COLONIAL CALIFORNIA TAX-EXEMPT FUND
COLONIAL CONNECTICUT TAX-EXEMPT FUND
COLONIAL FLORIDA TAX-EXEMPT FUND
COLONIAL MASSACHUSETTS TAX-EXEMPT FUND
COLONIAL MICHIGAN TAX-EXEMPT FUND
COLONIAL MINNESOTA TAX-EXEMPT FUND
COLONIAL NEW YORK TAX-EXEMPT FUND
COLONIAL NORTH CAROLINA TAX-EXEMPT FUND
COLONIAL OHIO TAX-EXEMPT FUND
Supplement to Prospectus dated May 31, 1994
(Supplanting Supplement dated December 1, 1994)
On February 17, 1995, the Trustees approved modifications to the
wording of the Funds' investment objectives. Each Fund's current
objective is to seek, primarily, high yield exempt from federal and
its state personal income tax, if any, and, secondarily,
preservation of capital. Effective May 31, 1995, each Fund's
objective will be to seek as high a level of after-tax total
return, as is consistent with prudent risk, by pursuing current
income exempt from federal and its state personal income tax (if
any) and opportunities for long-term appreciation from a portfolio
primarily invested in investment-grade municipal bonds.
This modification is intended to reflect the Funds' emphasis on
after-tax total return, a major component of which will continue to
be current tax-exempt income.
The first paragraph under the caption 12b-1 plans is revised in its
entirety as follows:
Under 12b-1 Plans, each Fund pays the Distributor an annual service
fee calculated at the rates of 0.10% of average net assets
attributed to shares outstanding on November 30, 1994, and 0.25% of
average net assets attributed to shares issued thereafter. Each
Fund also pays to the Distributor an annual distribution fee not
exceeding 0.75% of the average net assets attributed to its Class B
shares. Because the Class B shares bear the additional fee, their
dividends will be lower than those of Class A shares. Class B
shares automatically convert to Class A shares, generally eight
years after the Class B shares were purchased. 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Service rulings be rescinded.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 the Distributor's expenses in
any year, the Distributor would realize a profit. The Plans also
authorize other payments to the Distributor and its affiliates
(including the Adviser) which may be construed to be indirect
financing of sales of Fund shares.
Effective July 1, 1994, the management fee for each Fund has been
reduced. The new management fee is calculated at the following
annual rates based on the combined average daily net assets of all
of the Funds:
Combined Fund Assets Management Fee
-------------------- --------------
First $1 Billion 0.55%
Over $1 Billion
to $2 Billion 0.50%
Over $2 Billion 0.45%
The fee is allocated among the Funds based on each Fund's net
assets.
SP-36/716A-0395 March 6, 1995
