THE COLONIAL FUND
CLASS A, B AND C SHARES
SUPPLEMENT TO PROSPECTUS DATED MARCH 1, 2000
(REPLACING SUPPLEMENTS DATED MAY 17, 2000, JUNE 23, 2000,
AUGUST 1, 2000 and AUGUST 2, 2000)
Effective July 14, 2000, the Fund changed its name to "The Liberty Fund."
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 1-year, 5-year and 10-year periods ended December 31, 1999,
respectively.
Effective July 14, 2000, John E. Lennon no longer co-managed the Fund.
Effective August 1, 2000 Peter Wiley no longer co-managed the Fund and Harvey
Hirschhorn, Scott Schermerhorn and Richard C. Petrino began co-managing the
Fund. The current co-managers of the Fund are Messrs. Hirschhorn, Schermerhorn
and Petrino and Leslie W. Finnemore and Ann T. Peterson.
The sub-caption, PORTFOLIO MANAGERS, under the section MANAGING THE FUND is
changed by deleting the second and third paragraph and adding the following
paragraphs:
HARVEY B. HIRSCHHORN, a senior vice president of Colonial Management Associates,
Inc. (Colonial), has co-managed the Fund since August, 2000. Mr. Hirschhorn has
been affiliated with and has managed various other funds for Stein Roe & Farnham
Incorporated, an affiliate of Colonial, since 1973.
SCOTT SCHERMERHORN, a senior vice president of Colonial, has managed the Fund
since August, 2000. Mr. Schermerhorn has managed various other funds at Colonial
since October, 1998. Prior to joining Colonial, Mr. Schermerhorn was the head of
the value team at Federated Investors from May, 1996 to October, 1998 where he
managed the American Leader Fund, Federated Stock Trust and Federated Stock and
Bond Fund as well as other institutional accounts. Prior to 1996, Mr.
Schermerhorn was a member of the growth and income team at J&W Seligman.
RICHARD C. PETRINO, an assistant vice president of Colonial, has managed the
Fund since August, 2000. Mr. Petrino has been a research associate, research
analyst and an associate manager for other Colonial funds since 1994.
Effective August 1, 2000, the Class A contingent deferred sales charge (CDSC)
and the commission schedule on purchases over $1 million changed as follows:
The footnote to the table "Class A Sales Charges" under the sub-caption SALES
CHARGES under the section YOUR ACCOUNT is revised as follows:
Class A shares bought without an initial sales charge in accounts aggregating $1
million to $25 million at the time of purchase are subject to a 1% CDSC if the
shares are sold within 18 months of the time of purchase. Subsequent Class A
purchases that bring your account value above $1 million are subject to a CDSC
if redeemed within 18 months of the date of purchase. The 18 month period begins
on the first day of the month following each purchase. The contingent deferred
sales charge does not apply to retirement plans purchased through a fee-based
program.
The following replaces the table called "Purchases Over $1 Million" under the
sub-caption SALES CHARGES under the section YOUR ACCOUNT:
AMOUNT PURCHASED COMMISSION %
First $3 million 1.00
$3 million to less than $5 million 0.80
$5 million to less than $25 million 0.50
$25 million or more 0.25*
* Paid over 12 months but only to the extent the shares remain outstanding.
For Class A share purchases by participants in certain group retirement plans
offered through a fee-based program, financial advisors receive a 1% commission
from the distributor on all purchases of less than $3 million.
<PAGE>
[Sidebar]
UNDERSTANDING EXPENSES
SALES CHARGES are paid directly by shareholders to Liberty Funds Distributor,
Inc., the Fund's distributor.
ANNUAL FUND OPERATING EXPENSES are deducted from the Fund. They include
management fees, 12b-1 fees and administrative costs including pricing and
custody services.
EXAMPLE EXPENSES help you compare the cost of investing in the Fund to the cost
of investing in other mutual funds. It uses the following hypothetical
conditions:
* $10,000 initial investment
* 5% total return for each year
* Fund operating expenses remain
the same
* Assumes reinvestment of all dividends and distributions
* Assumes Class B shares convert to Class A shares after eight years
[End Sidebar]
The Annual Fund Operating Expenses table and the Example Expenses table under
the section YOUR EXPENSES are revised in their entirety as follows:
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (deducted directly from Fund assets)
Class A Class B Class C
<S> <C> <C> <C>
Management fee (%) 0.53 0.53 0.53
--------------------------------------------------- ----------- ----------- -----------
Distribution and service (12b-1) fees (*) (%) 0.24 0.99 0.99
--------------------------------------------------- ----------- ----------- -----------
Other expenses (%) 0.35 0.35 0.35
--------------------------------------------------- ----------- ----------- -----------
Total annual fund operating expenses (%) 1.12 1.87 1.87
</TABLE>
(*) The annual service fee portion of the 12b-1 fee may equal up to 0.15% on
net assets attributable to shares issued prior to April 1, 1989 and 0.25% on net
assets attributable to shares issued thereafter. This arrangement results in a
rate of service fee that is a blend between the 0.15% and 0.25% rates.
<TABLE>
<CAPTION>
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
Class 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Class A $683 $911 $1,156 $1,860
--------------------------------------- ---------- ----------- ----------- -----------
Class B: did not sell your
shares $190 $588 $1,011 $1,995
sold all your shares at
the end of the period $690 $888 $1,211 $1,995
--------------------------------------- ---------- ----------- ----------- -----------
Class C: did not sell your
shares $190 $588 $1,011 $2,190
sold all your shares at
the end of the period $290 $588 $1,011 $2,190
</TABLE>
The section DISTRIBUTION AND SERVICE FEES is revised in its entirety as follows:
DISTRIBUTION AND SERVICE FEES
--------------------------------------------------------------------------------
The Fund has adopted a plan under Rule 12b-1 that permits it to pay the Fund's
distributor marketing and other fees to support the sale and distribution of
Class A, B and C shares and certain services provided to you by your financial
advisor. The annual service fee is calculated by adding (1) 0.15% on net assets
attributable to shares issued prior to April 1, 1989 and (2) 0.25% on net assets
attributable to shares issued thereafter. This arrangement results in a rate of
service fee payable by the Fund that is a blend between the 0.15% and 0.25%
rates. For the fiscal year ended October 31, 1999, the service fee was 0.24% of
the Fund's average net assets. The annual distribution fee may equal up to 0.75%
for each of Class B and Class C shares. Distribution and service fees are paid
out of the assets of these classes. Over time, these fees may reduce the return
on your investment and may cost you more than paying other types of sales
charges. Class B shares automatically convert to Class A shares after a certain
number of years, eliminating the distribution fee upon conversion. Conversion
may occur three, four or eight years after purchase, depending on the program
you purchased your shares under. See "Your Account; Sales Charges" for the
conversion schedule applicable to Class B shares.
721-36/618C-0800 August 21, 2000
<PAGE>
THE COLONIAL FUND
CLASS Z SHARES
SUPPLEMENT TO PROSPECTUS DATED MARCH 1, 2000
(REPLACING SUPPLEMENTS DATED MAY 17, 2000, JUNE 23, 2000,
AUGUST 2, 2000 AND AUGUST 15, 2000)
Effective July 14, 2000, the Fund's name was changed to "The Liberty Fund."
The prospectus is amended to revise the categories of investors who are eligible
to purchase Class Z shares. The following investors are now eligible to purchase
Class Z shares: (i) clients of broker-dealers or registered investment advisors
that both recommend the purchase of Fund shares and charge such clients an
asset-based fee; (ii) a retirement plan (or the custodian for such plan) with
aggregate plan assets of at least $5 million at the time of purchase and which
purchases shares directly from Liberty Funds Distributor, Inc., the Funds'
distributor or through a third party broker-dealer; (iii) any insurance company,
trust company or bank purchasing shares for its own account; (iv) any endowment,
investment company or foundation; and (v) clients of investment advisory
affiliates of the distributor provided that the clients meet certain criteria
established by the distributor and its affiliates. Initial purchases of Class Z
shares are subject to a minimum purchase amount of $100,000, except that
purchases by retirement plans described in clause (ii) above are not subject to
any initial investment minimum. The Funds reserve the right to change the
investment minimums.
Effective July 14, 2000, John E. Lennon no longer co-managed the Fund.
Effective August 1, 2000 Peter Wiley no longer co-managed the Fund and Harvey
Hirschhorn, Scott Schermerhorn and Richard C. Petrino began co-managing the
Fund. The current co-managers of the Fund are Messrs. Hirschhorn,
Schermerhorn and Petrino and Leslie W. Finnemore and Ann T. Peterson.
The sub-caption, PORTFOLIO MANAGERS, under the section MANAGING THE FUND is
changed by deleting the second and third paragraph and adding the following
paragraphs:
HARVEY B. HIRSCHHORN, a senior vice president of Colonial Management Associates,
Inc. (Colonial), has co-managed the Fund since August, 2000. Mr. Hirschhorn has
been affiliated with and has managed various other funds for Stein Roe & Farnham
Incorporated, an affiliate of Colonial, since 1973.
SCOTT SCHERMERHORN, a senior vice president of Colonial, has managed the Fund
since August, 2000. Mr. Schermerhorn has managed various other funds at Colonial
since October, 1998. Prior to joining Colonial, Mr. Schermerhorn was the head of
the value team at Federated Investors from May, 1996 to October, 1998 where he
managed the American Leader Fund, Federated Stock Trust and Federated Stock and
Bond Fund as well as other institutional accounts. Prior to 1996, Mr.
Schermerhorn was a member of the growth and income team at J&W Seligman.
RICHARD C. PETRINO, an assistant vice president of Colonial, has managed the
Fund since August, 2000. Mr. Petrino has been a research associate, research
analyst and an associate manager for other Colonial funds since 1994.
<PAGE>
[SIDE BAR]
UNDERSTANDING PERFORMANCE
Calendar year total return show the Fund's Class Z share performance for each of
the last ten complete calendar years. It includes the effects of Fund expenses.
Average annual total returns are 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 returns are 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 Funds 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.
[END SIDEBAR]
The caption PERFORMANCE HISTORY is revised in its entirety as follows:
PERFORMANCE HISTORY
--------------------------------------------------------------------------------
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 Z shares. The
performance table following the bar chart shows how the Fund's average annual
returns for Class Z 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.
Calendar Year Total Returns (Class Z) (1)
1990 -7.50%
1991 26.13%
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%
Average Annual Total Returns - for periods ended December 31, 1999
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
<S> <C> <C> <C>
Class Z (%) 13.72 19.72(1) 13.77(1)
--------------------------------------- -------------- -------------- -------------
Russell Index (%) 20.91 28.04 18.13
--------------------------------------- -------------- -------------- -------------
S&P Index (%) 14.72 23.05 17.32
--------------------------------------- -------------- -------------- -------------
Salomon Index (%) (0.83) 7.73 7.74
--------------------------------------- -------------- -------------- -------------
Lipper Average (%) 8.98 16.33 12.26
</TABLE>
(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. Class A share returns are not
restated to reflect any differences in expenses between Class A
shares and the newer class 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.
721-36/696C-0800 August 21, 2000
