COLONIAL UTILITIES FUND
Supplement to the March 30, 1998 Prospectus
Revised July 13, 1998
The Fund's Prospectus is amended as follows:
(1) To the front cover of the Prospectus, a new paragraph is added below the
Table of Contents as follows:
This Prospectus is also available on-line at the Web site
http://www.libertyfunds.com. 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.
(2) The sub-caption "Borrowing of Money" under the caption HOW THE FUND PURSUES
ITS OBJECTIVE AND CERTAIN RISK FACTORS is revised in its entirety as
follows:
Borrowing of Money. The Fund may borrow money 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.
(3) A new caption and paragraph is added after the last paragraph of the
caption HOW THE FUND IS MANAGED as follows:
YEAR 2000
The Fund's Advisor, 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. The Fund will not pay the cost
of these modifications. 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.
(4) A new sentence is added as the last sentence under the caption HOW THE FUND
VALUES ITS SHARES as follows:
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.
(5) The following is added to the paragraph "Class A Shares" under the caption
HOW TO EXCHANGE SHARES:
Exchanges of Class A shares are not subject to a contingent deferred sales
charge. However, in determining whether a contingent deferred sales charge
is applicable to redemptions, the schedule of the fund in which the
original investment was made should be used.
(6) Under the caption TELEPHONE TRANSACTIONS the first sentence is revised in
its entirety and new second and third sentences are added as follows:
All shareholders and/or their financial advisors are automatically eligible
to exchange Fund shares and to redeem up to $100,000 of Fund shares by
calling 1-800-422-3737 toll-free any business day between 9:00 a.m.
(Eastern time) 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.
(7) Liberty Financial Investments, Inc., the Fund's distributor, changed its
name to Liberty Funds Distributor, Inc. (Distributor). The new name will
not affect the services the Distributor provides to the Fund. The
Distributor continues to offer selected investment products managed by
subsidiaries of its indirect parent company, Liberty Financial Companies,
Inc. (NYSE:L), the indirect parent of the Distributor.
(8) Colonial Investors Service Center, Inc. (Transfer Agent) the Fund's
transfer agent, changed its name to Liberty Funds Services, Inc. The new
name will not affect the services the Transfer Agent provides to the Fund.
(9) Price Waterhouse LLP, the Fund's independent accountants, changed its name
to PricewaterhouseCoopers LLP. The new name will not affect the services
the independent accountants provide to the Fund.
UF-36/228G-1198 October 30, 1998
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COLONIAL UTILITIES FUND
Supplement to Statement of Additional Information dated March 30, 1998
The Fund's Statement of Additional Information is amended as follows:
(1) A Special Meeting of Shareholders of the Fund was held on October 30, 1998.
The proposals received the required approvals and are effective
immediately:
(a) The first and sixth policies under the caption FUNDAMENTAL INVESTMENT
POLICIES are revised in their entirety as follows:
The Fund may:
1. Borrow from banks, other affiliated funds and other entities to
the extent permitted by applicable law, provided that the Fund's
borrowings shall not exceed 33 1/3% of the value of its total
assets (including the amount borrowed) less liabilities (other
than borrowings) or such other percentage permitted by law;
6. 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; and
(b) The Fund's fundamental investment policy regarding illiquid assets is
deleted from the caption FUNDAMENTAL INVESTMENT POLICIES and a new
policy is added under the caption OTHER INVESTMENT POLICIES as follows:
As non-fundamental investment policies which may be changed without a
shareholder vote, the Fund may not:
3. Invest more than 15% of its net assets in illiquid assets.
(c) A new sentence has been added under the caption OTHER INVESTMENT
POLICIES to specify that the Fund may be organized under a master
fund/feeder fund structure as follows:
Notwithstanding the investment policies and restrictions of the Fund,
the Fund may invest all or a portion of its investable assets in
investment companies with substantially the same investment objective,
policies and restrictions as the Fund.
(d) John V. Carberry, Salvatore Macera, Thomas E. Stitzel and Anne-Lee
Verville have been elected as new trustees.
John V. Carberry1, Age 51, is Senior Vice President of Liberty Financial
Companies, Inc. (formerly Managing Director, Salomon Brothers (investment
banking) from January 1988 to January 1998).
Salvatore Macera, Age 67, is a Private Investor (formerly Executive Vice
President of Itek Corp. and President of Itek Optical & Electronic Industries,
Inc. (electronics)). Trustee: Liberty Variable Investment Trust, Stein Roe
Variable Investment Trust.
Thomas E. Stitzel, Age 58, is Professor of Finance, College of Business, Boise
State University (higher education); Business consultant and author. Trustee:
Liberty Variable Investment Trust, Stein Roe Variable Investment Trust.
Anne-Lee Verville, Age 51, is a Consultant (formerly General Manager, Global
Education Industry from 1994 to 1997, and President, Applications Solutions
Division from 1991 to 1994, IBM Corporation (global education and global
applications)).
The following table sets forth the compensation paid to Messrs. Macera and
Stitzel in their capacities as Trustees of Liberty Variable Investment Trust
(LVIT), which offers nine funds: Colonial Growth and Income Fund, Variable
Series; Stein Roe Global Utilities Fund, Variable Series; Colonial International
Fund for Growth, Variable Series; Colonial U.S. Stock Fund, Variable Series;
Colonial Strategic Income Fund, Variable Series; Newport Tiger Fund, Variable
Series; Liberty All-Star Equity Fund, Variable Series, Colonial Small Cap Value
Fund, Variable Series and Colonial High Yield Securities Fund, Variable Series,
for serving during the fiscal year ended December 31, 1997:
Total Compensation From LVIT
and Investment Companies which
Trustee Aggregate 1997 Compensation(2( are Series of LVIT in 1997(3)
- ------- --------------------------- ---------------------------
Salvatore Macera $12,500 $33,500
Thomas E. Stitzel 12,500 33,500
(2) Stephen E. Gibson is President of the Colonial Funds. He replaces Harold W.
Cogger. Mr. Gibson is 45 years old and has been Chairman of the Board since
July, 1998, Chief Executive Officer and President since December 1996, and
President of Funds since June, 1998; Director, since July 1996 of the
Advisor (formerly Executive Vice President from July, 1996 to December,
1996); Director, Chief Executive Officer and President of TCG since
December, 1996 (formerly Managing Director of Marketing of Putnam
Investments, June, 1992 to July, 1996).
(3) Nancy L. Conlin is Secretary of the Colonial Funds. She replaces Michael H.
Koonce. Ms. Conlin is 44 years old and has been Secretary of the Funds
since April, 1998 (formerly Assistant Secretary from July, 1994 to April,
1998), is Director, Senior Vice President, General Counsel, Clerk and
Secretary of the Advisor since April, 1998 (formerly Vice President,
Counsel, Assistant Secretary and Assistant Clerk from July, 1994 to April,
1998), Vice President - Legal, General Counsel and Clerk of TCG since
April, 1998 (formerly Assistant Clerk from July, 1994 to April, 1998).
(4) William D Ireland, Jr., George L. Shinn and Sinclair Weeks, Jr., retired as
Trustees of the Trust effective April 24, 1998.
(5) The following paragraph is added under the caption MANAGEMENT OF THE FUNDS:
The Trustees have the authority to convert the Funds into a master
fund/feeder fund structure. Under this structure, a Fund may invest all or
a portion of its investable assets in investment companies with
substantially the same investment objectives, policies and restrictions as
the Fund. The primary reason to use the master fund/feeder fund structure
is to provide a mechanism to pool, in a single master fund, investments of
different investor classes, resulting in a larger portfolio, investment and
administrative efficiencies and economies of scale.
(6) Liberty Financial Investments, Inc., the Fund's distributor, changed its
name to Liberty Funds Distributor, Inc. (Distributor). The new name will
not affect the services the Distributor provides to the Fund. The
Distributor continues to offer selected investment products managed by
subsidiaries of its indirect parent company, Liberty Financial Companies,
Inc. (NYSE:L), the indirect parent of the Distributor.
(7) Colonial Investors Service Center, Inc.(Transfer Agent), the Fund's
transfer agent, changed its name to Liberty Funds Services, Inc. (Transfer
Agent). The new name will not affect the services the Transfer Agent
provides to the Fund.
(8) Price Waterhouse LLP, the Fund's independent accountants, changed its name
to PricewaterhouseCoopers LLP. The new name will not affect the services
the independent accountants provide to the Fund.
UF-39/251G-1198
October 30, 1998
- --------
1 Mr. Carberry is an "interested person," as defined in the Investment Company
Act of 1940, because of his affiliation with Liberty Financial Companies, Inc.,
an indirect majority-owned subsidiary of Liberty Mutual Insurance Company.
2 Consists of Trustee fees in the amount of (i) a $5,000 annual retainer,
(ii) a $1,500 meeting fee for each meeting attended in person and (iii) a
$500 meeting fee for each telephone meeting.
3 Includes Trustee fees paid by LVIT and by Stein Roe Variable Investment Trust.
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