COLONIAL TAX-EXEMPT FUND
COLONIAL TAX-EXEMPT INSURED FUND
COLONIAL INTERMEDIATE TAX-EXEMPT FUND
Supplement to Prospectus and Statement of Additional
Information dated April 1, 2000 (Replacing Supplements
dated May 5, 2000, May 16, 2000, June 23, 2000 and August 1, 2000)
Effective July 14, 2000, the Funds' changed their names. The Colonial Tax-Exempt
Fund changed its name to "Liberty Tax-Exempt Fund," the Colonial Tax-Exempt
Insured Fund changed its name to "Liberty Tax-Exempt Insured Fund" and the
Colonial Intermediate Tax-Exempt Fund changed its name to "Liberty Intermediate
Tax-Exempt Fund."
The first paragraph under the caption Primary Investment Strategies for the
Liberty Tax-Exempt Fund in the Funds' Prospectus is revised as follows:
Under normal market conditions, the Fund invests at least 65% of its total
assets in tax-exempt bonds that are rated investment grade, which means that
they are rated at least BBB (or Baa) by a nationally recognized rating agency.
The Fund's investment advisor may purchase bonds of any maturity.
Effective May 1, 2000, Joanne T. Costopoulos no longer managed the Liberty
Intermediate Tax-Exempt Fund.
As a result, the caption PORTFOLIO MANAGERS is revised in its entirety as
follows:
Brian M. Hartford, a senior vice president of Colonial Management Associates,
Inc. (Colonial), has co-managed the Liberty Tax-Exempt Fund since May, 1997.
Mr. Hartford has managed various other Liberty tax-exempt funds since 1993.
William C. Loring, a senior vice president of Colonial, co-manages the Liberty
Intermediate Tax-Exempt Fund and the Liberty Tax-Exempt Fund. Mr. Loring has
managed various other Liberty tax-exempt funds since 1986.
Gary Swayze, a senior vice president of Colonial, has managed the Liberty
Tax-Exempt Insured Fund since September, 1997. Prior to joining Colonial in
1997, Mr. Swayze was a portfolio manager and group leader at Fidelity Management
and Research Company from June, 1980 to June, 1995. During the period of June,
1995 to September, 1997, Mr. Swayze was the writer and editor of a bond market
newsletter.
Veronica Wallace, a vice president of Colonial co-manages the Liberty
Intermediate Tax-Exempt Fund. Ms. Wallace joined Stein Roe & Farnham
Incorporated (Stein Roe), an affiliate of Colonial, in June, 1965, as an account
administrator. Ms. Wallace has managed various other Liberty municipal funds
since 1995.
Ms. Wallace and Messrs. Loring, Swayze, and Hartford became joint employees of
Colonial and Stein Roe on March 15, 2000. Both Colonial and Stein Roe are
indirect wholly-owned subsidiaries of Liberty Financial Companies.
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 subcaption SALES
CHARGES under the section YOUR ACCOUNT was 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.
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The following replaced the table called "Purchases Over $1 Million" under the
subcaption 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.
Pursuant to the Board of Trustees approval, the transfer agency fees that each
Fund pays have been revised, effective January 1, 2000. Each Fund pays Liberty
Funds Services, Inc. (LFS) a monthly fee at the annual rate of 0.07% of the
average daily closing value of the total net assets of each Fund for such month.
In addition to this compensation, each Fund pays LFS the following fees:
1. A transaction fee of $1.18 per transaction occurring in Fund accounts
during any month; PLUS
2. An account fee for open accounts of $4.00 per annum, payable on a
monthly basis, in an amount equal to 1/12 the per annum charge; PLUS
3. An account fee for closed accounts of $1.50 per annum, payable on a
monthly basis, in an amount equal to 1/12 the per annum charge; PLUS
4. Each Fund's allocated share of LFS reimbursement out-of pocket expenses.
G-36/616C-0800 August 18, 2000
