purchase of debt instruments or similar evidences of indebtedness
typically sold privately to financial institutions, (c) through an interfund
lending program with other affiliated funds provided that no such loan may be
made if, as a result, the aggregate of such loans would exceed 33 1/3% of the
value of its total assets (taken at market value at the time of such loans) and
(d) through repurchase agreements.
Temporary/Defensive Investments. Temporarily available cash may be invested in
certificates of deposit, bankers' acceptances, high quality commercial paper,
Treasury bills and repurchase agreements. Some or all of the Fund's assets also
may be invested in such investments or in investment grade U.S. or foreign debt
securities, Eurodollar certificates of deposit and obligations of savings
institutions during periods of unusual market conditions. Under a repurchase
agreement, the Fund buys a security from a bank or dealer, which is obligated to
buy it back at a fixed price and time. The security is held in a separate
account at the Fund's custodian and constitutes the Fund's collateral for the
bank's or dealer's repurchase obligation. Additional collateral will be added so
that the obligation will at all times be fully collateralized. However, if the
bank or dealer defaults or enters bankruptcy, the Fund may experience costs and
delays in liquidating the collateral, and may experience a loss if it is unable
to demonstrate its rights to the collateral in a bankruptcy proceeding. Not more
than 15% of the Fund's net assets will be invested in repurchase agreements
maturing in more than 7 days and other illiquid securities.
Borrowing of Money. The Fund may borrow from banks, other affiliated funds and
other entities to the extent permitted by law for temporary or emergency
purposes up to 33 1/3% of its total assets.
Other. The Fund may not always achieve its investment objective. The Fund's
investment objective and non-fundamental investment policies may be changed
without shareholder approval. Additional information concerning certain of the
securities and investment techniques described above is contained in the
Statement of Additional Information.
HOW THE FUND MEASURES ITS PERFORMANCE
Performance may be quoted in sales literature and advertisements. Class Z share
average annual total returns are calculated in accordance with the Securities
and Exchange Commission's formula and assume the reinvestment of all
distributions. Other total returns differ from average annual total return only
in that they may relate to different time periods and may represent aggregate as
opposed to average annual total returns.
Performance results reflect any voluntary fee waivers or reimbursement of Fund
expenses by the Advisor or its affiliates. Absent these fee waivers or expense
reimbursements, performance results would have been lower.
The Fund's classes of shares were first offered for sale on different dates. The
total return for a newer class of shares (Class Z) includes the performance of
the newer class of shares since it was offered for sale and the performance for
the oldest existing class of shares from the date it was offered for sale up to
the date the newer class was offered for sale. See "Performance Measures" in the
Statement of Additional Information for information on how the calculations are
made.
Quotations from various publications may be included in sales literature and
advertisements. See "Performance Measures" in the Statement of Additional
Information for more information. All performance information is historical and
does not predict future results.
HOW THE FUND IS MANAGED
The Fund's Trustees formulate the Fund's general policies and oversee the Fund's
affairs. The Fund's investment operations are managed by the Advisor. Subject to
the supervision of the Fund's Trustees, the Advisor makes the Fund's day-to-day
investment decisions, arranges for the execution of portfolio transactions and
generally manages the Fund's investments. See "Management of the Fund" in the
Statement of Additional Information for information concerning the Trustees and
officers of the Trust and the Fund.
The Fund is managed by a team of investment professionals assigned to it by the
Advisor. No single individual has primary management responsibility over the
Fund's portfolio securities.
The Advisor places all orders for the purchase and sale of securities for the
Fund. In doing so, the Advisor seeks to obtain the best combination of price and
execution, which involves a number of judgmental factors. When the Advisor
believes that more than one broker-dealer is capable of providing the best
combination of price and execution in a particular portfolio transaction, the
Advisor often selects a broker-dealer that furnishes it with research products
or services. For its investment management services, the Advisor receives from
the Fund a monthly fee at an annual rate of 0.60% of the Fund's average daily
net assets.
The Administrator provides the Fund with certain administrative services and
generally oversees the operation of the Fund. The Fund pays the Administrator a
monthly fee at the annual rate of 0.40% of average daily net assets for these
services. The Administrator also provides pricing and bookkeeping services to
the Fund for a monthly fee of $2,250 plus a percentage of the Fund's average net
assets over $50 million. The Distributor, a subsidiary of the Administrator,
serves as the Fund's distributor. Liberty Funds Services Inc. (Transfer Agent),
an affiliate of the Administrator, serves as the Fund's shareholder services and
transfer agent for a fee of 0.236% annually of average net assets plus certain
out-of-pocket expenses.
Each of the foregoing fees is subject to any fee waiver or expense reimbursement
to which the Advisor and/or the Administrator may agree. See "Summary of
Expenses" above.
The Administrator, the Distributor, the Advisor, and the Transfer Agent are all
indirect wholly-owned subsidiaries of Liberty Financial Companies, Inc. (Liberty
Financial), which in turn is an indirect majority-owned subsidiary of Liberty
Mutual Insurance Company (Liberty Mutual). Liberty Mutual is an underwriter of
workers' compensation insurance and a property and casualty insurer in the U.S.
YEAR 2000
The Fund's Advisor, Administrator, Distributor and Transfer Agent (Liberty
Companies) are actively managing Year 2000 readiness for the Fund. The Liberty
Companies are taking steps that they believe are reasonably designed to address
the Year 2000 problem and are communicating with vendors who provide services,
software and systems to the Fund to provide that date-related information and
data can be properly processed and calculated on and after January 1, 2000. Many
Fund service providers and vendors, including the Liberty Companies, are in the
process of making Year 2000 modifications to their software and systems and
believe that such modifications will be completed on a timely basis prior to
January 1, 2000. However, no assurances can be given that all modifications
required to ensure proper data processing and calculation on and after January
1, 2000 will be timely made or that services to the Fund will not be adversely
affected.
HOW THE FUND VALUES ITS SHARES
Per share net asset value is calculated by dividing the total net asset value
attributable to Class Z shares by the number of Class Z shares outstanding.
Shares of the Fund are generally valued as of the close of regular trading
(normally 4:00 p.m. Eastern time) on the New York Stock Exchange (Exchange) each
day the Exchange is open. Portfolio securities for which market quotations are
readily available are valued at current market value. Short-term investments
maturing in 60 days or less are valued at amortized cost when the Administrator
determines, pursuant to procedures adopted by the Trustees, that such cost
approximates current market value. All other securities and assets are valued at
their fair value following procedures adopted by the Board of Trustees. In
addition, if the values of foreign securities have been materially affected by
events occurring after the closing of a foreign market, the foreign securities
may be valued at their fair value.
DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code and to distribute to shareholders net income and any net
realized gain annually in December. Distributions are invested in additional
Class Z shares at net asset value unless the shareholder elects to receive cash.
Regardless of the shareholder's election, distributions of $10 or less will not
be paid in cash to shareholders but will be invested in additional Class Z
shares at net asset value. If a shareholder has elected to receive dividends
and/or capital gain distributions in cash and the postal or other delivery
service selected by the Transfer Agent is unable to deliver checks to the
shareholder's address of record, such shareholder's distribution option will
automatically be converted to having all dividend and other distributions
reinvested in additional shares. No interest will accrue on amounts represented
by uncashed distribution or redemption checks. To change your election, call the
Transfer Agent for information.
Whether you receive distributions in cash or in additional Fund shares, you must
report them as taxable income unless you are a tax-exempt institution. If you
buy shares shortly before a distribution is declared, the distribution will be
taxable although it is in effect a partial return of the amount invested. Each
January, information on the amount and nature of distributions for the prior
year is sent to shareholders.
HOW TO BUY SHARES
Class Z shares are offered continuously at net asset value without a sales
charge. Orders received in good form prior to the time at which the Fund values
its shares (or placed with a financial service firm before such time and
transmitted by the financial service firm before the Fund processes that day's
share transactions) will be processed based on that day's closing net asset
value. Certificates will not be issued for Class Z shares. The Fund may refuse
any purchase order for its shares.
See the Statement of Additional Information for more information.
Shareholder Services and Account Fees. A variety of shareholder services are
available. For more information about these services or your account, call
1-800-345-6611. A shareholder's manual explaining all available services will be
provided upon request.
In June of any year, the Fund may deduct $10 (payable to the Transfer Agent)
from accounts valued at less than $1,000 unless the account value has dropped
below $1,000 solely as a result of share value depreciation. Shareholders will
receive 60 days' written notice to increase the account value before the fee is
deducted. The Fund may also deduct annual maintenance and processing fees
(payable to the Transfer Agent) in connection with certain retirement plan
accounts sponsored by the Distributor. See "Special Purchase Programs/Investor
Services" in the Statement of Additional Information for more information.
Other Classes of Shares. In addition to Class Z shares, the Fund offers seven
other classes of shares, Classes A, B, C, E, F, G, and H through a separate
Prospectus. Which Class is more beneficial to an investor depends on the amount
and intended length of the investment. In general, investors eligible to
purchase Class Z shares, which do not bear 12b-1 fees or contingent deferred
sales charges, should do so in preference over other classes.
Financial service firms may receive different compensation rates for selling
different classes of shares. The Distributor may pay additional compensation to
financial service firms which have made or may make significant sales. Initial
or contingent deferred sales charges may be reduced or eliminated for certain
persons or organizations purchasing Fund shares alone or in combination with
certain other mutual funds distributed by the Distributor. See the Statement of
Additional Information for more information.
HOW TO SELL SHARES
Shares may be sold on any day the Exchange is open, either directly to the Fund
or through your financial service firm. Sale proceeds generally are sent within
seven days (usually on the next business day after your request is received in
good form). However, for shares recently purchased by check, the Fund will delay
sending proceeds for up to 15 days in order to protect the Fund against
financial losses and dilution in net asset value caused by dishonored purchase
payment checks. To avoid delay in payment, investors are advised to purchase
shares unconditionally, such as by certified check or other immediately
available funds.
Selling Shares Directly To The Fund. Send a signed letter of instruction or
stock power form to the Transfer Agent. The sale price is the net asset value
next calculated after the Fund receives the request in proper form. Signatures
must be guaranteed by a bank, a member firm of a national stock exchange or
another eligible guarantor institution. Stock power forms are available from
financial service firms, the Transfer Agent and many banks. Additional
documentation is required for sales by corporations, agents, fiduciaries,
surviving joint owners and individual retirement account holders. For details
contact:
Liberty Funds Services, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Selling Shares Through Financial Service Firms. Financial service firms must
receive requests before the time at which the Fund's shares are valued to
receive that day's price, are responsible for furnishing all necessary
documentation to the Transfer Agent and may charge for this service.
General. The sale of shares is a taxable transaction for income tax purposes.
See the Statement of Additional Information for more information. Under unusual
circumstances, the Fund may suspend repurchases or postpone payment for up to
seven days or longer, as permitted by federal securities law. No interest will
accrue on amounts represented by uncashed distribution or redemption checks.
HOW TO EXCHANGE SHARES
Class Z shares may be exchanged at net asset value into the Class A or Class Z
shares of any other mutual fund distributed by the Distributor, including mutual
funds advised by the Advisor or the Administrator and their affiliates.
Carefully read the prospectus of the fund into which the exchange will go before
submitting the request. Call 1-800-426-3750 to receive a prospectus. Call
1-800-422-3737 to exchange shares by telephone. An exchange is a taxable capital
transaction. The exchange service may be changed, suspended or eliminated on 60
days' written notice. The Fund will terminate the exchange privilege as to a
particular shareholder if the Advisor determines, in its sole and absolute
discretion, that the shareholder's exchange activity is likely to adversely
impact the Advisor's ability to manage the Fund's investments in accordance with
its investment objectives or otherwise harm the Fund or its remaining
shareholders.
TELEPHONE TRANSACTIONS
All shareholders and/or their financial advisors are automatically eligible to
exchange Fund shares and redeem up to $100,000 of Fund shares by calling
1-800-422-3737 toll-free any business day between 9:00 a.m. and the time at
which the Fund values its shares. Telephone redemptions are limited to a total
of $100,000 in a 30-day period. Redemptions that exceed $100,000 may be
accomplished by placing a wire order trade through a broker or furnishing a
signature guaranteed request. Telephone redemption privileges for larger amounts
may be elected on the account application. The Transfer Agent will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine and may be liable for losses due to unauthorized or fraudulent
transactions in the event reasonable procedures are not employed. Such
procedures include restrictions on where proceeds of telephone redemptions may
be sent, limitations on the ability to redeem by telephone shortly after an
address change, recording of telephone lines and requirements that the redeeming
shareholder and/or his or her financial advisor provide certain identifying
information. Shareholders and/or their financial advisors wishing to redeem or
exchange shares by telephone may experience difficulty in reaching the Fund at
its toll-free telephone number during periods of drastic economic or market
changes. In that event, shareholders and/or their financial advisors should
follow the procedures for redemption or exchange by mail as described above
under "How to Sell Shares." The Advisor, the Administrator, the Transfer Agent
and the Fund reserve the right to change, modify, or terminate the telephone
redemption or exchange services at any time upon prior written notice to
shareholders. Shareholders and/or their financial advisors are not obligated to
transact by telephone.
ORGANIZATION AND HISTORY
The Fund was organized in 1996 as a separate portfolio of the Trust, which is a
Massachusetts business trust established in 1985.
The Trust is not required to hold annual shareholder meetings, but special
meetings may be called for certain purposes. Shareholders receive one vote for
each Fund share. Shares of the Fund and of any other series of the Trust that
maybe in existence from time to time generally vote together except when
required by law to vote separately by fund or by class. Shareholders owning in
the aggregate ten percent of Trust shares may call meetings to consider removal
of Trustees. Under certain circumstances, the Trust will provide information to
assist shareholders in calling such a meeting. See the Statement of Additional
Information for more information. Investment Advisor Stein Roe & Farnham
Incorporated One South Wacker Drive Chicago, IL 60606
Administrator
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Distributor
Liberty Funds Distributor, Inc.
One Financial Center
Boston, MA 02111-2621
Custodian
The Chase Manhattan Bank
270 Park Avenue
New York, NY 10017-2070
Shareholder Services and Transfer Agent
Liberty Funds Services, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611
Independent Accountants
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110-2624
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624
Your financial service firm is:
Printed in U.S.A.
December 1, 1998
STEIN ROE ADVISOR
TAX-MANAGED GROWTH FUND
CLASS Z SHARES
PROSPECTUS
Stein Roe Advisor Tax-Managed Growth Fund seeks to maximize long-term capital
growth while reducing shareholder exposure to taxes.
For more detailed information about the Fund, call the Administrator at
1-800-426-3750 for the February 28, 1998 Statement of Additional Information as
revised December 1, 1998.
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NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE
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