1940 Act File No: 811-6393
As filed with the Securities and Exchange Commission
on
February 27, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 10 /X/
LFC UTILITIES TRUST
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(Exact Name of Registrant as Specified in Declaration of Trust)
One Financial Center, Boston, Massachusetts 02111
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(Address of Principal Executive Offices)
617-426-6750
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(Registrant's Telephone Number, Including Area Code)
Name and Address
of Agent for Service Copy to:
Michael H. Koonce, Esq. John M. Loder, Esq.
Colonial Management Associates, Inc. Ropes & Gray
One Financial Center One International Place
Boston, MA 02111 Boston, MA 02110-2524
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EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant pursuant to Section
8(b) of the Investment Company Act of 1940 (the "1940 Act"). However, beneficial
interests in the Registrant are not being registered under the Securities Act of
1933 (the "1933 Act") because such interests will be issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Registrant may only
be made by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities that are "accredited
investors" within the meaning of Regulation D under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any beneficial interests in the Registrant.
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Registrant's Registration Statement on Form N-1A under the 1940 Act is hereby
amended to read in its entirety as follows:
PART A
Responses to Items 1 through 3 have been omitted pursuant to paragraph 4 of
Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant
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Introduction
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LFC Utilities Trust (the "Portfolio") is a no-load, diversified, open-end
management investment company which was organized as a trust under the laws of
the Commonwealth of Massachusetts on August 14, 1991. Beneficial interests in
the Portfolio (the "Interest" or "Interests") are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the Securities Act of 1933, as amended (the "1933
Act"). Investments in the Portfolio may be made only by investment companies,
insurance company separate accounts, common or commingled trust funds or similar
organizations or entities that are "accredited investors" within the meaning of
Regulation D under the 1933 Act. As of January 31, 1998, Colonial Global
Utilities Fund (the "Fund"), a series of Colonial Trust III, a Massachusetts
business trust, owned in excess of 99.99% of the Interests in the Portfolio and
the balance was owned by Liberty Financial Services, Inc. ("Liberty Services"),
a subsidiary of Liberty Financial Companies, Inc. ("Liberty Financial"). This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" within the meaning of the 1933 Act.
The Portfolio's Investment Objective
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The Portfolio's investment objective is to provide its investors with current
income and long-term growth of capital and income. It seeks to achieve its
objective by investing primarily in equity and debt securities of public utility
companies. The Portfolio is managed by Stein Roe & Farnham Incorporated ("the
Adviser"), successor to an investment advisory business that was founded in
1932.
How the Portfolio Pursues its Objective and Certain Risk Factors
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The basic investment policies and strategies of the Portfolio are described in
the Fund's prospectus which is filed under and incorporated herein by reference
to Part A of Post-Effective Amendment No. 100 of the Registration Statement on
Form N-1A of Colonial Trust III, of which the Fund is a series. The EDGAR filing
date and accession number of such Post-Effective Amendment are February 27, 1998
and 0000021847-98-000001.
Portfolio Turnover
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The portfolio turnover of the Portfolio is disclosed under "Portfolio Turnover"
in Part 1 of the Fund's Statement of Additional Information which is filed under
and incorporated herein by reference to Part B of Post-Effective Amendment No.
100 of the Registration Statement on Form N-1A of Colonial Trust III, of which
the Fund is a series. The EDGAR filing date and accession number of such
Post-Effective Amendment are February 27, 1998 and 0000021847-98-000001.
Item 5. Management of the Portfolio
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The Management of the Portfolio's business and affairs is the responsibility of
the Board of Trustees of the Portfolio. Information regarding portfolio
managers, management fees and the placing of orders for the purchase and sale of
portfolio securities is described under "How the Fund and the Portfolio are
Managed" in the Fund's prospectus which is filed under and incorporated herein
by reference to Part A of Post-Effective Amendment No. 100 of the Registration
Statement on Form N-1A of Colonial Trust III, of which the Fund is a series. The
EDGAR filing date and accession number of such Post-Effective Amendment are
February 27, 1998 and 0000021847-98-000001.
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Other Information
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Pursuant to its management agreement with the Portfolio, the Adviser is also
responsible for the supervision of the overall administration of the Portfolio
including providing office space and equipment in connection with the
maintenance of the headquarters of the Portfolio, with certain administrative
responsibilities being performed on its behalf by its affiliate, Colonial
Management Associates, Inc. ("Colonial"). Such administrative services include
(i) maintenance of books and records (other than accounting books and records);
(ii) the preparation and filing of all documents required for compliance by the
Portfolio with applicable laws and regulations; and (iii) negotiating the
Portfolio's agreements with, and overseeing and coordinating the activities of,
its custodian and other independent contractors and agents. Colonial, on behalf
of the Adviser, provides office space and facilities, equipment and personnel
for the performance of its administrative functions under the agreement. All
compensation of the trustees and officers of the Portfolio who are affiliated
persons of Colonial is paid by Colonial or its affiliates.
Under its management agreement with the Adviser, the Portfolio may use the name
"LFC," "Liberty," or "Liberty Financial" only so long as the management
agreement remains in effect.
Giving effect to the fee waiver and expense reimbursement agreements of the
Adviser then in effect, management fees of $1,256,020, $1,064,366 and $967,213
were paid for the fiscal years ended October 31, 1995, 1996 and 1997,
respectively.
The Adviser provides pricing and bookkeeping services to the Portfolio for a fee
of $25,000 per year plus 0.0025% of the Portfolio's average daily assets in
excess of $50 million and reimbursement of the Adviser's out-of-pocket expenses;
the Adviser also provides investor accounting services to the Portfolio for a
fee of $7,500 per year.
Custodian
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State Street Bank and Trust Company ("State Street Bank") acts as the custodian
of the Portfolio's assets, including its portfolio securities and cash. Foreign
securities held by the Portfolio are maintained in the custody of foreign banks
and trust companies that are members of State Street Bank's Global Custody
Network or foreign depositories used by such members.
Expenses
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The Portfolio pays all of its expenses, including: the compensation of its
Trustees who are not interested persons of the Portfolio; governmental fees;
interest charges; brokerage commissions; taxes; membership dues in the
Investment Company Institute allocable to the Portfolio; fees and expenses of
independent auditors, legal counsel and of the custodian of the Portfolio;
insurance premiums; amortization of organizational expenses; expenses of
calculating the net asset value of the Portfolio; and the investment management
and investor accounting service fees paid by the Portfolio to the Adviser,
SteinRoe Services, Inc. and Colonial, respectively. For fiscal year 1997, the
Portfolio's total expenses amounted to 0.60% of the Portfolio's average daily
net assets.
Item 5A. Management's Discussion of Fund Performance
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Omitted pursuant to paragraph 4 of Instruction F of the General Instructions to
Form N-1A.
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Item 6. Capital Stock and Other Securities.
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Investments in the Portfolio have no pre-emptive or conversion rights and are
fully paid and non-assessable, except as set forth below. The Portfolio is not
required and has no current intention to hold annual meetings of investors, but
the Portfolio will hold special meetings of investors when in the judgment of
the Trustees it is necessary or desirable to submit matters for an investor
vote. Changes in investment objective and fundamental policies will be submitted
to investors for approval. An investors' meeting will be held upon the written,
specific request to the Trustees of investors holding, in the aggregate, not
less than 10% of the Interests in the Portfolio. Investors have under certain
circumstances (e.g. upon application and submission of certain specified
documents to the Trustees by a specified number of shareholders) the right to
communicate with other investors in connection with requesting a meeting of
investors for the purpose of removing one or more Trustees. Investors also have
the right to remove one or more Trustees without a meeting by a declaration in
writing by a specified number of investors. Upon liquidation of the Portfolio,
investors would be entitled to share pro rata in the net assets of the Portfolio
available for distribution to investors (unless another sharing method is
required for federal income tax reasons, in accordance with the sharing method
adopted by the Trustees).
The Portfolio reserves the right to create and issue a number of series, in
which case investors in each series would participate solely in the earnings,
dividends and assets of the particular series. Interests in any series of the
Portfolio may be divided into two or more classes of Interests having such
preferences or special or relative rights or privileges as the Trustees of the
Portfolio may determine. Currently, the Portfolio has only one class of one
series.
The Portfolio is organized as a trust under the laws of the Commonwealth of
Massachusetts. Under the Declaration of Trust, the Trustees are authorized to
issue Interests in the Portfolio. Each investor is entitled to vote in
proportion to the amount of its investment in the Portfolio. Investments in the
Portfolio may not be transferred, but an investor may withdraw all or a portion
of his investment at any time at net asset value. Investors in the Portfolio
(e.g., investment companies, insurance company separate accounts and common and
commingled trust funds) will each be liable for all obligations of the
Portfolio. However, the risk of an investor in the Portfolio incurring financial
loss on account of such liability is limited to circumstances in which both
inadequate insurance exists and the Portfolio itself is unable to meet its
obligations.
It is intended that the Portfolio's assets, income and distributions will be
managed in such a way that an investor in the Portfolio will be able to satisfy
the requirements of Subchapter M of the Code for qualification as a regulated
investment company, assuming that the investor invested all of its assets in the
Portfolio.
The net income of the Portfolio shall consist of (i) all income accrued, less
the amortization of any premium, on the assets of the Portfolio, less (ii) all
actual and accrued expenses of the Portfolio determined in accordance with
generally accepted accounting principles. Income includes discount earned
(including both original issue and, by election, market discount) on discount
paper accrued ratably to the date of maturity and any net realized gains or
losses on the assets of the Portfolio. All the Net Income of the Portfolio is
allocated among the investors in the Portfolio in accordance with their
Interests (unless another sharing method is required for federal income tax
reasons, in accordance with the sharing method adopted by the Trustees).
Under the anticipated method of operation of the Portfolio, the Portfolio will
not be subject to any federal income tax. However, each investor in the
Portfolio will be taxable on its share (as determined in accordance with the
governing instruments of the Portfolio) of the Portfolio's ordinary income and
capital gain in determining its income tax liability. The determination of
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such share will be made in accordance with an allocation method designed to
satisfy the Internal Revenue Code of 1986, as amended, (the "Code") and
regulations promulgated thereunder. Distributions of net income and capital gain
are to be made pro rata to investors in accordance with their investment in the
Portfolio. For federal income tax purposes, however, income, gain or loss may be
allocated in a manner other than pro rata, if necessary to reflect gains or
losses properly allocable to fewer than all investors as a result of
contributions of securities to the Portfolio or redemptions of portions of an
investor's unrealized gain or loss in Portfolio assets.
As of the date of this Amendment, the Fund held over 99.99% of the Interests in,
and accordingly controlled, the Registrant.
Item 7. Purchase of Securities Being Offered.
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Interests in the Portfolio are issued solely in private placement transactions
that do not involve any "public offering" within the meaning of Section 4(2) of
the 1933 Act. Investments in the Portfolio may be made only by investment
companies, insurance company separate accounts, common or commingled trust funds
or similar organizations or entities that are "accredited investors" within the
meaning of Regulation D under the 1933 Act. This registration statement does not
constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.
An investment in the Portfolio may be made without a sales load. All investments
are made at net asset value next determined if an order is received by SteinRoe
Services Inc., the Portfolio's investor accounting agent, by the designated
cutoff time. The net asset value of the Portfolio is determined each day the New
York Stock Exchange ("Exchange") is open for trading as of the close (normally
4:00 p.m. Boston time) of the Exchange. The Portfolio determines its net asset
value by subtracting its liabilities from its total assets (i.e. the value of
its portfolio securities and other assets). For this purpose, portfolio
securities held by the Portfolio for which market quotations are readily
available are valued, in the case of listed domestic securities, at the last
sale price on the exchange on which that security is principally traded (or, if
there were no sales that day, at the latest bid price). Each over-the-counter
security for which the last sale price on the day of valuation is available from
NASDAQ is valued at the price. All other over-the-counter securities for which
reliable quotations are available are valued at the latest bid price. Long-term
corporate bonds and notes, for which market quotations are not considered
readily available, are valued on the basis of valuations furnished by a pricing
service approved by the Board of Trustees of the Portfolio which determines
valuations for normal, institutional-size trading units of such securities using
methods based on market transactions for comparable securities and various
relationships between securities which are generally recognized by institutional
traders. Foreign security valuations are generally based upon local convention
or regulation which may be the last sales price, last bid or asked price, or the
mean between last bid and asked price as of, in each case, the close of the
appropriate exchange or other designated time. Securities for which no such
reliable quotations or valuations are available are valued at fair value as
determined by the Board of Trustees of the Portfolio. Short-term securities with
less than sixty days remaining to maturity are valued at amortized cost, which
approximates market value.
Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each day the Exchange is open. The investor's percentage of the
aggregate Interests in the Portfolio will be computed as the percentage equal to
the fraction (i) the numerator of which is the beginning of the day value of
such investor's investment in the Portfolio, on such day plus or minus, as the
case may be, the amount of any additions to or withdrawals from the investor's
investment in the Portfolio effected on such day, and (ii) the denominator of
which is the aggregate beginning of the day net asset value of the Portfolio on
such day plus or minus, as the case may be, the amount of the
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net additions to or withdrawals from the aggregate investments in the Portfolio
by all investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio as of
the close of business.
There is no minimum initial or subsequent investment in the Portfolio.
The Portfolio reserves the right to cease accepting investments at any time or
to reject any investment order.
Item 8. Redemption or Repurchase
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An investor in the Portfolio may withdraw all or any portion of its investment
in the Portfolio at the next determined net asset value if a withdrawal request
in proper form is furnished by the investor to SteinRoe Services Inc., the
Portfolio's investor accounting agent, by the designated cutoff time. The
proceeds of a withdrawal will be paid by the Portfolio in federal funds normally
on the day (normally each day the Exchange is open) the withdrawal is effected,
but in any event within seven days. Investments in the Portfolio may not be
transferred.
The right of any investor to receive payment with respect to any withdrawal may
be suspended or the payment of the withdrawal proceeds postponed during any
period in which the Exchange is closed (other than weekends or holidays) or
trading on such Exchange is restricted, or to the extent otherwise permitted by
the 1940 Act as amended, if an emergency exists.
The Portfolio reserves its right to redeem in kind.
Item 9. Pending Legal Proceedings.
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Not applicable.
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PART B
Item 10. Cover Page.
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Not Applicable.
Item 11. Table of Contents.
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Page
General Information and History
Investment Objective and Policies
Management of the Portfolio
Control Persons and Principal Holders of Securities
Investment Advisory and Other Services
Brokerage Allocation and Other Practices
Capital Stock and Other Securities
Purchase, Redemption and Pricing of Securities
Tax Status
Underwriters
Calculation of Performance Data
Financial Statements
Item 12. General Information and History.
- -----------------------------------------
Not applicable.
Item 13. Investment Objective and Policies.
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The basic investment policies and strategies of the Portfolio are described in
Part A of this Registration Statement. Additional information about lower rated
bonds, foreign securities, zero coupon securities, pay-in-kind securities, money
market instruments, securities loans, forward commitments, repurchase
agreements, options on securities, futures contracts and related options and
foreign currency transactions, which supplements the information contained in
Part A regarding certain miscellaneous investment practices in which the
Portfolio may engage and the risks associated therewith, is described under
"Miscellaneous Investment Practices" in Part 2 of the Fund's Statement of
Additional Information which is filed under and incorporated herein by reference
to Part B of Post-Effective Amendment No. 100 of the Registration Statement on
Form N-1A of Colonial Trust III, of which the Fund is a series. The EDGAR filing
date and accession number of such Post-Effective Amendment are February 27, 1998
and 0000021847-98-000001.
Fundamental Investment Policies
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The fundamental investment policies which the Portfolio has adopted and which
may not be changed without approval by holders of a "majority of the outstanding
Interests" of the Portfolio, which as used in this Part B, means the vote of the
lesser of (i) 67% or more of the outstanding "voting Interests" of the Portfolio
present at a meeting, if the holders of more than 50% of the outstanding "voting
Interests" of the Portfolio are present or represented by proxy, or (ii) more
than 50% of the outstanding "voting Interests" of the Portfolio, are described
under "Fundamental Investment Policies" in Part 1 of the Fund's Statement of
Additional Information which is filed under and incorporated herein by reference
to Part B of Post-Effective Amendment No. 100 of the Registration Statement on
Form N-1A of Colonial Trust III, of which the Fund is a series. The EDGAR filing
date and accession number of such Post-Effective Amendment are February 27, 1998
and 0000021847-98-000001.
Other Investment Policies
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The Portfolio has also adopted additional non-fundamental investment policies
that may be required by various laws and administrative positions. These
policies are described under "Other Investment Policies" in Part 1 of the
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Fund's Statement of Additional Information which is filed under and incorporated
herein by reference to Part B of Post-Effective Amendment No. 100 of the
Registration Statement on Form N-1A of Colonial Trust III, of which the Fund is
a series. The EDGAR filing date and accession number of such Post-Effective
Amendment are February 27, 1998 and 0000021847-98-000001.
Portfolio Turnover
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The portfolio turnover rate of the Portfolio is disclosed under "Portfolio
Turnover" in Part 1 of the Fund's Statement of Additional Information which is
filed under and incorporated herein by reference to Part B of Post-Effective
Amendment No. 100 of the Registration Statement on Form N-1A of Colonial Trust
III, of which the Fund is a series. The EDGAR filing date and accession number
of such Post-Effective Amendment are February 27, 1998 and 0000021847-98-000001.
Item 14. Management of the Portfolio
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Information regarding the officers and Trustees of the Portfolio is described
under "Other Information Concerning the Portfolio" in Part 1 and "Management of
the Colonial Funds" in Part 2 of the Fund's Statement of Additional Information
which is filed under and incorporated herein by reference to Part B of
Post-Effective Amendment No. 100 of the Registration Statement on Form N-1A of
Colonial Trust III, of which the Fund is a series. The EDGAR filing date and
accession number of such Post-Effective Amendment are February 27, 1998 and
0000021847-98-000001.
The Portfolio's Declaration of Trust provides that it will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Portfolio, unless it is determined that they had acted with willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
their offices or had not acted in good faith in the reasonable belief that their
actions were in the best interests of the Portfolio.
Information regarding Trustee and officer ownership is described under "Fund
Charges and Expenses" in Part 1 of the Fund's Statement of Additional
Information which is filed under and incorporated herein by reference to Part B
of Post-Effective Amendment No. 100 of the Registration Statement on Form N-1A
of Colonial Trust III, of which the Fund is a series. The EDGAR filing date and
accession number of such Post-Effective Amendment are February 27, 1998 and
0000021847-98-000001.
Item 15. Control Persons and Principal Holders of Securities.
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The Fund has informed the Portfolio that whenever it is requested to vote on
matters pertaining to the fundamental policies of the Portfolio, it will hold a
meeting of Fund shareholders and will cast its proportionate vote as instructed
by its shareholders. It is anticipated that other investors in the Portfolio
will follow the same or similar practice.
At January 31, 1998, the Fund owned in excess of 99.99% of the Interests in the
Registrant, and the balance was owned by Liberty Services. On such date, no
person owned of record, or is known by Registrant to have owned beneficially, 5%
or more of the outstanding shares of the Fund. The officers and trustees of the
Fund as a group beneficially owned less than one percent of the outstanding
shares of the Fund on such date. The Fund's address is One Financial Center,
Boston, MA 02111.
Item 16. Investment Advisory And Other Services.
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Information regarding investment advisory and other services provided by or to
the Portfolio is described under Item 5 of Part A of this Registration Statement
and is also described under "Fund Charges and Expenses" and "Other Information
Concerning the Portfolio" in Part 1 of the Fund's Statement of Additional
Information which is filed under and incorporated by reference herein to Part B
of Post-Effective Amendment No. 100 of the Registration Statement on Form N-1A
of Colonial Trust III, of which the Fund is a series. The EDGAR filing date and
accession number of such Post-Effective Amendment are February 27, 1998 and
0000021847-98-000001.
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Custodian
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State Street Bank and Trust Company (the "Bank") is the custodian for the
securities and cash of the Portfolio, but it does not participate in the
investment decisions of the Portfolio. The Portfolio has authorized the Bank to
deposit certain portfolio securities in central depository systems as allowed by
federal law. The Bank's main office is at 225 Franklin Street, Boston,
Massachusetts 02107.
Portfolio securities purchased by the Portfolio in the U.S. are maintained in
the custody of the bank or of other domestic banks or depositories. Portfolio
securities purchased outside of the U.S. are maintained in the custody of
foreign banks and trust companies that are members of the Bank's Global Custody
Network, and foreign depositories of such foreign banks and trust companies.
Each of the domestic and foreign custodial institutions holding portfolio
securities has been approved by the Board of Trustees of the Portfolio in
accordance with regulations under the 1940 Act.
The Portfolio may invest in obligations (including repurchase agreements) of the
Bank and may purchase or sell securities from or to the Bank.
Independent Auditors
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The independent auditors for the Portfolio are KPMG Peat Marwick LLP, Peat
Marwick Plaza, 303 East Wacker Drive, Chicago, IL 60601. KPMG Peat Marwick LLP
audits and reports on the annual financial statements of the Portfolio, reviews
certain regulatory reports of the Portfolio and its federal income tax returns,
and performs such other accounting, auditing, tax and advisory services as the
Portfolio may engage them to do.
Limitation on Expenses
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The Portfolio bears all expenses of its operations other than those expressly
assumed by other entities under contract with it, as described in Part A.
The Adviser has agreed not to impose their respective fees under their
management and administrative agreements with the Portfolio and the Fund to the
extent those fees would otherwise cause the aggregate expenses of the Fund and
the Portfolio, excluding interest, taxes, brokerage and other expenses which are
capitalized in accordance with generally accepted accounting practices and
extraordinary expenses, to exceed the applicable limits prescribed by any state
in which the Fund's shares are being offered to the public.
Item 17. Brokerage Allocation and Other Practices
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Portfolio Transactions
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Information regarding brokerage commissions and portfolio transactions is
described under "Fund Charges and Expenses" and "Other Information Concerning
the Portfolio" in Part 1 of the Fund's Statement of Additional Information which
is filed under and incorporated herein by reference to Part B of Post-Effective
Amendment No. 100 of the Registration Statement on Form N-1A of Colonial Trust
III, of which the Fund is a series. The EDGAR filing date and accession number
of such Post-Effective Amendment are February 27, 1998 and 0000021847-98-000001.
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Item 18. Capital Stock and Other Securities
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Under the Declaration of Trust, the Trustees are authorized to issue Interests
in the Portfolio. Investors are entitled to participate pro rata in
distributions of taxable income, loss, gain and credit of the Portfolio (unless
another sharing method is required for federal income tax reasons, in accordance
with the sharing method adopted by the Trustees). Upon liquidation or
dissolution of the Portfolio, investors are entitled to share pro rata in the
Portfolio's net assets available for distribution to its investors (unless
another sharing method is required for federal income tax reasons, in accordance
with the sharing method adopted by the Trustees). Investments in the Portfolio
have no preference, preemptive, conversion or similar rights and are fully paid
and nonassessable, except as set forth below. Investments in the Portfolio may
not be transferred. No certificates representing an investor's Interest in the
Portfolio will be issued.
Each investor is entitled to vote in proportion to the amount of its investment
in the Portfolio. Investors in the Portfolio do not have cumulative voting
rights, and investors holding more than 50% of the aggregate Interest in the
Portfolio may elect all of the Trustees of the Portfolio if they choose to do so
and in such event the other investors in the Portfolio would not be able to
elect any Trustee. The Portfolio is not required and has no current intention to
hold annual meetings of investors but the Portfolio will hold special meetings
of investors when in the judgment of the Portfolio's Trustees it is necessary or
desirable to submit matters for an investor vote. The Portfolio will be required
to call a meeting of investors, upon specific written request to the Trustees of
investors holding, in the aggregate, not less than 10% of the Interests of the
Portfolio. The Trustees may make changes to the Portfolio's Declaration of Trust
which do not adversely affect the rights of investors, without investor
approval, if the Trustees deem such changes necessary or desirable.
The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two-thirds of its
investors (with the vote of each being in proportion to the respective
percentages of the Interests in the Portfolio), except that if the Trustees of
the Portfolio recommend such sale of assets, the approval by vote of a majority
of the investors (with the votes of each being in proportion to their respective
percentages of the Interests of the Portfolio) will be sufficient. The Portfolio
will dissolve upon the complete withdrawal, resignation, retirement or
bankruptcy of any investor and will terminate unless reconstituted and continued
with the consent of all remaining investors. The Portfolio may also be
terminated (I) if approved by the vote of two-thirds of its investors (with the
votes of each being in proportion to the amount of their investment), or (ii) by
the Trustees of the Portfolio by written notice to its investors. The
Declaration of Trust of the Portfolio contains a provision limiting the life of
the Portfolio to a term of years; consequently, the Portfolio will terminate on
December 31, 2080.
The Portfolio is organized as a common law trust under the laws of The
Commonwealth of Massachusetts. Investors in the Portfolio will be held
personally liable for its obligations and liabilities, subject, however, to
indemnification by the Portfolio in the event that there is imposed upon an
investor a greater portion of the liabilities and obligations of the Portfolio
than its proportionate Interest in the Portfolio. The Declaration of Trust also
provides that the Portfolio shall maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Portfolio, its investors, Trustees, officers, employees and agents covering
possible tort and other liabilities. Thus, the risk of an investor incurring
financial loss on account of investor liability is limited to circumstances in
which both inadequate insurance exists and the Portfolio itself is unable to
meet its obligations.
The Declaration of Trust of the Portfolio further provides that obligations of
the Portfolio are not binding upon the Trustees individually but only upon the
property of the Portfolio and that the Trustees will not be liable for any
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action for failure to act, but nothing in the Declaration of Trust protects a
Trustee against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office.
The Portfolio reserves the right to create and issue any number of series, in
which case investors in each series would participate only in the earnings and
assets of the particular series. Investors in each series would be entitled to
vote separately to approve advisory agreements or changes in investment policy,
but investors of all series may vote together in the election or selection of
Trustees, principal underwriters and accountants for the Portfolio. Upon
liquidation or dissolution of the Portfolio, the investors in each series would
be entitled to share pro rata in the net assets of their respective series
available for distribution to investors (unless another sharing method is
required for federal income tax reasons, in accordance with the sharing method
adopted by the Trustees). Interests of any series of the Portfolio may be
divided into two or more classes of interests having such preferences or special
or relative privileges as the Trustees of the Portfolio may determine.
Although it is expected that the Portfolio will initially have 10 or fewer
investors, the number of investors in the Portfolio will in no case exceed 100
in order to satisfy certain tax requirements. This number may be increased or
decreased should such requirements change. Similarly, if Congress enacts certain
proposed amendments to the Code, it may be desirable for the Portfolio to elect
the status of a regulated investment company ("RIC") as that term is defined in
Subchapter M of the Code, which would require that the Portfolio first change
its organizational status from that of a Massachusetts trust to that of a
Massachusetts business trust ("MBT") or other entity treated as a corporation
under the Code. The Portfolio's Declaration of Trust empowers the Trustees, on
behalf of the Portfolio, to change the Portfolio's organization form to that of
a MBT or otherwise reorganized as an entity treated as a corporation under the
Code and to elect RIC status without a vote of the investors. Any such action by
the Trustees on behalf of the Portfolio would be contingent upon there being no
adverse tax consequences to such action.
Item 19. Purchase, Redemption and Pricing of Securities Being Offered
- ---------------------------------------------------------------------
Interests in the Portfolio are issued solely in private placement transactions
that do not involve any "public offering" within the meaning of Section 4(2) of
the 1933 Act. Investments in the Portfolio may be made only by investment
companies, insurance company separate accounts, common or commingled trust funds
or similar organizations or entities that are "accredited investors" within the
meaning of Regulation D under the 1933 Act. This registration statement does not
constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.
The value of each investor's investment in the Portfolio will be based on its
pro rata share of the total net asset value of the Portfolio (i.e., the value of
its portfolio securities and other assets less its liabilities) as of the same
date and time. The Portfolio's net asset value per share is calculated as of
4:00 p.m. (Boston time) on each day the Exchange is open for trading. For this
purpose, portfolio securities held by the Portfolio for which market quotations
are readily available are valued, in the case of listed securities, at the last
sale price on the exchange on which that security is principally traded (or, if
there were no sales that day, at the closing bid price). Each over-the-counter
security for which the last sale price on the day of valuation is available from
NASDAQ is valued at that price. All other over-the-counter securities for which
reliable quotations are available are valued at the latest bid price. Long-term
corporate bonds and notes, for which market quotations are not considered
readily available, are valued on the basis of valuations furnished by a pricing
service approved by the Board of Trustees of the Portfolio which determines
valuations for normal,
12
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institutional-size trading units of such securities using methods based on
market transactions for comparable securities and various relationships between
securities which are generally recognized by institutional traders. Securities
for which no such reliable quotations or valuations are available are valued at
fair value as determined by the board of Trustees of the Portfolio. Short-Term
securities with less than sixty days remaining to maturity are valued at
amortized cost, which approximates market value.
The computation of the Registrant's net assets applicable to its investors'
beneficial interest is included in the Statement of Assets and Liabilities of
the Registrant as at October 31, 1997, referred to under Item 23. See Item 6 of
Part A.
Item 20. Tax Status
- -------------------
The Portfolio is organized as a common law trust under the laws of the
Commonwealth of Massachusetts. Under the anticipated method of operation of the
Portfolio, the Portfolio will not be subject to any federal income tax, nor is
it expected to have any Massachusetts income tax liability. Each investor in the
Portfolio will be taxable on its share (as determined in accordance with the
governing instruments of the Portfolio) of the Portfolio's ordinary income and
capital gain in determining its income tax liability. The determination of such
share will be made in accordance with a method designed to satisfy the Code and
regulations promulgated thereunder. There can be no assurance, however, that the
Internal Revenue Service will agree with such a method of allocation.
The Portfolio's taxable year-end is October 31. Although, as described above,
the Portfolio will not be subject to federal income tax, it will file
appropriate income tax returns.
It is intended that the Portfolio's assets, income and distributions will be
managed in such a way that an investor in the Portfolio will be able to satisfy
the requirements of Subchapter M of the Code for qualification as a RIC,
assuming that the investor invests all of its assets in the Portfolio.
In order for the Fund or any other investment company investing in the Portfolio
to qualify for federal income tax treatment as a regulated investment company,
at least 90% of its gross income for a taxable year must be derived from
qualifying income; i.e., dividends, interest, income derived from loans of
securities, gains from the sale of stock or securities or foreign currencies or
other income (including but not limited to gains from options, futures, or
forward contracts) derived with respect to its business of investing in stock,
securities or currencies. Each of the Fund and any such other investment company
will also be required to distribute each year at least 90% of its investment
company taxable income (in order to escape federal income tax on distributed
amounts) and to meet certain tax diversification requirements. Because the Fund
will, and any such other investment company may, invest all of its assets in the
Portfolio, the Portfolio must satisfy all of these tax requirements in order for
the Fund and any such other investment company to satisfy them.
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The Portfolio will allocate at least annually to the Fund and its other
shareholders their respective distributive shares of any net investment income
and net capital gains which have been recognized for federal income tax purposes
(including unrealized gains at the end of the Portfolio's taxable year on
certain options and futures transactions that are required to be
marked-to-market).
To the extent the Portfolio invests in foreign securities, it may be subject to
withholding and other taxes imposed by foreign countries. Tax treaties between
certain countries and the United States may reduce or eliminate such taxes. The
Fund and any other investment companies investing all their assets in the
Portfolio do not expect to be able to pass through their respective distributive
shares of such foreign taxes to their shareholders, who therefore will not be
entitled to foreign tax credits or deductions. However, the Fund and such other
companies will be entitled to deduct their respective distributive shares of
such taxes in determining their distributable income.
The Portfolio's foreign currency gains and losses from foreign currency
dispositions, foreign-currency denominated debt securities and payables or
receivables, and foreign currency forward contracts are subject to special tax
rules that generally cause them to be recharacterized as ordinary income and
losses and may affect the timing and amount of the Portfolio's recognition of
income gain or loss.
In order to avoid adverse tax consequences, the Portfolio may be required to
limit its equity investments in non-U.S. corporations that are treated as
"passive foreign investment companies" under the Code.
Item 21. Underwriters
- ---------------------
Not Applicable.
Item 22. Calculation of Performance Data
- ----------------------------------------
Not Applicable.
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Item 23. Financial Statements
The financial statements of Registrant, which are incorporated herein by
reference to the Fund's October 31, 1997 Annual Report (which was previously
filed electronically and whose EDGAR filing Accession Number is
0000883163-98-000008), have been included in reliance upon the report of KPMG
Peat Marwick LLP, independent auditors, as experts in accounting and auditing.
15
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PART C
Other Information
Item 24. Financial Statements and Exhibits
- ------------------------------------------
(a) Financial Statements (incorporated herein by reference to the Fund's
October 31, 1997 Annual Report which was previously filed pursuant to
Section 30(b)(2) of the Investment Company Act 1940 and whose EDGAR filing
Accession Number is 0000883163-98-000008)
The Financial Statements of the Registrant contained in the Fund's Annual
Report are as follows:
Investment portfolio
Statement of assets and liabilities
Statement of operations
Statement of changes in net assets
Financial Highlights
Notes to Financial Statements
Independent Auditors' Report
(b) Exhibits
---------
1. Declaration of Trust of Registrant(a)
1.a. Amendment dated 8/23/96 to Declaration of Trust of Registrant
2. By-laws of Registrant (a)
2.a. Amended and Restated By-Laws dated 8/23/96 of Registrant
3. Inapplicable
4. Inapplicable
5. Inapplicable
6. Inapplicable pursuant to Instruction F.4 to Form N-1A
7. Inapplicable
8. Custodian Contract between Registrant and State Street Bank & Trust
Company (a)
9.(a)(1) Management Agreement between Registrant and Stein Roe & Farnham
Incorporated (a)
(a)(2) Amendment effective March 1, 1994 to Management Agreement between
Registrant and Stein Roe & Farnham Incorporated (a)
(b) Service Agreement between Registrant and Stein Roe & Farnham
Incorporated(a)
(c) Accounting and Bookkeeping Agreement between Registrant and
Stein Roe & Farnham Incorporated (a)
10. Inapplicable pursuant to Instruction F.4 to Form N-1A
11. Inapplicable pursuant to Instruction F.4 to Form N-1A
12. Inapplicable pursuant to Instruction F.4 to Form N-1A
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13. Inapplicable
14. Inapplicable
15. Inapplicable
16. Inapplicable
17. Power of Attorney for: Robert J. Birnbaum, Tom Bleasdale, Lora S.
Collins, James E. Grinnell, William D. Ireland, Jr., Richard W. Lowry,
William E. Mayer, James L. Moody, Jr., John J. Neuhauser, George L.
Shinn, Robert L. Sullivan and Sinclair Weeks, Jr. (b)
-----------------------------------------------------
(a) Incorporated by reference to Amendment No. 8 to Registrant's Form N-1A
filed on August 30, 1996.
(b) Incorporated by reference to Item 24 of Part C of Post-Effective Amendment
No. 99 of the Registration Statement on Form N-1A of Colonial Trust III,
of which Colonial Global Utilities Fund, a feeder fund of the Registrant,
is a series. The EDGAR filing date and Accession number of such
Post-Effective Amendment are December 19, 1997 and 0000883163-97-000038.
17
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Item 25. Persons Controlled by or Under Common Control with Registrant
- ----------------------------------------------------------------------
At January 31, 1998, over 99.99% of the outstanding Interests in Registrant were
held by the Fund, a registered open-end management investment company organized
as a series of Colonial Trust III, a Massachusetts business trust, and the
balance was owned by Liberty Services. See Item 15 above for information about
the principal holders of the shares of the Fund.
Item 26. Number of Holders of Securities
- ----------------------------------------
(1) (2)
Number of Record Holders (as of
Title of Class January 31, 1998)
- -------------- -----------------
Beneficial Interests 2
Item 27. Indemnification
- ------------------------
See Article V, Sections 5.02 and 5.03 of Registrant's Declaration of Trust filed
as Exhibit 1 hereto.
Item 28. Business and Other Connections of Investment Adviser
- -------------------------------------------------------------
Information about the business and other connections of the investment adviser
is described under and incorporated herein by reference to Item 28 of Part C of
Post-Effective Amendment No. 100 of the Registration Statement on Form N-1A of
Colonial Trust III, of which the Fund is a series. The EDGAR filing date and
Accession number of such Post-Effective Amendment are February 27, 1998 and
0000021847-98-000001.
Item 29. Principal Underwriters
- -------------------------------
Inapplicable
Item 30. Location of Accounts and Records
- -----------------------------------------
The journals and records required by items (1), (2)(i), (ii) and (iii), (3),
(5), (6), (7) and (8) and the ledger required by item 2(iv) of paragraph b of
Rule 31a-1 under the Investment Company Act of 1940 are maintained at Colonial
Management Associates, Inc., One Financial Center, Boston, MA 02111.
Item 31. Management Services
- ----------------------------
See Item 5 under Part A and Item 16 under Part B of this Registration Statement.
Item 32. Undertakings
- ---------------------
Not applicable
18
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SIGNATURES
Pursuant to the requirements of the 1940 Act, the Registrant has duly caused
this Amendment No. 10 to its Registration Statement on Form N-1A to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Boston
and the Commonwealth of Massachusetts on the 27th day of February, 1998.
LFC UTILITIES TRUST
By: MICHAEL H. KOONCE
----------------
Michael H. Koonce
Secretary
19
