COLONIAL TRUST II /, 485APOS, 1998-10-30

COLONIAL TRUST II /
485APOS, 1998-10-30

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Registration Numbers: 2-66976
811-3009
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 37 [ X ]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]

Amendment No. 37 [ X ]

COLONIAL TRUST II
(Exact Name of Registrant as Specified in Charter)

One Financial Center, Boston, Massachusetts 02111
(Address of Principal Executive Offices)

(617) 426-3750
(Registrant's Telephone Number, Including Area Code)

Name and Address of Agent for Service: Copy to:

Nancy L. Conlin, Esquire John M. Loder, Esquire
Colonial Management Associates, Inc. Ropes & Gray
One Financial Center One International Place
Boston, Massachusetts 02111 Boston, Massachusetts 02110-2624

It is proposed that this filing will become effective (check appropriate box):

[ ] immediately upon filing pursuant to paragraph (b)
[ ] on [date] pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on [date] pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ X ] on January 13, 1999 pursuant to paragraph (a)(2) of Rule 485

If appropriate check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.

<PAGE>

COLONIAL TRUST II

Cross Reference Sheet

[SoGen] Global Fund-Classes A, B and C

[SoGen] Overseas Fund-Classes A, B and C

Item Number of Form N-1A Prospectus Location or Caption

Part A

1. Cover page

2. Summary of expenses

3. The Fund's Financial History

4. Organization and History; The Fund's
Investment Objective; How the Fund Pursues
its Objective and Certain Risk Factors

5. Cover page; How the Fund is Managed;
Organization and History; The Fund's
Investment Objective; Back cover

6. Organization and History; Distributions
and Taxes; How to Buy Shares

7. Summary of Expenses; How to Buy shares;
How the Fund Values its Shares; 12b-1
Plan; Back cover

8. How to Sell Shares; How to Exchange
Shares; Telephone Transactions

9. Not applicable

<PAGE>

January 13, 1999

[SOGEN] GLOBAL FUND
[SOGEN] OVERSEAS FUND

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 risks 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.

Each of [SoGen] Global Fund (Global Fund) and [SoGen] Overseas Fund (Overseas
Fund) (each a Fund and collectively, the Funds) is a diversified portfolio of
Colonial Trust II (Trust), an open-end management investment company.

The Global Fund seeks to provide long term growth of capital by investing
primarily in common stocks (and in securities convertible into common stocks) of
the United States and foreign companies.

The Overseas Fund seeks long-term growth of capital by investing primarily in
securities of small and medium size non-U.S. companies. The Fund particularly
seeks companies that have growth potential, financial strength and stability,
strong management and fundamental value. However, the Fund may invest in
companies that do not have all of these characteristics.

Each Fund is managed by [Societe Generale Asset Management Corp.] (Advisor), an
investment advisor since [ ] and an affiliate of the Administrator.

This Prospectus explains concisely what you should know before investing in the
Funds. Read it carefully and retain it for future reference. More detailed
information about the Funds is in the January 13, 1999 Statement of Additional
Information which has been filed with the Securities and Exchange Commission
(SEC) 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.

Each Fund offers multiple classes of shares. Class A shares are offered at net
asset value plus a sales charge imposed at the time of purchase; Class B shares
are offered at net asset value and are subject to an annual distribution fee and
a declining contingent deferred sales charge on redemptions made within six
years after purchase; and Class C shares are offered at net asset value and are
subject to an annual distribution fee and a contingent deferred sales charge on
redemptions made within one year after purchase. Each of the Class A, B and C
shares is subject to a contingent redemption fee on redemptions and exchanges
made within five business days of purchase. Class B shares automatically convert
to Class A shares after approximately eight years. See "How to Buy Shares."

<TABLE>
<CAPTION>
Contents Page

<S> <C>
Summary of Expenses
The Funds' Financial History
The Funds' Investment Objective
How the Funds Pursue their Objectives
and Certain Risk Factors
How the Funds Measure their Performance
How the Funds are Managed
Year 2000
How the Funds Value their Shares
Distributions and Taxes
How to Buy Shares
How to Sell Shares
How to Exchange Shares
Telephone Transactions
12b-1 Plans
Organization and History
Appendix
</TABLE>

This Prospectus is also available on-line at our 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.

- ------------------------------ ------------------------------

NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE

- ------------------------------ ------------------------------
<PAGE>

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 Funds. The
following tables summarize your maximum transaction costs and your annual
expenses, adjusted to reflect current fees, for an investment in the Class A, B
and C shares of each Fund. See "How the Funds are Managed" and "12b-1 Plans" for
more complete descriptions of each Fund's various costs and expenses.

Shareholder Transaction Expenses(1)(2)
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Maximum Initial Sales Charge Imposed on a Purchase (as a % of offering price)(3) 5.75% 0.00%(4) 0.00%(4)
Maximum Contingent Deferred Sales Charge (as a % of offering price)(3) 1.00%(5) 5.00% 5.00%
Maximum Contingent Redemption Fee (3)(6) 2.00% 2.00% 2.00%
</TABLE>

(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.
(3) Does not apply to reinvested distributions.
(4) Because of the distribution fee applicable to Class B and Class C shares,
long-term Class B and Class C shareholders may pay more in aggregate sales
charges than the maximum initial sales charge permitted by the National
Association of Securities Dealers, Inc. However, because Class B shares
automatically convert to Class A shares after approximately 8 years, this
is less likely for Class B shares than for a class without a conversion
feature.
(5) Only with respect to any portion of purchases of $1 million to $5 million
redeemed within approximately 18 months after purchase. See "How to Buy
Shares."
(6) A contingent redemption fee in the amount of 2.00% is imposed on
redemptions and exchanges of fund shares purchased and held for five
business days or less. See "Contingent Redemption Fee" under the caption
"How to Sell Shares."

Annual Operating Expenses (as a % of average net assets)

<TABLE>
<CAPTION>
Global Fund
---------------------------------------------------
Class A Class B Class C
<S> <C> <C> <C>
Management fee (after fee waiver)(7) 0.75% 0.75% 0.75%
12b-1 fees (after fee waiver)(7) 0.35 1.00 1.00
Other expenses x.xx x.xx x.xx
---- ---- ----
Total operating expenses (after fee waiver)(7) x.xx% x.xx% x.xx%
==== ==== ====
</TABLE>

(7) The Advisor has voluntarily agreed to waive a portion of its Management
fee (and Other expenses as applicable) to the extent Total operating
expenses (exclusive of the % Rule 12b-1 distribution fee) exceed x.xx%. If
the waivers were not made, the Fund' s Management fees would have been
x.xx%, x.xx%, x.xx%, x.xx%, x.xx%, and estimated Total operating expenses
would have been x.xx%, x.xx%, x.xx% and x.xx%.

<TABLE>
<CAPTION>
Overseas Fund
---------------------------------------------------
Class A Class B Class C
<S> <C> <C> <C>
Management fee (after fee waiver)(8) 0.75% 0.75% 0.75%
12b-1 fees (after fee waiver)(8) 0.35 1.00 1.00
Other expenses x.xx x.xx x.xx
---- ---- ----
Total operating expenses (after fee waiver)(8) x.xx% x.xx% x.xx%
==== ==== ====
</TABLE>

(8) The Advisor has voluntarily agreed to waive a portion of its Management fee
(and Other expenses as applicable) to the extent Total operating expenses
(exclusive of the 0.75% Rule 12b-1 distribution fee) exceed x.xx%. If the
waivers were not made, the Fund' s Management fees would have been x.xx%,
x.xx%, x.xx%, x.xx%, x.xx%, and estimated Total operating expenses would
have been x.xx%, x.xx%, x.xx% and x.xx%.

1
<PAGE>

Example
The following Example shows the cumulative transaction and operating expenses
attributable to a hypothetical $1,000 investment in each Class of shares of each
Fund for the periods specified, assuming a 5% annual return and, unless
otherwise noted, redemption at period end. The expense numbers in the Example
assume the expense limit described above remains in effect for all periods
referenced. 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:

<TABLE>
<CAPTION>
Global Fund
----------------------------------------------------------------------
Class A Class B Class C
<S> <C> <C> <C> <C> <C>
Period: (10),(13) (11),(13) (10),(12) (11),(12)
1 year $xx $xx $xx $xx $xx
3 years xx xx xx xx Xx
5 years
10 years
</TABLE>

<TABLE>
<CAPTION>
Overseas Fund
----------------------------------------------------------------------
Class A Class B Class C
<S> <C> <C> <C> <C> <C>
Period: (10),(13) (11),(13) (10),(12) (11),(12)
1 year $xx $xx $xx $xx $xx
3 years xx xx xx xx xx
5 years
10 years
</TABLE>

(10) Assumes redemption at period end.
(11) Assumes no redemption.
(12) Class C shares do not incur a contingent deferred sales charge on
redemptions made after one year.
(13) Class B shares automatically convert to Class A shares after approximately
8 years; therefore, years 9 and 10 reflect Class A share expenses.

2
<PAGE>

THE FUND'S FINANCIAL HISTORY

The following financial highlights and the related financial statements for each
of the years in the nine year period ended March 31, 1998 have been audited by
KPMG Peat Marwick LLP, independent auditors, whose report thereon is unqualified
and appears in the Fund's March 31, 1998 Annual Report to Shareholders, which is
incorporated by reference in the Statement of Additional Information. The
financial highlights and the related financial statements for the one year
period ended March 31, 1989 have been audited by other auditors whose report
thereon dated May 5, 1989 expressed an unqualified opinion. This information
should be read in conjunction with the Financial Statements and notes thereto,
which also appear in the Fund's Annual Report to Shareholders. [As of July 31,
1998, SoGen International Fund, Inc. became SoGen International Fund (the
predecessor fund), a separate investment portfolio of SoGen Funds, Inc.,
pursuant to an Agreement and Plan of Reorganization dated April 27, 1998. SoGen
International Fund's name was changed to [SoGen] Global Fund on December 31,
1998.]

<TABLE>
<CAPTION>
Global Fund
Class A
===============================================================================================
Year ended March 31
-----------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per Share Data
Net asset value - Beginning of year $26.68 $26.09 $23.20 $23.32 $20.12 $18.44 $17.51 $17.71 $17.31 $16.91
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 1.47 1.03 1.06 0.10 0.53 0.64 0.69 0.78 0.64 0.71
Net realized and unrealized
gains (losses) on investments 2.10 1.39 3.37 0.49 3.37 2.02 1.45 0.20 1.48 1.26
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment Operations 3.57 2.42 4.43 0.59 3.90 2.66 2.14 0.98 2.12 1.97
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (1.36) (1.09) (0.81) (0.15) (0.47) (0.64) (0.84) (0.71) (0.71) (0.80)
Distributions from capital gains (1.47) (0.74) (0.73) (0.56) (0.23) (0.34) (0.37) (0.47) (1.01) (0.77)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions (2.83) (1.83) (1.54) (0.71) (0.70) (0.98) (1.21) (1.18) (1.72) (1.57)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value - End of year $27.42 $26.68 $26.09 $23.20 $23.32 $20.12 $18.44 $17.51 $17.71 $17.31
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total return(a) 14.35% 9.48% 19.57% 2.63% 19.50% 14.87% 12.53% 6.03% 12.18% 11.94%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (millions) $4,035 $3,908 $3,033 $1,922 $1,781 $650 $355 $240 $176 $126
Ratios of operating expenses to
average net assets 1.18% (b) 1.21% (b) 1.25% (b) 1.26% 1.28% 1.31% 1.37% 1.30% 1.38% 1.39%
Ratio of net investment income
to average net assets 2.80% (b) 3.08% (b) 3.71% (b) 2.70% 2.34% 3.69% 4.00% 4.84% 4.32% 4.23%
Portfolio turnover rate 20.63% 12.85% 9.64% 12.96% 23.96% 17.94% 24.25% 24.14% 30.62% 33.05%
Average commission rate paid(c) $0.028 $0.003 $0.013 -- -- -- -- -- -- --
</TABLE>

(a) Does not give effect to deduction of the sales load.
(b) The ratio of operating expenses to average net assets for the years ended
March 31, 1998, 1997 and 1996 would have been 1.19%, 1.21% and 1.25%,
respectively, without the effect of earnings credits. The ratio of net
investment income to average net assets for the years ended March 31, 1998,
1997 and 1996 would have been 2.80%, 3.08% and 3.71%, respectively, without
the effect of earnings credits.
(c) Average commission rate paid is expressed on a per share basis. Not all
commissions are computed on a per share basis; therefore, commissions
expressed as a percentage of transactions may be higher. Due to SEC
disclosure guidelines, average commissions per share are calculated only
for the periods subsequent to the year ended March 31, 1995.

3
<PAGE>

THE FUND'S FINANCIAL HISTORY (CONT'D)

The following financial highlights and the related financial statements for the
period from August 31, 1993 to March 31, 1994 and the fiscal years ended March
31, 1995, 1996, 1997 and 1998 have been audited by KPMG Peat Marwick LLP,
independent auditors, whose report thereon is unqualified and appears in the
SoGen Funds, Inc. March 31, 1998 Annual Report to Shareholders, which is
incorporated by reference in the Statement of Additional Information. This
information should be read in conjunction with the Financial Statements and
notes thereto, which also appear in the SoGen Funds, Inc. Annual Report to
Shareholders.

<TABLE>
<CAPTION>
Overseas Fund
Class A
-----------------------------------------------------------------
Period From
Year Ended March 31 August 31, 1993
to
1998 1997 1996 1995 March 31, 1994
--------------------------------------------- ----------------
<S> <C> <C> <C> <C> <C>
Selected Per Share Data
Net asset value - Beginning of year $13.84 $13.26 $11.65 $11.54 $10.00
------ ------ ------ ------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.88 0.61 0.48 0.14 (0.01)
Net realized and unrealized
gains on investments 0.31 0.95 1.74 0.04 1.55
------ ------ ------ ------ ------
Total from Investment Operations 1.19 1.56 2.22 0.18 1.54
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.83) (0.60) (0.44) (0.05) --
Distributions from capital gains (0.68) (0.38) (0.17) (0.02) --
------ ------ ------ ------ ------
Total Distributions (1.51) (0.98) (0.61) (0.07) --
------ ------ ------ ------ ------
Net asset value - End of year $13.52 $13.84 $13.26 $11.65 $11.54
------ ------ ------ ------ ------
Total return(d) 10.00% 12.16% 19.47% 1.56% 15.35% (c)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (millions) $1,007 $953 $647 $439 $120
Ratios of operating expenses to
average net assets 1.22% (b) 1.27% (b) 1.37% 1.40% 1.72% (a)
Ratio of net investment income
to average net assets 2.20% (b) 2.28% (b) 3.31% 2.29% (0.23)% (a)
Portfolio turnover rate 22.13% 15.18% 9.46% 3.16% 6.11%
Average commission rate paid(e) $0.0177 $0.0207 $0.0190 -- --
</TABLE>

(a) Annualized.
(b) The ratios of operating expenses to average net assets and net investment
income to average net assets for the year ended March 31, 1998 for the Fund
would have been the same without the effect of earnings credits. The ratio
of operating expenses to average net assets and net investment income to
average net assets for the year ended March 31, 1997 for the Fund would
have been the same and 2.27%, respectively, without the effect of earnings
credits.
(c) Total return disclosed for the period ended March 31, 1994 is not
annualized. The annualized total return for the period ended March 31, 1994
was 26.40% for the Fund.
(d) Does not give effect to deduction of the sales load.
(e) Average commission rate paid is expressed on a per share basis. Not all
commissions are computed on a per share basis; therefore, commissions
expressed as a percentage of transactions may be higher. Due to SEC
disclosure guidelines, average commissions per share are calculated only
for the periods subsequent to the year ended March 31, 1995.

Further performance information is contained in each Fund's Annual Report to
shareholders, which is obtainable free of charge by calling 1800426-3750.

4
<PAGE>

THE FUNDS' INVESTMENT OBJECTIVES

The Global Fund seeks to provide long-term growth of capital by investing
primarily in common stocks and in securities convertible into common stocks of
the United States and foreign companies.

HOW THE FUNDS PURSUE THEIR OBJECTIVES AND CERTAIN RISK FACTORS

Global Fund
- -----------

In seeking to achieve the Fund's objective, the Fund will normally invest its
assets primarily in common stocks (and in securities convertible into common
stocks) of United States and foreign companies. However, the Fund reserves the
right to invest a portion of its assets in fixed income securities of domestic
or foreign issuers which, in addition to the income they may provide, appear in
some instances to offer potential for long-term growth of capital. When deemed
appropriate by the Fund's Advisor or for short-term investment or defensive
purposes, the Fund may hold up to 100% of its assets in short-term debt
instruments including commercial paper and certificates of deposit. Among the
types of fixed income securities in which the Fund may invest from time to time
are United States government obligations. United States government obligations
include Treasury Notes, Bonds and Bills which are direct obligations of the
United States government backed by the full faith and credit of the United
States, and securities issued by agencies and instrumentalities of the United
States government, which may be (i) guaranteed by the United States Treasury,
such as the securities of the Government National Mortgage Association, or (ii)
supported by the issuer's right to borrower from the Treasury and backed by the
credit of the federal agency or instrumentality itself, such as securities of
the Federal Intermediate Land Banks, Federal Land Banks, Bank of Cooperatives,
Federal Home Loan Banks, Tennessee Valley Authority and Farmers Home
Administration.

The foregoing investment objective is part of the fundamental policy of the Fund
and may not be changed without the approval of a majority of the outstanding
voting securities of the Fund (defined by the Investment Company Act of 1940 as
(i) 67 percent or more of the voting securities present at a meeting of
stockholders, if the holders of more than 50 percent of the outstanding voting
securities of such company are present or represented by proxy; or (ii) more
than 50 percent of the outstanding voting securities of such company, whichever
is less).

In addition to the investment policies described above (and subject to certain
restrictions described herein), the Fund may invest in some or all of the
following securities and employ some or all of the following investment
techniques, some of which may present special risks as described below.

Because the Fund's investments will be subject to the market fluctuations and
risks inherent in all investments, there can be no assurance that the Fund's
stated objectives will be realized. The Advisor will seek to minimize these
risks through professional management and investment diversification. The value
of shares of the Fund when sold may be higher or lower than when purchased.

Overseas Fund
- -------------

The Fund may invest in securities traded in mature markets (for example, Japan,
Canada and the United Kingdom) and in emerging markets (Mexico and Indonesia,
for example). A list of the mature and emerging markets in which the Fund may
invest is included in "Foreign Securities." There are no limits on the Fund's
geographic asset distribution, but the Fund ordinarily invests in at least three
countries outside the United States.

The equity securities in which the Fund may invest include common preferred
stocks, warrants or other similar rights, and convertible securities. The Fund
may purchase foreign securities in the form of sponsored or unsponsored American
Depository Receipts (ADRs), Global Depository Receipts (GDRs) and European
Depository Receipts (EDRs) or other securities representing underlying shares of
foreign issuers. The Fund may also invest in any other type of security,

5
<PAGE>

including up to 20% of its total assets in debt securities. Such debt securities
may include lower-rated securities, commonly referred to as "junk bonds" (i.e.,
securities rated BB or lower by Standard & Poor's Corporation (S&P) or Ba or
lower by Moody's Investors Service, Inc. (Moody's)), and securities that are not
rated. There are no restrictions as to the ratings of debt securities acquired
by the Fund or the portion of the Fund's assets that may be invested in debt
securities in a particular rating category. Under normal market conditions, the
Fund invests at least 75% of its total assets, taken at market value, in foreign
securities. The Fund may also invest in "structured securities" in which the
value is linked to the price of an underlying instrument.

Foreign Investments. The Funds provides investors with an opportunity to place a
portion of their assets in a diversified portfolio of foreign securities which
may entail a greater degree of risk (including risks relating to exchange rate
fluctuations, tax provisions, or expropriation of assets) than does investment
in securities of domestic issuers. From time to time, many foreign economies
have grown faster than the U.S. economy, and the returns on investments in these
countries have exceeded those of similar U.S. investments, although there can be
no assurance that these conditions will continue. International investing allows
investors to achieve greater diversification and to take advantage of changes in
foreign economies and market conditions.

The Funds may invest in securities of foreign issuers directly or in the form of
ADRs, GDRs, EDRs, or other securities representing underlying shares of foreign
issuers. Positions in these securities are not necessarily denominated in the
same currency as the common stocks into which they may be converted. ADRs are
receipts typically issued by a U.S. bank or trust company evidencing ownership
of the underlying securities. EDRs are European receipts evidencing a similar
arrangement. GDRs are global offerings where two securities are issued
simultaneously in two markets, usually publicly in non-U.S. markets and
privately in the U.S. market. Generally ADRs, in registered form, are designed
for use in the U.S. securities markets, EDRs, in bearer form, are designed for
use in European securities markets. GDRs are designed for use in the U.S. and
European securities markets. The Funds may invest in both "sponsored" and
"unsponsored" ADRs. In a sponsored ADR, the issuer typically pays some or all of
the expenses of the depository and agrees to provide its regular shareholder
communications to ADR holders. An unsponsored ADR is created independently of
the issuer of the underlying security. The ADR holders generally pay the
expenses of the depository and do not have an undertaking from the issuer of the
underlying security to furnish shareholder communications. Issuers of
unsponsored ADRs are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of the ADRs. Each Fund does not expect to
invest 5% or more of its total assets in unsponsored ADRs.

With respect to portfolio securities that are issued by foreign issuers or
denominated in foreign currencies, the investment performance of the Fund is
affected by the strength or weakness of the U.S. dollar against these
currencies. For example, if the dollar falls in value relative to the Japanese
yen, the dollar value of a yen-denominated stock held in the portfolio will rise
even though the price of the stock remains unchanged. Conversely, if the dollar
rises in value relative to the yen, the dollar value of the yen-denominated
stock will fall. (See discussion of transaction hedging and portfolio hedging
under "Currency Exchange Transactions.")

Investors should understand and consider carefully the greater risks involved in
foreign investing. Investing in foreign securities and other positions which are
generally denominated in foreign currencies, and utilization of forward foreign
currency exchange contracts (see "Foreign Currency Transactions" below), involve
certain risks and opportunities not typically associated with investing in U.S.
securities. These include: fluctuations in the rates of exchange between the
U.S. dollar and foreign currencies; changes in exchange control regulations or
currency restrictions that would prevent cash from being brought back to the
United States; less public information with respect to issuers of securities;
less governmental supervision of stock exchanges, securities brokers and issuers
of securities; different accounting, auditing and financial reporting standards;
different settlement periods and trading practices; less liquidity and
frequently greater price volatility in foreign markets than in the United
States; imposition of foreign taxes; and sometimes less advantageous legal,
operational and financial protections applicable to foreign sub-custodial
arrangements.

6
<PAGE>

Investing in countries outside the United States entails political risk. There
exists the possibility of restrictions on foreign investors, expropriation of
assets, confiscatory taxation, seizure or nationalization of foreign bank
deposits or other assets, establishment of exchange controls, or other adverse
political or social developments that could affect investment in these nations.
Economies in individual markets may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product, rates of
inflation, currency depreciation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many emerging market
countries have experienced extremely high rates of inflation for many years.
That has had and may continue to have very negative effects on the economics and
securities markets of those countries.

The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States. There
also may be a lower level of monitoring and regulation in emerging markets of
traders, insiders and investors. Enforcement of existing regulations has been
extremely limited.

The countries in which the Funds invest are included in those listed below. The
Funds may not invest in all the countries listed, and it may invest in countries
that are not listed, when such investments are consistent with each Fund's
investment objective and policies.

<TABLE>
<CAPTION>
Mature Markets Emerging Markets
-------------- ----------------
<S> <C> <C>
Australia Argentina Peru
Austria Brazil Philippines
Belgium Chile Poland
Canada Czech Republic Portugal
Denmark Ecuador South Africa
Finland Greece South Korea
France Hungary Sri Lanka
Germany India Taiwan
Hong Kong Indonesia Thailand
Ireland Israel Turkey
Italy Jamaica Uruguay
Japan Jordan Venezuela
Luxembourg Kenya Vietnam
Netherlands Malaysia
New Zealand Mexico
Norway Morocco
Singapore Nigeria
Spain Pakistan
Sweden People's Republic of China
Switzerland
United Kingdom
United States
</TABLE>

It may not be feasible for the Funds currently to invest in all of these
countries due to restricted access to their securities markets or an inability
to implement satisfactory custodial arrangements.

Restricted and Illiquid Securities. Each Fund may invest up to 15% of its net
assets in illiquid securities, including certain securities that are subject to
legal or contractual restrictions on resale ("restricted securities") and
securities acquired in private placements. Because an active trading market for
such securities may not exist, the sale of such securities may be subject to
delay and additional costs. Time deposits and repurchase agreements maturing in
more than seven days are considered to be illiquid.

Generally, restricted securities may be sold only in privately negotiated
transactions or in a public offering with respect to which a registration
statement is in effect under the Securities Act of 1933 (1933 Act). Where
registration is required, each Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time a Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, a Fund might obtain a less favorable price
than that which prevailed when it decided to sell. Restricted securities will be
priced at fair value as determined in good faith by the Board of Trustees. If,
through the appreciation of illiquid securities or the depreciation of liquid
securities, each Fund should be in a position where more than 10% of the value
of its net assets is invested in illiquid assets, including restricted
securities, the Fund will take appropriate steps to protect liquidity.

Notwithstanding the above, each Fund may purchase securities that have been
privately placed but that are eligible for purchase and sale under Rule 144A
under the 1933 Act. That rule permits certain qualified institutional buyers,
such as the Funds, to trade in privately placed securities that have not been
registered for sale under the 1933 Act. The Advisor, under the supervision of
the Board of Trustees, will consider whether securities purchased under Rule
144A are illiquid and thus subject to the Funds' restriction on investing in
illiquid securities. A

7
<PAGE>

determination as to whether a Rule 144A security is liquid or not is a factual
issue requiring an evaluation of a number of factors. In making this
determination, the Advisor will consider the trading of a Rule 144A security. In
addition, the Advisor could consider (1) the frequency of trades and quotes, (2)
the number of dealers and potential purchasers, (3) the dealer undertakings to
make a market, and (4) the nature of the security and of market place trades
(e.g., the time needed to dispose of the security, the method of soliciting
offers and the mechanics of transfer). The liquidity of Rule 144A securities
would be monitored and if, as a result of changed conditions, it is determined
that a Rule 144A security is no longer liquid, the Fund's holdings of illiquid
securities would be reviewed to determine what steps, if any, are required to
assure that the Fund does not invest more than the maximum percentage of its
assets in illiquid securities. Investing in Rule 144A securities could have the
effect of increasing the amount of the Funds' assets invested in illiquid
securities if qualified institutional buyers are unwilling to purchase such
securities.

Bank Obligations. Each Fund may invest in bank obligations, which may include
bank certificates of deposit, time deposits or bankers' acceptances.
Certificates of deposit and time deposits are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and
earning a specified return. Bankers' acceptances are negotiable drafts or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Investments in these instruments are limited to obligations of domestic banks
(including their foreign branches) and U.S. and foreign branches of foreign
banks having capital surplus and undivided profits in excess of $100 million.

Foreign Currency Transactions. Each Fund may engage in currency exchange
transactions to hedge against losses in the U.S. dollar value of its portfolio
securities resulting from possible variations in exchange rates and not for
speculation. A currency exchange transaction may be conducted either on a spot
(i.e. cash) basis at the spot rate for purchasing or selling currency prevailing
in the foreign exchange market or through a forward currency exchange contract
("forward contract"). A forward contract is an agreement to purchase or sell a
specified currency at a specified future date (or within a specified time
period) and price set at the time of the contract. Forward contracts are usually
entered into with banks and broker/dealers, are not exchange-traded and are
usually for less than one year, but may be renewed. Currency exchange
transactions may involve currencies of the different countries in which the
Funds may invest and serve as hedges against possible variations in the exchange
rates between these currencies and the U.S. dollar. The Funds' currency
transactions are limited to transaction hedging and portfolio hedging involving
either specific transactions or portfolio positions. Transaction hedging is the
purchase or sale of a forward contract with respect to specific payable or
receivables of each Fund accruing in connection with the purchase or sale of
portfolio securities. Portfolio hedging is the use of a forward contract with
respect to a portfolio security position denominated or quoted in a particular
currency. The Funds may engage in portfolio hedging with respect to the currency
of a particular country in amounts approximating actual or anticipated positions
in securities denominated in that currency.

If a Fund enters into a forward contract, the custodian bank will segregate
liquid assets of the Fund having a value equal to the Fund's commitment under
such forward contract.

At the maturity of a forward contract to deliver a particular currency, a Fund
may either sell the portfolio security related to such contract and make
delivery of the currency, or it may retain the security and either acquire the
currency on the spot market or terminate its contractual obligation to deliver
the currency by purchasing an offsetting contract with the same currency trader
obligating it to purchase on the same maturity date the same amount of the
currency.

It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of a forward contract. Accordingly, it
may be necessary for a Fund to purchase additional currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of currency the Fund is obligated to deliver, and if a
decision is made to sell the security and make delivery of the currency.
Conversely, it may be necessary to sell on the spot market some of the currency
received upon the sale of the portfolio security if its market value exceeds the
amount of currency the Fund is obligated to deliver.

8
<PAGE>

If a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. If a Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
currency. Should forward prices decline during the period between the date the
Fund enters into a forward contract for the sale of a currency and the date it
enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Fund will suffer a loss to the extent the price of the
currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. A default on the contract would deprive the Fund of unrealized
profits or force the Fund to cover its commitments for purchase or sale of
currency, if any, at the current market price.

Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for a Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the devaluation level it anticipates. The cost to the Funds of
engaging in currency exchange transactions varies with such factors as the
currency involved, the length of the contract period and prevailing market
conditions. Since currency exchange transactions are usually conducted on a
principal basis, no fees or commissions are involved.

Investments in Debt Securities. The Global Fund may invest up to 100% and the
Overseas fund may invest up to 20% of its respective total assets in debt
securities that are below investment grade quality. The Fund may also invest in
debt securities which are in default. "Investment grade" debt securities are
those rated within the four highest ratings categories of Standard & Poor's
Corporation (S&P) or Moody's Investor Service, Inc. (Moody's) or, if unrated,
determined by the Funds' Advisor to be of comparable quality. The market value
of debt securities generally varies in response to changes in interest rates and
the financial conditions of each issuer. During periods of declining interest
rates, the value of debt securities generally increases. Conversely, during
periods of rising interest rates, the value of such securities generally
declines. These changes in market value will be reflected in each Funds' net
asset value.

Securities rated BBB by S&P or Baa by Moody's (the lowest investment grade
ratings) are considered to be medium grade and to have speculative
characteristics. Debt securities that are unrated, are considered by the Advisor
to be equivalent to below investment grade (often referred to as "junk bonds").
On balance, debt securities that are below investment grade are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal according to the terms of the obligation and, therefore,
carry greater investment risk, including the possibility of issuer default and
bankruptcy. Adverse publicity and investors' perceptions, whether or not based
on fundamental analysis, may decrease the values and liquidity of lower-rated
debt securities, especially in a thinly traded market. During periods of thin
trading in these markets, the spread between bid and asked prices is likely to
increase significantly, and a Fund may have greater difficulty selling its
portfolio securities. Analyses of the creditworthiness of issuers of lower-rated
debt securities may be more complex than for issuers of higher rated securities,
and the ability of a Fund to achieve its investment objective may, to the extent
of investment in lower-rated debt securities be more dependent upon such
creditworthiness analyses than would be the case if the Fund were investing in
higher rated securities.

Lower-rated debt securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment grade securities.
The prices of lower-rated debt securities have been found to be less sensitive
to interest rate changes than higher rated investments, but more sensitive to
adverse economic downturns or individual corporate developments. A projection of
an economic downturn or of a period of rising interest rates, for example, could
cause a decline in lower-rated debt securities' prices because the advent of a
recession could lessen the ability of a highly-leveraged company to make
principal and interest payments on its debt securities. If the issuer of
lower-rated debt securities defaults, a Fund may incur additional expenses
seeking recovery.

For a more complete description of the characteristics of bonds in each rating
category see "Appendix."

9
<PAGE>

Expenses. The cost of investing in foreign securities is higher than the cost of
investing in U.S. securities. Investing in each Fund is an efficient way for an
individual to participate in foreign markets, but its expenses, including
advisory and custody fees, are higher than the expenses of a typical mutual fund
that invests in domestic equities.

"When-Issued" or "Delayed Delivery" Securities. The Overseas Fund may purchase
securities on a "when-issued" or "delayed delivery" basis. Although the payment
and interest terms of these securities are established at the time the Fund
enters into the commitment, the securities may be delivered and paid for a month
or more after the date of purchase, when their value may have changed. The Fund
makes such commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement date if the Advisor
deems it advisable for investment reasons.

At the time the Fund enters into a binding obligation to purchase securities on
a when-issued basis, liquid assets of the Fund having a value at least as great
as the purchase price of the securities to be purchased will be segregated on
the books of the Fund and held by the custodian throughout the period of the
obligation. The use of these investment strategies, as well as any borrowing by
the Fund, may increase net asset value fluctuation.

Securities purchased on a when-issued or delayed delivery basis are recorded as
assets on the day following the purchase and are marked-to-market daily. The
Fund will not invest more than 25% of its assets in when-issued or delayed
delivery securities, does not intend to purchase such securities for speculative
purposes and will make commitments to purchase securities on a when-issued or
delayed delivery basis with the intention of actually acquiring the securities.
However, the Fund reserves the right to sell acquired when-issued or delayed
delivery securities before their settlement dates if deemed advisable.

Investment in Other Investment Companies. Certain markets are closed in whole or
in part to equity investments by foreigners. The Overseas Fund may be able to
invest in such markets solely or primarily through governmentally-authorized
investment companies. The Fund generally may invest up to 10% of its assets in
shares of other investment companies and up to 5% of its assets in any one
investment company (in each case measured at the time of investment), as long as
no investment represents more than 3% of the outstanding voting stock of the
acquired investment company at the time of investment. These restrictions do not
apply to certain investment companies known as private investment companies and
"qualified purchaser" investment companies.

Investment in another investment company may involve the payment of a premium
above the value of the issuer's portfolio securities, and is subject to market
availability. In the case of a purchase of shares of such a company in a public
offering, the purchase price may include an underwriting spread. The Fund does
not intend to invest in such an investment company unless, in the judgement of
the Fund's investment advisor, the potential benefits of such investment justify
the payment of any applicable premium or sales charge. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.

Structured Securities. The Overseas Fund may invest in structured notes and/or
preferred stock, the value of which is linked to currencies, interest rates,
other commodities, indices or other financial indicators. Structured securities
have different characteristics and risks than other types of securities in which
the Fund may invest. For example, the coupon, dividend and/or redemption amounts
may be increased or decreased depending on the change in the value of an
underlying instrument.

Investment in structured securities involves certain risks. In addition to the
credit risk of the security's issuer and the normal risks of price changes in
response to changes in interest rates, the redemption amount may decrease as a
result of changes in the price of the underlying instrument. Further, in the
case of certain structured securities, the coupon and/or dividend may be reduced
to zero, and any further declines in the value of the underlying instrument may
then reduce the redemption amount payable on maturity. Finally, structured
securities may be more volatile than the price of the underlying instrument.

Temporary Strategies; Cash Reserves. The Overseas Fund has the flexibility to
respond promptly to changes in market and economic conditions. In the interest
of preserving shareholders' capital,

10
<PAGE>

the Advisor may employ a temporary defensive investment strategy if it
determines such a strategy to be warranted. Pursuant to such a defensive
strategy, the Fund temporarily may hold cash (U.S. dollars, foreign currencies,
multinational currency units) and/or invest up to 100% of its assets in high
quality debt securities or money market instruments of U.S. or foreign issuers.
Most or all of the Fund's investments may be made in the United States and
denominated in U.S. dollars. It is impossible to predict whether, when or for
how long a Fund will employ defensive strategies.

In addition, pending investment of proceeds from new sales of shares or to meet
ordinary daily cash needs, the Fund temporarily may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest any portion
of its assets in money market instruments.

Other. Each Fund may not always achieve its investment objective. Each Fund's
investment objective and non-fundamental investment policies may be changed
without shareholder approval. Each Fund's fundamental investment policies listed
in the Statement of Additional Information cannot be changed without the
approval of a majority of each Fund's outstanding voting securities. Additional
information concerning certain of the securities and investment techniques
described above is contained in the Statement of Additional Information.

HOW THE FUNDS MEASURE THEIR PERFORMANCE

Performance may be quoted in sales literature and advertisements. Each Class's
average annual total returns are calculated in accordance with the SEC's formula
and assume the reinvestment of all distributions, the maximum initial sales
charge on Class A shares and the contingent deferred sales charge applicable to
the time period quoted on Class B and Class C shares. Other total returns differ
from average annual total return only in that they may relate to different time
periods, may represent aggregate as opposed to average annual total returns, and
may not reflect the initial sales charge or contingent deferred sales charges.

Each Class's performance may be compared to various indices. 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 FUNDS ARE MANAGED

The Trustees formulate the Funds' general policies and oversee the Funds'
affairs as conducted by the Advisor.

The Advisor is an indirect subsidiary of Liberty Financial Companies, Inc.
(Liberty Financial), which in turn is an indirect majority-owned subsidiary of
Liberty Mutual Insurance Company (Liberty Mutual).

The Administrator is an indirect wholly-owned subsidiary of Liberty Financial.
Liberty Mutual is considered to be the controlling entity of the Advisor, the
Administrator and their affiliates. Liberty Mutual is an underwriter of workers'
compensation insurance and a property and casualty insurer in the U.S.

Liberty Funds Distributor, Inc. (Distributor), a subsidiary of the
Administrator, serves as the distributor for the Funds' shares. Liberty Funds
Services, Inc. (Transfer Agent), an affiliate of the Administrator, serves as
the shareholder services and transfer agent for the Funds.

The Advisor furnishes the Funds with investment management services at the
Advisor's expense. The Advisor delegates certain of its administrative functions
to the Administrator.

For these services, the Global Fund pays the Advisor 1.00% of the first $25
million of the Fund's average daily net assets and 0.75% in excess over $25
million.

For these services, the Overseas Fund pays the Advisor 0.75% of the Fund's
average daily net assets.

Jean-Marie Eveillard is primarily responsible for the day-to-day management of
each Fund. Mr. Eveillard is President and a Director of the Advisor.

The Transfer Agent provides transfer agency and shareholder services to the
Funds for a monthly fee at the annual rate of 0.236% of each Fund's

11
<PAGE>

average daily net assets plus certain out-of-pocket expenses.

Each of the foregoing fees is subject to any reimbursement or fee waiver to
which the Advisor and its affiliates may agree.

The Advisor places all orders for purchases and sales of portfolio securities.
In selecting broker-dealers, the Advisor may consider research and brokerage
services furnished by such broker-dealers to the Advisor and its affiliates. In
recognition of the research and brokerage services provided, the Advisor may
cause each Fund to pay the selected broker-dealer a higher commission than would
have been charged by another broker-dealer not providing such services.

Subject to seeking best execution, the Advisor may consider sales of shares of
each Fund (and of certain other funds advised by the Advisor, the Administrator
and their affiliates) in selecting broker-dealers for portfolio security
transactions.

YEAR 2000

The Funds' Advisor, Administrator, Distributor and Transfer Agent (Liberty
Companies) are actively managing Year 2000 readiness for the Funds. A central
program office at the Liberty Companies is working within the Liberty Companies
and with vendors who provide services, software and systems to the Funds 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 Funds 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 Funds will
not be adversely affected.

HOW THE FUNDS VALUE THEIR SHARES

Per share net asset value is calculated by dividing the total value of each
Class's net assets by its number of outstanding shares. Shares of each Fund are
generally valued as of the close of regular trading on the New York Stock
Exchange (Exchange) (normally 4:00 p.m. Eastern time) 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 Advisor determines, pursuant to
procedures adopted by the Trustees, that such cost approximates current market
value. The Board of Trustees has adopted procedures to value at their fair value
(i) foreign securities if the value of such securities have been materially
affected by events occurring after the closing of a foreign market and all other
securities.

DISTRIBUTIONS AND TAXES

Each 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. Distributions are invested in additional shares of the
same Class of each Fund 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
shares of the same Class of each Fund 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 taxable 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
may 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.

12
<PAGE>

HOW TO BUY SHARES

Shares of each Fund are offered continuously. Orders received in good form prior
to the time at which each Fund values its shares (or placed with the financial
service firm before such time and transmitted by the financial service firm
before each Fund processes that day's share transactions) will be processed
based on that day's closing net asset value, plus any applicable initial sales
charge.

The minimum initial investment is $1,000; subsequent investments may be as small
as $50. The minimum initial investment for the Fundamatic program is $50; and
the minimum initial investment for retirement accounts sponsored by the
Distributor is $25. Certificates will not be issued for Class B or Class C
shares and there are some limitations on the issuance of Class A share
certificates. Each Fund may refuse any purchase order for its shares. See the
Statement of Additional Information for more information.

The Funds also offers Class Z shares which are offered through a separate
Prospectus only to (i) pension and profit sharing plans, employee benefit
trusts, endowments, foundations and corporations and high net worth individuals,
or through certain broker-dealers, financial institutions and other financial
intermediaries which have entered into agreements with the Funds, (ii) the
Advisor and its affiliates. The minimum initial investment in Class Z shares is
$1 million.

Class A Shares. Class A shares are offered at net asset value plus an initial
sales charge as follows:

<TABLE>
<CAPTION>
Initial Sales Charge
------------------------------
Retained
by
Financial
Service
as % of Firm as
-------------------- % of
Amount Offering Offering
Amount Purchased Invested Price Price
<S> <C> <C> <C> <C>
Less than $50,000 6.10% 5.75% 5.00%
$50,000 to less than
$100,000 4.71% 4.50% 3.75%
$100,000 to less than
$250,000 3.63% 3.50% 2.75%
$250,000 to less than
$500,000 2.56% 2.50% 2.00%
$500,000 to less than
$1,000,000 2.04% 2.00% 1.75%
$1,000,000 or more 0.00% 0.00% 0.00%
</TABLE>

On purchases of $1 million or more, the Distributor pays the financial service
firm a cumulative commission as follows:

<TABLE>
<CAPTION>
Amount Purchased Commission
<S> <C>
First $3,000,000 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25%(1)
</TABLE>

(1) Paid over 12 months but only to the extent the shares remain outstanding.

In determining the sales charge and commission applicable to a new purchase
under the above schedules, the amount of the current purchase is added to the
current value of shares previously purchased and still held by an investor. If a
purchase results in an account having a value from $1 million to $5 million,
then the portion of the shares purchased that caused the account's value to
exceed $1 million will be subject to a 1.00% contingent deferred sales charge,
payable to the Distributor, if redeemed within 18 months after the end of the
month in which the purchase was accepted. If the purchase results in an account
having a value in excess of $5 million, the contingent deferred sales charge
will not apply to the portion of the purchased shares comprising such excess
amount.

13
<PAGE>

contingent deferred sales charge if redeemed within six years after purchase. As
shown below, the amount of the contingent deferred sales charge depends on the
number of years after purchase that the redemption occurs:

<TABLE>
<CAPTION>
Years After Contingent Deferred
Purchase Sales Charge
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
More than 6 0.00%
</TABLE>

Year one ends one year after the end of the month in which the purchase was
accepted and so on. The Distributor pays financial service firms a commission of
5.00% on Class B share purchases.

Class C Shares. Class C shares are offered at net asset value and are subject to
a 0.75% annual distribution fee and a 1.00% contingent deferred sales charge on
redemptions made within one year after the end of the month in which the
purchase was accepted.

The Distributor pays financial service firms an initial commission of 1.00% on
Class C share purchases and an ongoing commission of 0.75% annually, commencing
after the shares purchased have been outstanding for one year. Payment of the
ongoing commission is conditioned on receipt by the Distributor of the 0.75%
annual distribution fee referred to above. The commission may be reduced or
eliminated by the Distributor at any time.

General. All contingent deferred sales charges are deducted from the amount
redeemed, not the amount remaining in the account, and are paid to the
Distributor. Shares issued upon distribution reinvestment and amounts
representing appreciation are not subject to a contingent deferred sales charge.
The contingent deferred sales charge is imposed on redemptions which result in
the account value falling below its Base Amount (the total dollar value of
purchase payments in the account reduced by prior redemptions on which a
contingent deferred sales charge was paid and any exempt redemptions). When a
redemption subject to a contingent deferred sales charge is made, generally,
older shares will be redeemed first unless the shareholder instructs otherwise.
See the Statement of Additional Information for more information.

Which Class is more beneficial to an investor depends on the amount and intended
length of the investment. Large investments, qualifying for a reduced Class A
sales charge, avoid the distribution fee. Investments in Class B shares have
100% of the purchase price invested immediately. Investors investing for a
relatively short period of time might consider Class C shares. Purchases of
$250,000 or more must be for Class A or Class C shares. Purchases of $1,000,000
or more must be for Class A shares. Consult your financial service firm.

Special Purchase Programs. Each Fund allows certain investors or groups of
investors to purchase shares with reduced or without initial or contingent
deferred sales charges. These programs are described in the Statement of
Additional Information under "Programs for Reducing or Eliminating Sales
Charges."

Class A shares of each Fund may also be purchased at net asset value by (i)
investment advisors or financial planners who have entered into agreements with
the Distributor (or who maintain a master account with a broker or agent that
has entered into such an agreement) and who charge a management, consulting or
other fee for their services, and clients of such investment advisors or
financial planners who place trades for their own accounts, if the accounts are
linked to the master account of such investment advisor or financial planner on
the books and records of the broker or agent; and (ii) retirement and deferred
compensation plans and trusts used to fund those plans, including, but not
limited to, those defined in Section 401(a), 403(b), or 457 of the Internal
Revenue Code and "rabbi trusts," where the plans are administered by firms that
have entered into agreements with the Distributor or the Transfer Agent.

Investors may be charged a fee if they effect transactions in a Fund's shares
through a broker or agent.

14
<PAGE>

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. Some services are described in the attached account application.
A shareholder's manual explaining all available services will be provided upon
request.

In June of any year, each 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. Each 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.

HOW TO SELL SHARES

Shares of each Fund 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, each
Fund will delay sending proceeds for 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 federal fund wire or other
immediately available funds.

Contingent Redemption Fee. Each Fund can experience substantial price
fluctuations and is intended for long-term investors. Short-term "market timers"
who engage in frequent purchases and redemptions can disrupt the Fund's
investment program and create additional transaction costs that are borne by all
shareholders. The Fund will assess a redemption fee in the amount of 2.00% on
redemptions and exchanges of Fund shares purchased and held for five business
days or less.

The contingent redemption fee will be paid to the Fund to help offset
transaction costs. Each Fund will use the "first-in, first-out" (FIFO) method to
determine the five business day holding period. Under this method, the date of
the redemption or exchange will be compared with the earliest purchase date of
shares held in the account. If this holding period is five business days or
less, the contingent redemption fee will be assessed.

The contingent redemption fee does not apply to any shares purchased through the
reinvestment of dividends. The fee may not apply to omnibus accounts.

Selling Shares Directly To Each Fund. Send a signed letter of instruction or
stock power form to the Transfer Agent, along with any certificates for shares
to be sold. The sale price is the net asset value (less any applicable
contingent deferred sales charge) 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 prior to the time at which each Fund values its shares 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 and
may be subject to a contingent deferred sales charge. The contingent deferred
sales charge may be waived under certain circumstances. See the Statement of
Additional Information for more information. Under unusual circumstances, each
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.

15
<PAGE>

HOW TO EXCHANGE SHARES

Except as described below with respect to money market funds, shares of each
Fund may be exchanged at net asset value for shares of other mutual funds
distributed by the Distributor, including mutual funds advised by the Advisor,
the Administrator and their affiliates. Generally, such exchanges must be
between the same classes of shares. Consult your financial service firm or the
Transfer Agent for information regarding what funds are available.

Shares will continue to age without regard to the exchange for purposes of
conversion and in determining the contingent deferred sales charge, if any, upon
redemption. 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. Each 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 each Fund's investments in
accordance with its investment objective or otherwise harm the Fund or its
remaining shareholders.

Class A Shares. An exchange from a money market fund into a non-money market
fund will be at the applicable offering price next determined (including sales
charge), except for amounts on which an initial sales charge was paid. Non-money
market fund shares must be held for five months before qualifying for exchange
to a fund with a higher sales charge, after which exchanges are made at the net
asset value next determined. 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
into which the original investment was made should be used.

Class B Shares. Exchanges of Class B shares are not subject to the contingent
deferred sales charge. However, if shares are redeemed within six years after
the original purchase, a contingent deferred sales charge will be assessed using
the schedule of the fund in which the original investment was made.

Class C Shares. Exchanges of Class C shares are not subject to the contingent
deferred sales charge. However, if shares are redeemed within one year after the
original purchase, a 1.00% contingent deferred sales charge will be assessed.
Only one "round-trip" exchange of the Fund's Class C shares may be made per
three-month period, measured from the date of the initial purchase. For example,
an exchange from Fund X to Fund Y and back to Fund X would be permitted only
once during each three-month period.

TELEPHONE TRANSACTIONS

All shareholders and/or their financial advisors are automatically eligible to
exchange Fund shares and to redeem up to $100,000 of each Fund's 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 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 related 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 each 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 each Fund
reserves 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.

16
<PAGE>

12B-1 PLANS

Under their 12b-1 Plans, each Fund pays the Distributor monthly a service fee at
an annual rate of 0.25% of each Fund's net assets attributed to Class A, Class B
and Class C shares. Each Fund's 12b-1 Plan also requires the Fund to pay the
Distributor monthly a distribution fee at an annual rate of 0.10% of the average
daily net assets attributed to its Class A shares and 0.75% of the average daily
net assets attributed to its Class B and Class C shares. Because the Class B and
Class C shares bear additional distribution fees, their dividends will be lower
than the dividends of Class A shares. Class B shares automatically convert to
Class A shares, approximately eight years after the Class B shares were
purchased. Class C shares do not convert. The multiple class structure could be
terminated should certain Internal Revenue Service rulings be rescinded. See the
Statement of Additional Information for more information. The Distributor uses
the fees to defray the cost of commissions and service fees paid to financial
service firms which have sold shares of each Fund, and to defray other expenses
such as sales literature, prospectus printing and distribution, shareholder
servicing costs and compensation to wholesalers. Should the fees exceed the
Distributor's expenses in any year, the Distributor would realize a profit. Each
Fund's Plan also authorizes other payments to the Distributor and its affiliates
(including the Advisor and the Administrator) which may be construed to be
indirect financing of sales of shares of each Fund.

ORGANIZATION AND HISTORY

The Trust is a Massachusetts business trust organized in 1980. Each Fund
represents the entire interest in a separate portfolio of the Trust.

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 each Fund and any other series of the Trust that may
be 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.

The Global Fund and Overseas Fund are a successor series to a separate series of
the SoGen Funds, Inc., incorporated under Maryland law in 1993. On December 29,
1998, the shareholders of the Global Fund and Overseas Fund's respective
predecessor series approved an Agreement and Plan of Reorganization which
permitted the Funds' predecessor series to reorganize as separate series of the
Trust.

17
<PAGE>

APPENDIX

DESCRIPTION OF BOND RATINGS

S&P

AAA bonds have the highest rating assigned by S&P. Capacity to pay interest and
repay principal is extremely strong.

AA bonds have a very strong capacity to pay interest and repay principal, and
they differ from AAA only in a small degree.

A bonds have a strong capacity to pay interest and repay principal, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB bonds are regarded as having an adequate capacity to pay interest and repay
principal. Whereas they normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal than for bonds in the A
category.

BB, B, CCC, CC and C bonds are regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and C the highest degree. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or large exposures to adverse conditions.

BB bonds have less near-term vulnerability to default than other speculative
issues. However, this category faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

B bonds have a greater vulnerability to default but currently have the capacity
to meet interest payments and principal repayments. Adverse business, financial,
or economic conditions will likely impair capacity or willingness to pay
interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

CCC bonds have a currently identifiable vulnerability to default, and are
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, the bonds are not likely to have
the capacity to pay interest and repay principal. The CCC rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.

CC rating typically is applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating.

C rating typically is applied to debt subordinated to senior debt which is
assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

CI rating is reserved for income bonds on which no interest is being paid.

D bonds are in payment default. The D rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

Plus(+) or minus(-): ratings from AA to CCC may be modified by the addition of a
plus or minus sign to show relative standing within the major rating categories.

Provisional Ratings. The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, although addressing credit
quality subsequent to completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion. The
investor should exercise

18
<PAGE>

his own judgment with respect to such likelihood and risk.

Municipal Notes:
SP-1. Notes rated SP-1 have very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety characteristics
are designated as SP-1+.

SP-2. Notes rated SP-2 have satisfactory capacity to pay principal and interest.

Notes due in three years or less normally receive a note rating. Notes maturing
beyond three years normally receive a bond rating, although the following
criteria are used in making that assessment:

[bullet] Amortization schedule (the larger the final maturity relative to other
maturities, the more likely the issue will be rated as a note).

[bullet] Source of payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be rated as a note).

Demand Feature of Variable Rate Demand Securities:
S&P assigns dual ratings to all long-term debt issues that have as part of their
provisions a demand feature. The first rating addresses the likelihood of
repayment of principal and interest as due, and the second rating addresses only
the demand feature. The long-term debt rating symbols are used for bonds to
denote the long-term maturity and the commercial paper rating symbols are
usually used to denote the put (demand) option (for example, AAA/A-1+).
Normally, demand notes receive note rating symbols combined with commercial
paper symbols (for example, SP-1+/A-1+).

Commercial Paper:
A. Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designations, 1, 2, and 3 to indicate the relative degree of safety.

A-1. This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are designed A-1+.

Corporate Bonds:
The description of the applicable rating symbols and their meanings is
substantially the same as its Municipal Bond ratings set forth above.

MOODY'S

Aaa bonds are judged to be of the best quality. They carry the smallest degree
of investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.

Aa bonds are judged to be of high quality by all standards. Together with Aaa
bonds they comprise what are generally known as high grade bonds. They are rated
lower than the best bonds because margins of protection may not be as large as
in Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.

Those bonds in the Aa through B groups which Moody's believes possess the
strongest investment attributes are designated by the symbol Aa1, A1, Baa1, Ba1
and B1.

A bonds possess many favorable investment attributes and are to be considered as
upper medium grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.

Baa bonds are considered as medium grade obligations, i.e. they are neither
highly protected nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have speculative
characteristics as well.

Ba bonds are judged to have speculative elements; their future cannot be
considered as well secured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times

19
<PAGE>

over the future. Uncertainty of position characterizes bonds in this class.

B bonds generally lack characteristics of a desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.

Caa bonds are of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.

Ca bonds represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings.

C bonds are the lowest rated class of bonds and issues so rated can be regarded
as having extremely poor prospects of ever attaining any real investment
standing.

Conditional Ratings. Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally. These are
bonds secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
conditions attach. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.

Note: Those bonds in the Aa, A, Baa, Ba, and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols Aa 1,
A 1, Baa 1, Ba 1, and B 1.

Municipal Notes:
MIG 1. This designation denotes best quality. There is present strong protection
by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.

MIG 2. This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.

MIG 3. This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.

Demand Feature of Variable Rate Demand Securities:
Moody's may assign a separate rating to the demand feature of a variable rate
demand security. Such a rating may include:

VMIG 1. This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.

VMIG 2. This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.

VMIG 3. This designation denotes favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.

Commercial Paper:
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment capacity of rated issuers:

Prime-1 Highest Quality
Prime-2 Higher Quality
Prime-3 High Quality

If an issuer represents to Moody's that its Commercial Paper obligations are
supported by the credit of another entity or entities, Moody's, in assigning
ratings to such issuers, evaluates the financial strength of the indicated
affiliated corporations, commercial banks, insurance companies, foreign
governments, or other entities, but only as one factor in the total rating
assessment.

Corporate Bonds:
The description of the applicable rating symbols (Aaa, Aa, A) and their meanings
is identical to that of its Municipal Bond ratings as set forth above, except
for the numerical modifiers. Moody's applies numerical modifiers 1, 2, and 3 in
the Aa and A classifications of its corporate bond rating system. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a midrange ranking; and the modifier 3
indicates that the issuer ranks in the lower end of its generic rating category.

20
<PAGE>

Investment Advisor
Societe Generale Asset Management Corp.
1221 Avenue of the Americas
New York, NY 10020

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
4 Chase Metro Tech Center
Brooklyn, NY 11245

Shareholder Services and Transfer Agent
Liberty Funds Services, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611

Independent Auditors
KPMG Peat Marwick LLP
757 Third Avenue
New York, NY 10017

Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624

Your financial service firm is:

Printed in U.S.A.

January 13, 1999

[SOGEN] GLOBAL FUND
[SOGEN] OVERSEAS FUND

PROSPECTUS

The Global Fund seeks to provide long term growth of capital by investing
primarily in common stocks (and in securities convertible into common stocks) of
the United States and foreign companies.

For more detailed information about the Fund, call the Distributor at
1-800-426-3750 for the January 13, 1999 Statement of Additional Information.

- ------------------------------ ------------------------------

NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE

- ------------------------------ ------------------------------

Liberty

Please send your completed application to:

Liberty Funds Services, Inc. (LFSI)
P.O. Box 1722
Boston, Massachusetts 02105-1722

New A, B & C Shares Account Application/Revision to Existing Account

To open a new account, complete sections 1, 2, 3, & 7.

To apply for special services for a new or existing account, complete sections
4, 5, 6, or 8 as appropriate.

___ Please check here if this is a revision.

1-----------Account ownership--------------
Please choose one of the following.

__Individual: Print your name, Social Security #, U.S. citizen status.

__Joint Tenant w/rights of survivorship: Print all names, the Social
Security # for the first person,
and his/her U.S. citizen status.

__Uniform Gift to Minors: Names of custodian and minor, minor's Social Security
#, minor's U.S. citizen status.

__Corporation, Association, Partnership: Include full name, Taxpayer I.D. #.

__Trust: Name of trustee, trust title & date, and trust's Taxpayer I.D. #.

______________________________________
Name of account owner

______________________________________
Name of joint account owner (JTWROS)

______________________________________
Street address

______________________________________
City, State, and Zip

______________________________________
Daytime phone number

______________________________________
Social Security # or Taxpayer I.D. #

Are you a U.S. citizen? ___Yes ___No

______________________________________
If no, country of permanent residence

______________________________________
Account Owner's date of birth

______________________________________
Account number (if existing account)

2 -----Fund(s) you are purchasing--------
Your investment will be made in Class A shares if no class is indicated.
Certificates are not available for Class B or C shares. If no distribution
option is selected, distributions will be reinvested in additional fund
shares. Please consult with your financial advisor to determine which class of
shares best suits your needs.

Fund Fund Fund

________________ ___________________ _____________________
Name of Fund Name of Fund Name of Fund

$_______________ $__________________ $____________________
Amount Amount Amount

Class
___ A Shares ___ B Shares (less than $250,000) ___ C Shares (less than
$1,000,000)

Method of Payment Choose one

___Check payable to the Fund ___Bank wired on ____/____/____ (Date)
Wire/Trade confirmation #_____________

Ways to receive your distributions

Choose one (If none chosen, dividends and capital gains will be reinvested).
Distributions of $10.00 or less will automatically be reinvested in additional
fund shares.

___Reinvest dividends and capital gains

___Dividends and capital gains in cash

___Dividends in cash; reinvest capital gains

___Automatic Dividend Diversification See section 5A, inside.

___Direct Deposit Complete Bank information
in section 4B. I understand that my bank must be a member of the
Automated Clearing House System.

3---Your signature & taxpayer I.D. number certification----

Each person signing on behalf of an entity represents that his/her actions are
authorized. I have received and read each appropriate fund prospectus and
understand that its terms are incorporated by reference into this application.
I understand that this application is subject to acceptance. I understand that
certain redemptions may be subject to a contingent deferred sales charge. It
is agreed that the fund, The Colonial Group, Inc. and its affiliates and their
officers, directors, agents, and employees will not be liable for any loss,
liability, damage, or expense for relying upon this application or any
instruction believed genuine.

I certify, under penalties of perjury, that:

1. The Social Security # or Taxpayer I.D. # provided is correct.

You must cross out Item 2a, b or c below only if you have been notified by the
Internal Revenue Service (IRS) that you are currently subject to back-up
withholding because of under-reporting interest or dividends on you tax return.

2. I am not subject to back-up withholding because: (a) I am exempt from back-
up withholding, or (b) I have not been notified by the IRS that I am
subject to back-up withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer
subject to back-up withholding.

The Internal Revenue Service does not require your consent to any provision of
this document other than the certifications required to avoid backup
withholdings.

X______________________________________________
Signature

_______________________________________________
Capacity, if applicable Date

X______________________________________________
Signature

_______________________________________________
Capacity, if applicable Date

4--------Ways to withdraw from your fund-------

It may take up to 30 days to activate the following features. Complete only
the sections that apply to the features you would like.

A. Systematic Withdrawal Plan (SWP)
Dividends and capital gains must be reinvested.
You can receive monthly, quarterly, or semiannual checks from your account in
any amount you select, with certain limitations. The value of the shares in your
account must be at least $5,000 and you must reinvest all of your
distributions. Checks will be processed on the 10th calendar day of the month
unless the 10th falls on a non-business day or the first day of the week. If
this occurs, the process date will be the previous business day. If you
receive your SWP payment via electronic funds transfer (EFT), you may request
it to be processed any day of the month. Withdrawals in excess of 12% annually
of your current account value will not be accepted. Redemptions made in
addition to SWP payments may be subject to a contingent deferred sales charge
for Class B or C shares. Please consult your financial or tax advisor before
electing this option.

Funds for withdrawal:

___________________
Name of fund

Withdrawal amount
Redeem shares from account as follows:
Dollar amount of payment $___________
or
Total annual %_________

Frequency (choose one)
__Monthly __Quarterly __Semiannually

I would like payments to begin _____/_____ (month, day).

___________________
Name of fund

Withdrawal Amount
Redeem shares from account as follows:
Dollar amount of payment $___________
or
Total annual %_________

Frequency (choose one)
__Monthly __Quarterly __Semiannually

I would like payments to begin _____/_____ (month, day).

Payment instructions
If you are having this service added to an existing account, please sign below
and have your signature guaranteed.
Send the payment to (choose one):
__My address of record.
__My bank account via EFT. Please complete the Bank Information section below.
All EFT transactions will be made two business days after the processing date.
ACH banks only.
__The payee listed at right.

______________________________________________
Name of payee

______________________________________________
Address of payee

______________________________________________
City

______________________________________________
State Zip

______________________________________________
Payee's bank account number, if applicable

B. Telephone withdrawal options
All telephone transaction calls are recorded. These options are not available
for retirement accounts. Please sign below and have your signature(s)
guaranteed.

1. Fast Cash
You are automatically eligible for this service. You or your financial
advisor can withdraw up to $50,000 from your account and have it sent to your
address of record. For your protection, this service is only available on
accounts that have not had an address change within 30 days of the redemption
request. This option is not available for Stein Roe Advisor Tax-Managed Growth
Fund, Newport Japan Opportunites Fund or Newport Tiger Cub Fund.

2. Telephone Redemption
__I would like the Telephone Redemption privilege either by federal fund wire
or EFT. Telephone redemptions over $500 will be sent via federal fund wire,
usually on the next business day ($7.50 will be deducted). Redemptions of
$500 or less will be sent by check to your designated bank.

3. On-Demand EFT Redemption
__I would like the On-Demand EFT Redemption privilege. Proceeds paid via EFT
will be credited to your bank account two business days after the process
date. You or your financial advisor may withdraw shares from your fund account
by telephone and send your money to your bank account. If you are adding this
service to an existing account, complete the Bank Information section below
and have all shareholder signatures guaranteed.

Liberty Funds Services, Inc. (LFSI) and the fund's liability is
limited when following telephone instructions; a shareholder may suffer a loss
from an unauthorized transaction reasonably believed by LFSI to have been
authorized.

Bank Information (For Sections A and B above)
I authorize deposits to the following bank account:

____________________________________________________________
Bank name City Bank account number

____________________________________________________________
Bank street address State Zip Bank routing # (your bank
can provide this)

X__________________________________
Signature of account owner(s)

X__________________________________
Signature of account owner(s) Place signature guarantee here.

5-----Ways to make additional investments--------

These services involve continuous investments regardless of varying share
prices. Please consider your ability to continue purchases through periods of
price fluctuations. Dollar cost averaging does not assure a profit or protect
against loss in declining markets.

A. Automatic Dividend Diversification
Please diversify my portfolio by investing distributions from one fund into
another Colonial, Stein Roe Advisor or Newport fund. These investments will
be made in the same share class and without sales charges. Accounts must be
identically registered. I have received and carefully read the prospectus for
the fund(s) listed below. This option is not available for Stein Roe Advisor
Tax-Managed Growth Fund.

____________________________
From fund

____________________________
Account number (if existing)

____________________________
To fund

____________________________
Account number (if existing)

____________________________
From fund

____________________________
Account number (if existing)

____________________________
To fund

____________________________
Account number (if existing)

B. Automated Dollar Cost Averaging
This program allows you to automatically have money from any Colonial, Stein Roe
Advisor or Newport fund in which you have a balance of at least $5,000
exchanged into the same share class of up to four other identically registered
Colonial, Stein Roe Advisor or Newport accounts, on a monthly basis. The minimum
amount for each exchange is $100. Please complete the section below. This
option is not available for Stein Roe Advisor Tax-Managed Growth Fund.

____________________________________
Fund from which shares will be sold

$_________________________
Amount to redeem monthly

____________________________________
Fund to invest shares in

$_________________________
Amount to invest monthly

____________________________________
Fund to invest shares in

$_________________________
Amount to invest monthly

____________________________________
Fund to invest shares in

$_________________________
Amount to invest monthly

C. Automatic Investment Plan/On-Demand EFT Purchase
This option automatically transfers the specified amount from your bank
checking account to your Colonial, Stein Roe Advisor or Newport fund
account on a regular basis. The On-Demand EFT Purchase program moves money
from your bank checking account to your Colonial, Stein Roe Advisor or Newport
fund account by electronic funds transfer based on your telephone request.
You will receive the applicable price two business days after the receipt of
yourrequest. Your bank needs to be a member of the Automated Clearing House
System.Please attach a blank check marked "VOID." (Deposit slips are not a
substitution).Also, complete the section below. Please allow 3 weeks for LFSI
to establish these services with your bank.

____________________________________
Fund name

_________________________________
Account number

$_____________________ _________________
Amount to transfer Month to start

___________________________________
Fund name

________________________________
Account number

$_____________________ _________________
Amount to transfer Month to start

__On-Demand Purchase (will be automatically established if you choose
Automatic Investment Plan)
__Automatic Investment Plan Frequency:
__Monthly or __Quarterly

Check one:

__EFT- Choose any day of the month_____________________
__Paper Draft-Choose either the:
__5th day of the month
__20th day of the month

Authorization to honor checks drawn by Liberty Funds Services, Inc. (LFSI) Do
Not Detach. Make sure all account holders sign to the far right. Please attach
a blank check marked "VOID" here. (Deposit slips are not a substitution).
See reverse for bank instructions.

I authorize LFSI to draw on my bank account, by check or electronic funds
transfer, for an investment in a Colonial, Stein Roe Advisor or Newport fund.
LFSI and my bank are not liable for any loss arising from delays or dishonored
draws. If a draw is not honored, I understand that notice may not be given and
LFSI may reverse the purchase and charge my account $15.

______________________________________
Bank name

______________________________________
Bank street address

______________________________________
City State Zip

______________________________________
Bank account number

______________________________________
Bank routing #

X_____________________________________
Signature(s) of account holder

6------------Ways to reduce your sales charges------------
These services can help you reduce your sales charge while increasing your
share balance over the long term.

A. Right of Accumulation
If you, your spouse or your children own any other shares in other
Colnial, Stein Roe Advisor or Newport funds, you may be eligible for a reduced
sales charge. The combined value of your accounts must be $50,000 or more.
Class A shares of money market funds are not eligible unless purchased by
exchange from another Colonial, Stein Roe Advisor or Newport fund.

The sales charge for your purchase will be based on the sum of the purchase(s)
added to the value of all shares in other Colonial, Stein Roe
Advisor or Newport funds at the previous day's public offering price.

__Please link the accounts listed below for Right of Accumulation privileges,
so that this and future purchases will receive any discount for which they
are eligible.

_____________________________________
Name on account

_____________________________________
Account number

_____________________________________
Name on account

_____________________________________
Account number

B. Statement of Intent
If you agree in advance to invest at least $50,000 within 13 months, you'll
pay a lower sales charge on every dollar you invest. If you sign a Statement
of Intent within 90 days after you establish your account, you can receive a
retroactive discount on prior investments. The amount required to receive a
discount varies by fund; see the sales charge table in the "How to Buy Shares"
section of your fund prospectus.

__I want to reduce my sales charge.
I agree to invest $ _______________ over a 13-month period starting
______/______/ 19______ (not more than 90 days prior to this application). I
understand an additional sales charge must be paid if I do not complete this
Statement of Intent.

7-------------Financial service firm---------------------
To be completed by a Representative of your financial service firm. If making
changes to the services on an account that has been in existence for more than
30 days, please have your clients signature guaranteed.

This application is submitted in accordance with our selling agreement with
Liberty Funds Distributor, Inc. (LFDI), the Fund's prospectus, and this
application. We will notify LFDI of any purchase made under a Statement
of Intent, Right of Accumulation, or Sponsored Arrangement. We guarantee the
signatures on this application and the legal capacity of the signers.

_____________________________________
Representative's name

_____________________________________
Representative's number

_____________________________________
Representative's phone number

_____________________________________
Account # for client at financial
service firm

_____________________________________
Branch office address

_____________________________________
City

_____________________________________
State Zip

_____________________________________
Branch office number

_____________________________________
Name of financial service firm

_____________________________________
Main office address

_____________________________________
City

_____________________________________
State Zip

X____________________________________
Authorized signature

8----------Request for a combined quarterly statement mailing-----------
LFSI can mail all of your quarterly statements in one envelope. This
option simplifies your record keeping and helps reduce fund expenses.

__I want to receive a combined quarterly mailing for all my accounts. Please
indicate account numbers or tax I.D. numbers of accounts to be linked.

________________________________________________________________________

Automatic Investment Plan (See reverse side)
Applications must be received before the start date for processing.

This program's deposit privilege can be revoked by LFSI without prior
notice if any check is not paid upon presentation. LFSI has no obligation
to notify the shareholder of non-payment of any draw. This program may be
discontinued by LFSI by written notice at least 30 business days prior
to the due date of any draw or by the shareholder at any time.

To the Bank Named on the Reverse Side:

Your depositor has authorized LFSI, to collect amounts due under an
investment program from his/her personal checking account. When
you pay and charge the draws to the account of your depositor
executing the authorization payable to the order of LFSI, Liberty Funds
Distributor, Inc., hereby indemnifies and holds you harmless from any
loss (including reasonable expenses) you may suffer from honoring such
draw, except any losses due to your payment of any draw against insufficient
funds.

Liberty Funds Distributor, Inc. SH-760F-1098(1098)
21
<PAGE>

COLONIAL TRUST II

Cross Reference Sheet

[SoGen] Gold Fund-Classes A, B and C

Item Number of Form N-1A Prospectus Location or Caption

Part A

1. Cover page

2. Summary of expenses

3. The Fund's Financial History

4. Organization and History; The Fund's
Investment Objective; How the Fund Pursues
its Objective and Certain Risk Factors

5. Cover page; How the Fund is Managed;
Organization and History; The Fund's
Investment Objective; Back cover

6. Organization and History; Distributions
and Taxes; How to Buy Shares

7. Summary of Expenses; How to Buy shares;
How the Fund Values its Shares; 12b-1
Plan; Back cover

8. How to Sell Shares; How to Exchange
Shares; Telephone Transactions

9. Not applicable

January 13, 1999

[SOGEN] GOLD FUND

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.

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.

[SoGen] Gold Fund (Fund) seeks growth of capital by investing primarily in
securities of companies engaged in mining, processing, dealing in or holding
gold or other precious metals such as silver, platinum and palladium, both in
the United States and in foreign countries.

The Fund is a diversified portfolio of Colonial Trust II (Trust), an open-end
management investment company.

The Fund is managed by [Societe Generale Asset Management Corp.] (Advisor), an
investment advisor since [ ] and an affiliate of the Administrator.

This Prospectus explains concisely what you should know before investing in the
Fund. Read it carefully and retain it for future reference. More detailed
information about the Fund is in the January 13, 1999 Statement of Additional
Information which has been filed with the Securities and Exchange Commission
(SEC) 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.

xx-xxx/xx-xxxx

The Fund offers multiple classes of shares. Class A shares are offered at net
asset value plus a sales charge imposed at the time of purchase; Class B shares
are offered at net asset value and are subject to an annual distribution fee and
a declining contingent deferred sales charge on redemptions made within six
years after purchase; and Class C shares are offered at net asset value and are
subject to an annual distribution fee and a contingent deferred sales charge on
redemptions made within one year after purchase. Each of the Class A, B and C
shares is subject to a contingent redemption fee on redemptions and exchanges
made within five business days of purchase. Class B shares automatically convert
to Class A shares after approximately eight years. See "How to Buy Shares."

<TABLE>
<CAPTION>
Contents Page
<S> <C>
Summary of Expenses
The Fund's Financial History
The Fund's Investment Objective
How the Fund Pursues its Objective and
Certain Risk Factors
How the Fund Measures its Performance
How the Fund is Managed
Year 2000
How the Fund Values its Shares
Distributions and Taxes
How to Buy Shares
How to Sell Shares
How to Exchange Shares
Telephone Transactions
12b-1 Plans
Organization and History
Appendix
</TABLE>

- ------------------------------ ---------------------------

NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE

- ------------------------------ ---------------------------

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 A, B and C shares of the Fund. See "How
the Fund is Managed" and "12b-1 Plan" for more complete descriptions of the
Fund's various costs and expenses.

Shareholder Transaction Expenses(1)(2)

<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Maximum Initial Sales Charge Imposed on a Purchase (as a % of offering price)(3) 5.75% 0.00%(4) 0.00%(4)
Maximum Contingent Deferred Sales Charge (as a % of offering price)(3) 1.00%(5) 5.00% 5.00%
Maximum Contingent Redemption Fee (3)(6) 2.00% 2.00% 2.00%
</TABLE>

Annual Operating Expenses (as a % of average net assets)

<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Management fee (after fee waiver)(7) 0.75% 0.75% 0.75%
12b-1 fees (after fee waiver)(7) 0.35 1.00 1.00
Other expenses x.xx x.xx x.xx
---- ---- ----
Total operating expenses (after fee waiver)(7) x.xx% x.xx% x.xx%
==== ==== ====
</TABLE>

(7) The Advisor has voluntarily agreed to waive a portion of its Management
fee (and Other expenses as applicable) to the extent Total operating
expenses (exclusive of the 0.75% Rule 12b-1 distribution fee) exceed
x.xx%. If the waivers were not made, the Fund's Management fees would have
been x.xx%, x.xx%, x.xx%, x.xx%, x.xx%, and estimated Total operating
expenses would have been x.xx%, x.xx%, x.xx% and x.xx%.

Example
The following Example shows the cumulative transaction and operating expenses
attributable to a hypothetical $1,000 investment in each Class of shares of the
Fund for the periods specified, assuming a 5% annual return and, unless
otherwise noted, redemption at period end. The expense numbers in the Example
assume the expense limit described above remains in effect for all periods
referenced. 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:

<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C> <C> <C>
Period: (8) (9) (8) (9)
1 year $xx $xx $xx $xx $xx
3 years xx xx xx xx xx
5 years
10 years
</TABLE>

(8) Assumes redemption at period end.
(9) Assumes no redemption.
(10) Class C shares do not incur a contingent deferred sales charge on
redemptions made after one year.
(11) Class B shares automatically convert to Class A shares after approximately
8 years; therefore, years 9 and 10 reflect Class A share expenses.

2
<PAGE>

THE FUND'S FINANCIAL HISTORY

The following financial highlights and the related financial statements for each
of the years in the five year period ended March 31, 1998 have been audited by
KPMG Peat Marwick LLP, independent auditors, whose report thereon is unqualified
and appears in the Fund's March 31, 1998 Annual Report to Shareholders, which is
incorporated by reference in the Statement of Additional Information. This
information should be read in conjunction with the Financial Statements and
notes thereto, which also appear in the Fund's Annual Report to Shareholders.

<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------
Period From
Year Ended March 31 August 31, 1993
to
1998 1997 1996 1995 March 31, 1994
--------------------------------------------- ----------------
<S> <C> <C> <C> <C> <C>
Selected Per Share Data
Net asset value - Beginning of year $10.60 $12.25 $11.28 $11.42 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.13 0.26 0.24 0.08 (0.01)
Net realized and unrealized
gains (losses) on investments (3.03) (1.75) 1.35 (0.10) 1.43
------ ------ ------ ------ ------
Total from Investment Operations (2.90) (1.49) 1.59 (0.02) 1.42
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.39) (0.14) (0.35) (0.04) --
Distributions from capital gains -- (0.02) (0.27) (0.08) --
------ ------ ------ ------ ------
Total Distributions (0.39) (0.16) (0.62) (0.12) --
------ ------ ------ ------ ------
Net asset value - End of year $7.31 $10.60 $12.25 $11.28 $11.42
------ ------ ------ ------ ------
Total return(d) (27.23)% (12.21)% 14.81% (0.14)% 14.15% (c)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of year (millions) $31 $53 $63 $51 $22
Ratios of operating expenses to
average net assets 1.50% (b) 1.45% (b) 1.41% 1.46% 2.27% (a)
Ratio of net investment income
to average net assets 1.52% (b) 1.20% (b) 1.29% 0.79% (0.32)% (a)
Portfolio turnover rate 11.20% 16.83% 22.40% 11.56% 4.55%
Average commission rate paid(e) $0.013 $0.0009 $0.0002 -- --
</TABLE>

(a) Annualized.
(b) The ratios of operating expenses to average net assets and net investment
income to average net assets for the year ended March 31, 1998 for the Fund
would have been 1.56% and 1.46%, respectively, without the effect of
earnings credits. The ratio of operating expenses to average net assets and
net investment income to average net assets for the year ended March 31,
1997 for the Fund would have been 1.46% and 1.19%, respectively, without
the effect of earnings credits.
(c) Total return disclosed for the period ended March 31, 1994 is not
annualized. The annualized total return for the period ended March 31, 1994
was 24.34% for the Fund.
(d) Does not give effect to deduction of the sales load.
(e) Average commission rate paid is expressed on a per share basis. Not all
commissions are computed on a per share basis; therefore, commissions
expressed as a percentage of transactions may be higher. Due to Securities
and Exchange Commission disclosure guidelines, average commissions per
share are calculated only for the periods subsequent to the year ended
March 31, 1995.

Further performance information is contained in the Fund's Annual Report to
shareholders, which is obtainable free of charge by calling 1-800-426-3750.

3
<PAGE>

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks growth of capital by investing primarily in securities of
companies engaged in mining, processing, dealing in or holding gold or other
precious metals such as silver, platinum and palladium, both in the United
States and in foreign countries.

HOW THE FUND PURSUES ITS OBJECTIVE AND CERTAIN RISK FACTORS

Gold-related investments have provided protection against loss of purchasing
power during periods of extensive price inflation and/or following periods of
extensive credit expansion. Under normal circumstances, at least 65% of the
value of the Fund's total assets will be invested in securities (which may
include both equity and, to a limited extent, debt securities) consisting of
issuers engaged in gold operations, including securities of gold mining finance
companies as well as operating companies with long-, medium- or short-life
mines. Up to 35% of the Fund's assets may be invested in equity and, to a
limited extent, debt securities unrelated to the precious metals industry where
the Advisor believes such securities are consistent with the Fund's investment
objective.

The Advisor is of the belief that a gold-based investment medium will, over the
medium term, protect capital from adverse monetary and political developments of
a national or international nature and may offer better opportunity for capital
growth than many other forms of investment. Investments in gold may provide more
of a hedge against currencies with declining buying power, devaluation and
inflation than other types of investments. In those periods when investments in
gold and gold-related securities appreciate in value relative to the U.S.
dollar, the Fund's investments may serve to offset erosion in the purchasing
power of the U.S. dollar.

As indicated, the Advisor is of the belief that the price of gold and
gold-related securities generally are likely to experience significant
appreciation in the relatively near future. If, however, this expected bull
market in gold-related securities does not develop or if it does but the Advisor
should conclude that any price appreciation that occurs is not likely to
continue, the Advisor expects that it will recommend to the Fund's Board of
Trustees that the Advisor seek the vote of all of the Fund's shareholders to
liquidate the Fund. Liquidation would involve the sale of all of the Fund's
assets, followed by the distribution of the proceeds, less accrued liabilities,
to shareholders. The decision to recommend liquidation will not, however, affect
the right of Fund shareholders to redeem their shares or to exchange their
shares for shares of other funds distributed by Liberty Funds Distributor, Inc.
(Distributor) and funds advised by the Advisor, the Administrator and their
affiliates.

Potential investors should carefully weigh the consequences of investing in, and
paying the related sales charge for, the Fund that may have a limited term from
the date of this Prospectus.

The Fund anticipates that it will normally invest in common stocks and
securities convertible into common stocks, such as convertible preferreds,
convertible debentures and sponsored or unsponsored American Depository Receipts
(ADRs), Global Depository Receipts (GDRs) and European Depository Receipts
(EDRs) for those securities, all of which may be traded on a securities exchange
or over-the-counter. The Fund may invest up to 20% of its total assets in debt
securities, including lower-rated securities, commonly referred to as "junk
bonds" (i.e., securities rated BB or lower by Standard & Poor's Corporation
(S&P) or Ba or lower by Moody's Investors Service, Inc. (Moody's) and securities
that are not rated). There are no restrictions as to the ratings of debt
securities acquired by the Fund or the portion of the Fund's assets that may be
invested in debt securities in a particular rating category. The market
performance of non-convertible debt securities of companies engaged in mining
and processing gold can be expected to be comparable to that of other debt
obligations of similar quality and generally will not react to fluctuations in
the price of gold. An investment in the debt instruments of gold-related
companies, therefore, cannot be expected to provide the hedge against inflation
that may be provided through investment in equity securities of companies
engaged in such activities. Investment in such debt securities can serve to
reduce the risk of fluctuation in net asset value of a portfolio composed
primarily of gold-related equity investments. The Fund may also invest in
"structured securities" in which the value is linked to the price of an
underlying instrument.

Because of the Fund's policy of investing primarily in securities of companies
engaged in gold mining, processing, dealing in or holding gold and other
precious metals, a substantial part of the Fund's assets will generally be
invested in securities of companies domiciled or operating in one or more
foreign countries.

Fluctuations in the Price of Gold. Due to the Fund's policy of concentrating its
investments in gold and other precious metal-related issuers, investment in the

4
<PAGE>

Fund's shares involves special considerations, including changes in U.S. or
foreign tax, currency or mining laws and increased environmental costs. The
price of gold has been subject to dramatic downward and upward price movements
over short periods of time and may be affected by unpredictable international
monetary and political policies such as currency devaluations or revaluations,
economic conditions within an individual country, trade imbalances, or trade or
currency restrictions between countries. The price of gold, in turn, is likely
to affect the market prices of securities of companies mining or processing
gold, and accordingly, the value of the Fund's investments in such securities
may also be affected. Gold-related investments as a group have performed less
well than the stock market in general during periods when the U.S. dollar is
strong, inflation is low and general economic conditions are stable.

Foreign Investments. The Fund provides investors with an opportunity to place a
portion of their assets in a diversified portfolio of foreign securities which
may entail a greater degree of risk (including risks relating to exchange rate
fluctuations, tax provisions, or expropriation of assets) than does investment
in securities of domestic issuers. From time to time, many foreign economies
have grown faster than the U.S. economy, and the returns on investments in these
countries have exceeded those of similar U.S. investments, although there can be
no assurance that these conditions will continue. International investing allows
investors to achieve greater diversification and to take advantage of changes in
foreign economies and market conditions.

The Fund may invest in securities of foreign issuers directly or in the form of
ADRs, GDRs, EDRs, or other securities representing underlying shares of foreign
issuers. Positions in these securities are not necessarily denominated in the
same currency as the common stocks into which they may be converted. ADRs are
receipts typically issued by a U.S. bank or trust company evidencing ownership
of the underlying securities. EDRs are European receipts evidencing a similar
arrangement. GDRs are global offerings where two securities are issued
simultaneously in two markets, usually publicly in non-U.S. markets and
privately in the U.S. market. Generally ADRs, in registered form, are designed
for use in the U.S. securities markets, EDRs, in bearer form, are designed for
use in European securities markets. GDRs are designed for use in the U.S. and
European securities markets. The Fund may invest in both "sponsored" and
"unsponsored" ADRs. In a sponsored ADR, the issuer typically pays some or all of
the expenses of the depository and agrees to provide its regular shareholder
communications to ADR holders. An unsponsored ADR is created independently of
the issuer of the underlying security. The ADR holders generally pay the
expenses of the depository and do not have an undertaking from the issuer of the
underlying security to furnish shareholder communications. Issuers of
unsponsored ADRs are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of the ADRs. The Fund does not expect to invest
5% or more of its total assets in unsponsored ADRs.

The Fund may invest in securities of foreign issuers directly or in the form of
American Depository Receipts (ADRs), Global Depository Receipts (GDRs), European
Depository Receipts (EDRs), or other securities representing underlying shares
of foreign issuers. Positions in these securities are not necessarily
denominated in the same currency as the common stocks into which they may be
converted. ADRs are receipts typically issued by an American bank or trust
company evidencing ownership of the underlying securities. EDRs are European
receipts evidencing a similar arrangement. GDRs are global offerings where two
securities are issued simultaneously in two markets, usually publicly in
non-U.S. markets and privately in the U.S. market. Generally ADRs, in registered
form, are designed for use in the U.S. securities markets, EDRs, in bearer form,
are designed for use in European securities markets. GDRs are designed for use
in the U.S. and European securities markets. The Fund may invest in both
"sponsored" and "unsponsored" ADRs. In a sponsored ADR, the issuer typically
pays some or all of the expenses of the depository and agrees to provide its
regular shareholder communications to ADR holders. An unsponsored ADR is created
independently of the issuer of the underlying security. The ADR holders
generally pay the expenses of the depository and do not have an undertaking from
the issuer of the underlying security to furnish shareholder communications.
Issuers of unsponsored ADRs are not obligated to disclose material information
in the United States and, therefore, there may not be a correlation between such
information and the market value of the ADRs. The Fund does not expect to invest
5% or more of its total assets in unsponsored ADRs.

5
<PAGE>

portfolio hedging under "Currency Exchange Transactions.")

The Fund may invest in gold-related investments in any countries deemed suitable
by the Advisor.

It may not be feasible for the Fund currently to invest in all of these
countries due to restricted access to their securities markets or an inability
to implement satisfactory custodial arrangements.

Restricted and Illiquid Securities. The Fund may invest up to 15% of its net
assets in illiquid securities, including certain securities that are subject to
legal or contractual restrictions on resale ("restricted securities") and
securities acquired in private placements. Because an active trading market for
such securities may not exist, the sale of such securities may be subject to
delay and additional costs. Time deposits and repurchase agreements maturing in
more than seven days are considered to be illiquid.

Generally, restricted securities may be sold only in privately negotiated
transactions or in a public offering with respect to which a registration
statement is in effect under the Securities Act of 1933 (1933 Act). Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than that which prevailed when it decided to sell. Restricted securities will be
priced at fair value as determined in good faith by the Board of Trustees. If,
through the appreciation of illiquid securities or the depreciation of liquid

6
<PAGE>

securities, the Fund should be in a position where more than 10% of the value of
its net assets is invested in illiquid assets, including restricted securities,
the Fund will take appropriate steps to protect liquidity. Notwithstanding the
above, the Fund may purchase securities that have been privately placed but that
are eligible for purchase and sale under Rule 144A under the 1933 Act. That rule
permits certain qualified institutional buyers, such as the Fund, to trade in
privately placed securities that have not been registered for sale under the
1933 Act. The Advisor, under the supervision of the Board of Trustees, will
consider whether securities purchased under Rule 144A are illiquid and thus
subject to the Fund's restriction on investing in illiquid securities. A
determination as to whether a Rule 144A security is liquid or not is a factual
issue requiring an evaluation of a number of factors. In making this
determination, the Advisor will consider the trading of a Rule 144A security. In
addition, the Advisor could consider (1) the frequency of trades and quotes, (2)
the number of dealers and potential purchasers, (3) the dealer undertakings to
make a market, and (4) the nature of the security and of market place trades
(e.g., the time needed to dispose of the security, the method of soliciting
offers and the mechanics of transfer). The liquidity of Rule 144A securities
would be monitored and if, as a result of changed conditions, it is determined
that a Rule 144A security is no longer liquid, the Fund's holdings of illiquid
securities would be reviewed to determine what steps, if any, are required to
assure that the Fund does not invest more than the maximum percentage of its
assets in illiquid securities. Investing in Rule 144A securities could have the
effect of increasing the amount of the Fund's assets invested in illiquid
securities if qualified institutional buyers are unwilling to purchase such
securities.

Bank Obligations. The Fund may invest in bank obligations, which may include
bank certificates of deposit, time deposits or bankers' acceptances.
Certificates of deposit and time deposits are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and
earning a specified return. Bankers' acceptances are negotiable drafts or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Investments in these instruments are limited to obligations of domestic banks
(including their foreign branches) and U.S. and foreign branches of foreign
banks having capital surplus and undivided profits in excess of $100 million.

Foreign Currency Transactions. The Fund may engage in currency exchange
transactions to hedge against losses in the U.S. dollar value of its portfolio
securities resulting from possible variations in exchange rates and not for
speculation. A currency exchange transaction may be conducted either on a spot
(i.e. cash) basis at the spot rate for purchasing or selling currency prevailing
in the foreign exchange market or through a forward currency exchange contract
("forward contract"). A forward contract is an agreement to purchase or sell a
specified currency at a specified future date (or within a specified time
period) and price set at the time of the contract. Forward contracts are usually
entered into with banks and broker/dealers, are not exchange-traded and are
usually for less than one year, but may be renewed. Currency exchange
transactions may involve currencies of the different countries in which the Fund
may invest and serve as hedges against possible variations in the exchange rates
between these currencies and the U.S. dollar. The Fund's currency transactions
are limited to transaction hedging and portfolio hedging involving either
specific transactions or portfolio positions. Transaction hedging is the
purchase or sale of a forward contract with respect to specific payable or
receivables of the Fund accruing in connection with the purchase or sale of
portfolio securities. Portfolio hedging is the use of a forward contract with
respect to a portfolio security position denominated or quoted in a particular
currency. The Fund may engage in portfolio hedging with respect to the currency
of a particular country in amounts approximating actual or anticipated positions
in securities denominated in that currency.

If the Fund enters into a forward contract, the custodian bank will segregate
liquid assets of the Fund having a value equal to the Fund's commitment under
such forward contract.

At the maturity of a forward contract to deliver a particular currency, the Fund
may either sell the portfolio security related to such contract and make
delivery of the currency, or it may retain the security and either acquire the
currency on the spot market or terminate its contractual obligation to deliver
the currency by purchasing an offsetting contract with the same currency trader
obligating it to purchase on the same maturity date the same amount of the
currency.

It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of a forward contract. Accordingly, it
may be necessary for the Fund to purchase additional currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of currency the Fund is obligated to deliver, and if a
decision is made to sell the security and make delivery of the currency.
Conversely, it may be necessary to sell on the spot market some of the currency
received upon the sale of the portfolio

7
<PAGE>

security if its market value exceeds the amount of currency the Fund is
obligated to deliver.

If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. If the Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
currency. Should forward prices decline during the period between the date the
Fund enters into a forward contract for the sale of a currency and the date it
enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Fund will suffer a loss to the extent the price of the
currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. A default on the contract would deprive the Fund of unrealized
profits or force the Fund to cover its commitments for purchase or sale of
currency, if any, at the current market price.

Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the devaluation level it anticipates. The cost to the Fund of
engaging in currency exchange transactions varies with such factors as the
currency involved, the length of the contract period and prevailing market
conditions. Since currency exchange transactions are usually conducted on a
principal basis, no fees or commissions are involved.

Investments in Debt Securities. The Fund may invest up to 20% of its total
assets in debt securities that are below investment grade quality. The Fund may
also invest in debt securities which are in default. "Investment grade" debt
securities are those rated within the four highest ratings categories of S&P or
Moody's or, if unrated, determined by the Fund's Advisor to be of comparable
quality. The market value of debt securities generally varies in response to
changes in interest rates and the financial conditions of each issuer. During
periods of declining interest rates, the value of debt securities generally
increases. Conversely, during periods of rising interest rates, the value of
such securities generally declines. These changes in market value will be
reflected in the Fund's net asset value.

Securities rated BBB by S&P or Baa by Moody's (the lowest investment grade
ratings) are considered to be medium grade and to have speculative
characteristics. Debt securities that are unrated, are considered by the Advisor
to be equivalent to below investment grade (often referred to as "junk bonds").
On balance, debt securities that are below investment grade are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal according to the terms of the obligation and, therefore,
carry greater investment risk, including the possibility of issuer default and
bankruptcy. Adverse publicity and investors' perceptions, whether or not based
on fundamental analysis, may decrease the values and liquidity of lower-rated
debt securities, especially in a thinly traded market. During periods of thin
trading in these markets, the spread between bid and asked prices is likely to
increase significantly, and the Fund may have greater difficulty selling its
portfolio securities. Analyses of the creditworthiness of issuers of lower-rated
debt securities may be more complex than for issuers of higher rated securities,
and the ability of the Fund to achieve its investment objective may, to the
extent of investment in lower-rated debt securities be more dependent upon such
creditworthiness analyses than would be the case if the Fund were investing in
higher rated securities.

Lower-rated debt securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment grade securities.
The prices of lower-rated debt securities have been found to be less sensitive
to interest rate changes than higher rated investments, but more sensitive to
adverse economic downturns or individual corporate developments. A projection of
an economic downturn or of a period of rising interest rates, for example, could
cause a decline in lower-rated debt securities' prices because the advent of a
recession could lessen the ability of a highly-leveraged company to make
principal and interest payments on its debt securities. If the issuer of
lower-rated debt securities defaults, the Fund may incur additional expenses
seeking recovery.

For a more complete description of the characteristics of bonds in each rating
category see "Appendix."

Expenses. The cost of investing in foreign securities is higher than the cost of
investing in U.S. securities. Investing in the Fund is an efficient way for an
individual to participate in foreign markets, but its expenses, including
advisory and custody fees, are higher than the expenses of a typical mutual fund
that invests in domestic equities.

8
<PAGE>

"When-Issued" or "Delayed Delivery" Securities. The Fund may purchase securities
on a "when-issued" or "delayed delivery" basis. Although the payment and
interest terms of these securities are established at the time the Fund enters
into the commitment, the securities may be delivered and paid for a month or
more after the date of purchase, when their value may have changed. The Fund
makes such commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement date if the Advisor
deems it advisable for investment reasons.

Structured Securities. The Fund may invest in structured notes and/or preferred
stock, the value of which is linked to currencies, interest rates, other
commodities, indices or other financial indicators. Structured securities have
different characteristics and risks than other types of securities in which the
Fund may invest. For example, the coupon, dividend and/or redemption amounts may
be increased or decreased depending on the change in the value of an underlying
instrument.

Temporary Strategies; Cash Reserves. The Fund has the flexibility to respond
promptly to changes in market and economic conditions. In the interest of
preserving shareholders' capital, the Advisor may employ a temporary defensive
investment strategy if it determines such a strategy to be warranted. Pursuant
to such a defensive strategy, the Fund temporarily may hold cash (U.S. dollars,
foreign currencies, multinational currency units) and/or invest up to 100% of
its assets in high quality debt securities or money market instruments of U.S.
or foreign issuers. Most or all of the Fund's investments may be made in the
United States and denominated in U.S. dollars. It is impossible to predict
whether, when or for how long a Fund will employ defensive strategies.

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. The Fund's fundamental investment policies listed
in the Statement of Additional Information cannot be changed without the
approval of a majority of the Fund's outstanding voting securities. 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

9
<PAGE>

HOW THE FUND IS MANAGED

The Trustees formulate the Fund's general policies and oversee the Fund's
affairs as conducted by the Advisor.

Liberty Funds Distributor, Inc. (Distributor), a subsidiary of the
Administrator, serves as the distributor for the Fund's shares. Liberty Funds
Services, Inc. (Transfer Agent), an affiliate of the Administrator, serves as
the shareholder services and transfer agent for the Fund.

The Advisor furnishes the Fund with investment management services at the
Advisor's expense. For these services, the Fund pays the Advisor 0.75% of the
Fund's average daily net assets. The Advisor delegates certain of its
administrative functions to the Administrator.

Jean-Marie Eveillard is primarily responsible for the day-to-day management of
the Advisor. Mr. Eveillard is President and a Director of the Advisor.

The Transfer Agent provides transfer agency and shareholder services to Fund for
a monthly fee at the annual rate of 0.236% of the Fund's average daily net
assets plus certain out-of-pocket expenses.

Each of the foregoing fees is subject to any reimbursement or fee waiver to
which the Advisor and its affiliates may agree.

The Advisor places all orders for purchases and sales of portfolio securities.
In selecting broker-dealers, the Advisor may consider research and brokerage
services furnished by such broker-dealers to the Advisor and its affiliates. In
recognition of the research and brokerage services provided, the Advisor may
cause the Fund to pay the selected broker-dealer a higher commission than would
have been charged by another broker-dealer not providing such services.

Subject to seeking best execution, the Advisor may consider sales of shares of
the Fund (and of certain other funds advised by the Advisor, the Administrator
and their affiliates) in selecting broker-dealers for portfolio security
transactions.

YEAR 2000

The Fund's Advisor, Administrator, Distributor and Transfer Agent (Liberty
Companies) are actively managing Year 2000 readiness for the Fund. A central
program office at the Liberty Companies is working within the Liberty Companies
and 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 services, 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.

HOW THE FUND VALUE ITS SHARES

Per share net asset value is calculated by dividing the total value of each
Class's net assets by its number of outstanding shares. Shares of the Fund are
generally valued as of the close of regular trading on the New York Stock
Exchange (Exchange) (normally 4:00 p.m. Eastern time) 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 Advisor determines, pursuant to
procedures adopted by the Trustees, that such cost approximates current market
value. The Board of Trustees has adopted procedures to value at their fair value
(i) foreign securities if the value of such securities have been materially
affected by events occurring after the closing of a foreign market and (ii) all
other securities.

10
<PAGE>

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.

Distributions are invested in additional shares of the same Class of the Fund 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 shares of the same Class of the
Fund 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.

HOW TO BUY SHARES

Shares of the Fund are offered continuously. Orders received in good form prior
to the time at which the Fund values its shares (or placed with the 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, plus any applicable initial sales charge.

The minimum initial investment is $1,000; subsequent investments may be as small
as $50. The minimum initial investment for the Fundamatic program is $50; and
the minimum initial investment for retirement accounts sponsored by the
Distributor is $25. Certificates will not be issued for Class B or Class C
shares and there are some limitations on the issuance of Class A share
certificates. The Fund may refuse any purchase order for its shares. See the
Statement of Additional Information for more information.

The Fund also offers Class Z shares which are offered through a separate
Prospectus only to (i) pension and profit sharing plans, employee benefit
trusts, endowments, foundations and corporations and high net worth individuals,
or through certain broker-dealers, financial institutions and other financial
intermediaries which have entered into agreements with the Fund, (ii) the
Advisor and its affiliates. The minimum initial investment in Class Z shares is
$1 million.

Class A Shares. Class A shares are offered at net asset value plus an initial
sales charge as follows:

<TABLE>
<CAPTION>
Initial Sales Charge
----------------------------------
Retained
by
Financial
Service
as % of Firm as
------------------ % of
Amount Offering Offering
Amount Purchased Invested Price Price
<S> <C> <C> <C>
Less than $50,000 6.10% 5.75% 5.00%
$50,000 to less than
$100,000 4.71% 4.50% 3.75%
$100,000 to less than
$250,000 3.63% 3.50% 2.75%
$250,000 to less than
$500,000 2.56% 2.50% 2.00%
$500,000 to less than
$1,000,000 2.04% 2.00% 1.75%
$1,000,000 or more 0.00% 0.00% 0.00%
</TABLE>

On purchases of $1 million or more, the Distributor pays the financial service
firm a cumulative commission as follows:

<TABLE>
<CAPTION>
Amount Purchased Commission
<S> <C>
First $3,000,000 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25%(1)
</TABLE>

(1) Paid over 12 months but only to the extent the shares remain outstanding.

11
<PAGE>

account having a value in excess of $5 million, the contingent deferred sales
charge will not apply to the portion of the purchased shares comprising such
excess amount.

Class B Shares. Class B shares are offered at net asset value, without an
initial sales charge, subject to a 0.75% annual distribution fee for
approximately eight years (at which time they automatically convert to Class A
shares not bearing a distribution fee) and a declining contingent deferred sales
charge if redeemed within six years after purchase. As shown below, the amount
of the contingent deferred sales charge depends on the number of years after
purchase that the redemption occurs:

<TABLE>
<CAPTION>
Years After Contingent Deferred
Purchase Sales Charge
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
More than 6 0.00%
</TABLE>

Year one ends one year after the end of the month in which the purchase was
accepted and so on. The Distributor pays financial service firms a commission of
5.00% on Class B share purchases.

Special Purchase Programs. The Fund allows certain investors or groups of
investors to purchase shares with reduced or without initial or contingent
deferred sales charges. These programs are described in the Statement of
Additional Information under "Programs for Reducing or Eliminating Sales
Charges."

Class A shares of the Fund may also be purchased at net asset value by (i)
investment advisors or financial planners who have entered into agreements with
the Distributor (or who maintain a master account with a broker or agent that
has entered into such an agreement) and who charge a management, consulting or
other fee for their services, and clients of such investment advisors or
financial planners who place trades for their own accounts, if the accounts are
linked to the master account of such investment advisor or financial planner on
the books and records of the broker or agent; and (ii) retirement and deferred
compensation plans and trusts used to fund those plans, including, but not
limited to, those defined in Section 401(a), 403(b), or 457 of the Internal
Revenue Code and "rabbi trusts," where the plans are administered by firms that
have entered into agreements with the Distributor or the Transfer Agent.

Investors may be charged a fee if they effect transactions in a Fund's shares
through a broker or agent.

12
<PAGE>

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
also deducted. The Fund may 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.

HOW TO SELL SHARES

Shares of the Fund 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 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 federal fund wire or other
immediately available funds.

Contingent Redemption Fee. The Fund can experience substantial price
fluctuations and is intended for long-term investors. Short-term "market timers"
who engage in frequent purchases and redemptions can disrupt the Fund's
investment program and create additional transaction costs that are borne by all
shareholders. The Fund will assess a redemption fee in the amount of 2.00% on
redemptions and exchanges of Fund shares purchased and held for five business
days or less.

The contingent redemption fee will be paid to the Fund to help offset
transaction costs. The Fund will use the "first-in, first-out" (FIFO) method to
determine the five business day holding period. Under this method, the date of
the redemption or exchange will be compared with the earliest purchase date of
shares held in the account. If this holding period is five business days or
less, the contingent redemption fee will be assessed.

The contingent redemption fee does not apply to any shares purchased through the
reinvestment of dividends. The fee may not apply to omnibus accounts.

Selling Shares Directly To The Fund. Send a signed letter of instruction or
stock power form to the Transfer Agent, along with any certificates for shares
to be sold. The sale price is the net asset value (less any applicable
contingent deferred sales charge) 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 prior to the time at which the Fund values its shares 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 and
may be subject to a contingent deferred sales charge. The contingent deferred
sales charge may be waived under certain circumstances. 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

Except as described below with respect to money market funds, Fund shares may be
exchanged at net asset value for shares of other mutual funds distributed by the
Distributor, including mutual funds advised by the Advisor, the Administrator
and their affiliates. Generally, such exchanges must be between the same classes
of shares. Consult your financial service firm or the Transfer Agent for
information regarding what funds are available.

Shares will continue to age without regard to the exchange for purposes of
conversion and in

13
<PAGE>

determining the contingent deferred sales charge, if any, upon redemption.
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 objective 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 to redeem up to $100,000 of the Fund's 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 writing a check
against the account for funds allowing check writing, or furnishing a signature
guaranteed request. Telephone redemption privileges 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 related 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.

12B-1 PLAN

Under its 12b-1 Plan, the Fund pays the Distributor monthly a service fee at an
annual rate of 0.25% of the Fund's net assets attributed to Class A, Class B and
Class C shares. The Fund's 12b-1 Plan also requires the Fund to pay the
Distributor monthly a distribution fee at an annual rate 0.10% of the average
daily net assets attributed to its Class A shares and of 0.75% of the average
daily net assets attributed to its Class B and Class C shares. Because the Class
B and Class C shares bear additional distribution fees, their dividends will be
lower than the dividends of Class A shares. Class B shares automatically convert
to Class A shares, approximately eight years after the Class B shares were
purchased. Class C shares do not convert. The multiple class structure could be
terminated should certain Internal Revenue Service rulings be rescinded. See the
Statement of Additional Information for more information. The Distributor uses
the fees to defray the cost of commissions and service fees paid to financial
service firms which have sold Fund shares, and to defray other expenses such as
sales literature, prospectus printing and distribution, shareholder servicing
costs and compensation to wholesalers. Should the fees exceed

14
<PAGE>

the Distributor's expenses in any year, the Distributor would realize a profit.
The Fund's Plan also authorizes other payments to the Distributor and its
affiliates (including the Advisor and the Administrator) which may be construed
to be indirect financing of sales of Fund shares.

ORGANIZATION AND HISTORY

The Trust is a Massachusetts business trust organized in 1980. The Fund
represents the entire interest in a separate portfolio of the Trust.

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 any other series of the Trust that may
be 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.

The Fund is a successor series to a separate series of the SoGen Funds, Inc.
under Maryland law in 1993. On [date], 1998, the shareholders of the Fund's
predecessor series, approved an Agreement and Plan of Reorganization which
permitted the Fund's predecessor series to reorganize as a separate series of
the Trust.