The Colonial fund
Class A, B and C Shares
Supplement to Prospectus dated March 1, 2000
The caption Performance History is revised to include Salomon Brothers Broad
Investment Grade Index (Salomon Index). The Salomon Index is an unmanaged index
that tracks the performance of corporate, mortgage, agency and treasury bonds.
The average annual total return of the Salomon Index is (0.83%), 7.73% and 7.74%
for the one-year, 5-year and 10-year periods ended December 31, 1999,
respectively.
721-36/349B-0500 May 17, 2000
The Colonial Fund
Class Z Shares
Supplement to Prospectus dated March 1, 2000
The caption Performance History is revised in its entirety as follows:
Understanding Performance
Calendar year total return shows the Fund's Class A share performance for each
of the last ten complete calendar years. It includes the effects of Fund
expenses.
Average annual total return is a measure of the Fund's performance over the past
one year, five year and ten-year periods. It includes the effects of Fund
expenses.
The Fund's return is compared to the Russell 1000 Index (Russell Index), an
unmanaged index that tracks performance of large capitalization stocks traded on
the New York Stock Exchange, the American Stock Exchange and the NASDAQ. The
Fund's return was compared formerly to the Standard & Poor's MidCap 400 Index
(S&P Index), an unmanaged index that tracks the performance of
middle-capitalization U.S. stocks. In the past, the Fund had a medium market
capitalization and used the S&P Index as an appropriate benchmark. However, the
Fund's current market capitalization more closely resembles a large
capitalization fund. Therefore, the Fund is changing its benchmark to the
Russell Index. Unlike the Fund, indices are not investments, do not incur fees
or expenses and are not professionally managed. It is not possible to invest
directly in indices. The Fund's return is also compared to the average return of
the Salomon Brothers Broad Investment Grade Index (Salomon Index), an unmanaged
index that tracks the performance of corporate, mortgage, agency and treasury
bonds, and the Lipper Balanced Fund category average (Lipper Average). This
Lipper Average, which is calculated by Lipper, Inc., is composed of funds with
similar investment objectives to the Fund. Sales charges are not reflected in
the Lipper Average.
Performance history
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The bar chart below shows changes in the Fund's performance from year to year by
illustrating the Fund's calendar year total returns for its Class A shares. The
performance table following the bar chart shows how the Fund's average annual
returns for Class A shares compare with those of a broad measure of market
performance for 1 year, 5 years and 10 years. The chart and table are intended
to illustrate some of the risks of investing in the Fund by showing the changes
in the Fund's performance. All returns include the reinvestment of dividends and
distributions. Performance results include the effect of expense reduction
arrangements, if any. As with all mutual funds, past performance does not
predict the Fund's future performance.
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Calendar Year Total Returns (Class A)
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[PERFORMANCE GRAPH]
1990 -7.50%
1991 28.13%
1992 12.96%
1993 14.46%
1994 -2.10%
1995 29.02%
1996 17.16%
1997 26.32%
1998 13.28%
1999 13.72%
For period shown in bar chart:
Best quarter: 2nd quarter 1997, +15.78%
Worst quarter: 3rd quarter 1990, -11.99%
1 Year 5 Years 10 Years
Class Z (%) 13.72 19.72(1) 13.77(1)
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Russell Index (%) 20.91 28.04 18.13
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- -------------------------------------- -------------- -------------- -----------
S&P Index (%) 14.72 23.05 17.32
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- -------------------------------------- -------------- -------------- -----------
Salomon Index (%) (0.83) 7.73 7.74
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Lipper Average (%) 8.80 16.31 11.86
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(1) Class Z is a newer class of shares. Its 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 of shares. The Class A
share returns are not restated to reflect any differences in expenses
between Class A shares and the newer classes of shares. If differences in
expenses were reflected, the returns for periods prior to the inception of
the newer class of shares would be higher, since Class Z shares are not
subject to sales charges or service fees. Class A shares were initially
offered on April 30, 1982, and Class Z shares were initially offered on
July 31, 1995.
721-36/350B-0500 May 17, 2000
