Registration Nos: 33-45117
811-6529
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. __10__ [ X ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. __12__ [ X ]
COLONIAL TRUST VI
(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:
Arthur O. Stern, 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).
[ X ] on September 30, 1996 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).
[ ] on [date] 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.
DECLARATION PURSUANT TO RULE 24f-2
The Registrant has registered an indefinite number of its shares of
beneficial interest under the Securities Act of 1933 pursuant to Rule 24f-2
under the Investment Company Act of 1940. On August 26, 1996, the Registrant
filed the Rule 24f-2 Notice for Registrant's fiscal year ended June 30, 1996.
<PAGE>
COLONIAL TRUST VI
Cross Reference Sheet (Colonial International Equity Fund)
Item Number of Form N-1A Location or Caption in Prospectus
Part A
1. Cover Page
2. Summary of Expenses
3. The Fund's Financial History
4. Organization and History; How the
Fund Pursues its Objective and
Certain Risk Factors; The Fund's
Investment Objective
5. Cover Page; How the Fund is
Managed; Organization and
History; The Fund's Investment
Objective
6. Organization and History;
Distributions and Taxes; How to
Buy Shares
7. How to Buy Shares; How the Fund
Values its Shares; 12b-1 Plans;
Back Cover
8. How to Sell Shares; How to
Exchange Shares; Telephone
Transactions
9. Not Applicable
September 30, 1996
COLONIAL
INTERNATIONAL EQUITY
FUND
PROSPECTUS
BEFORE YOU INVEST
Colonial Management Associates, Inc. (Adviser) and your full-service financial
adviser 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 adviser to determine how investing in
this mutual fund may suit your unique needs, time horizon and risk tolerance.
Colonial International Equity Fund (Fund), a diversified portfolio of Colonial
Trust VI (Trust), an open-end management investment company, seeks total return
through a combination of long-term growth of capital and income by investing
primarily in equity securities of companies outside the United States. The Fund
is managed by the Adviser, an investment adviser since 1931.
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 September 30, 1996 Statement of Additional
Information which has been filed with the Securities and Exchange Commission and
is obtainable free of charge by calling the Adviser at 1-800-248-2828. The
Statement of Additional Information is incorporated by reference in (which means
it is considered to be a part of) this Prospectus.
IE-01/684C-0996
The Fund offers three 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, in addition, are subject to an annual
distribution fee and a declining contingent deferred sales charge on redemptions
made within six years after purchase; and Class D shares are offered at net
asset value plus a small initial sales charge and are subject to a contingent
deferred sales charge on redemptions made within one year after purchase and a
continuing distribution fee. Class B shares automatically convert to Class A
shares after approximately eight years. See "How to Buy Shares."
Contents Page
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
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
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, ENDORSED OR
INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES 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 Fund. The
following tables summarize your maximum transaction costs and your annual
expenses for an investment in each Class of the Fund's shares. "Other expenses"
are based on estimated amounts for the current fiscal year. See "How the Fund is
Managed" and "12b-1 Plans" for more complete descriptions of the Fund's various
costs and expenses.
<TABLE>
Shareholder Transaction Expenses (1)(2)
<CAPTION>
Class A Class B Class D
<S> <C> <C> <C>
Maximum Initial Sales Charge Imposed on a purchase (as a
% of offering price)(3) 5.75% 0.00%(5) 1.00%(5)
Maximum Contingent Deferred Sales Charge (as a % of
offering price)(3) 1.00%(4) 5.00% 1.00%
</TABLE>
(1) For accounts less than $1,000 an annual fee of $10 may be deducted. See
"How to Sell Shares."
(2) Redemption proceeds exceeding $5,000 sent via federal funds wire will be
subject to a $7.50 charge per transaction.
(3) Does not apply to reinvested distributions.
(4) 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."
(5) Because of the 0.75% distribution fee applicable to Class B and Class D
shares, long-term Class B and Class D 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
the Fund's Class B shares automatically convert to Class A shares after
approximately eight years, this is less likely for Class B shares than
for a class without a conversion feature.
Annual Operating Expenses (as a % of average net assets)
Class A Class B Class D
Management fee (after fee
waiver) 0.70% 0.70% 0.70%
12b-1 fees 0.25 1.00 1.00
Other expenses 0.80 0.80 0.80
---- ---- ----
Total operating expenses 1.75% 2.50% 2.50%
==== ==== ====
The Adviser has agreed, until further notice, to waive fees and bear certain
Fund expenses to the extent that "Total operating expenses" (exclusive of
service fees, distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 1.50% annually of the Fund's average net
assets. Absent such agreement, the "Management fee" would be 0.95% for each
Class, estimated "Other expenses" would be 0.80% for each Class and "Total
operating expenses" would be 2.00% for Class A shares and 2.75% for each of
Class B shares and Class D shares.
Example
The following Example shows the cumulative 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 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:
Class A Class B Class D
Period: (6) (7) (6) (7)
1 year $ 74 $ 75 $ 25 $ 45 $ 35
3 years 109 108 78 87 87(8)
If the Adviser did not continue to waive or bear certain Fund expenses, the
amounts in the Example would be:
Class A Class B Class D
Period: (6) (7) (6) (7)
1 year $ 77 $ 78 $ 28 $ 48 $ 38
3 years 117 115 85 94 94(8)
(6) Assumes redemption at period end.
(7) Assumes no redemption.
(8) Class D shares do not incur a contingent deferred sales charge on
redemptions made after one year.
THE FUND'S FINANCIAL HISTORY (b)
The following schedule of financial highlights for a share outstanding
throughout the period from March 31, 1996 (effective date of registration)
through June 30, 1996 has been audited by Price Waterhouse LLP, independent
accountants. Their unqualified report is included in the Fund's 1996 Annual
Report and is incorporated by reference into the Statement of Additional
Information.
<TABLE>
<CAPTION>
Period ended June 30
-------------------------------------------------
1996(c)
------------------------------------------------
Class A Class B Class D
<S> <C> <C> <C>
Net asset value - Beginning of period $9.930 $9.930 $9.930
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a) 0.055 0.035 0.035
Net realized and unrealized gain 0.315 0.315 0.315
Total from Investment Operations 0.370 0.350 0.350
Net asset value - End of period $10.300 $10.280 $10.280
Total return(d)(e) 3.73(f) 3.52(f) 3.52(f)
RATIOS TO AVERAGE NET ASSETS
Expenses 1.75%(g)(h) 2.50%(g)(h) 2.50%(g)(h)
Fees and expenses waived or borne by the Adviser 0.22%(g)(h) 0.22%(g)(h) 0.22%(g)(h)
Net investment income 2.17%(g)(h) 1.42%(g)(h) 1.42%(g)(h)
Portfolio turnover 4%(f) 4%(f) 4%(f)
Average Commission Rate $0.013 $0.013 $0.013
Net assets at end of period (000) $14,929 $257 $257
_________________________________
(a) Net of fees and expenses waived or borne by the
Adviser which amounted to:
$0.006 $0.006 $0.006
</TABLE>
(b) Per share data was calculated using average shares outstanding during the
period.
(c) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
(d) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(e) If the Adviser had not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) Annualized.
(h) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
Further performance information is contained in the Fund's Annual Report to
shareholders, which is obtainable free of charge by calling 1-800-248-2828.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
The Fund seeks total return through a combination of long-term growth of capital
and income by investing primarily in equity securities of companies outside the
United States.
HOW THE FUND PURSUES ITS OBJECTIVE AND CERTAIN RISK FACTORS
The Fund seeks to achieve its objective by investing primarily in equity
securities of companies domiciled or with primary operations outside the United
States. Such companies may be located or operate in developed, newly
industrialized or emerging markets. Investments in foreign securities involve
special risks. See "Foreign Investments" below. In selecting investments, the
Adviser uses a disciplined process intended to create a diversified portfolio
whose performance (before expenses) will exceed that of the universe of
international equity funds while maintaining risk characteristics that are
generally consistent with that universe. However, there is no assurance that the
portfolio's performance will exceed (or its risk characteristics will match)
that of the international equity fund universe, or that the Fund will achieve
its objective.
Equity Securities Generally. Equity securities generally include common and
preferred stock, warrants (rights) to purchase such stock, debt securities
convertible into stock, sponsored and unsponsored American Depository Receipts
(receipts issued in the U.S. by banks or trust companies evidencing ownership of
underlying foreign securities) and Global Depository Receipts (receipts issued
by foreign banks or trust companies). Equity securities also include shares
issued by investment companies that invest primarily in the foregoing
securities.
Debt Securities Generally. The Fund may invest in foreign government debt
securities of any maturity that pay fixed, floating or adjustable interest
rates. The values of debt securities generally fluctuate inversely with changes
in interest rates in the countries where the securities are issued.
Foreign Investments. Investments in foreign securities (both equity and debt),
American Depository Receipts and Global Depository Receipts have special risks
related to political, economic, and legal conditions outside of the U.S. As a
result, the prices of foreign securities and, therefore, the net asset value of
Fund shares, may fluctuate substantially more than the prices of securities of
issuers based in the U.S. Special risks associated with foreign securities
include the possibility of unfavorable movements in currency exchange rates,
difficulties in obtaining and enforcing judgments abroad, the existence of less
liquid and less regulated markets, the unavailability of reliable information
about issuers, the existence (or potential disposition) of different accounting,
auditing and legal standards in foreign countries, the existence (or potential
imposition) of exchange control regulations (including currency blockage), and
political and economic instability, among others. In addition, transactions in
foreign securities may be more costly due to currency conversion costs and
higher brokerage and custodial costs. See "Foreign Securities" and "Foreign
Currency Transactions" in the Statement of Additional Information for more
information about foreign investments.
Emerging Markets. The Fund's investments may consist of securities issued by
companies located in countries whose economies or securities markets are not yet
highly developed. Special risks associated with these investments (in addition
to the considerations regarding foreign investments generally) may include,
among others, greater political uncertainties, an economy's dependence on
revenues from particular commodities or on international aid or development
assistance, highly limited numbers of potential buyers for such securities,
heightened volatility of security prices, restrictions on repatriation of
capital invested abroad and delays and disruptions in securities settlement
procedures.
Small Companies. The smaller, less well established companies in which the Fund
may invest may offer greater opportunities for capital appreciation than larger,
better established companies, but may also involve certain special risks. Such
companies often have limited product lines, operating histories, markets or
financial resources and depend heavily on a small management group. Their
securities may trade less frequently, in smaller volumes, and fluctuate more
sharply in value than exchange-listed securities of larger companies.
Other Investment Companies. Up to 10% of the Fund's total assets (at the time of
purchase) may be invested in other investment companies. Such investments will
involve the payment of duplicative fees through the indirect payment of a
portion of the expenses, including advisory fees, of such other investment
companies.
Index and Interest Rate Futures; Options. The Fund may purchase and sell (i)
U.S. and foreign stock and bond index futures contracts, (ii) U.S. and foreign
interest rate futures contracts and (iii) options on any of the foregoing, all
of which may be considered to be derivative securities. Such transactions may be
entered into (i) to gain exposure to a particular market pending investment in
individual securities, or (ii) to hedge against increases in interest rates. The
Fund may also purchase and write options on individual securities. A futures
contract creates an obligation by the seller to deliver and the buyer to take
delivery of a type of instrument at the time and in the amount specified in the
contract. A sale of a futures contract can be terminated in advance of the
specified delivery date by subsequently purchasing a similar contract; a
purchase of a futures contract can be terminated by a subsequent sale. Gain or
loss on a contract generally is realized upon such termination. An option
generally gives the option holder the right, but not the obligation, to purchase
or sell the underlying instrument prior to the option's specified expiration
date. If the option expires un-exercised, the holder will lose any amount it
paid to acquire the option. Transactions in futures and related options may not
precisely achieve the goals of hedging or gaining market exposure to the extent
there is an imperfect correlation between the price movements of the contracts
and of the underlying index or securities. In addition, if the Adviser's
prediction of rates or stock market movements is inaccurate, the Fund may be
worse off than if it had not purchased or sold the contract or option. The total
market value of securities to be acquired or delivered pursuant to options
contracts entered into by the Fund will not exceed 5% of the Fund's total
assets. In addition, the Fund may not purchase or sell futures contracts or
purchase related options if immediately thereafter the sum of the amount of
deposits for initial margin or premiums on existing futures and related options
positions would exceed 5% of the Fund's total assets.
Foreign Currency Transactions. In connection with its investments in foreign
securities, the Fund may purchase and sell (i) foreign currencies on a spot or
forward basis, and (ii) foreign currency futures contracts. Such transactions
may be entered into (i) to lock in a particular foreign exchange rate pending
settlement of a purchase or sale of a foreign security or pending the receipt of
interest, principal or dividend payments on a foreign security held by the Fund,
or (ii) to hedge against a decline in the value, in U.S. dollars or in another
currency, of a foreign currency in which securities held by the Fund are
denominated. The Fund will not attempt, nor would it be able, to eliminate all
foreign currency risk. Further, although hedging may lessen the risk of loss if
the hedged currency's value declines, it limits the potential gain from currency
increases. See the Statement of Additional Information for information relating
to the Fund's obligations in entering into such transactions.
Leverage. The purchase and sale of futures and forward currency contracts and
the purchase and sale of certain options may present additional risks associated
with the use of leverage. Leverage may magnify the effect on Fund shares of
fluctuations in the values of the securities underlying these transactions. In
accordance with Securities and Exchange Commission pronouncements, to reduce
(but not necessarily eliminate) leverage, the Fund will either "cover" its
obligations under such transactions by holding the securities (or rights to
acquire the securities) it is obligated to deliver under such transactions, or
deposit and maintain in a segregated account with its custodian cash or high
quality liquid debt securities equal in value to the Fund's obligations under
such transactions.
Temporary/Defensive Investments. Temporarily available cash may be invested in
U.S. or foreign currency denominated cash equivalents and short-term debt
obligations, including certificates of deposit, time deposits, bankers'
acceptances, commercial paper, treasury bills and repurchase agreements. Some or
all of the Fund's assets also may be invested in such investments during periods
of unusual market conditions. Under a repurchase agreement, the Fund buys a
security from a bank or dealer, which is obligated to buy it back at a fixed
price and time. The security is held in a separate account at the Fund's
custodian, and constitutes the Fund's collateral for the bank's or dealer's
repurchase obligation. Additional collateral may be added so that the obligation
will at all times be fully collateralized. However, if the bank or dealer
defaults or enters bankruptcy, the Fund may experience costs and delays in
liquidating the collateral, and may experience a loss if it is unable to
demonstrate its rights to the collateral in a bankruptcy proceeding. Not more
than 15% of the Fund's net assets will be invested in repurchase agreements
maturing in more than 7 days and other illiquid assets.
Borrowing of Money. The Fund may borrow money from banks for temporary or
emergency purposes up to 10% of its net assets; however, the Fund will not
purchase additional portfolio securities (other than short-term securities)
while borrowings exceed 5% of net assets.
Other. The Fund may not always achieve its investment objective. The Fund's
investment objective and non-fundamental policies may be changed without
shareholder approval. The Fund will notify investors at least 30 days prior to
any material change in the Fund's investment objective. If there is a change in
the investment objective, shareholders should consider whether the Fund remains
an appropriate investment in light of their financial position and needs.
Shareholders may incur a contingent deferred sales charge if shares are redeemed
in response to a change in investment objective. 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
Performance may be quoted in sales literature and advertisements. Each Class's
average annual total returns are calculated in accordance with the Securities
and Exchange Commission's formula and assume the reinvestment of all
distributions, the maximum initial sales charge of 5.75% on Class A shares, the
maximum initial sales charge of 1.00% on Class D shares and the contingent
deferred sales charge applicable to the time period quoted on Class B and Class
D shares. Other total returns differ from the 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 or
contingent deferred sales charges.
Each Class's yield, which differs from total return because it does not consider
changes in net asset value, is calculated in accordance with the Securities and
Exchange Commission's formula. Each Class's distribution rate is calculated by
dividing the most recent twelve months' distributions by the maximum offering
price of that Class at the end of the period. 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 FUND IS MANAGED
The Trustees formulate the Fund's general policies and oversee the Fund's
affairs as conducted by the Adviser.
The Adviser is a subsidiary of The Colonial Group, Inc. Colonial Investment
Services, Inc. (Distributor) is a subsidiary of the Adviser and serves as the
distributor for the Fund's shares. Colonial Investors Service Center, Inc.
(Transfer Agent), an affiliate of the Adviser, serves as the shareholder
services and transfer agent for the Fund. The Colonial Group, Inc. is a direct
subsidiary of Liberty Financial Companies, Inc. which in turn is an indirect
subsidiary of Liberty Mutual Insurance Company (Liberty Mutual). Liberty
Mutual is considered to be thecontrolling entity of the Adviser and its
affiliates. Liberty Mutual is an underwriter of workers' compensation
insurance and a property and casualty insurer in the U.S.
The Adviser furnishes the Fund with investment management, accounting and
administrative personnel and services, office space and other equipment and
services at the Adviser's expense. For these services, the Fund paid the Adviser
0.70% of the Fund's average daily net assets for the period ended June 30, 1996.
Gita Rao, Vice President of the Adviser, co-manages the Fund and has co-managed
various other Colonial funds since 1996. Prior to joining the Adviser in 1995,
Ms. Rao was a Quantitative Research Analyst at Fidelity Management & Research
Company, and a Vice President in the equity research group at Kidder, Peabody
and Company.
Daniel Rie, Senior Vice President and Director of the Adviser, co-manages the
Fund. He has managed various other Colonial equity funds since 1986.
Peter Wiley, Vice President of the Adviser, co-manages the Fund and has
co-managed various other Colonial equity funds since 1995. Prior to co-managing
the Fund, Mr. Wiley was an Equity Research Analyst of the Adviser. Prior to
joining the Adviser in 1992, Mr. Wiley was an Analyst at State Street Bank and
Trust Company and an Assistant Technical Staff Member of the Massachusetts
Institute of Technology's Lincoln Laboratory.
The Adviser also provides pricing and bookkeeping services to the Fund for a
monthly fee of $2,250 plus a percentage of the Fund's average net assets over
$50 million. The Transfer Agent provides transfer agency and shareholder
services to the Fund for a fee of 0.25% annually of average net assets plus
certain out-of-pocket expenses.
Each of the foregoing fees is subject to any reimbursement or fee waiver to
which the Adviser may agree.
The Adviser places all orders for the purchase and sale of portfolio securities.
In selecting broker-dealers, the Adviser may consider research and brokerage
services furnished to it and its affiliates. Subject to seeking best execution,
the Adviser may consider sales of shares of the Fund (and of certain other
Colonial funds) in selecting broker-dealers for portfolio security transactions.
Fund expenses consist of management, bookkeeping, shareholder service and
transfer agent fees discussed above, 12b-1 service and distribution fees
discussed under the caption "12b-1 Plans," and all other expenses, fees,
charges, taxes, organization costs and liabilities incurred or arising in
connection with the Fund or Trust or in connection with the management thereof,
including but not limited to, Trustees' compensation and expenses and auditing,
counsel, custodian and other expenses deemed necessary and proper by the
Trustees.
HOW THE FUND VALUES 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
valued as of the close of 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 it is determined, pursuant to procedures adopted by the Trustees, that such
cost approximates market value. All other securities and assets are valued at
their fair value following procedures adopted by the Trustees.
DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code and to distribute to shareholders virtually all net income
at least annually and any net realized gain, at least 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. To change your election, call the Transfer Agent for
information.
Whether you receive 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 will 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.
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 (normally 4:00 p.m. Eastern
time) (or placed with a 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 Colonial Fundamatic program is
$50; and the minimum initial investment for a Colonial retirement account is
$25. Certificates will not be issued for Class B or Class D 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.
Class A Shares. Class A shares are offered at net asset value, plus an initial
sales charge as follows:
<PAGE>
Initial Sales Charge
-----------------------
Retained
by
Financial
Service
Firm
as % of as % of
---------------
Amount OfferingOffering
Amount Purchased InvestedPrice Price
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%
On purchases of $1 million or more, the Distributor pays the financial service
firm a cumulative commission as follows:
Amount Purchased Commission
First $3,000,000 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25%(1)
(1) Paid over 12 months but only to the extent shares remain outstanding.
Purchases of $1 million to $5 million are subject to a 1.00% contingent deferred
sales charge payable to the Distributor on redemptions within 18 months from the
first day of the month following the purchase. The contingent deferred sales
charge does not apply to the excess of any purchase over $5 million.
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:
Years Contingent Deferred
After Purchase Sales Charge
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%
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
4.00% on Class B share purchases.
Class D Shares. Class D shares are offered at net asset value plus a 1.00%
initial sales charge, subject to a 0.75% annual distribution fee and a 1.00%
contingent deferred sales charge on redemptions made within one year from the
first day of the month after purchase.
The Distributor pays financial service firms an initial commission of 1.85% on
purchases of Class D shares and an ongoing commission of 0.65% annually. 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 if the distribution fee paid by the Fund is reduced or eliminated
for any reason.
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 (including initial sales charges, if any) in the account,
reduced by prior redemptions on which a contingent deferred sales charge was
paid and any exempt redemptions). 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 invested immediately. Investors investing for a relatively
short period of time might consider Class D shares. Purchases of $250,000 or
more must be for Class A or Class D shares. Purchases of $500,000 or more must
be for Class A shares. Consult your financial service firm.
Financial service firms may receive different compensation rates for selling
different classes of shares. The Distributor may pay additional compensation to
financial service firms which have made or may make significant sales.
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
deducted.
Special Purchase Programs. The Fund allows certain investors or groups of
investors to purchase shares at a reduced, or without an, initial or contingent
deferred sales charge. These programs are described in the Statement of
Additional Information under "Programs for Reducing or Eliminating Sales
Charges" and "How to Sell Shares."
Shareholder Services. 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.
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 send proceeds as soon as the check has cleared (which may take up to
15 days).
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:
Colonial Investors Service Center, 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.
In addition, the Fund may deduct annual maintenance and processing fees (payable
to the Transfer Agent) in connection with certain retirement plan accounts. See
"Special Purchase Programs/Investor Services" in the Statement of Additional
Information for more information.
HOW TO EXCHANGE SHARES
Exchanges at net asset value may be made among the same class of shares of most
Colonial funds. Not all Colonial funds offer Class D shares. Shares will
continue to age without regard to the exchange for purposes of conversion and
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 1-800-248-2828 to receive a prospectus and an
exchange authorization form. 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.
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.
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 into which the original investment was made.
Class D Shares. Exchanges of Class D shares will not be 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.
TELEPHONE TRANSACTIONS
All shareholders and/or their financial advisers are automatically eligible to
exchange Fund shares and redeem up to $50,000 of Fund 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 redemption privileges for larger
amounts may be elected on the account application. Proceeds and confirmations of
telephone transactions will be mailed or sent to the address of record.
Telephone redemptions are not available on accounts with an address change in
the preceding 30 days. The Adviser, the Transfer Agent and the Fund will not be
liable when following telephone instructions reasonably believed to be genuine,
and a shareholder may suffer a loss from unauthorized transactions. 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 transactions in the event reasonable procedures are not employed.
All telephone transactions are recorded. Shareholders and/or their financial
advisers are required to provide their name, address and account number.
Financial advisers are also required to provide their broker number.
Shareholders and/or their financial advisers 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 financial advisers should follow the
procedures for redemption or exchange by mail as described above under "How to
Sell Shares." The Adviser, 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 advisers are not obligated to transact by telephone.
12B-1 PLANS
Under 12b-1 Plans, the Fund pays the Distributor an annual service fee of 0.25%
of the Fund's average net assets attributed to each Class of shares. The Fund
also pays the Distributor an annual distribution fee of 0.75% of the average net
assets attributed to its Class B and Class D shares. Because the Class B and
Class D shares bear the additional distribution fee, 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 D 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 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.
ORGANIZATION AND HISTORY
The Trust is a Massachusetts business trust organized in 1991. The Fund
commenced operations in 1996 as a separate portfolio of the Trust.
As of the date of this Prospectus, the Adviser owned 100% of each Class of
shares of the Fund and therefore may be deemed to "control" the Fund.
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 Trust 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.
<PAGE>
Investment Adviser
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Distributor
Colonial Investment Services, Inc.
One Financial Center
Boston, MA 02111-2621
Custodian
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108-2624
Shareholder Services and Transfer Agent
Colonial Investors Service Center, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110-2624
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624
Your financial service firm is:
Printed in U.S.A.
September 30, 1996
COLONIAL
INTERNATIONAL EQUITY FUND
PROSPECTUS
Colonial International Equity Fund seeks total return through a combination of
long-term growth of capital and income by investing primarily in equity
securities of companies outside the United States.
For more detailed information about the Fund, call the Adviser at 1-800-248-2828
for the September 30, 1996 Statement of Additional Information.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, ENDORSED OR
INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
<PAGE>
COLONIAL TRUST VI
Cross Reference Sheet (Colonial Equity Income Fund)
Item Number of Form N-1A Location or Caption in Prospectus
Part A
1. Cover Page
2. Summary of Expenses
3. The Fund's Financial History
4. Organization and History; How the
Fund Pursues its Objective and
Certain Risk Factors; The Fund's
Investment Objective
5. Cover Page; How the Fund is
Managed; Organization and
History; The Fund's Investment
Objective
6. Organization and History;
Distributions and Taxes; How to
Buy Shares
7. How to Buy Shares; How the Fund
Values its Shares; 12b-1 Plans;
Back Cover
8. How to Sell Shares; How to
Exchange Shares; Telephone
Transactions
9. Not Applicable
September 30, 1996,
COLONIAL EQUITY INCOME FUND
PROSPECTUS
BEFORE YOU INVEST
Colonial Management Associates, Inc. (Adviser) and your full-service financial
adviser 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 adviser to determine how investing in
this mutual fund may suit your unique needs, time horizon and risk tolerance.
Colonial Equity Income Fund (Fund), a diversified portfolio of Colonial Trust VI
(Trust), an open-end management investment company, seeks current income and
long-term growth. The Fund is managed by the Adviser, an investment adviser
since 1931.
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 September 30, 1996 Statement of Additional
Information which has been filed with the Securities and Exchange Commission and
is obtainable free of charge by calling the Adviser at 1-800-248-2828. The
Statement of Additional Information is incorporated by reference in (which means
it is considered to be a part of) this Prospectus.
EI-0996
The Fund offers three 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, in addition, are subject to an annual
distribution fee and a declining contingent deferred sales charge on redemptions
made within six years after purchase; and Class D shares are offered at net
asset value plus a small initial sales charge and are subject to a contingent
deferred sales charge on redemptions made within one year after purchase and a
continuing distribution fee. Class B shares automatically convert to Class A
shares after approximately eight years. See "How to Buy Shares."
Contents Page
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
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
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, ENDORSED OR
INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES 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 Fund. The
following tables summarize your maximum transaction costs and your annual
expenses for an investment in each Class of the Fund's shares. "Other expenses"
are based on estimated amounts for the current fiscal year. See "How the Fund is
Managed" and "12b-1 Plans" for more complete descriptions of the Fund's various
costs and expenses.
<TABLE>
Shareholder Transaction Expenses (1)(2)
<CAPTION>
Class A Class B Class D
<S> <C> <C> <C>
Maximum Initial Sales Charge Imposed on a Purchase (as a % of offering 5.75% 0.00%(5) 1.00%(5)
price 3)
Maximum Contingent Deferred Sales Charge (as a % of offering price)(3) 1.00%(4) 5.00% 1.00%
</TABLE>
(1) For accounts less than $1,000 an annual fee of $10 may be deducted. See
"How to Sell Shares."
(2) Redemption proceeds exceeding $5,000 sent via federal funds wire will be
subject to a $7.50 charge per transaction.
(3) Does not apply to reinvested distributions.
(4) 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."
(5) Because of the 0.75% distribution fee applicable to Class B and Class D
shares, long-term Class B and Class D 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
the Fund's 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.
<TABLE>
Annual Operating Expenses (as a % of average net assets)
<CAPTION>
Class A Class B Class D
<S> <C> <C> <C>
Management fee (after fee waiver) 0.00% 0.00% 0.00%
12b-1 fees 0.25 1.00 1.00
Other expenses (after fee waiver) 1.30% 1.30% 1.30%
----- ----- -----
Total operating expenses 1.55% 2.30% 2.30%
===== ===== =====
</TABLE>
The Adviser has agreed, until further notice, to waive fees and bear certain
Fund expenses to the extent that total operating expenses (exclusive of service
fees, distribution fees, brokerage commissions, interest, taxes and
extraordinary expenses, if any) exceed 1.30% annually of the Fund's average net
assets. Absent such agreement, the "Management fee" would be 0.80% for each
Class of shares, estimated "Other expenses" would be 2.62% for each Class of
shares and "Total operating expenses" would be 3.67% for Class A shares and
4.42% for each of Class B and Class D shares.
Example
The following Example shows the cumulative 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 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 D
<S> <C> <C> <C> <C> <C>
Period: (6) (7) (6) (7)
1 year $ 72 $ 73 $ 23 $ 43 $ 33
3 years 104 102 72 81 81(8)
</TABLE>
If the Adviser did not continue to waive or bear certain Fund expenses, the
amounts in the Example would be:
<TABLE>
<CAPTION>
Class A Class B Class D
<S> <C> <C> <C> <C>
Period: (6) (7) (6) (7)
1 year $ 92 $ 94 $ 44 $ 64 $ 54
3 years 163 164 134 142 142(8)
</TABLE>
(6) Assumes redemption at period end.
(7) Assumes no redemption.
(8) Class D shares do not incur a contingent deferred sales charge on
redemptions made after one year.
<PAGE>
THE FUND'S FINANCIAL HISTORY (b)
The following schedule of financial highlights for a share outstanding
throughout the period from March 31, 1996 (effective date of registration)
through June 30, 1996 has been audited by Price Waterhouse LLP, independent
accountants. Their unqualified report is included in the Fund's 1996 Annual
Report and is incorporated by reference into the Statement of Additional
Information.
<TABLE>
<CAPTION>
Period ended June 30
-------------------------------------------------
1996(c)
-------------------------------------------------
Class A Class B Class D
<S> <C> <C> <C>
Net asset value - Beginning of period $9.940 $9.940 $9.940
-------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.044 0.024 0.024
Net realized and unrealized gain 0.296 0.296 0.296
------ ------ -----
Total from Investment Operations 0.340 0.320 0.320
------ ------ -----
Net asset value - End of period $10.280 $10.260 $10.260
======== ======== =======
Total return (d)(e) 3.42%(f) 3.22%(f) 3.22%(f)
== == ===
RATIOS TO AVERAGE NET ASSETS
Expenses 1.55%(g)(h) 2.30%(g)(h) 2.30%(g)(h)
Fees and expenses waived or borne by the Adviser 1.55%(g)(h) 1.55%(g)(h) 1.55%((g)(h)
Net investment income 1.77%(g)(h) 1.02%(g)(h) 1.02%(g)(h)
Portfolio turnover 16%(f) 16%(f) 16% (f)
Average commission rate $0.031 $0.031 $0.031
Net assets at end of period (000) $2,570 $257 $257
- ---------------------------------
(a) Net of fees and expenses waived or borne by the
Adviser which amounted to $0.039 $0.039 $0.039
</TABLE>
(b) Per share data was calculated using average shares outstanding during the
period.
(c) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with
the Securities and Exchange Commission.
(d) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(e) If the Adviser had not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) Annualized.
(h) The benefits derived from custody credits and directed
brokerage arrangements had no impact.
Further performance information is contained in the Fund's Annual Report to
shareholders, which is obtainable free of charge by calling 1-800-248-2828.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
The Fund seeks current income and long-term growth.
HOW THE FUND PURSUES ITS OBJECTIVE AND CERTAIN RISK FACTORS
The Fund seeks to achieve its objective by investing primarily in U.S. and
foreign income-producing equity securities. Normally at least 65% of the Fund's
assets will be invested in equity securities. The Fund also may invest up to 35%
of its assets in U.S. or foreign debt securities. In selecting investments, the
Adviser uses a disciplined process intended to create a diversified portfolio
the performance (before expenses) of which will exceed that of the universe of
income and growth funds while maintaining risk characteristics that are
generally consistent with that universe. However, there is no assurance that the
portfolio's performance will exceed (or its risk characteristics will match)
that of the income and growth fund universe, or that the Fund will achieve its
objective.
Equity Securities Generally. Equity securities generally include common and
preferred stocks, warrants (rights) to purchase such stock, debt securities
convertible into stock, sponsored and unsponsored American Depository Receipts
(receipts issued in the U.S. by banks or trust companies evidencing ownership of
underlying foreign securities) and Global Depository Receipts (receipts issued
by foreign banks or trust companies). Stocks represent shares of ownership in a
company. Generally, preferred stock has a specified dividend and ranks after
debt securities and before common stocks in its claim on income for dividend
payments and on assets should the issuer be liquidated. Debt or preferred equity
securities convertible into or exchangeable for equity securities traditionally
pay dividends or interest at rates higher than common stock but lower than
non-convertible securities. Warrants are options to buy a stated of number of
shares of common stock at a specified price anytime during the life of the
warrants (generally two or more years).
The Fund may invest in equity securities on a "when-issued" or forward basis.
This means that the Fund will enter into a contract to purchase the underlying
security for a fixed price on a date beyond the customary settlement date. No
interest accrues until settlement.
Debt Securities Generally. The Fund may invest in debt securities, without
regard to quality or rating. Up to 20% of the Fund's assets may be invested in
lower rated debt securities (commonly referred to as "junk bonds"). Lower rated
debt securities are debt securities which, because of the greater possibility
that the issuers will default, are not investment grade (i.e., are rated below
BBB by Standard & Poor's Corporation or below Baa by Moody's Investors Service,
or are unrated but considered by the Adviser to be of comparable credit
quality). Because of the increased risk of default, these securities generally
have higher nominal or effective interest rates than higher quality securities.
Lower rated bonds also are generally considered significantly more speculative
and likely to default than higher quality bonds. Relative to other debt
securities, their values tend to be more volatile because: (1) an economic
downturn may more significantly impact their potential for default, and (2) the
secondary market for such securities may at times be less liquid or respond more
adversely to negative publicity or investor perceptions, making it more
difficult to value or dispose of the securities. The likelihood that these
securities will help the Fund achieve its investment objective is more dependent
on the Adviser's own credit analysis.
Foreign Investments. Investments in foreign securities (both equity and debt),
sponsored and unsponsored American Depository Receiptsand Global Depository
Receipts have special risks related to political, economic and legal conditions
outside of the U.S. As a result, the prices of foreign securities may fluctuate
substantially more than the prices of securities of issuers based in the U.S.
Special risks associated with foreign securities include the possibility of
unfavorable currency exchange rates, the existence of less liquid markets, the
unavailability of reliable information about issuers, the existence (or
potential imposition) of exchange control regulations (including currency
blockage) and political and economic instability, among others. In addition,
transactions in foreign securities may be more costly due to currency conversion
costs and higher brokerage and custodial costs. See "Foreign Securities" and
"Foreign Currency Transactions" in the Statement of Additional Information for
more information about foreign investments.
Foreign Currency Transactions. In connection with its investments in foreign
securities, the Fund may purchase and sell (i) foreign currencies on a spot or
forward basis, (ii) foreign currency futures contracts, and (iii) options on
foreign currencies and foreign currency futures. Such transactions will be
entered into (i) to lock in a particular foreign exchange rate pending
settlement of a purchase or sale of a foreign security or pending the receipt of
interest, principal or dividend payments on a foreign security held by the Fund,
or (ii) to hedge against a decline in the value, in U.S. dollars or in another
currency, of a foreign currency in which securities held by the Fund are
denominated. The Fund will not attempt, nor would it be able, to eliminate all
foreign currency risk. Further, although hedging may lessen the risk of loss if
the hedged currency's value declines, it limits the potential gain from currency
value increases. See the Statement of Additional Information for information
relating to the Fund's obligations in entering into such transactions.
Temporary/Defensive Investments. Temporarily available cash may be invested in
U.S. or foreign currency-denominated cash equivalents and short-term debt
obligations, including certificates of deposit, time deposits, bankers'
acceptances, commercial paper, Treasury bills and repurchase agreements. Some or
all of the Fund's assets also may be invested in such investments during periods
of unusual market conditions. Under a repurchase agreement, the Fund buys a
security from a bank or dealer, which is obligated to buy it back at a fixed
price and time. The security is held in a separate account at the Fund's
custodian, and constitutes the Fund's collateral for the bank's or dealer's
repurchase obligation. Additional collateral will be added so that the
obligation will at all times be fully collateralized. However, if the bank or
dealer defaults or enters bankruptcy, the Fund may experience costs and delays
in liquidating the collateral, and may experience a loss if it is unable to
demonstrate its right to the collateral in a bankruptcy proceeding. Not more
than 15% of the Fund's net assets will be invested in repurchase agreements
maturing in more than 7 days and other illiquid assets.
Borrowing of Money. The Fund may borrow money from banks for temporary or
emergency purposes up to 10% of its net assets; however, the Fund will not
purchase additional portfolio securities (other than short-term securities)
while borrowings exceed 5% of net assets.
Other. The Fund may not always achieve its investment objective. The Fund's
investment objective and non-fundamental policies may be changed without
shareholder approval. The Fund will notify investors at least 30 days prior to
any material change in the Fund's investment objective. If there is a change in
the investment objective, shareholders should consider whether the Fund remains
an appropriate investment in light of their financial position and needs.
Shareholders may incur a contingent deferred sales charge if shares are redeemed
in response to a change in investment objective. 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
Performance may be quoted in sales literature and advertisements. Each Class's
average annual total returns are calculated in accordance with the Securities
and Exchange Commission's formula and assume the reinvestment of all
distributions, the maximum initial sales charge of 5.75% on Class A shares, the
maximum initial sales charge of 1.00% on Class D shares and the contingent
deferred sales charge applicable to the time period quoted on Class B and Class
D 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 or
contingent deferred sales charges.
Each Class's yield, which differs from total return because it does not consider
changes in net asset value, is calculated in accordance with the Securities and
Exchange Commission's formula. Each Class's distribution rate is calculated by
dividing the most recent quarter's distributions, annualized, by the maximum
offering price of that Class at the end of the quarter. 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 FUND IS MANAGED
The Trustees formulate the Fund's general policies and oversee the Fund's
affairs as conducted by the Adviser.
The Adviser is a subsidiary of The Colonial Group, Inc. Colonial Investment
Services, Inc. (Distributor) is a subsidiary of the Adviser and serves as the
distributor for the Fund's shares. Colonial Investors Service Center, Inc.
(Transfer Agent), an affiliate of the Adviser, serves as the shareholder
services and transfer agent for the Fund. The Colonial Group, Inc. is a direct
subsidiary of Liberty Financial Companies, Inc. which in turn is an indirect
subsidiary of Liberty Mutual Insurance Company (Liberty Mutual). Liberty Mutual
is considered to be the controlling entity of the Adviser and its affiliates.
Liberty Mutual is an underwriter of workers' compensation insurance and a
property and casualty insurer in the U.S.
The Adviser furnishes the Fund with investment management, accounting and
administrative personnel and services, office space and other equipment and
services at the Adviser's expense. For these services, the Fund pays the Adviser
an annual rate of 0.80% of the Fund's average daily net assets.
John E. Lennon, Vice President of the Adviser, co-manages the Fund. He has
managed various other Colonial equity funds since 1982.
Peter Wiley, Vice President of the Adviser, co-manages the Fund and has
co-managed various other Colonial equity funds since 1995. Prior to co-managing
the Fund, Mr. Wiley was an Equity Research Analyst of the Adviser. Prior to
joining the Adviser in 1992, Mr. Wiley was an Analyst at State Street Bank and
Trust Company and an Assistant Technical Staff Member of the Massachusetts
Institute of Technology's Lincoln Laboratory.
The Adviser also provides pricing and bookkeeping services to the Fund for a
monthly fee of $2,250 plus a percentage of the Fund's average net assets over
$50 million. The Transfer Agent provides transfer agency and shareholder
services to the Fund for a fee of 0.25% annually of average net assets plus
certain out-of-pocket expenses.
Each of the foregoing fees is subject to any reimbursement or fee waiver to
which the Adviser may agree.
The Adviser places all orders for the purchase and sale of portfolio securities.
In selecting broker-dealers, the Adviser may consider research and brokerage
services furnished to it and its affiliates. Subject to seeking best execution,
the Adviser may consider sales of shares of the Fund (and of certain other
Colonial funds) in selecting broker-dealers for portfolio security transactions.
Fund expenses consist of management, bookkeeping, shareholder service and
transfer agent fees discussed above, 12b-1 service and distribution fees
discussed under the caption "12b-1 Plans," and all other expenses, fees,
charges, taxes, organization costs and liabilities incurred or arising in
connection with the Fund or Trust or in connection with the management thereof,
including but not limited to, trustees' compensation and expenses and auditing,
counsel, custodian and other expenses deemed necessary and proper by the
Trustees.
HOW THE FUND VALUES 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
valued as of the close of 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 it is determined, pursuant to procedures adopted by the Trustees, that such
cost approximates market value. All other securities and assets are valued at
their fair value following procedures adopted by the Trustees.
DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code and to distribute to shareholders virtually all net income
at least quarterly and any net realized gain at least 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. To change your election, call the Transfer Agent for
information. Whether you receive 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 will 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.
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 (normally 4:00 p.m. Eastern
time) (or placed with a 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 Colonial Fundamatic program is
$50; and the minimum initial investment for a Colonial retirement account is
$25. Certificates will not be issued for Class B or Class D 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.
Class A Shares. Class A shares are offered at net asset value plus an initial
sales charge as follows:
Initial Sales Charge
Retained
by
Financial
Service
Firm
as % of as % of
Amount Offering Offering
Amount Purchased Invested Price Price
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%
On purchases of $1 million or more, the Distributor pays the financial service
firm a cumulative commission as follows:
Amount Purchased Commission
First $3,000,000 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25%(1)
(1) Paid over 12 months but only to the extent the
shares remain outstanding.
Purchases of $1 million to $5 million are subject to a 1.00% contingent deferred
sales charge payable to the Distributor on redemptions within 18 months from the
first day of the month following the purchase. The contingent deferred sales
charge does not apply to the excess of any purchase over $5 million.
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:
Years Contingent Deferred
After Purchase Sales Charge
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%
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
4.00% on Class B share purchases.
Class D Shares. Class D shares are offered at net asset value plus a 1.00%
initial sales charge, subject to a 0.75% annual distribution fee and a 1.00%
contingent deferred sales charge on redemptions made within one year from the
first day of the month after purchase.
The Distributor pays financial service firms an initial commission of 1.85% on
purchases of Class D shares and an ongoing commission of 0.65% annually. 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 if the distribution fee paid by the Fund is reduced or eliminated
for any reason.
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 (including initial sales charges, if any) in the account,
reduced by prior redemptions on which a contingent deferred sales charge was
paid and any exempt redemptions). 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 invested immediately. Investors investing for a relatively
short period of time might consider Class D shares. Purchases of $250,000 or
more must be for Class A or Class D shares. Purchases of $500,000 or more must
be for Class A shares. Consult your financial service firm.
Financial service firms may receive different compensation rates for selling
different classes of shares. The Distributor may pay additional compensation to
financial service firms which have made or may make significant sales.
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 deducted.
Special Purchase Programs. The Fund allows certain investors or groups of
investors to purchase shares at a reduced, or without an, initial or contingent
deferred sales charge. These programs are described in the Statement of
Additional Information under "Programs for Reducing or Eliminating Sales
Charges" and "How to Sell Shares."
Shareholder Services. 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.
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 send proceeds as soon as the check has cleared (which may take up to
15 days).
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:
Colonial Investors Service Center, 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.
The Fund may deduct annual maintenance and processing fees (payable to the
Transfer Agent) in connection with certain retirement plan accounts. See
"Special Purchase Programs/Investor Services" in the Statement of Additional
Information for more information.
HOW TO EXCHANGE SHARES
Exchanges at net asset value may be made among the same class of shares of most
Colonial funds. Not all Colonial funds offer Class D shares. Shares will
continue to age without regard to the exchange for purposes of conversion and
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 1-800-248-2828 to receive a prospectus and an
exchange authorization form. 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.
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.
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 into which the original investment was made.
Class D Shares. Exchanges of Class D shares will not be 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.
TELEPHONE TRANSACTIONS
All shareholders and/or their financial advisers are automatically eligible to
exchange Fund shares and redeem up to $50,000 of Fund 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 redemption privileges for larger
amounts may be elected on the account application. Proceeds and confirmations of
telephone transactions will be mailed or sent to the address of record.
Telephone redemptions are not available on accounts with an address change in
the preceding 30 days. The Adviser, the Transfer Agent and the Fund will not be
liable when following telephone instructions reasonably believed to be genuine,
and a shareholder may suffer a loss from unauthorized transactions. 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 transactions in the event reasonable procedures are not employed.
All telephone transactions are recorded. Shareholders and/or their financial
advisers are required to provide their name, address and account number.
Financial advisers are also required to provide their broker number.
Shareholders and/or their financial advisers 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 advisers should follow the
procedures for redemption or exchange by mail as described above under "How to
Sell Shares." The Adviser, 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 advisers are not obligated to transact by telephone.
12B-1 PLANS
Under 12b-1 Plans, the Fund pays the Distributor an annual service fee of 0.25%
of the Fund's average net assets attributed to each Class of shares. The Fund
also pays the Distributor an annual distribution fee of 0.75% of the average net
assets attributed to its Class B and Class D shares. Because the Class B and
Class D shares bear the additional distribution fee, 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 D 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 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.
ORGANIZATION AND HISTORY
The Trust is a Massachusetts business trust organized in 1991. The Fund
commenced operations in 1996 as a separate portfolio of the Trust.
As of the date of this Prospectus, the Keyport Life Insurance Company owned 100%
of each Class of shares of the Fund and, therefore, may be deemed to "control"
the Fund.
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 Trust 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.
<PAGE>
APPENDIX
DESCRIPTION OF BOND RATINGS
S&P
AAA The highest rating assigned by S&P indicates an extremely strong capacity to
repay principal and interest.
AA bonds also qualify as high quality. Capacity to repay principal and pay
interest is very strong, and in the majority of instances, they differ from AAA
only in small degree.
A bonds have a strong capacity to repay principal and interest, although they
are somewhat more susceptible to the adverse effects of changes in circumstances
and economic conditions.
BBB bonds are regarded as having an adequate capacity to repay principal and
interest. Whereas they normally exhibit protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to repay principal and interest than for bonds in the A category.
BB, B, CCC and CC bonds are regarded, on balance, as predominantly speculative
with respect to capacity to pay interest and principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and CC
the highest degree. While likely to have some quality and protection
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C ratings are reserved for income bonds on which no interest is being paid.
D bonds are in default, and payment of interest and/or principal is in arrears.
Plus(+) or minus (-) are modifiers relative to the standing within the major
rating categories.
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 protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risk 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 and Baa1.
A bonds possess many of the 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, 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 over the future. Uncertainty of position characterizes these
bonds.
B bonds generally lack characteristics of the 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. They may be in default or there may be present
elements of danger with respect to principal or interest.
Ca bonds are speculative in a high degree, often in default or having other
marked shortcomings.
C bonds are the lowest rated class of bonds and can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
<PAGE>
Investment Adviser
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Distributor
Colonial Investment Services, Inc.
One Financial Center
Boston, MA 02111-2621
Custodian
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108-2624
Shareholder Services and Transfer Agent
Colonial Investors Service Center, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110-2624
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624
Your financial service firm is:
Printed in U.S.A.
September 30, 1996
COLONIAL EQUITY INCOME FUND
PROSPECTUS
Colonial Equity Income Fund seeks current income and long-term growth.
For more detailed information about the Fund, call the Adviser at 1-800-248-2828
for the September 30, 1996 Statement of Additional Information.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, ENDORSED OR
INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
<PAGE>
COLONIAL TRUST VI
Cross Reference Sheet (Colonial Aggressive Growth Fund)
Item Number of Form N-1A Location or Caption in Prospectus
Part A
1. Cover Page
2. Summary of Expenses
3. The Fund's Financial History
4. Organization and History; How the
Fund Pursues its Objective and
Certain Risk Factors; The Fund's
Investment Objective
5. Cover Page; How the Fund is
Managed;Organization and History;
The Fund's Investment Objective
6. Organization and History;
Distributions and Taxes; How to
Buy Shares
7. How to Buy Shares; How the Fund
Value its Shares; 12b-1 Plans;
Back Cover
8. How to Sell Shares; How to
Exchange Shares; Telephone
Transactions
9. Not Applicable
September 30, 1996
COLONIAL AGGRESSIVE GROWTH FUND
PROSPECTUS
BEFORE YOU INVEST
Colonial Management Associates, Inc. (Adviser) and your full-service financial
adviser 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 adviser to determine how investing in
this mutual fund may suit your unique needs, time horizon and risk tolerance.
Colonial Aggressive Growth Fund (Fund), a diversified portfolio of Colonial
Trust VI (Trust), an open-end management investment company, seeks capital
appreciation. The Fund is managed by the Adviser, an investment adviser since
1931.
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 September 30, 1996 Statement of Additional
Information which has been filed with the Securities and Exchange Commission and
is obtainable free of charge by calling the Adviser at 1-800-248-2828. The
Statement of Additional Information is incorporated by reference in (which means
it is considered to be a part of) this Prospectus.
AG-01/686C-0996
The Fund offers three 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, in addition, are subject to an annual
distribution fee and a declining contingent deferred sales charge on redemptions
made within six years after purchase; and Class D shares are offered at net
asset value plus a small initial sales charge and are subject to a contingent
deferred sales charge on redemptions made within one year after purchase and a
continuing distribution fee. Class B shares automatically convert to Class A
shares after approximately eight years. See "How to Buy Shares."
Contents Page
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
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
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, ENDORSED OR
INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES 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 Fund. The
following tables summarize your maximum transaction costs and your estimated
annual expenses for an investment in each Class of the Fund's shares. "Other
expenses" are based on estimated amounts for the current fiscal year. See "How
the Fund is Managed" and "12b-1 Plans" for more complete descriptions of the
Fund's various costs and expenses.
<TABLE>
Shareholder Transaction Expenses (1)(2)
<CAPTION>
<S> <C> <C> <C>
Class A Class B Class D
Maximum Initial Sales Charge Imposed on a Purchase
(as a % of offering price)(3) 5.75% 0.00%(5) 1.00%(5)
Maximum Contingent Deferred Sales Charge
(as a % of offering price)(3) 1.00%(4) 5.00% 1.00%
</TABLE>
(1) For accounts less than $1,000 an annual fee of $10 may be deducted. See
"How to Sell Shares."
(2) Redemption proceeds exceeding $5,000 sent via federal funds wire will be
subject to a $7.50 charge per transaction.
(3) Does not apply to reinvested distributions.
(4) 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."
(5) Because of the 0.75% distribution fee applicable to Class B and Class D
shares, long-term Class B and Class D 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
the Fund's 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.
<TABLE>
Annual Operating Expenses (as a % of average net assets)
<CAPTION>
Class A Class B Class D
<S> <C> <C> <C>
Management fee (after fee waiver) 0.00% 0.00% 0.00%
12b-1 fees 0.25 1.00 1.00
Other expenses (after fee waiver) 1.30 1.30 1.30
----- ---- ----
Total operating expenses 1.55% 2.30% 2.30%
===== ===== =====
</TABLE>
The Adviser has agreed, until further notice, to waive fees and bear certain
Fund expenses to the extent that "Total operating expenses" (exclusive of
service fees, distribution fees, brokerage commissions, interest, taxes and
extraordinary expenses, if any) exceed 1.30% annually of the Fund's average net
assets. Absent such agreement, the "Management fee" would be 0.85% for each
Class of shares, estimated "Other expenses" would be 2.35% for each Class of
shares and "Total operating expenses" would be 3.45% for Class A shares and
4.20% for each of Class B and Class D shares.
Example
The following Example shows the cumulative 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 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 D
Period: (6) (7) (6) (7)
<S> <C> <C> <C> <C> <C>
1 year $ 72 $ 73 $23 $43 $33
3 years 104 102 72 81 81(8)
</TABLE>
If the Adviser did not continue to waive or bear certain Fund expenses, the
amounts in the Example would be:
<TABLE>
<CAPTION>
Class A Class B Class D
Period: (6) (7) (6) (7)
<S> <C> <C> <C> <C> <C>
1 year $ 90 $ 92 $ 42 $ 62 $ 52
3 years 157 157 127 136 136(8)
</TABLE>
(6) Assumes redemption at period end.
(7) Assumes no redemption.
(8) Class D shares do not incur a contingent deferred sales charge on
redemptions made after one year.
THE FUND'S FINANCIAL HISTORY(b)
The following schedule of financial highlights for a share outstanding
throughout the period from March 31, 1996 (effective date of registration)
through June 30, 1996 has been audited by Price Waterhouse LLP, independent
accountants. Their unqualified report is included in the Fund's 1996 Annual
Report and is incorporated by reference into the Statement of Additional
Information.
<TABLE>
<CAPTION>
Period ended June 30
1996(c)
----------------------------------------------------------
Class A Class B Class D
<S> <C> <C> <C>
Net asset value - Beginning of period $10.110 $10.110 $10.110
-------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (a) (0.016) (0.036) (0.036)
Net realized and unrealized gain 1.206 1.206 1.206
------ ------ -----
Total from investment operations 1.190 1.170 1.170
------ ------ -----
Net asset value - End of period $11.300 $11.280 $11.280
======== ======== =======
Total return (d)(e) $11.770(f) $11.570(f) $11.570(f)
========== ========== ==========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.55(g)(h) 2.30(g)(h) 2.30%(g)(h)
Fees and expenses waived or borne by the Adviser 1.38(g)(h) 1.38(g)(h) 1.38%(g)(h)
Net investment loss (0.58)(g)(h) (1.33)(g)(h) (1.33%)(g)(h)
Portfolio turnover 0%(f) 0%(f) 0%(f)
Average commission rate $0.000 $0.000 $0.000
Net assets at end of period (000) $2,826 $282 $282
- ---------------------------------
(a) Net of fees and expenses waived or borne by the
Adviser which amounted to
$0.038 $0.038 $0.038
</TABLE>
(b) Per share data was calculated using average shares outstanding during
the period
(c) The fund commenced investment operations on March 25, 1996. The total
return is calculated based on on the effective date of registatation
(March 31, 1996) with the Securities and Exchange Commission.
(d) Total return at net asset value assuming all distributions reivested and
no initial sales charge or contingent deferred sales charge.
(e) Had the adviser not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) Annualized.
(h) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
Further performance information is contained in the Fund' Annual Report to
shareholders, which is obtainable free of charge by calling 1-800-248-2828.
THE FUND'S INVESTMENT OBJECTIVE
The Fund seeks capital appreciation.
HOW THE FUND PURSUES ITS OBJECTIVE AND CERTAIN RISK FACTORS
The Fund seeks to achieve its objective by investing principally in common
stocks and convertible preferred stocks. The Fund may also purchase bonds,
including convertible bonds, and other types of securities, as explained below.
In selecting investments, the Adviser uses a disciplined process intended to
create a diversified portfolio whose performance (before expenses) will exceed
that of the universe of capital appreciation funds while maintaining risk
characteristics that are generally consistent with that universe. However, there
is no assurance that the portfolio's performance will exceed (or its risk
characteristics will match) that of the capital appreciation fund universe, or
that the Fund will achieve its objective.
Equity Securities Generally. Equity securities generally include common and
preferred stock, warrants (rights) to purchase such stock, debt securities
convertible into stock, sponsored and unsponsored American Depository Receipts
(receipts issued in the U.S. by banks or trust companies evidencing ownership of
underlying foreign securities) and Global Depository Receipts (receipts issued
by foreign banks or trust companies). Equity securities also include shares
issued by investment companies that invest primarily in the foregoing
securities. Stocks represent shares of ownership in a company. Generally,
preferred stock has a specified dividend and ranks after debt securities and
before common stocks in its claim on income for dividend payments and on assets
should the issuer be liquidated. Debt or preferred equity securities convertible
into or exchangeable for equity securities traditionally pay dividends or
interest at rates higher than common stock but lower than non-convertible
securities. Warrants are options to buy a stated number of shares of common
stock at a specified price anytime during the life of the warrants. A reason for
investing in warrants is to permit the Fund to participate in an anticipated
increase in the market value of a security without having to purchase the
security to which the warrants relate. Warrants convey no rights to dividends or
voting rights, but only an option to purchase equity securities of the issuer at
a fixed price. If such securities appreciate, the warrants may be exercised and
the underlying security sold at a gain. A loss will be incurred if such
securities decrease in value and the warrant is sold. If the term of the warrant
expires before it is exercised, the Fund will loose its entire investment in the
warrant. The Fund may invest in equity securities on a "when-issued" or forward
basis. This means that the Fund will enter into a contract to purchase the
underlying security for a fixed price on a date beyond the customary settlement
date. No interest accrues until settlement.
Small and New Issuers. The Fund generally invests a significant portion of its
assets in the securities of smaller and newer issues. Small and medium-sized
companies (having stock market values between $20 million and $1 billion for
smaller-sized companies and $1 billion and $8 billion for medium-sized
companies) with a market niche or proprietary products have the potential to
grow rapidly. Such securities of companies may offer greater opportunities for
capital appreciation than the securities of larger, better established
companies, but may also involve certain special risks. Such companies often have
limited product lines, operating histories, markets or financial resources and
depend heavily on a small management group. Their securities may trade less
frequently, in smaller volumes, and fluctuate more sharply in value, than
exchange listed securities of larger companies.
Other Investment Companies. Up to 10% of the Fund's total assets may be invested
in other investment companies. Such investments will involve the payment of
duplicative fees through the indirect payment of a portion of the expenses,
including advisory fees, of such other investment companies.
Foreign Investments. Investments in foreign securities, sponsored and
unsponsored American Depository Receipts and Global Depository Receipts have
special risks related to political, economic and legal conditions outside of the
U.S. As a result, the prices of foreign securities may fluctuate substantially
more than the prices of securities of issuers based in the U.S. Special risks
associated with foreign securities include the possibility of unfavorable
movements in currency exchange rates, the existence of less liquid markets, the
unavailability of reliable information about issuers, the existence (or
potential imposition) of exchange control regulations (including currency
blockage) and political and economic instability, among others. In addition,
transactions in foreign securities may be more costly due to currency conversion
costs and higher brokerage and custodial costs. See "Foreign Securities" and
"Foreign Currency Transactions" in the Statement of Additional Information for
more information about foreign investments.
Private Placements. The Fund may purchase securities in private placements.
These are offerings directly to a small number of investors, usually
institutions. Unlike public offerings, such securities are not registered with
the Securities and Exchange Commission and although certain of these securities
may be readily sold to other institutional investors, others may be illiquid and
their sale may involve delays and additional costs. The Fund will not invest
more than 15% of its net assets in illiquid securities.
Foreign Currency Transactions. In connection with its investments in foreign
securities, the Fund may purchase and sell (i) foreign currencies on a spot or
forward basis, (ii) foreign currency futures contracts, and (iii) options on
foreign currencies and foreign currency futures. Such transactions will be
entered into (i) to lock in a particular foreign exchange rate pending
settlement of a purchase or sale of a foreign security or pending the receipt of
interest, principal or dividend payments on a foreign security held by the Fund,
or (ii) to hedge against a decline in the value, in U.S. dollars or in another
currency, of a foreign currency in which securities held by the Fund are
denominated. The Fund will not attempt, nor would it be able, to eliminate all
foreign currency risk. Further, although hedging may lessen the risk of loss if
the hedged currency's value declines, it limits the potential gain from currency
value increases. See the Statement of Additional Information for information
relating to the Fund's obligations in entering into such transactions.
Index and Interest Rate Futures; Options. The Fund may purchase and sell (i)
U.S. and foreign stock and bond index futures contracts, (ii) U.S. and foreign
interest rate futures contracts and (iii) options on any of the foregoing, all
of which may be considered to be derivative securities. Such transactions may be
entered into (i) to gain exposure to a particular market pending investment in
individual securities, or (ii) to hedge against increases in interest rates. The
Fund also may purchase and write options on individual securities. An index
futures contract is a contract to buy or sell units of an index at a specified
future date at a price agreed upon when the contract is made. A futures contract
creates an obligation by the seller to deliver and the buyer to take delivery of
a type of instrument at the time and in the amount specified in the contract. A
sale of a futures contract can be terminated in advance of the specified
delivery date by subsequently purchasing a similar contract; a purchase of a
futures contract can be terminated by a subsequent sale. Gain or loss on a
contract generally is realized upon such termination. An option generally gives
the option holder the right, but not the obligation, to purchase or sell the
underlying instrument prior to the option's specified expiration date. If the
option expires unexercised, the holder will lose any amount it paid to acquire
the option. Transactions in futures and related options may not precisely
achieve the goals of hedging or gaining market exposure to the extent there is
an imperfect correlation between the price movements of the contracts and of the
underlying index or securities. In addition, if the Adviser's prediction of
rates or stock market movements is inaccurate, the Fund may be worse off than if
it had not purchased or sold the futures contract or option. The total market
value of securities to be acquired or delivered pursuant to options contracts,
entered into by the Fund, will not exceed 5% of the Fund's total assets. In
addition, the Fund may not purchase or sell futures contracts or purchase
related options if immediately thereafter the sum of the amount of deposits for
initial margin or premiums on existing futures and related options positions
would exceed 5% of the Fund's total assets.
Temporary/Defensive Investments. Temporarily available cash may be invested in
U.S. or foreign currency denominated cash equivalents and short-term debt
obligations, including certificates of deposit, time deposits, bankers'
acceptances, commercial paper, Treasury bills and repurchase agreements. Some or
all of the Fund's assets also may be invested in such investments during periods
of unusual market conditions. Under a repurchase agreement, the Fund buys a
security from a bank or dealer, which is obligated to buy it back at a fixed
price and time. The security is held in a separate account at the Fund's
custodian, and constitutes the Fund's collateral for the bank's or dealer's
repurchase obligation. Additional collateral may be added so that the obligation
will at all times be fully collateralized. However, if the bank or dealer
defaults or enters bankruptcy, the Fund may experience costs and delays in
liquidating the collateral, and may experience a loss if it is unable to
demonstrate its rights to the collateral in a bankruptcy proceeding. Not more
than 15% of the Fund's net assets will be invested in repurchase agreements
maturing in more than 7 days and other illiquid assets.
Borrowing of Money. The Fund may borrow money from banks for temporary or
emergency purposes up to 10% of its net assets; however, the Fund will not
purchase additional portfolio securities (other than short-term securities)
while borrowings exceed 5% of net assets.
Leverage. The purchase of securities on a "when-issued" basis, the entering into
of forward commitments, the purchase and sale of futures and forward currency
contracts and the purchase and sale of certain options may present additional
risks associated with the use of leverage. Leverage may magnify the effect on
Fund share values of fluctuations in the values of the securities underlying
these transactions. In accordance with Securities and Exchange Commission
pronouncements, to reduce (but not necessarily eliminate) leverage, the Fund
will either "cover" its obligations under such transactions by holding the
securities (or rights to acquire the securities) it is obligated to deliver
under such transactions, or deposit and maintain in a segregated account with
its custodian cash or high quality liquid debt securities equal in value to the
Fund's obligations under such transactions.
Other. The Fund may not always achieve its investment objective. The Fund's
investment objective and non-fundamental policies may be changed without
shareholder approval. The Fund will notify investors at least 30 days prior to
any material change in the Fund's investment objective. If there is a change in
the investment objective, shareholders should consider whether the Fund remains
an appropriate investment in light of their financial position and needs.
Shareholders may incur a contingent deferred sales charge if shares are redeemed
in response to a change in investment objective. 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
Performance may be quoted in sales literature and advertisements. Each Class's
average annual total returns are calculated in accordance with the Securities
and Exchange Commission's formula and assume the reinvestment of all
distributions, the maximum initial sales charge of 5.75% on Class A shares, the
maximum initial sales charge of 1.00% on Class D shares and the contingent
deferred sales charge applicable to the time period quoted on Class B and Class
D shares. Other total returns differ from the 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 or
contingent deferred sales charges.
Each Class's yield, which differs from total return because it does not consider
changes in net asset value, is calculated in accordance with the Securities and
Exchange Commission's formula. Each Class's distribution rate is calculated by
dividing the most recent twelve months' distributions by the maximum offering
price of that Class at the end of the period. 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 FUND IS MANAGED
The Trustees formulate the Fund's general policies and oversee the Fund's
affairs as conducted by the Adviser.
The Adviser is a subsidiary of The Colonial Group, Inc. Colonial Investment
Services, Inc. (Distributor) is a subsidiary of the Adviser and serves as the
distributor for the Fund's shares. Colonial Investors Service Center, Inc.
(Transfer Agent), an affiliate of the Adviser, serves as the shareholder
services and transfer agent for the Fund. The Colonial Group, Inc. is a direct
subsidiary of Liberty Financial Companies, Inc. which in turn is an indirect
subsidiary of Liberty Mutual Insurance Company (Liberty Mutual). Liberty Mutual
is considered to be the controlling entity of the Adviser and its affiliates.
Liberty Mutual is an underwriter of workers' compensation insurance and a
property and casualty insurer in the U.S.
The Adviser furnishes the Fund with investment management, accounting and
administrative personnel and services, office space and other equipment and
services at the Adviser's expense. For these services, the Fund pays the Adviser
an annual rate of 0.85% of the Fund's average daily net assets.
James P. Haynie and Michael E. Rega, Vice Presidents of the Adviser, co-manage
the Fund. Mr. Haynie has managed various other Colonial equity funds since
1993. Prior to joining the Adviser in 1993, he was an equity portfolio manager
with Trinity Investments. Prior to 1995, Mr. Rega was a senior equity
research analyst with the Adviser and a project manager at the Massachusetts
Institute of Technology.
The Adviser also provides pricing and bookkeeping services to the Fund for a
monthly fee of $2,250 plus a percentage of the Fund's average net assets over
$50 million. The Transfer Agent provides transfer agency and shareholder
services to the Fund for a fee of 0.25% annually of average net assets plus
certain out-of-pocket expenses.
Each of the foregoing fees is subject to any reimbursement or fee waiver to
which the Adviser may agree.
The Adviser places all orders for the purchase and sale of portfolio securities.
In selecting broker-dealers, the Adviser may consider research and brokerage
services furnished to it and its affiliates. Subject to seeking best execution,
the Adviser may consider sales of shares of the Fund (and of certain other
Colonial funds) in selecting broker-dealers for portfolio security transactions.
Fund expenses consist of management, bookkeeping, shareholder service and
transfer agent fees discussed above, 12b-1 service and distribution fees
discussed under the caption "12b-1 Plans," and all other expenses, fees,
charges, taxes, organization costs and liabilities incurred or arising in
connection with the Fund or Trust or in connection with the management thereof,
including but not limited to Trustees' compensation and expenses and auditing,
counsel, custodian and other expenses deemed necessary and proper by the
Trustees.
HOW THE FUND VALUES 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
valued as of the close of 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 it is determined, pursuant to procedures adopted by the Trustees, that such
cost approximates market value. All other securities and assets are valued at
their fair value following procedures adopted by the Trustees.
DISTRIBUTIONS AND TAXES
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code and to distribute to shareholders virtually all net income
and any net realized gain, at least 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. To change your election, call the Transfer Agent for
information.
Whether you receive 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 will 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.
HOW TO BUY SHARES
Shares of the Fund are offered continuously. Orders received in good form prior
to the time (normally 4:00 p.m. Eastern time) at which the Fund values its
shares (or placed with a 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 Colonial Fundamatic program is
$50; and the minimum initial investment for a Colonial retirement account is
$25. Certificates will not be issued for Class B or Class D 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.
Class A Shares. Class A shares are offered at net asset value plus an initial
sales charge as follows:
Initial Sales Charge
Retained
by
Financial
Service
Firm
as % of as % of
Offering
Amount Offering Price
Amount Purchased Invested Price
Less than $50,000 6.10% 5.75% 5.00%
$50,000 to less than 4.71% 4.50% 3.75%
$100,000
$100,000 to less than 3.63% 3.50% 2.75%
$250,000
$250,000 to less than 2.56% 2.50% 2.00%
$500,000
$500,000 to less than 2.04% 2.00% 1.75%
$1,000,000
$1,000,000 or more 0.00% 0.00% 0.00%
On purchases of $1 million or more, the Distributor pays the financial service
firm a cumulative commission as follows:
Amount Purchased Commission
First $3,000,000 1.00%
Next $2,000,000 0.50%
Over $5,000,000 0.25%(1)
(1) Paid over 12 months but only to the extent the
shares remain outstanding.
Purchases of $1 million to $5 million are subject to a 1.00% contingent deferred
sales charge payable to the Distributor on redemptions within 18 months from the
first day of the month following the purchase. The contingent deferred sales
charge does not apply to the excess of any purchase over $5 million.
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:
Years Contingent Deferred
After Purchase Sales Charge
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%
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
4.00% on Class B share purchases.
Class D Shares. Class D shares are offered at net asset value plus a 1.00%
initial sales charge, subject to a 0.75% annual distribution fee and a 1.00%
contingent deferred sales charge on redemptions made within one year from the
first day of the month after purchase.
The Distributor pays financial service firms an initial commission of 1.85% on
purchases of Class D shares and an ongoing commission of 0.65% annually. 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 if the distribution fee paid by the Fund is reduced or eliminated
for any reason.
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 (including initial sales charges, if any) in the account,
reduced by prior redemptions on which a contingent deferred sales charge was
paid and any exempt redemptions). 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 invested immediately. Investors investing for a relatively
short period of time might consider Class D shares. Purchases of $250,000 or
more must be for Class A or Class D shares. Purchases of $500,000 or more must
be for Class A shares. Consult your financial service firm.
Financial service firms may receive different compensation rates for selling
different classes of shares. The Distributor may pay additional compensation to
financial service firms which have made or may make significant sales.
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
deducted.
Special Purchase Programs. The Fund allows certain investors or groups of
investors to purchase shares at a reduced, or without an, initial or contingent
deferred sales charge. These programs are described in the Statement of
Additional Information under "Programs for Reducing or Eliminating Sales
Charges" and "How to Sell Shares."
Shareholder Services. 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.
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 send proceeds as soon as the check has cleared (which may take up to
15 days).
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:
Colonial Investors Service Center, 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.
The Fund may deduct annual maintenance and processing fees (payable to the
Transfer Agent) in connection with certain retirement plan accounts. See
"Special Purchase Programs/Investor Services" in the Statement of Additional
Information for more information.
HOW TO EXCHANGE SHARES
Exchanges at net asset value may be made among the same class of shares of most
Colonial funds. Not all Colonial funds offer Class D shares. Shares will
continue to age without regard to the exchange for purposes of conversion and
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 1-800-248-2828 to receive a prospectus and an
exchange authorization form. 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.
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.
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 into which the original investment was made.
Class D Shares. Exchanges of Class D shares will not be 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.
TELEPHONE TRANSACTIONS
All shareholders and/or their financial advisers are automatically eligible to
exchange Fund shares and redeem up to $50,000 of Fund 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 redemption privileges for larger
amounts may be elected on the account application. Proceeds and confirmations of
telephone transactions will be mailed or sent to the address of record.
Telephone redemptions are not available on accounts with an address change in
the preceding 30 days. The Adviser, the Transfer Agent and the Fund will not be
liable when following telephone instructions reasonably believed to be genuine,
and a shareholder may suffer a loss from unauthorized transactions. 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 transactions in the event reasonable procedures are not employed.
All telephone transactions are recorded. Shareholders and/or their financial
advisers are required to provide their name, address and account number.
Financial advisers are also required to provide their broker number.
Shareholders and/or their financial advisers 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 advisers should follow the
procedures for redemption or exchange by mail as described above under "How to
Sell Shares." The Adviser, 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 advisers are not obligated to transact by telephone.
12B-1 PLANS
Under 12b-1 Plans, the Fund pays the Distributor an annual service fee of 0.25%
of the Fund's average net assets attributed to each Class of shares. The Fund
also pays the Distributor an annual distribution fee of 0.75% of the average net
assets attributed to its Class B and Class D shares. Because the Class B and
Class D shares bear the additional distribution fee, 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 D 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 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.
ORGANIZATION AND HISTORY
The Trust is a Massachusetts business trust organized in 1991. The Fund
commenced operations in 1996 as a separate portfolio of the Trust.
As of the date of this Prospectus,, Keyport Life Insurance Company owned 100% of
each Class of shares of the Fund and, therefore, may be deemed to "control" the
Fund.
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 Trust 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.
<PAGE>
Investment Adviser
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Distributor
Colonial Investment Services, Inc.
One Financial Center
Boston, MA 02111-2621
Custodian
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108-2624
Shareholder Services and Transfer Agent
Colonial Investors Service Center, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110-2624
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624
Your financial service firm is:
Printed in U.S.A.
September 30, 1996
COLONIAL AGGRESSIVE GROWTH FUND
PROSPECTUS
Colonial Aggressive Growth Fund seeks capital appreciation.
For more detailed information about the Fund, call the Adviser at 1-800-248-2828
for the September 30, 1996 Statement of Additional Information.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, ENDORSED OR
INSURED BY, ANY BANK OR GOVERNMENT AGENCY.
<PAGE>
Part A of Post-Effective Amendment No. 7 as it relates to the Prospectus of
Colonial U.S. Fund for Growth and the Class Z Prospectus of Colonial Small Stock
Fund, filed with the Commission on October 11, 1995, is incorporated herein by
reference.
Part A of Post-Effective Amendment No. 8 as it relates to the Class A, B and D
share Prospectus of Colonial Small Stock Fund, filed with the Commission on
November 3, 1995, is incorporated herein by reference.
<PAGE>
COLONIAL TRUST VI
Cross Reference Sheet (Colonial International Equity Fund)
Item Number of Form N-1A Location or Caption in the Statement of
Additional Information
Part B
10. Cover Page
11. Table of Contents
12. Not Applicable
13. Investment Objective and Policies;
Fundamental Investment Policies; Other
Investment Policies; Portfolio
Turnover; Miscellaneous Investment
Practices
14. Fund Charges and Expenses;
Management of the Colonial Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses; Management
of the Colonial Funds
17. Fund Charges and Expenses; Management
of the Colonial Funds
18. Shareholder Meetings
19. How to Buy Shares; Determination of Net
Asset Value; Suspension of Redemptions;
Special Purchase Programs/Investor
Services; Programs For Reducing or
Eliminating Sales Charges; How to Sell
Shares; How to Exchange Shares
20. Taxes
21. Fund Charges and Expenses; Management
of the Colonial Funds
22. Fund Charges and Expenses; Investment
Performance; Performance Measures
23. Independent Accountants
COLONIAL INTERNATIONAL EQUITY FUND
Statement of Additional Information
September 30, 1996
This Statement of Additional Information (SAI) contains information which may be
useful to investors but which is not included in the Prospectus of Colonial
International Equity Fund (Fund). This SAI is not a prospectus and is authorized
for distribution only when accompanied or preceded by the Prospectus of the Fund
dated September 30, 1996. This SAI should be read together with the Prospectus.
Investors may obtain a free copy of the Prospectus from Colonial Investment
Services, Inc., One Financial Center, Boston, MA 02111-2621.
Part 1 of this SAI contains specific information about the Fund. Part 2 includes
information about the Colonial funds generally and additional information about
certain securities and investment techniques described in the Fund's prospectus.
TABLE OF CONTENTS
Part 1 Page
Definitions
Investment Objective and Policies
Fundamental Investment Policies
Other Investment Policies
Portfolio Turnover
Fund Charges and Expenses
Investment Performance
Custodian
Independent Accountants
Part 2
Miscellaneous Investment Practices
Taxes
Management of the Colonial Funds
Determination of Net Asset Value
How to Buy Shares
Special Purchase Programs/Investor Services
Programs for Reducing or Eliminating Sales Charges
How to Sell Shares
Distributions
How to Exchange Shares
Suspension of Redemptions
Shareholder Liability
Shareholder Meetings
Performance Measures
Appendix I
Appendix II
IE-16/685C-0996
<PAGE>
COLONIAL INTERNATIONAL EQUITY FUND
Statement of Additional Information
September 30, 1996
DEFINITIONS
"Fund" Colonial International Equity Fund
"Trust" Colonial Trust VI
"Adviser" Colonial Management Associates, Inc., the Fund's
investment adviser
"CISI" Colonial Investment Services, Inc., the Fund's
distributor
"CISC" Colonial Investors Service Center, Inc., the
Fund's shareholder services and transfer agent
INVESTMENT OBJECTIVES AND POLICIES
The Fund's Prospectus describes its investment objective and policies. Part 1 of
this SAI includes additional information concerning, among other things, the
fundamental investment policies of the Fund. Part 2 contains additional
information about the following securities and investment techniques that are
described or referred to in the Prospectus:
Small Companies
Foreign Securities
Money Market Instruments
Repurchase Agreements
Futures Contracts and Related Options
Foreign Currency Transactions
Except as described below under "Fundamental Investment Policies," the Fund's
investment policies are not fundamental, and the Trustees may change the
policies without shareholder approval.
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (Act) provides that a "vote of a majority of
the outstanding voting securities" means the affirmative vote of the lesser of
(1) more than 50% of the outstanding shares of the Fund, or (2) 67% or more of
the shares present at a meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy. The following fundamental
investment policies can not be changed without such a vote.
Total assets and net assets are determined at current value for purposes of
compliance with investment restrictions and policies. All percentage limitations
will apply at the time of investment and are not violated unless an excess or
deficiency occurs as a result of such investment. For the purpose of the Act's
diversification requirement, an issuer is the entity whose revenues support the
security.
The Fund may:
1. Issue senior securities only through borrowing money from banks for
temporary or emergency purposes up to 10% of its net assets; however, the
Fund will not purchase additional portfolio securities (other than
short-term securities) while borrowings exceed 5% of net assets;
2. Only own real estate acquired as the result of owning securities and not
more than 5% of total assets;
3. Purchase and sell futures contracts and related options so long as the
total initial margin and premiums on the contracts do not exceed 5% of its
total assets;
4. Underwrite securities issued by others only when disposing of portfolio
securities;
5. Make loans through lending of securities not exceeding 30% of total
assets, through the purchase of debt instruments or similar evidences of
indebtedness typically sold privately to financial institutions and
through repurchase agreements; and
6. Not concentrate more than 25% of its total assets in any one industry or,
with respect to 75% of total assets, purchase any security (other than
obligations of the U.S. government and cash items including receivables)
if as a result more than 5% of its total assets would then be invested in
securities of a single issuer or purchase the voting securities of an
issuer if, as a result of such purchases, the Fund would own more than 10%
of the outstanding voting shares of such issuer.
OTHER INVESTMENT POLICIES
As non-fundamental investment policies which may be changed without a
shareholder vote, the Fund may not:
1. Purchase securities on margin, but it may receive short-term credit to
clear securities transactions and may make initial or maintenance margin
deposits in connection with futures transactions;
2. Have a short securities position, unless the Fund owns, or owns rights
(exercisable without payment) to acquire, an equal amount of such
securities;
3. Own securities of any company if the Trust knows that officers and
Trustees of the Trust or officers and directors of the Adviser who
individually own more than 0.5% of such securities together own more
than 5% of such securities;
4. Invest in interests in oil, gas or other mineral exploration or
development programs, including leases;
5. Purchase any security resulting in the Fund having more than 5% of its
total assets invested in securities of companies (including
predecessors) less than three years old;
6. Pledge more than 33% of its total assets;
7. Purchase any security if, as a result of such purchase, more than 10% of
its total assets would be invested in securities which are restricted as
to disposition;
8. Invest more than 15% of its net assets in illiquid assets;
9. Purchase or sell real estate (including limited partnership interests)
although it may purchase and sell (a) securities which are secured by
real estate and (b) securities of companies which invest or deal in real
estate; provided, however, that nothing in this restriction shall limit
the Fund's ability to acquire or take possession of or sell real estate
which it has obtained as a result of enforcement of its rights and
remedies in connection with securities it is otherwise permitted to
acquire; and
10. Invest in warrants if, immediately after giving effect to any such
investment, the Fund's aggregate investment in warrants, valued at the
lower of cost or market, would exceed 5% of the value of the Fund's net
assets. Included within that amount, but not to exceed 2% of the value
of the Fund's net assets, may be warrants which are not listed on the
New York Stock Exchange or the American Stock Exchange. Warrants
acquired by the Fund in units or attached to securities will be deemed
to be without value.
PORTFOLIO TURNOVER
Period March 31, 1996
(effective date of registration)
through June 30, 1996
4%
FUND CHARGES AND EXPENSES
Under the Fund's management agreement, the Fund pays the Adviser a monthly fee
based on the average daily net assets of the Fund at the annual rate of 0.95%
subject to any voluntary reduction that the Adviser may agree to from time to
time.
Recent Fees paid to the Adviser, CISI and CISC (dollars in thousands)
(before voluntary reductions)(a)
Period March 31, 1996
(effective date of registration)
through June 30, 1996
Management fee $36
Bookkeeping fee 7
Shareholder service and transfer agent fee 10
12b-1 fees:
Service fee 10
Distribution Fee (Class B) (b)
Distribution Fee (Class D) (b)
(a) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
(b) Rounds to less than one.
Brokerage Commissions (dollars in thousands)
Period March 31, 1996
(effective date of registration)
through June 30, 1996
Total commissions $ 26
Directed transactions (c) 0
Commissions on directed transactions 0
(c) See "Management of the Colonial Funds - Portfolio Transactions - Brokerage
and research services" in Part 2 of this SAI.
Trustees Fees
For the period ended June 30, 1996, and the calendar year ended December 31,
1995, the Trustees received the following compensation for serving as Trustees:
Aggregate
Compensation Total Compensation From Trust
From Fund For The and Fund Complex Paid To The
Period Ended Trustees For The Calendar
Trustee June 30, 1996 Year Ended December 31, 1995
- ------- ------------- -----------------------
Robert J. Birnbaum(e) $0 $ 71,250
Tom Bleasdale 0 98,000 (f)
Lora S. Collins 0 91,000
James E. Grinnell(e) 0 71,250
William D. Ireland, Jr. 0 113,000
Richard W. Lowry(e) 0 71,250
William E. Mayer 0 91,000
James L. Moody, Jr. 0 94,500 (g)
John J. Neuhauser 0 91,000
George L. Shinn 0 102,500
Robert L. Sullivan 0 101,000
Sinclair Weeks, Jr. 0 112,000
(d) At December 31, 1995, the Colonial Funds complex consisted of 33
open-end and 5 closed-end management investment company portfolios.
(e) Elected as a Trustee of the Colonial Funds complex on April 21, 1995.
(f) Includes $49,000 payable in later years as deferred compensation.
(g) Total compensation of $94,500 for the calendar year ended December
31, 1995 will be payable in later years as deferred compensation.
The following table sets forth the amount of compensation paid to Messrs.
Birnbaum, Grinnell and Lowry in their capacities as Trustees or Directors of the
Liberty All-Star Equity Fund and Liberty All-Star Growth Fund, Inc. (formerly
known as The Charles Allmon Trust, Inc.) (together, Liberty Funds) for service
during the calendar year ended December 31, 1995, and of Liberty Financial Trust
(now known as Colonial Trust VII) and LFC Utilities Trust (together, Liberty
Funds II) for the period January 1, 1995 through March 26, 1995 (h):
Total Compensation Total Compensation
From Liberty Funds I For From Liberty Funds For
The Period January 1, 1995 The Calendar Year Ended
Trustee through March 26, 1995 December 31, 1995 (i)
- ------- ---------------------- ---------------------
Robert J. Birnbaum $2,900 $16,675
James E. Grinnell 2,900 22,900
Richard W. Lowry 2,900 26,250 (j)
(h) On March 27, 1995, four of the portfolios in the Liberty Financial
Trust (now known as Colonial Trust VII) were merged into existing
Colonial funds and a fifth was reorganized into a new portfolio of
Colonial Trust III. Prior to their election as Trustees of the Colonial
Funds, Messrs. Birnbaum, Grinnell and Lowry served as Trustees of
Liberty Funds II; they continue to serve as Trustees or Directors of
Liberty Funds I.
(i) At December 31, 1995, the Liberty Funds were advised by Liberty Asset
Management Company (LAMCO). LAMCO is an indirect wholly-owned
subsidiary of Liberty Financial Companies, Inc.(an intermediate parent
of the Adviser).
(j) Includes $3,500 paid to Mr. Lowry for service as Trustee of Liberty
Newport World Portfolio (formerly known as Liberty All-Star World
Portfolio) (Liberty Newport) during the calendar year ended December
31, 1995. At December 31, 1995, Liberty Newport was managed by Newport
Pacific Management, Inc. and Stein Roe & Farnham Incorporated, each an
affiliate of the Adviser.
Ownership of the Fund
At August 30, 1996, the Adviser owned 100% of each Class of shares of the Fund
and, therefore, may be deemed to "control" the Fund.
<TABLE>
Sales Charges (dollars in thousands)
<CAPTION>
Class A Shares
Period March 31, 1996
(effective date of registration)
through June 30, 1996
<S> <C>
Aggregate initial sales charges on Fund share sales $0
Initial sales charges retained by CISI 0
</TABLE>
<TABLE>
<CAPTION>
Class B Shares
Period March 31, 1996
(effective date of registration)
through June 30, 1996
<S> <C>
Aggregate contingent deferred sales charges (CDSC)
on Fund redemptions retained by CISI $0
</TABLE>
<TABLE>
<CAPTION>
Class D Shares
Period March 31, 1996
(effective date of registration)
through June 30, 1996
<S> <C>
Aggregate CDSC on Fund redemptions retained by CISI $0
</TABLE>
12b-1 Plans, CDSC and Conversion of Shares
The Fund offers three classes of shares - Class A, Class B and Class D. The Fund
may in the future offer other classes of shares. The Trustees have approved
12b-1 Plans (Plans) pursuant to Rule 12b-1 under the Act. Under the Plans, the
Fund pays CISI a service fee at an annual rate of 0.25% of average net assets
attributed to each Class of shares and a distribution fee at an annual rate of
0.75% of average net assets attributed to Class B and Class D shares . CISI may
use the entire amount of such fees to defray the costs of commissions and
service fees paid to financial service firms (FSFs) and for certain other
purposes. Since the distribution and service fees are payable regardless of the
amount of CISI's expenses, CISI may realize a profit from the fees.
The Plans authorize any other payments by the Fund to CISI and its affiliates
(including the Adviser) to the extent that such payments might be construed to
be indirectly financing the distribution of Fund shares.
The Trustees believe the Plans could be a significant factor in the growth and
retention of Fund assets resulting in a more advantageous expense ratio and
increased investment flexibility which could benefit each class of Fund
shareholders. The Plans will continue in effect from year to year so long as
continuance is specifically approved at least annually by a vote of the
Trustees, including the Trustees who are not interested persons of the Trust and
have no direct or indirect financial interest in the operation of the Plans or
in any agreements related to the Plans (independent Trustees), cast in person at
a meeting called for the purpose of voting on the Plans. The Plans may not be
amended to increase the fee materially without approval by vote of a majority of
the outstanding voting securities of the relevant class of shares and all
material amendments of the Plans must be approved by the Trustees in the manner
provided in the foregoing sentence. The Plans may be terminated at any time by
vote of a majority of the independent Trustees or by vote of a majority of the
outstanding voting securities of the relevant class of shares. The continuance
of the Plans will only be effective if the selection and nomination of the
Trustees who are non-interested Trustees is effected by such non-interested
Trustees.
Class A shares are offered at net asset value plus varying sales charges which
may include a CDSC. Class B shares are offered at net asset value and are
subject to a CDSC if redeemed within six years after purchase. Class D shares
are offered at net asset value plus a 1.00% initial sales charge and are subject
to a 1.00% CDSC on redemptions within one year after purchase. The CDSCs are
described in the Prospectus.
No CDSC will be imposed on shares derived from reinvestment of distributions on
or amounts representing capital appreciation. In determining the applicability
and rate of any CDSC, it will be assumed that a redemption is made first of
shares representing capital appreciation, next of shares representing
reinvestment of distributions and finally of other shares held by the
shareholder for the longest period of time.
Eight years after the end of the month in which a Class B share is purchased,
such share and a pro rata portion of any shares issued on the reinvestment of
distributions will be automatically converted into Class A shares having an
equal value.
Sales related expenses (dollars in thousands) of CISI relating to the Fund for
the period March 31, 1996 (effective date of registration) through June 30, 1996
were:
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class D Shares
<S> <C> <C> <C>
Fees to FSFs $0 $0 $0
Cost of sales material relating to the Fund
(including printing and mailing expenses) 0 0 0
Allocated travel, entertainment and other
promotional expenses (including advertising) 0 0 0
</TABLE>
INVESTMENT PERFORMANCE
The Fund's yields for the month ended June 30, 1996 were:
Yield Adjusted Yield
Class A: 0.78% 0.58%
Class B: 0.08% (0.13)%
----- -------
Class D: 0.08% (0.13)%
----- -------
The Fund's total returns at June 30, 1996 were:
Class A Shares
Period March 31, 1996
(effective date of registration)
through June 30, 1996
With sales charge of 5.75% (2.24)%
Without sales charge 3.73%
Class B Shares
Period March 31, 1996
(effective date of registration)
through June 30, 1996
With applicable CDSC (1.48)% (5.00% CDSC)
Without CDSC 3.52%
Class D Shares
Period March 31, 1996
(effective date of registration)
through June 30, 1996
With applicable CDSC 1.49%(1.00% CDSC)
Without CDSC 3.52%
The Fund's Class A, Class B and Class D distributions rates at June 30, 1996,
based on the most recent twelve months' distributions, and the maximum offering
price at the end of the twelve month period, were 0%, 0% and 0%, respectively.
See Part 2 of this SAI, "Performance Measures," for how calculations are made.
CUSTODIAN
Boston Safe Deposit and Trust Company is the Fund's custodian. The custodian is
responsible for safeguarding the Fund's cash and securities, receiving and
delivering securities and collecting the Fund's interest and dividends.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP are the Fund's independent accountants providing audit and
tax return preparation services and assistance and consultation in connection
with the review of various Securities and Exchange Commission filings. The
financial statements incorporated by reference in this SAI have been so
incorporated and the financial highlights included in the Prospectus have been
so included, in reliance upon the report of Price Waterhouse LLP given on the
authority of said firm as experts in accounting and auditing.
The financial statements and Report of Independent Accountants appearing in the
June 30, 1996 Annual Report, are incorporated in this SAI by reference.
STATEMENT OF ADDITIONAL INFORMATION
PART 2
The following information applies generally to most Colonial funds. "Colonial
funds" or "funds" include each series of Colonial Trust I, Colonial Trust II,
Colonial Trust III, Colonial Trust IV, Colonial Trust V, Colonial Trust VI and
Colonial Trust VII. In certain cases, the discussion applies to some but not all
of the Colonial funds, and you should refer to your Fund's Prospectus and to
Part 1 of this SAI to determine whether the matter is applicable to your Fund.
You will also be referred to Part 1 for certain data applicable to your Fund.
MISCELLANEOUS INVESTMENT PRACTICES
Part 1 of this Statement lists on page b which of the following investment
practices are available to your Fund. If an investment practice is not listed in
Part 1 of this SAI, it is not applicable to your Fund.
Short-Term Trading
In seeking the fund's investment objective, the Adviser will buy or sell
portfolio securities whenever it believes it is appropriate. The Adviser's
decision will not generally be influenced by how long the fund may have owned
the security. From time to time the fund will buy securities intending to seek
short-term trading profits. A change in the securities held by the fund is known
as "portfolio turnover" and generally involves some expense to the fund. These
expenses may include brokerage commissions or dealer mark-ups and other
transaction costs on both the sale of securities and the reinvestment of the
proceeds in other securities. If sales of portfolio securities cause the fund to
realize net short-term capital gains, such gains will be taxable as ordinary
income. As a result of the fund's investment policies, under certain market
conditions the fund's portfolio turnover rate may be higher than that of other
mutual funds. The fund's portfolio turnover rate for a fiscal year is the ratio
of the lesser of purchases or sales of portfolio securities to the monthly
average of the value of portfolio securities, excluding securities whose
maturities at acquisition were one year or less. The fund's portfolio turnover
rate is not a limiting factor when the Adviser considers a change in the fund's
portfolio.
Lower Rated Bonds
Lower rated bonds are those rated lower than Baa by Moody's, BBB by S&P, or
comparable unrated securities. Relative to comparable securities of higher
quality:
1. the market price is likely to be more volatile because:
a. an economic downturn or increased interest rates may have a more
significant effect on the yield, price and potential for default;
b. the secondary market may at times become less liquid or respond to
adverse publicity or investor perceptions,increasing the difficulty
in valuing or disposing of the bonds;
c. existing legislation limits and future legislation may further
limit (i) investment by certain institution or (ii) tax
deductibility of the interest by the issuer, which may adversely
affect value; and
d. certain lower rated bonds do not pay interest in cash on a current
basis. However, the fund will accrue and distribute this interest
on a current basis, and may have to sell securities to generate
cash for distributions.
2. the fund's achievement of its investment objective is more
dependent on the Adviser's credit analysis.
3. lower rated bonds are less sensitive to interest rate changes, but
are more sensitive to adverse economic developments.
Small Companies
Smaller, less well established companies may offer greater opportunities for
capital appreciation than larger, better established companies, but may also
involve certain special risks related to limited product lines, markets, or
financial resources and dependence on a small management group. Their securities
may trade less frequently, in smaller volumes, and fluctuate more sharply in
value than securities of larger companies.
Foreign Securities
The fund may invest in securities traded in markets outside the United States.
Foreign investments can be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S. company, and
foreign companies may not be subject to accounting, auditing and financial
reporting standards comparable to those applicable to U.S. companies. Securities
of some foreign companies are less liquid or more volatile than securities of
U.S. companies, and foreign brokerage commissions and custodian fees may be
higher than in the United States. Investments in foreign securities can involve
other risks different from those affecting U.S. investments, including local
political or economic developments, expropriation or nationalization of assets
and imposition of withholding taxes on dividend or interest payments. Foreign
securities, like other assets of the fund, will be held by the fund's custodian
or by a subcustodian or depository. See also "Foreign Currency Transactions"
below.
The fund may invest in certain Passive Foreign Investment Companies (PFICs)
which may be subject to U.S. federal income tax on a portion of any "excess
distribution" or gain (PFIC tax) related to the investment. The PFIC tax is the
highest ordinary income rate, and it could be increased by an interest charge on
the deemed tax deferral.
The fund may possibly elect to include in its income its pro rata share of the
ordinary earnings and net capital gain of PFICs. This election requires certain
annual information from the PFICs which in many cases may be difficult to
obtain. An alternative election would permit the fund to recognize as income any
appreciation (but not depreciation) on its holdings of PFICs as of the end of
its fiscal year.
Zero Coupon Securities (Zeros)
The fund may invest in debt securities which do not pay interest, but instead
are issued at a deep discount from par. The value of the security increases over
time to reflect the interest accrued. The value of these securities may
fluctuate more than similar securities which are issued at par and pay interest
periodically. Although these securities pay no interest to holders prior to
maturity, interest on these securities is reported as income to the fund and
distributed to its shareholders. These distributions must be made from the
fund's cash assets or, if necessary, from the proceeds of sales of portfolio
securities. The fund will not be able to purchase additional income producing
securities with cash used to make such distributions and its current income
ultimately may be reduced as a result.
Step Coupon Bonds (Steps)
The fund may invest in debt securities which do not pay interest for a stated
period of time and then pay interest at a series of different rates for a series
of periods. In addition to the risks associated with the credit rating of the
issuers, these securities are subject to the volatility risk of zero coupon
bonds for the period when no interest is paid.
Tender Option Bonds
A tender option bond is a Municipal Security (generally held pursuant to a
custodial arrangement) having a relatively long maturity and bearing interest at
a fixed rate substantially higher than prevailing short-term tax-exempt rates,
that has been coupled with the agreement of a third party, such as a bank,
broker-dealer or other financial institution, pursuant to which such institution
grants the security holders the option, at periodic intervals, to tender their
securities to the institution and receive the face value thereof. As
consideration for providing the option, the financial institution receives
periodic fees equal to the difference between the Municipal Security's fixed
coupon rate and the rate, as determined by a remarketing or similar agent at or
near the commencement of such period, that would cause the securities, coupled
with the tender option, to trade at par on the date of such determination. Thus,
after payment of this fee, the security holder effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt rate. The
Adviser will consider on an ongoing basis the creditworthiness of the issuer of
the underlying Municipal Securities, of any custodian, and of the thrid-party
provider of the tender option. In certain instances and for certain tender
option bonds, the option may be terminable in the event of a default in payment
of principal or interest on the underlying Municipal Securities and for other
reasons.
Pay-In-Kind (PIK) Securities
The fund may invest in securities which pay interest either in cash or
additional securities at the issuer's option. These securities are generally
high yield securities and in addition to the other risks associated with
investing in high yield securities are subject to the risks that the interest
payments which consist of additional securities are also subject to the risks of
high yield securities.
Money Market Instruments
Government obligations are issued by the U.S. or foreign governments, their
subdivisions, agencies and instrumentalities. Supranational obligations are
issued by supranational entities and are generally designed to promote economic
improvements. Certificates of deposits are issued against deposits in a
commercial bank with a defined return and maturity. Banker's acceptances are
used to finance the import, export or storage of goods and are "accepted" when
guaranteed at maturity by a bank. Commercial paper is promissory notes issued by
businesses to finance short-term needs (including those with floating or
variable interest rates, or including a frequent interval put feature).
Short-term corporate obligations are bonds and notes (with one year or less to
maturity at the time of purchase) issued by businesses to finance long-term
needs. Participation Interests include the underlying securities and any related
guaranty, letter of credit, or collateralization arrangement which the fund
would be allowed to invest in directly.
Securities Loans
The fund may make secured loans of its portfolio securities amounting to not
more than the percentage of its total assets specified in Part 1 of this SAI,
thereby realizing additional income. The risks in lending portfolio securities,
as with other extensions of credit, consist of possible delay in recovery of the
securities or possible loss of rights in the collateral should the borrower fail
financially. As a matter of policy, securities loans are made to banks and
broker-dealers pursuant to agreements requiring that loans be continuously
secured by collateral in cash or short-term debt obligations at least equal at
all times to the value of the securities on loan. The borrower pays to the fund
an amount equal to any dividends or interest received on securities lent. The
fund retains all or a portion of the interest received on investment of the cash
collateral or receives a fee from the borrower. Although voting rights, or
rights to consent, with respect to the loaned securities pass to the borrower,
the fund retains the right to call the loans at any time on reasonable notice,
and it will do so in order that the securities may be voted by the fund if the
holders of such securities are asked to vote upon or consent to matters
materially affecting the investment. The fund may also call such loans in order
to sell the securities involved.
Forward Commitments
The fund may enter into contracts to purchase securities for a fixed price at a
future date beyond customary settlement time ("forward commitments" and "when
issued securities") if the fund holds until the settlement date, in a segregated
account, cash or high-grade debt obligations in an amount sufficient to meet the
purchase price, or if the fund enters into offsetting contracts for the forward
sale of other securities it owns. Forward commitments may be considered
securities in themselves, and involve a risk of loss if the value of the
security to be purchased declines prior to the settlement date. Where such
purchases are made through dealers, the fund relies on the dealer to consummate
the sale. The dealer's failure to do so may result in the loss to the fund of an
advantageous yield or price. Although the fund will generally enter into forward
commitments with the intention of acquiring securities for its portfolio or for
delivery pursuant to options contracts it has entered into, the fund may dispose
of a commitment prior to settlement if the Adviser deems it appropriate to do
so. The fund may realize short-term profits or losses upon the sale of forward
commitments.
Mortgage Dollar Rolls
In a mortgage dollar roll, the fund sells a mortgage-backed security and
simultaneously enters into a commitment to purchase a similar security at a
later date. The fund either will be paid a fee by the counterparty upon entering
into the transaction or will be entitled to purchase the similar security at a
discount. As with any forward commitment, mortgage dollar rolls involve the risk
that the counterparty will fail to deliver the new security on the settlement
date, which may deprive the fund of obtaining a beneficial investment. In
addition, the security to be delivered in the future may turn out to be inferior
to the security sold upon entering into the transaction. Also, the transaction
costs may exceed the return earned by the fund from the transaction.
Repurchase Agreements
The fund may enter into repurchase agreements. A repurchase agreement is a
contract under which the fund acquires a security for a relatively short period
(usually not more than one week) subject to the obligation of the seller to
repurchase and the fund to resell such security at a fixed time and price
(representing the fund's cost plus interest). It is the fund's present intention
to enter into repurchase agreements only with commercial banks and registered
broker-dealers and only with respect to obligations of the U.S. government or
its agencies or instrumentalities. Repurchase agreements may also be viewed as
loans made by the fund which are collateralized by the securities subject to
repurchase. The Adviser will monitor such transactions to determine that the
value of the underlying securities is at least equal at all times to the total
amount of the repurchase obligation, including the interest factor. If the
seller defaults, the fund could realize a loss on the sale of the underlying
security to the extent that the proceeds of sale including accrued interest are
less than the resale price provided in the agreement including interest. In
addition, if the seller should be involved in bankruptcy or insolvency
proceedings, the fund may incur delay and costs in selling the underlying
security or may suffer a loss of principal and interest if the fund is treated
as an unsecured creditor and required to return the underlying collateral to the
seller's estate.
Reverse Repurchase Agreements
In a reverse repurchase agreement, the fund sells a security and agrees to
repurchase the same security at a mutually agreed upon date and price. A reverse
repurchase agreement may also be viewed as the borrowing of money by the fund
and, therefore, as a form of leverage. The fund will invest the proceeds of
borrowings under reverse repurchase agreements. In addition, the fund will enter
into a reverse repurchase agreement only when the interest income expected to be
earned from the investment of the proceeds is greater than the interest expense
of the transaction. The fund will not invest the proceeds of a reverse
repurchase agreement for a period which exceeds the duration of the reverse
repurchase agreement. The fund may not enter into reverse repurchase agreements
exceeding in the aggregate one-third of the market value of its total assets,
less liabilities other than the obligations created by reverse repurchase
agreements. Each fund will establish and maintain with its custodian a separate
account with a segregated portfolio of securities in an amount at least equal to
its purchase obligations under its reverse repurchase agreements. If interest
rates rise during the term of a reverse repurchase agreement, entering into the
reverse repurchase agreement may have a negative impact on a money market fund's
ability to maintain a net asset value of $1.00 per share.
Options on Securities
Writing covered options. The fund may write covered call options and covered put
options on securities held in its portfolio when, in the opinion of the Adviser,
such transactions are consistent with the fund's investment objective and
policies. Call options written by the fund give the purchaser the right to buy
the underlying securities from the fund at a stated exercise price; put options
give the purchaser the right to sell the underlying securities to the fund at a
stated price.
The fund may write only covered options, which means that, so long as the fund
is obligated as the writer of a call option, it will own the underlying
securities subject to the option (or comparable securities satisfying the cover
requirements of securities exchanges). In the case of put options, the fund will
hold cash and/or high-grade short-term debt obligations equal to the price to be
paid if the option is exercised. In addition, the fund will be considered to
have covered a put or call option if and to the extent that it holds an option
that offsets some or all of the risk of the option it has written. The fund may
write combinations of covered puts and calls on the same underlying security.
The fund will receive a premium from writing a put or call option, which
increases the fund's return on the underlying security if the option expires
unexercised or is closed out at a profit. The amount of the premium reflects,
among other things, the relationship between the exercise price and the current
market value of the underlying security, the volatility of the underlying
security, the amount of time remaining until expiration, current interest rates,
and the effect of supply and demand in the options market and in the market for
the underlying security. By writing a call option, the fund limits its
opportunity to profit from any increase in the market value of the underlying
security above the exercise price of the option but continues to bear the risk
of a decline in the value of the underlying security. By writing a put option,
the fund assumes the risk that it may be required to purchase the underlying
security for an exercise price higher than its then-current market value,
resulting in a potential capital loss unless the security subsequently
appreciates in value.
The fund may terminate an option that it has written prior to its expiration by
entering into a closing purchase transaction in which it purchases an offsetting
option. The fund realizes a profit or loss from a closing transaction if the
cost of the transaction (option premium plus transaction costs) is less or more
than the premium received from writing the option. Because increases in the
market price of a call option generally reflect increases in the market price of
the security underlying the option, any loss resulting from a closing purchase
transaction may be offset in whole or in part by unrealized appreciation of the
underlying security.
If the fund writes a call option but does not own the underlying security, and
when it writes a put option, the fund may be required to deposit cash or
securities with its broker as "margin" or collateral for its obligation to buy
or sell the underlying security. As the value of the underlying security varies,
the fund may have to deposit additional margin with the broker. Margin
requirements are complex and are fixed by individual brokers, subject to minimum
requirements currently imposed by the Federal Reserve Board and by stock
exchanges and other self-regulatory organizations.
Purchasing put options. The fund may purchase put options to protect its
portfolio holdings in an underlying security against a decline in market value.
Such hedge protection is provided during the life of the put option since the
fund, as holder of the put option, is able to sell the underlying security at
the put exercise price regardless of any decline in the underlying security's
market price. For a put option to be profitable, the market price of the
underlying security must decline sufficiently below the exercise price to cover
the premium and transaction costs. By using put options in this manner, the fund
will reduce any profit it might otherwise have realized from appreciation of the
underlying security by the premium paid for the put option and by transaction
costs.
Purchasing call options. The fund may purchase call options to hedge against an
increase in the price of securities that the fund wants ultimately to buy. Such
hedge protection is provided during the life of the call option since the fund,
as holder of the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying security's market
price. In order for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price to cover the
premium and transaction costs. These costs will reduce any profit the fund might
have realized had it bought the underlying security at the time it purchased the
call option.
Over-the-Counter (OTC) options. The Staff of the Division of Investment
Management of the Securities and Exchange Commission has taken the position that
OTC options purchased by the fund and assets held to cover OTC options written
by the fund are illiquid securities. Although the Staff has indicated that it is
continuing to evaluate this issue, pending further developments, the fund
intends to enter into OTC options transactions only with primary dealers in U.S.
Government Securities and, in the case of OTC options written by the fund, only
pursuant to agreements that will assure that the fund will at all times have the
right to repurchase the option written by it from the dealer at a specified
formula price. The fund will treat the amount by which such formula price
exceeds the amount, if any, by which the option may be "in-the-money" as an
illiquid investment. It is the present policy of the fund not to enter into any
OTC option transaction if, as a result, more than 15% (10% in some cases, refer
to your fund's Prospectus) of the fund's net assets would be invested in (i)
illiquid investments (determined under the foregoing formula) relating to OTC
options written by the fund, (ii) OTC options purchased by the fund, (iii)
securities which are not readily marketable, and (iv) repurchase agreements
maturing in more than seven days.
Risk factors in options transactions. The successful use of the fund's options
strategies depends on the ability of the Adviser to forecast interest rate and
market movements correctly.
When it purchases an option, the fund runs the risk that it will lose its entire
investment in the option in a relatively short period of time, unless the fund
exercises the option or enters into a closing sale transaction with respect to
the option during the life of the option. If the price of the underlying
security does not rise (in the case of a call) or fall (in the case of a put) to
an extent sufficient to cover the option premium and transaction costs, the fund
will lose part or all of its investment in the option. This contrasts with an
investment by the fund in the underlying securities, since the fund may continue
to hold its investment in those securities notwithstanding the lack of a change
in price of those securities.
The effective use of options also depends on the fund's ability to terminate
option positions at times when the Adviser deems it desirable to do so. Although
the fund will take an option position only if the Adviser believes there is a
liquid secondary market for the option, there is no assurance that the fund will
be able to effect closing transactions at any particular time or at an
acceptable price.
If a secondary trading market in options were to become unavailable, the fund
could no longer engage in closing transactions. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series of
options. A marketplace may discontinue trading of a particular option or options
generally. In addition, a market could become temporarily unavailable if unusual
events -- such as volume in excess of trading or clearing capability -- were to
interrupt normal market operations.
A marketplace may at times find it necessary to impose restrictions on
particular types of options transactions, which may limit the fund's ability to
realize its profits or limit its losses.
Disruptions in the markets for the securities underlying options purchased or
sold by the fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, the fund as purchaser or writer of an
option will be unable to close out its positions until options trading resumes,
and it may be faced with losses if trading in the security reopens at a
substantially different price. In addition, the Options Clearing Corporation
(OCC) or other options markets may impose exercise restrictions. If a
prohibition on exercise is imposed at the time when trading in the option has
also been halted, the fund as purchaser or writer of an option will be locked
into its position until one of the two restrictions has been lifted. If a
prohibition on exercise remains in effect until an option owned by the fund has
expired, the fund could lose the entire value of its option.
Special risks are presented by internationally-traded options. Because of time
differences between the United States and various foreign countries, and because
different holidays are observed in different countries, foreign options markets
may be open for trading during hours or on days when U.S. markets are closed. As
a result, option premiums may not reflect the current prices of the underlying
interest in the United States.
Futures Contracts and Related Options
Upon entering into futures contracts, in compliance with the SEC's requirements,
cash, cash equivalents or high-grade debt securities, equal in value to the
amount of the fund's obligation under the contract (less any applicable margin
deposits and any assets that constitute "cover" for such obligation), will be
segregated with the fund's custodian. For example, if a fund investing primarily
in foreign equity securities enters into a contract denominated in a foreign
currency, the fund will segregate cash, cash equivalents or high-grade debt
securities equal in value to the difference between the fund's obligation under
the contract and the aggregate value of all readily marketable equity securities
denominated in the applicable foreign currency held by the fund.
A futures contract sale creates an obligation by the seller to deliver the type
of instrument called for in the contract in a specified delivery month for a
stated price. A futures contract purchase creates an obligation by the purchaser
to take delivery of the type of instrument called for in the contract in a
specified delivery month at a stated price. The specific instruments delivered
or taken at settlement date are not determined until on or near that date. The
determination is made in accordance with the rules of the exchanges on which the
futures contract was made. Futures contracts are traded in the United States
only on commodity exchange or boards of trade -- known as "contract markets" --
approved for such trading by the Commodity Futures Trading Commission (CFTC),
and must be executed through a futures commission merchant or brokerage firm
which is a member of the relevant contract market.
Although futures contracts by their terms call for actual delivery or acceptance
of commodities or securities, the contracts usually are closed out before the
settlement date without the making or taking of delivery. Closing out a futures
contract sale is effected by purchasing a futures contract for the same
aggregate amount of the specific type of financial instrument or commodity with
the same delivery date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid the difference
and realizes a gain. Conversely, if the price of the offsetting purchase exceeds
the price of the initial sale, the seller realizes a loss. Similarly, the
closing out of a futures contract purchase is effected by the purchaser's
entering into a futures contract sale. If the offsetting sale price exceeds the
purchase price, the purchaser realizes a gain, and if the purchase price exceeds
the offsetting sale price, the purchaser realizes a loss.
Unlike when the fund purchases or sells a security, no price is paid or received
by the fund upon the purchase or sale of a futures contract, although the fund
is required to deposit with its custodian in a segregated account in the name of
the futures broker an amount of cash and/or U.S. Government Securities. This
amount is known as "initial margin". The nature of initial margin in futures
transactions is different from that of margin in security transactions in that
futures contract margin does not involve the borrowing of funds by the fund to
finance the transactions. Rather, initial margin is in the nature of a
performance bond or good faith deposit on the contract that is returned to the
fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Futures contracts also involve brokerage costs.
Subsequent payments, called "variation margin", to and from the broker (or the
custodian) are made on a daily basis as the price of the underlying security or
commodity fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "marking to market."
The fund may elect to close some or all of its futures positions at any time
prior to their expiration. The purpose of making such a move would be to reduce
or eliminate the hedge position then currently held by the fund. The fund may
close its positions by taking opposite positions which will operate to terminate
the fund's position in the futures contracts. Final determinations of variation
margin are then made, additional cash is required to be paid by or released to
the fund, and the fund realizes a loss or a gain. Such closing transactions
involve additional commission costs.
Options on futures contracts. The fund will enter into written options on
futures contracts only when, in compliance with the SEC's requirements, cash or
equivalents equal in value to the commodity value (less any applicable margin
deposits) have been deposited in a segregated account of the fund's custodian.
The fund may purchase and write call and put options on futures contracts it may
buy or sell and enter into closing transactions with respect to such options to
terminate existing positions. The fund may use such options on futures contracts
in lieu of writing options directly on the underlying securities or purchasing
and selling the underlying futures contracts. Such options generally operate in
the same manner as options purchased or written directly on the underlying
investments.
As with options on securities, the holder or writer of an option may terminate
his position by selling or purchasing an offsetting option. There is no
guarantee that such closing transactions can be effected.
The fund will be required to deposit initial margin and maintenance margin with
respect to put and call options on futures contracts written by it pursuant to
brokers' requirements similar to those described above.
Risks of transactions in futures contracts and related options. Successful use
of futures contracts by the fund is subject to the Adviser`s ability to predict
correctly movements in the direction of interest rates and other factors
affecting securities markets.
Compared to the purchase or sale of futures contracts, the purchase of call or
put options on futures contracts involves less potential risk to the fund
because the maximum amount at risk is the premium paid for the options (plus
transaction costs). However, there may be circumstances when the purchase of a
call or put option on a futures contract would result in a loss to the fund when
the purchase or sale of a futures contract would not, such as when there is no
movement in the prices of the hedged investments. The writing of an option on a
futures contract involves risks similar to those risks relating to the sale of
futures contracts.
There is no assurance that higher than anticipated trading activity or other
unforeseen events might not, at times, render certain market clearing facilities
inadequate, and thereby result in the institution, by exchanges, of special
procedures which may interfere with the timely execution of customer orders.
To reduce or eliminate a hedge position held by the fund, the fund may seek to
close out a position. The ability to establish and close out positions will be
subject to the development and maintenance of a liquid secondary market. It is
not certain that this market will develop or continue to exist for a particular
futures contract. Reasons for the absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient trading interest
in certain contracts or options; (ii) restrictions may be imposed by an exchange
on opening transactions or closing transactions or both; (iii) trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of contracts or options, or underlying securities; (iv)
unusual or unforeseen circumstances may interrupt normal operations on an
exchange; (v) the facilities of an exchange or a clearing corporation may not at
all times be adequate to handle current trading volume; or (vi) one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of contracts or options (or a particular
class or series of contracts or options), in which event the secondary market on
that exchange (or in the class or series of contracts or options) would cease to
exist, although outstanding contracts or options on the exchange that had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms.
Use by tax-exempt funds of U.S. Treasury security futures contracts and options.
The funds investing in tax-exempt securities issued by a governmental entity may
purchase and sell futures contracts and related options on U.S. Treasury
securities when, in the opinion of the Adviser, price movements in Treasury
security futures and related options will correlate closely with price movements
in the tax-exempt securities which are the subject of the hedge. U.S. Treasury
securities futures contracts require the seller to deliver, or the purchaser to
take delivery of, the type of U.S. Treasury security called for in the contract
at a specified date and price. Options on U.S. Treasury security futures
contracts give the purchaser the right in return for the premium paid to assume
a position in a U.S. Treasury futures contract at the specified option exercise
price at any time during the period of the option.
In addition to the risks generally involved in using futures contracts, there is
also a risk that price movements in U.S. Treasury security futures contracts and
related options will not correlate closely with price movements in markets for
tax-exempt securities.
Index futures contracts. An index futures contract is a contract to buy or sell
units of an index at a specified future date at a price agreed upon when the
contract is made. Entering into a contract to buy units of an index is commonly
referred to as buying or purchasing a contract or holding a long position in the
index. Entering into a contract to sell units of an index is commonly referred
to as selling a contract or holding a short position. A unit is the current
value of the index. The fund may enter into stock index futures contracts, debt
index futures contracts, or other index futures contracts appropriate to its
objective(s). The fund may also purchase and sell options on index futures
contracts.
There are several risks in connection with the use by the fund of index futures
as a hedging device. One risk arises because of the imperfect correlation
between movements in the prices of the index futures and movements in the prices
of securities which are the subject of the hedge. The Adviser will attempt to
reduce this risk by selling, to the extent possible, futures on indices the
movements of which will, in its judgment, have a significant correlation with
movements in the prices of the fund's portfolio securities sought to be hedged.
Successful use of index futures by the fund for hedging purposes is also subject
to the Adviser's ability to predict correctly movements in the direction of the
market. It is possible that, where the fund has sold futures to hedge its
portfolio against a decline in the market, the index on which the futures are
written may advance and the value of securities held in the fund's portfolio may
decline. If this occurs, the fund would lose money on the futures and also
experience a decline in the value in its portfolio securities. However, while
this could occur to a certain degree, the Adviser believes that over time the
value of the fund's portfolio will tend to move in the same direction as the
market indices which are intended to correlate to the price movements of the
portfolio securities sought to be hedged. It is also possible that, if the fund
has hedged against the possibility of a decline in the market adversely
affecting securities held in its portfolio and securities prices increase
instead, the fund will lose part or all of the benefit of the increased values
of those securities that it has hedged because it will have offsetting losses in
its futures positions. In addition, in such situations, if the fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements.
In addition to the possibility that there may be an imperfect correlation, or no
correlation at all, between movements in the index futures and the securities of
the portfolio being hedged, the prices of index futures may not correlate
perfectly with movements in the underlying index due to certain market
distortions. First, all participants in the futures markets are subject to
margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions which would distort the normal relationship between the
index and futures markets. Second, margin requirements in the futures market are
less onerous than margin requirements in the securities market, and as a result
the futures market may attract more speculators than the securities market.
Increased participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price distortions in the
futures market and also because of the imperfect correlation between movements
in the index and movements in the prices of index futures, even a correct
forecast of general market trends by the Adviser may still not result in a
successful hedging transaction.
Options on index futures. Options on index futures are similar to options on
securities except that options on index futures give the purchaser the right, in
return for the premium paid, to assume a position in an index futures contract
(a long position if the option is a call and a short position if the option is a
put), at a specified exercise price at any time during the period of the option.
Upon exercise of the option, the delivery of the futures position by the writer
of the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account which represents the
amount by which the market price of the index futures contract, at exercise,
exceeds (in the case of a call) or is less than (in the case of a put) the
exercise price of the option on the index future. If an option is exercised on
the last trading day prior to the expiration date of the option, the settlement
will be made entirely in cash equal to the difference between the exercise price
of the option and the closing level of the index on which the future is based on
the expiration date. Purchasers of options who fail to exercise their options
prior to the exercise date suffer a loss of the premium paid.
Options on indices. As an alternative to purchasing call and put options on
index futures, the fund may purchase call and put options on the underlying
indices themselves. Such options could be used in a manner identical to the use
of options on index futures.
Foreign Currency Transactions
The fund may engage in currency exchange transactions to protect against
uncertainty in the level of future currency exchange rates.
The fund may engage in both "transaction hedging" and "position hedging". When
it engages in transaction hedging, the fund enters into foreign currency
transactions with respect to specific receivables or payables of the fund
generally arising in connection with the purchase or sale of its portfolio
securities. The fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging the fund attempts to protect itself against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
The fund may purchase or sell a foreign currency on a spot (or cash) basis at
the prevailing spot rate in connection with the settlement of transactions in
portfolio securities denominated in that foreign currency. The fund may also
enter into contracts to purchase or sell foreign currencies at a future date
("forward contracts") and purchase and sell foreign currency futures contracts.
For transaction hedging purposes the fund may also purchase exchange-listed and
over-the-counter call and put options on foreign currency futures contracts and
on foreign currencies. Over-the-counter options are considered to be illiquid by
the SEC staff. A put option on a futures contract gives the fund the right to
assume a short position in the futures contract until expiration of the option.
A put option on currency gives the fund the right to sell a currency at an
exercise price until the expiration of the option. A call option on a futures
contract gives the fund the right to assume a long position in the futures
contract until the expiration of the option. A call option on currency gives the
fund the right to purchase a currency at the exercise price until the expiration
of the option.
When it engages in position hedging, the fund enters into foreign currency
exchange transactions to protect against a decline in the values of the foreign
currencies in which its portfolio securities are denominated (or an increase in
the value of currency for securities which the fund expects to purchase, when
the fund holds cash or short-term investments). In connection with position
hedging, the fund may purchase put or call options on foreign currency and
foreign currency futures contracts and buy or sell forward contracts and foreign
currency futures contracts. The fund may also purchase or sell foreign currency
on a spot basis.
The precise matching of the amounts of foreign currency exchange transactions
and the value of the portfolio securities involved will not generally be
possible since the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of those securities
between the dates the currency exchange transactions are entered into and the
dates they mature.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration or maturity of a forward or futures contract.
Accordingly, it may be necessary for the fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security or securities being hedged is less than the amount
of foreign currency the fund is obligated to deliver and if a decision is made
to sell the security or securities and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency received upon the sale of the portfolio security or securities if the
market value of such security or securities exceeds the amount of foreign
currency the fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in the underlying
prices of the securities which the fund owns or intends to purchase or sell.
They simply establish a rate of exchange which one can achieve at some future
point in time. Additionally, although these techniques tend to minimize the risk
of loss due to a decline in the value of the hedged currency, they tend to limit
any potential gain which might result from the increase in value of such
currency.
Currency forward and futures contracts. Upon entering into such contracts, in
compliance with the SEC's requirements, cash, cash equivalents or high-grade
debt securities, equal in value to the amount of the fund's obligation under the
contract (less any applicable margin deposits and any assets that constitute
"cover" for such obligation), will be segregated with the fund's custodian. For
example, if a fund investing primarily in foreign equity securities enters into
a contract denominated in a foreign currency, the fund will segregate cash, cash
equivalents or high-grade debt securities equal in value to the difference
between the fund's obligation under the contract and the aggregate value of all
readily marketable equity securities denominated in the applicable foreign
currency held by the fund.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract as agreed by the parties, at a price set at the time of
the contract. In the case of a cancelable contract, the holder has the
unilateral right to cancel the contract at maturity by paying a specified fee.
The contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. A currency futures contract is a standardized contract for
the future delivery of a specified amount of a foreign currency at a future date
at a price set at the time of the contract. Currency futures contracts traded in
the United States are designed and traded on exchanges regulated by the CFTC,
such as the New York Mercantile Exchange.
Forward currency contracts differ from currency futures contracts in certain
respects. For example, the maturity date of a forward contract may be any fixed
number of days from the date of the contract agreed upon by the parties, rather
than a predetermined date in a given month. Forward contracts may be in any
amounts agreed upon by the parties rather than predetermined amounts. Also,
forward contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires no margin or
other deposit.
At the maturity of a forward or futures contract, the fund may either accept or
make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected on
a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
Positions in currency futures contracts may be closed out only on an exchange or
board of trade which provides a secondary market in such contracts. Although the
fund intends to purchase or sell currency futures contracts only on exchanges or
boards of trade where there appears to be an active secondary market, there is
no assurance that a secondary market on an exchange or board of trade will exist
for any particular contract or at any particular time. In such event, it may not
be possible to close a futures position and, in the event of adverse price
movements, the fund would continue to be required to make daily cash payments of
variation margin.
Currency options. In general, options on currencies operate similarly to options
on securities and are subject to many similar risks. Currency options are traded
primarily in the over-the-counter market, although options on currencies have
recently been listed on several exchanges. Options are traded not only on the
currencies of individual nations, but also on the European Currency Unit
("ECU"). The ECU is composed of amounts of a number of currencies, and is the
official medium of exchange of the European Economic Community's European
Monetary System.
The fund will only purchase or write currency options when the Adviser believes
that a liquid secondary market exists for such options. There can be no
assurance that a liquid secondary market will exist for a particular option at
any specified time. Currency options are affected by all of those factors which
influence exchange rates and investments generally. To the extent that these
options are traded over the counter, they are considered to be illiquid by the
SEC staff.
The value of any currency, including the U.S. dollars, may be affected by
complex political and economic factors applicable to the issuing country. In
addition, the exchange rates of currencies (and therefore the values of currency
options) may be significantly affected, fixed, or supported directly or
indirectly by government actions. Government intervention may increase risks
involved in purchasing or selling currency options, since exchange rates may not
be free to fluctuate in respect to other market forces.
The value of a currency option reflects the value of an exchange rate, which in
turn reflects relative values of two currencies, the U.S. dollar and the foreign
currency in question. Because currency transactions occurring in the interbank
market involve substantially larger amounts than those that may be involved in
the exercise of currency options, investors may be disadvantaged by having to
deal in an odd lot market for the underlying currencies in connection with
options at prices that are less favorable than for round lots. Foreign
governmental restrictions or taxes could result in adverse changes in the cost
of acquiring or disposing of currencies.
There is no systematic reporting of last sale information for currencies and
there is no regulatory requirement that quotations available through dealers or
other market sources be firm or revised on a timely basis. Available quotation
information is generally representative of very large round-lot transactions in
the interbank market and thus may not reflect exchange rates for smaller odd-lot
transactions (less than $1 million) where rates may be less favorable. The
interbank market in currencies is a global, around-the-clock market. To the
extent that options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the options markets.
Settlement procedures. Settlement procedures relating to the fund's investments
in foreign securities and to the fund's foreign currency exchange transactions
may be more complex than settlements with respect to investments in debt or
equity securities of U.S. issuers, and may involve certain risks not present in
the fund's domestic investments, including foreign currency risks and local
custom and usage. Foreign currency transactions may also involve the risk that
an entity involved in the settlement may not meet its obligations.
Foreign currency conversion. Although foreign exchange dealers do not charge a
fee for currency conversion, they do realize a profit based on the difference
(spread) between prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the fund at one rate,
while offering a lesser rate of exchange should the fund desire to resell that
currency to the dealer. Foreign currency transactions may also involve the risk
that an entity involved in the settlement may not meet its obligation.
Participation Interests
The fund may invest in municipal obligations either by purchasing them directly
or by purchasing certificates of accrual or similar instruments evidencing
direct ownership of interest payments or principal payments, or both, on
municipal obligations, provided that, in the opinion of counsel to the initial
seller of each such certificate or instrument, any discount accruing on such
certificate or instrument that is purchased at a yield not greater than the
coupon rate of interest on the related municipal obligations will be exempt from
federal income tax to the same extent as interest on such municipal obligations.
The fund may also invest in tax-exempt obligations by purchasing from banks
participation interests in all or part of specific holdings of municipal
obligations. Such participations may be backed in whole or part by an
irrevocable letter of credit or guarantee of the selling bank. The selling bank
may receive a fee from the fund in connection with the arrangement. The fund
will not purchase such participation interests unless it receives an opinion of
counsel or a ruling of the Internal Revenue Service that interest earned by it
on municipal obligations in which it holds such participation interests is
exempt from federal income tax.
(The following paragraph applies only to Colonial Municipal Money Market Fund, a
series of Colonial Trust IV)
The determinations concerning the liquidity and appropriate valuation of a
municipal lease obligation, as with any other municipal security are made based
on all relevant factors. These factors include among others: (1) the frequency
of trades and quotes for the obligation; (2) the number of dealers willing to
purchase or sell the security and the number of other potential buyers; (3) the
willingness of dealers to undertake to make a market in the security; and (4)
the nature of the marketplace trades, including the time needed to dispose of
the security, the method of soliciting offers, and the mechanics of the
transfer.
Stand-by Commitments
When the fund purchases municipal obligations it may also acquire stand-by
commitments from banks and broker-dealers with respect to such municipal
obligations. A stand-by commitment is the equivalent of a put option acquired by
the fund with respect to a particular municipal obligation held in its
portfolio. A stand-by commitment is a security independent of the municipal
obligation to which it relates. The amount payable by a bank or dealer during
the time a stand-by commitment is exercisable, absent unusual circumstances
relating to a change in market value, would be substantially the same as the
value of the underlying municipal obligation. A stand-by commitment might not be
transferable by the fund, although it could sell the underlying municipal
obligation to a third party at any time.
The fund expects that stand-by commitments generally will be available without
the payment of direct or indirect consideration. However, if necessary and
advisable, the fund may pay for stand-by commitments either separately in cash
or by paying a higher price for portfolio securities which are acquired subject
to such a commitment (thus reducing the yield to maturity otherwise available
for the same securities.) The total amount paid in either manner for outstanding
stand-by commitments held in the fund portfolio will not exceed 10% of the value
of the fund's total assets calculated immediately after each stand-by commitment
is acquired. The fund will enter into stand-by commitments only with banks and
broker-dealers that, in the judgment of the Trust's Board of Trustees, present
minimal credit risks.
Inverse Floaters
Inverse floaters are derivative securities whose interest rates vary inversely
to changes in short-term interest rates and whose values fluctuate inversely to
changes in long-term interest rates. The value of certain inverse floaters will
fluctuate substantially more in response to a given change in long-term rates
than would a traditional debt security. These securities have investment
characteristics similar to leverage, in that interest rate changes have a
magnified effect on the value of inverse floaters.
Rule 144A Securities
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 Adviser, 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 investment restriction on illiquid securities. A
determination of whether a Rule 144A security is liquid or not is a question of
fact. In making this determination, the Adviser will consider the trading
markets for the specific security, taking into account the unregistered nature
of a Rule 144A security. In addition, the Adviser could consider the (1)
frequency of trades and quotes, (2) number of dealers and potential purchasers,
(3) dealer undertakings to make a market, and (4) nature of the security and of
marketplace 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, if any, steps are
required to assure that the fund does not invest more than its investment
restriction on illiquid securities allows. 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.
TAXES
All discussions of taxation at the shareholder level relate to federal taxes
only. Consult your tax adviser for state and local tax considerations and for
information about special tax considerations that may apply to shareholders that
are not natural persons.
Dividends Received Deductions. Distributions will qualify for the corporate
dividends received deduction only to the extent that dividends earned by the
fund qualify. Any such dividends are, however, includable in adjusted current
earnings for purposes of computing corporate alternative minimum tax (AMT).
Return of Capital Distributions. To the extent that a distribution is a return
of capital for federal tax purposes, it reduces the cost basis of the shares on
the record date and is similar to a partial return of the original investment
(on which a sales charge may have been paid). There is no recognition of a gain
or loss, however, unless the return of capital reduces the cost basis in the
shares to below zero.
Funds that invest in U.S. Government Securities. Many states grant tax-free
status to dividends paid to shareholders of mutual funds from interest income
earned by the fund from direct obligations of the U.S. government. Investments
in mortgage-backed securities (including GNMA, FNMA and FHLMC Securities) and
repurchase agreements collateralized by U.S. government securities do not
qualify as direct federal obligations in most states. Shareholders should
consult with their own tax advisers about the applicability of state and local
intangible property, income or other taxes to their fund shares and
distributions and redemption proceeds received from the fund.
Distributions from Tax-Exempt Funds. Each tax-exempt fund will have at least 50%
of its total assets invested in tax-exempt bonds at the end of each quarter so
that dividends from net interest income on tax-exempt bonds will be exempt from
Federal income tax when received by a shareholder. The tax-exempt portion of
dividends paid will be designated within 60 days after year-end based upon the
ratio of net tax-exempt income to total net investment income earned during the
year. That ratio may be substantially different from the ratio of net tax-exempt
income to total net investment income earned during any particular portion of
the year. Thus, a shareholder who holds shares for only a part of the year may
be allocated more or less tax-exempt dividends than would be the case if the
allocation were based on the ratio of net tax-exempt income to total net
investment income actually earned while a shareholder.
The Tax Reform Act of 1986 makes income from certain "private activity bonds"
issued after August 7, 1986, a tax preference item for the AMT at the maximum
rate of 28% for individuals and 20% for corporations. If the fund invests in
private activity bonds, shareholders may be subject to the AMT on that part of
the distributions derived from interest income on such bonds. Other provisions
of the Tax Reform Act affect the tax treatment of distributions for
corporations, casualty insurance companies and financial institutions; interest
on all tax-exempt bonds is included in corporate adjusted current earnings when
computing the AMT applicable to corporations. Seventy-five percent of the excess
of adjusted current earnings over the amount of income otherwise subject to the
AMT is included in a corporation's alternative minimum taxable income.
Dividends derived from any investments other than tax-exempt bonds and any
distributions of short-term capital gains are taxable to shareholders as
ordinary income. Any distributions of net long-term gains will in general be
taxable to shareholders as long-term capital gains regardless of the length of
time fund shares are held.
Shareholders receiving social security and certain retirement benefits may be
taxed on a portion of those benefits as a result of receiving tax-exempt income,
including tax-exempt dividends from the fund.
Special Tax Rules Applicable to Tax-Exempt Funds. Income distributions to
shareholders who are substantial users or related persons of substantial users
of facilities financed by industrial revenue bonds may not be excludable from
their gross income if such income is derived from such bonds. Income derived
from the fund's investments other than tax-exempt instruments may give rise to
taxable income. The fund's shares must be held for more than six months in order
to avoid the disallowance of a capital loss on the sale of fund shares to the
extent of tax-exempt dividends paid during that period. A shareholder who
borrows money to purchase the fund's shares will not be able to deduct the
interest paid with respect to such borrowed money.
Sales of Shares. In general, any gain or loss realized upon a taxable
disposition of shares by a shareholder will be treated as long-term capital gain
or loss if the shares have been held for more than twelve months, and otherwise
as short-term capital gain or loss assuming such shares are held as a capital
asset. However, any loss realized upon a taxable disposition of shares held for
six months or less will be treated as long-term, rather than short-term, capital
loss to the extent of any long-term capital gain distributions received by the
shareholder with respect to those shares. All or a portion of any loss realized
upon a taxable disposition of shares will be disallowed if other shares are
purchased within 30 days before or after the disposition. In such a case, the
basis of the newly purchased shares will be adjusted to reflect the disallowed
loss.
Backup Withholding. Certain distributions and redemptions may be subject to a
31% backup withholding unless a taxpayer identification number and certification
that the shareholder is not subject to the withholding is provided to the fund.
This number and form may be provided by either a Form W-9 or the accompanying
application. In certain instances, CISC may be notified by the Internal Revenue
Service that a shareholder is subject to backup withholding.
Excise Tax. To the extent that the Fund does not annually distribute
substantially all taxable income and realized gains, it is subject to an excise
tax. The Adviser intends to avoid this tax except when the cost of processing
the distribution is greater than the tax.
Tax Accounting Principles. To qualify as a "regulated investment company," the
fund must (a) derive at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of 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 such securities or currencies; (b)
derive less than 30% of its gross income from the sale or other disposition of
certain assets held less than three months; (c) diversify its holdings so that,
at the close of each quarter of its taxable year, (i) at least 50% of the value
of its total assets consists of cash, cash items, U.S. Government securities,
and other securities limited generally with respect to any one issuer to not
more than 5% of the total assets of the fund and not more than 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any issuer (other than U.S.
Government securities).
Futures Contracts. Accounting for futures contracts will be in accordance with
generally accepted accounting principles. The amount of any realized gain or
loss on the closing out of a futures contract will result in a capital gain or
loss for tax purposes. In addition, certain futures contracts held by the fund
(so-called "Section 1256 contracts") will be required to be "marked-to-market"
(deemed sold) for federal income tax purposes at the end of each fiscal year.
Sixty percent of any net gain or loss recognized on such deemed sales or on
actual sales will be treated as long-term capital gain or loss, and the
remainder will be treated as short-term capital gain or loss.
However, if a futures contract is part of a "mixed straddle" (i.e., a straddle
comprised in part of Section 1256 contracts), a fund may be able to make an
election which will affect the character arising from such contracts as
long-term or short-term and the timing of the recognition of such gains or
losses. In any event, the straddle provisions described below will be applicable
to such mixed straddles.
Special Tax Rules Applicable to "Straddles". The straddle provisions of the Code
may affect the taxation of the fund's options and futures transactions and
transactions in securities to which they relate. A "straddle" is made up of two
or more offsetting positions in "personal property," including debt securities,
related options and futures, equity securities, related index futures and, in
certain circumstances, options relating to equity securities, and foreign
currencies and related options and futures.
The straddle rules may operate to defer losses realized or deemed realized on
the disposition of a position in a straddle, may suspend or terminate the fund's
holding period in such positions, and may convert short-term losses to long-term
losses in certain circumstances.
Foreign Currency-Denominated Securities and Related Hedging Transactions. The
fund's transactions in foreign currency-denominated debt securities, certain
foreign currency options, futures contracts and forward contracts may give rise
to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned.
If more than 50% of the fund's total assets at the end of its fiscal year are
invested in securities of foreign corporate issuers, the fund may make an
election permitting its shareholders to take a deduction or credit for federal
tax purposes for their portion of certain foreign taxes paid by the fund. The
Adviser will consider the value of the benefit to a typical shareholder, the
cost to the fund of compliance with the election, and incidental costs to
shareholders in deciding whether to make the election. A shareholder's ability
to claim such a foreign tax credit will be subject to certain limitations
imposed by the Code, as a result of which a shareholder may not get a full
credit for the amount of foreign taxes so paid by the fund. Shareholders who do
not itemize on their federal income tax returns may claim a credit (but no
deduction) for such foreign taxes.
Certain securities are considered to be Passive Foreign Investment Companies
(PFICS) under the Code, and the fund is liable for any PFIC-related taxes.
MANAGEMENT OF THE COLONIAL FUNDS (in this section, and the following sections
entitled "Trustees and Officers," "The Management Agreement," "Administration
Agreement," "The Pricing and Bookkeeping Agreement," "Portfolio Transactions,"
"Investment decisions," and "Brokerage and research services," the "Adviser"
refers to Colonial Management Associates, Inc.)
The Adviser is the investment adviser to each of the Colonial funds (except
for Colonial Municipal Money Market Fund, Colonial Growth Fund, Colonial
Global Utilities Fund, Colonial Newport Tiger Fund, Colonial Newport Tiger
Cub Fund and Colonial Newport Japan Fund - see Part I of each Fund's
respective SAI for a description of the investment adviser). The Adviser
is a subsidiary of The Colonial Group, Inc. (TCG), One Financial Center,
Boston, MA 02111. TCG is a direct subsidiary of Liberty Financial Companies,
Inc. (Liberty Financial), which in turn is a direct subsidiary of LFC
Holdings, Inc., which in turn is a direct subsidiary of Liberty Mutual
Equity Corporation, which in turn is a wholly-owned subsidiary of Liberty Mutual
Insurance Company (Liberty Mutual). Liberty Mutual is an underwriter of
workers' compensation insurance and a property and casualty insurer in the
U.S. Liberty Financial's address is 600 Atlantic Avenue, Boston, MA 02210.
Liberty Mutual's address is 175 Berkeley Street, Boston, MA 02117.
<TABLE>
Trustees and Officers (this section applies to all of the Colonial funds)
<CAPTION>
Name and Address Age Position with Principal Occupation During Past Five Years
- ---------------- --- -------------- -------------------------------------------
Fund
----
<S> <C> <C> <C>
Robert J. Birnbaum(1) (2) 68 Trustee Retired since 1994 (formerly Special Counsel, Dechert
313 Bedford Road Price & Rhoads from September, 1988 to December, 1993)
Ridgewood, NJ 07450
Tom Bleasdale 65 Trustee Retired since 1993 (formerly Chairman of the Board and
1508 Ferncroft Tower Chief Executive Officer, Shore Bank & Trust Company from
Danvers, MA 01923 1992-1993), is a Director of The Empire Company since
June, 1995 (3)
Lora S. Collins 60 Trustee Attorney with Kramer, Levin, Naftalis, Nessen, Kamin &
919 Third Avenue Frankel since September, 1986 (3)
New York, NY 10022
James E. Grinnell (1) (2) 66 Trustee Private Investor since November, 1988
22 Harbor Avenue
Marblehead, MA 01945
William D. Ireland, Jr. 72 Trustee Retired since 1990, is a Trustee of certain charitable
103 Springline Drive and non-charitable organizations since February, 1990 (3)
Vero Beach, FL 32963
Richard W. Lowry (1) (2) 60 Trustee Private Investor since August, 1987
10701 Charleston Drive
Vero Beach, FL 32963
William E. Mayer* 55 Trustee Dean, College of Business and Management, University of
College Park, MD 20742 Maryland since October, 1992 (formerly Dean, Simon
Graduate School of Business, University of Rochester from
October, 1991 to July, 1992) (3)
James L. Moody, Jr. 64 Trustee Chairman of the Board, Hannaford Bros., Co. since May,
1984 (formerly Chief Executive Officer, Hannaford Bros.
Co. from May, 1973 to May, 1992) (3)
John J. Neuhauser 52 Trustee Dean, Boston College School of Management since 1978 (3)
140 Commonwealth Avenue
Chestnut Hill, MA 02167
George L. Shinn 73 Trustee Financial Consultant since 1989 (formerly Chairman, Chief
The First Boston Corp. Executive Officer and Consultant, The First Boston
Tower Forty Nine Corporation from 1983 to July, 1991) (3)
12 East 49th Street
New York, NY 10017
Robert L. Sullivan 68 Trustee Self-employed Management Consultant since January, 1989
7121 Natelli Woods Lane (3)
Bethesda, MD 20817
Sinclair Weeks, Jr. 72 Trustee Chairman of the Board, Reed & Barton Corporation since
Bay Colony Corporate Ctr. 1987 (3)
Suite 4550
1000 Winter Street
Waltham, MA 02154
Harold W. Cogger 59 President President of Colonial funds since March, 1996 (formerly
(formerly Vice Vice President from July, 1993 to March, 1996); is
President) President since July, 1993, Chief Executive Officer
since March, 1995 and Director since March, 1984 of
the Adviser (formerly Executive Vice President of the
Adviser from October,1989 to July, 1993); President since
October, 1994, Chief Executive Officer since March, 1995
and Director since October, 1981 of TCG; Executive Vice
President and Director, Liberty Financial (3)
Peter L. Lydecker 42 Chief Financial Chief Financial Officer, Chief Accounting Offier and
Officer, Chief Controller of Colonial funds since June, 1993 (formerly
Accounting Assistant Controller from March, 1985 to June, 1993);
Officer and is Vice President of the Adviser since June, 1993
Controller (formerly Assistant Vice President of the Adviser from
(formerly August, 1988 to June, 1993) (3)
Assistant
Controller)
Davey S. Scoon 49 Vice President Vice President of Colonial funds since June, 1993, is
Executive Vice President since July, 1993 and Director
since March, 1985 of the Adviser (formerly Senior Vice
President and Treasurer of the Adviser from March, 1985
to July, 1993); Executive Vice President and Chief
Operating Officer, TCG since March, 1995 (formerly Vice
President - Finance and Administration of TCG from
November, 1985 to March, 1995) (3)
Arthur O. Stern 56 Secretary Secretary of Colonial funds since 1985, is Director
since 1985, Executive Vice President since July, 1993,
General Counsel, Clerk and Secretary since March, 1985
of the Adviser; Executive Vice President, Legal since
March, 1995 and Clerk since March, 1985 of TCG
(formerly Executive Vice President, Compliance from
March, 1995 to March, 1996 and Vice President - Legal
of TCG from March, 1985 to March, 1995) (3)
</TABLE>
(1) Elected to the Colonial Funds complex on April 21, 1995.
(2) On April 3, 1995, and in connection with the merger of TCG with a
subsidiary of Liberty Financial which occurred on March 27, 1995,
Liberty Financial Trust (LFT) changed its name to Colonial Trust VII.
Prior to the merger, each of Messrs. Birnbaum, Grinnell, and Lowry was
a Trustee of LFT. Mr. Birnbaum has been a Trustee of LFT since
November, 1994. Each of Messrs. Grinnell and Lowry has been a Trustee
of LFT since August, 1991. Each of Messrs. Grinnell and Lowry continue
to serve as Trustees under the new name, Colonial Trust VII, along with
each of the other Colonial Trustees named above. The Colonial Trustees
were elected as Trustees of Colonial Trust VII effective April 3, 1995.
(3) Elected as a Trustee or officer of the LFC Utilities Trust, the master
fund in Colonial Global Utilities Fund, a series of Colonial Trust III
(LFC Portfolio) on March 27, 1995 in connection with the merger of TCG
with a subsidiary of Liberty Financial.
* Trustees who are "interested persons" (as defined in the Investment
Company Act of 1940) of the fund or the Adviser.
The address of the officers of each Colonial Fund is One Financial Center,
Boston, MA 02111.
The Trustees serve as trustees of all Colonial funds for which each Trustee will
receive an annual retainer of $45,000 and attendance fees of $7,500 for each
regular joint meeting and $1,000 for each special joint meeting. Committee
chairs receive an annual retainer of $5,000. Committee members receive an annual
retainer of $1,000 and $1,000 for each special meeting attended. Two-thirds of
the Trustee fees are allocated among the Colonial funds based on each fund's
relative net assets and one-third of the fees are divided equally among the
Colonial funds.
The Adviser and/or its affiliate, Colonial Advisory Services, Inc. (CASI), has
rendered investment advisory services to investment company, institutional and
other clients since 1931. The Adviser currently serves as investment adviser and
administrator for 33 open-end and 5 closed-end management investment company
portfolios, and is the administrator for 53 open-end management investment
company portfolios (collectively, Colonial funds). Trustees and officers of the
Trust, who are also officers of the Adviser or its affiliates, will benefit from
the advisory fees, sales commissions and agency fees paid or allowed by the
Trust. More than 30,000 financial advisers have recommended Colonial funds to
over 800,000 clients worldwide, representing more than $16.3. billion in assets.
The Agreement and Declaration of Trust (Declaration) of the Trust provides that
the Trust 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 Trust but that such indemnification will not
relieve any officer or Trustee of any liability to the Trust or its shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties. The Trust, at its expense, provides liability
insurance for the benefit of its Trustees and officers.
The Management Agreement (this section does not apply to the Colonial Municipal
Money Market Fund, Colonial Growth Fund, Colonial Global Utilities Fund,
Colonial Newport Tiger Fund, Colonial Newport Japan Fund or Colonial Newport
Tiger Cub Fund) Under a Management Agreement (Agreement), the Adviser has
contracted to furnish each fund with investment research and recommendations or
fund management, respectively, and accounting and administrative personnel and
services, and with office space, equipment and other facilities. For these
services and facilities, each Colonial fund pays a monthly fee based on the
average of the daily closing value of the total net assets of each fund for such
month.
The Adviser's compensation under the Agreement is subject to reduction in any
fiscal year to the extent that the total expenses of each fund for such year
(subject to applicable exclusions) exceed the most restrictive applicable
expense limitation prescribed by any state statute or regulatory authority in
which the Trust's shares are qualified for sale. The most restrictive expense
limitation applicable to a Colonial fund is 2.5% of the first $30 million of the
Trust's average net assets for such year, 2% of the next $70 million and 1.5% of
any excess over $100 million.
Under the Agreement, any liability of the Adviser to the fund and its
shareholders is limited to situations involving the Adviser's own willful
misfeasance, bad faith, gross negligence or reckless disregard of duties.
The Agreement may be terminated with respect to the fund at any time on 60 days'
written notice by the Adviser or by the Trustees of the Trust or by a vote of a
majority of the outstanding voting securities of the fund. The Agreement will
automatically terminate upon any assignment thereof and shall continue in effect
from year to year only so long as such continuance is approved at least annually
(i) by the Trustees of the Trust or by a vote of a majority of the outstanding
voting securities of the fund and (ii) by vote of a majority of the Trustees who
are not interested persons (as such term is defined in the 1940 Act) of the
Adviser or the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
The Adviser pays all salaries of officers of the Trust. The Trust pays all
expenses not assumed by the Adviser including, but not limited to, auditing,
legal, custodial, investor servicing and shareholder reporting expenses. The
Trust pays the cost of typesetting for its Prospectuses and the cost of printing
and mailing any Prospectuses sent to shareholders. CISI pays the cost of
printing and distributing all other Prospectuses.
The Agreement provides that the Adviser shall not be subject to any liability to
the Trust or to any shareholder of the Trust for any act or omission in the
course of or connected with rendering services to the Trust in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
duties on the part of the Adviser.
Administration Agreement (this section applies only to the Colonial Municipal
Money Market Fund, Colonial Growth Fund, Colonial Global Utilities Fund,
Colonial Newport Tiger Fund, Colonial Newport Japan Fund and Colonial Newport
Tiger Cub Fund and their respective Trusts).
Under an Administration Agreement with each Fund, the Adviser, in its capacity
as the Administrator to each Fund, has contracted to perform the following
administrative services:
(a) providing office space, equipment and clerical personnel;
(b) arranging, if desired by the respective Trust, for its
Directors, officers and employees to serve as Trustees,
officers or agents of each Fund;
(c) preparing and, if applicable, filing all documents
required for compliance by each Fund with applicable laws
and regulations;
(d) preparation of agendas and supporting documents for and
minutes of meetings of Trustees, committees of Trustees
and shareholders;
(e) coordinating and overseeing the activities of each Fund's
other third-party service providers; and
(f) maintaining certain books and records of each Fund.
With respect to the Colonial Municipal Money Market Fund, the Administration
Agreement for this Fund provides for the following services in addition to the
services referenced above:
(g) monitoring compliance by the Fund with Rule 2a-7 under the
Investment Company Act of 1940 (the "1940 Act") and
reporting to the Trustees from time to time with respect
thereto; and
(h) monitoring the investments and operations of the SR&F
Municipal Money Market Portfolio (Municipal Money Market
Portfolio) in which Colonial Municipal Money Market Fund
is invested and the LFC Portfolio and reporting to the
Trustees from time to time with respect thereto.
The Administration Agreement has a one year term. The Adviser is paid a monthly
fee at the annual rate of average daily net assets set forth in Part 1 of this
Statement of Additional Information.
The Pricing and Bookkeeping Agreement
The Adviser provides pricing and bookkeeping services to each Colonial fund
pursuant to a Pricing and Bookkeeping Agreement. The Pricing and Bookkeeping
Agreement has a one-year term. The Adviser, in its capacity as the Administrator
to each of Colonial Municipal Money Market Fund, Colonial Growth Fund and
Colonial Global Utilities Fund, is paid an annual fee of $18,000, plus 0.0233%
of average daily net assets in excess of $50 million. For each of the other
Colonial funds (except for Colonial Newport Tiger Fund, Colonial Newport Japan
Fund and Colonial Newport Tiger Cub Fund), the Adviser is paid monthly a fee of
$2,250 by each fund, plus a monthly percentage fee based on net assets of the
fund equal to the following:
1/12 of 0.000% of the first $50 million;
1/12 of 0.035% of the next $950 million;
1/12 of 0.025% of the next $1 billion;
1/12 of 0.015% of the next $1 billion; and
1/12 of 0.001% on the excess over $3 billion
The Adviser provides pricing and bookkeeping services to Colonial Newport Tiger
Fund, Colonial Newport Japan Fund and Colonial Newport Tiger Cub Fund for an
annual fee of $27,000, plus 0.035% of Colonial Newport Tiger Fund's average
daily net assets over $50 million.
Stein Roe & Farnham Incorporated, the investment adviser of each of the
Municipal Money Market Portfolio, SR&F Growth Investor Portfolio and LFC
Portfolio, provides pricing and bookkeeping services to each Portfolio for a fee
of $25,000 plus 0.0025% annually of average daily net assets of each Portfolio
over $50 million.
Portfolio Transactions
The following sections entitled "Investment decisions" and "Brokerage and
research services" do not apply to Colonial Municipal Money Market Fund,
Colonial Growth Fund, Colonial U.S. Fund for Growth and Colonial Global
Utilities Fund. For each of these funds, see Part 1 of its respective SAI. The
Adviser of Colonial Newport Tiger Fund, Colonial Newport Japan Fund and Colonial
Newport Tiger Cub Fund follows the same procedures as those set forth under
"Brokerage and research services."
Investment decisions. The Adviser acts as investment adviser to each of the
Colonial funds (except for the Colonial Municipal Money Market Fund, Colonial
Growth Fund, Colonial Global Utilities Fund, Colonial Newport Tiger Fund,
Colonial Newport Japan Fund and Colonial Newport Tiger Cub Fund, each of which
is administered by the Adviser, and Colonial U.S. Fund for Growth for which
investment decisions have been delegated by the Adviser to State Street Bank and
Trust Company, the fund's sub-adviser). The Adviser's affiliate, CASI, advises
other institutional, corporate, fiduciary and individual clients for which CASI
performs various services. Various officers and Trustees of the Trust also serve
as officers or Trustees of other Colonial funds and the other corporate or
fiduciary clients of the Adviser. The Colonial funds and clients advised by the
Adviser or the funds administered by the Adviser sometimes invest in securities
in which the Fund also invests and sometimes engage in covered option writing
programs and enter into transactions utilizing stock index options and stock
index and financial futures and related options ("other instruments"). If the
Fund, such other Colonial funds and such other clients desire to buy or sell the
same portfolio securities, options or other instruments at about the same time,
the purchases and sales are normally made as nearly as practicable on a pro rata
basis in proportion to the amounts desired to be purchased or sold by each.
Although in some cases these practices could have a detrimental effect on the
price or volume of the securities, options or other instruments as far as the
Fund is concerned, in most cases it is believed that these practices should
produce better executions. It is the opinion of the Trustees that the
desirability of retaining the Adviser as investment adviser to the Colonial
funds outweighs the disadvantages, if any, which might result from these
practices.
The portfolio managers of Colonial International Fund for Growth, a series of
Colonial Trust III, will use the trading facilities of Stein Roe & Farnham
Incorporated, an affiliate of the Adviser, to place all orders for the purchase
and sale of this fund's portfolio securities, futures contracts and foreign
currencies.
Brokerage and research services. Consistent with the Rules of Fair Practice of
the National Association of Securities Dealers, Inc., and subject to seeking
"best execution" (as defined below) and such other policies as the Trustees may
determine, the Adviser may consider sales of shares of the Colonial funds as a
factor in the selection of broker-dealers to execute securities transactions for
a Colonial fund.
The Adviser places the transactions of the Colonial funds with broker-dealers
selected by the Adviser and, if applicable, negotiates commissions.
Broker-dealers may receive brokerage commissions on portfolio transactions,
including the purchase and writing of options, the effecting of closing purchase
and sale transactions, and the purchase and sale of underlying securities upon
the exercise of options and the purchase or sale of other instruments. The
Colonial funds from time to time also execute portfolio transactions with such
broker-dealers acting as principals. The Colonial funds do not intend to deal
exclusively with any particular broker-dealer or group of broker-dealers.
Except as described below in connection with commissions paid to a clearing
agent on sales of securities, it is the Adviser's policy always to seek best
execution, which is to place the Colonial funds' transactions where the Colonial
funds can obtain the most favorable combination of price and execution services
in particular transactions or provided on a continuing basis by a broker-dealer,
and to deal directly with a principal market maker in connection with
over-the-counter transactions, except when it is believed that best execution is
obtainable elsewhere. In evaluating the execution services of, including the
overall reasonableness of brokerage commissions paid to, a broker-dealer,
consideration is given to, among other things, the firm's general execution and
operational capabilities, and to its reliability, integrity and financial
condition.
Subject to such practice of always seeking best execution, securities
transactions of the Colonial funds may be executed by broker-dealers who also
provide research services (as defined below) to the Adviser and the Colonial
funds. The Adviser may use all, some or none of such research services in
providing investment advisory services to each of its investment company and
other clients, including the fund. To the extent that such services are used by
the Adviser, they tend to reduce the Adviser's expenses. In the Adviser's
opinion, it is impossible to assign an exact dollar value for such services.
Subject to such policies as the Trustees may determine, the Adviser may cause
the Colonial funds to pay a broker-dealer which provides brokerage and research
services to the Adviser an amount of commission for effecting a securities
transaction, including the sale of an option or a closing purchase transaction,
for the Colonial funds in excess of the amount of commission which another
broker-dealer would have charged for effecting that transaction. As provided in
Section 28(e) of the Securities Exchange Act of 1934, "brokerage and research
services" include advice as to the value of securities, the advisability of
investing in, purchasing or selling securities and the availability of
securities or purchasers or sellers of securities; furnishing analyses and
reports concerning issues, industries, securities, economic factors and trends
and portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). The Adviser must determine in good faith that such greater
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker-dealer viewed in terms of that
particular transaction or the Adviser's overall responsibilities to the Colonial
funds and all its other clients.
The Trustees have authorized the Adviser to utilize the services of a clearing
agent with respect to all call options written by Colonial funds that write
options and to pay such clearing agent commissions of a fixed amount per share
(currently 1.25 cents) on the sale of the underlying security upon the exercise
of an option written by a fund. The Trustees may further authorize the Adviser
to depart from the present policy of always seeking best execution and to pay
higher brokerage commissions from time to time for other brokerage and research
services as described above in the future if developments in the securities
markets indicate that such would be in the interests of the shareholders of the
Colonial funds.
Principal Underwriter
CISI is the principal underwriter of the Trust's shares. CISI has no obligation
to buy the Colonial funds' shares, and purchases the Colonial funds' shares only
upon receipt of orders from authorized FSFs or investors.
Investor Servicing and Transfer Agent
CISC is the Trust's investor servicing agent (transfer, plan and dividend
disbursing agent), for which it receives fees which are paid monthly by the
Trust. The fee paid to CISC is based on the average daily net assets of each
Colonial fund plus reimbursement for certain out-of-pocket expenses. See "Fund
Charges and Expenses" in Part 1 of this SAI for information on fees received by
CISC. The agreement continues indefinitely but may be terminated by 90 days'
notice by the Fund or Colonial funds to CISC or generally by 6 months' notice by
CISC to the Fund or Colonial funds. The agreement limits the liability of CISC
to the Fund or Colonial funds for loss or damage incurred by the Fund or
Colonial funds to situations involving a failure of CISC to use reasonable care
or to act in good faith in performing its duties under the agreement. It also
provides that the Fund or Colonial funds will indemnify CISC against, among
other things, loss or damage incurred by CISC on account of any claim, demand,
action or suit made on or against CISC not resulting from CISC's bad faith or
negligence and arising out of, or in connection with, its duties under the
agreement.
DETERMINATION OF NET ASSET VALUE
Each Colonial fund determines net asset value (NAV) per share for each Class as
of the close of the New York Stock Exchange (Exchange) (generally 4:00 p.m.
Eastern time, 3:00 p.m. Chicago time) each day the Exchange is open. Currently,
the Exchange is closed Saturdays, Sundays and the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, the Fourth of July, Labor Day,
Thanksgiving and Christmas. Funds with portfolio securities which are primarily
listed on foreign exchanges may experience trading and changes in NAV on days on
which such Fund does not determine NAV due to differences in closing policies
among exchanges. This may significantly affect the NAV of the Fund's redeemable
securities on days when an investor cannot redeem such securities. The net asset
value of the Municipal Money Market Portfolio will not be determined on days
when the Exchange is closed unless, in the judgment of the Municipal Money
Market Portfolio's Board of Trustees, the net asset value of the Municipal Money
Market Portfolio should be determined on any such day, in which case the
determination will be made at 3:00 p.m., Chicago time. Debt securities generally
are valued by a pricing service which determines valuations based upon market
transactions for normal, institutional-size trading units of similar securities.
However, in circumstances where such prices are not available or where the
Adviser deems it appropriate to do so, an over-the-counter or exchange bid
quotation is used. Securities listed on an exchange or on NASDAQ are valued at
the last sale price. Listed securities for which there were no sales during the
day and unlisted securities are valued at the last quoted bid price. Options are
valued at the last sale price or in the absence of a sale, the mean between the
last quoted bid and offering prices. Short-term obligations with a maturity of
60 days or less are valued at amortized cost pursuant to procedures adopted by
the Trustees. The values of foreign securities quoted in foreign currencies are
translated into U.S. dollars at the exchange rate for that day. Portfolio
positions for which there are no such valuations and other assets are valued at
fair value as determined in good faith under the direction of the Trust's
Trustees.
Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of the
Exchange. Trading on certain foreign securities markets may not take place on
all business days in New York, and trading on some foreign securities markets
takes place on days which are not business days in New York and on which the
Fund's NAV is not calculated. The values of these securities used in determining
the NAV are computed as of such times. Also, because of the amount of time
required to collect and process trading information as to large numbers of
securities issues, the values of certain securities (such as convertible bonds,
U.S. government securities, and tax-exempt securities) are determined based on
market quotations collected earlier in the day at the latest practicable time
prior to the close of the Exchange. Occasionally, events affecting the value of
such securities may occur between such times and the close of the Exchange which
will not be reflected in the computation of each Colonial fund's NAV. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value following procedures
approved by the Trust's Trustees.
(The following two paragraphs are applicable only to Colonial Newport Tiger
Fund, Colonial Newport Japan Fund and Colonial Newport Tiger Cub Fund "Adviser"
in these two paragraphs refers to each fund's Adviser which is Newport Fund
Management, Inc.)
Trading in securities on stock exchanges and over-the-counter markets in the Far
East is normally completed well before the close of the business day in New
York. Trading on Far Eastern securities markets may not take place on all
business days in New York, and trading on some Far Eastern securities markets
does take place on days which are not business days in New York and on which the
Fund's NAV is not calculated.
The calculation of the Fund's NAV accordingly may not take place
contemporaneously with the determination of the prices of the Fund's portfolio
securities used in such calculations. Events affecting the values of portfolio
securities that occur between the time their prices are determined and the close
of the Exchange (when the Fund's NAV is calculated) will not be reflected in the
Fund's calculation of NAV unless the Adviser, acting under procedures
established by the Board of Trustees of the Trust, deems that the particular
event would materially affect the Fund's NAV, in which case an adjustment will
be made. Assets or liabilities initially expressed in terms of foreign
currencies are translated prior to the next determination of the NAV of the
Fund's shares into U.S. dollars at prevailing market rates.
Amortized Cost for Money Market Funds (this section currently applies only to
Colonial Government Money Market Fund, a series of Colonial Trust II - see
"Amortized Cost for Money Market Funds" under "Other Information Concerning the
Portfolio" in Part 1 of the SAI of Colonial Municipal Money Market Fund for
information relating to the Municipal Money Market Portfolio)
Money market funds generally value their portfolio securities at amortized cost
according to Rule 2a-7 under the 1940 Act.
Portfolio instruments are valued under the amortized cost method, whereby the
instrument is recorded at cost and thereafter amortized to maturity. This method
assures a constant NAV but may result in a yield different from that of the same
portfolio under the market value method. The Trust's Trustees have adopted
procedures intended to stabilize a money market fund's NAV per share at $1.00.
When a money market fund's market value deviates from the amortized cost of
$1.00, and results in a material dilution to existing shareholders, the Trust's
Trustees will take corrective action to: realize gains or losses; shorten the
portfolio's maturity; withhold distributions; redeem shares in kind; or convert
to the market value method (in which case the NAV per share may differ from
$1.00). All investments will be determined pursuant to procedures approved by
the Trust's Trustees to present minimal credit risk.
See the Statement of Assets and Liabilities in the shareholder report of the
Colonial Government Money Market Fund for a specimen price sheet showing the
computation of maximum offering price per share of Class A shares.
HOW TO BUY SHARES
The Prospectus contains a general description of how investors may buy shares of
the Fund and tables of charges. This SAI contains additional information which
may be of interest to investors.
The Fund will accept unconditional orders for shares to be executed at the
public offering price based on the NAV per share next determined after the order
is placed in good order. The public offering price is the NAV plus the
applicable sales charge, if any. In the case of orders for purchase of shares
placed through FSFs, the public offering price will be determined on the day the
order is placed in good order, but only if the FSF receives the order prior to
the time at which shares are valued and transmits it to the Fund before the Fund
processes that day's transactions. If the FSF fails to transmit before the Fund
processes that day's transactions, the customer's entitlement to that day's
closing price must be settled between the customer and the FSF. If the FSF
receives the order after the time at which the Fund values its shares, the price
will be based on the NAV determined as of the close of the Exchange on the next
day it is open. If funds for the purchase of shares are sent directly to CISC,
they will be invested at the public offering price next determined after receipt
in good order. Payment for shares of the Fund must be in U.S. dollars; if made
by check, the check must be drawn on a U.S. bank.
The Fund receives the entire NAV of shares sold. For shares subject to an
initial sales charge, CISI's commission is the sales charge shown in the Fund's
Prospectus less any applicable FSF discount. The FSF discount is the same for
all FSFs, except that CISI retains the entire sales charge on any sales made to
a shareholder who does not specify a FSF on the Investment Account Application
("Application"). CISI generally retains 100% of any asset-based sales charge
(distribution fee) or contingent deferred sales charge. Such charges generally
reimburse CISI for any up-front and/or ongoing commissions paid to FSFs.
Checks presented for the purchase of shares of the Fund which are returned by
the purchaser's bank or checkwriting privilege checks for which there are
insufficient funds in a shareholder's account to cover redemption will subject
such purchaser or shareholder to a $15 service fee for each check returned.
Checks must be drawn on a U.S. bank and must be payable in U.S. dollars.
CISC acts as the shareholder's agent whenever it receives instructions to carry
out a transaction on the shareholder's account. Upon receipt of instructions
that shares are to be purchased for a shareholder's account, the designated FSF
will receive the applicable sales commission. Shareholders may change FSFs at
any time by written notice to CISC, provided the new FSF has a sales agreement
with CISI.
Shares credited to an account are transferable upon written instructions in good
order to CISC and may be redeemed as described under "How to Sell Shares" in the
Prospectus. Certificates will not be issued for Class A shares unless
specifically requested and no certificates will be issued for Class B, C, D, T
or Z shares. The Colonial money market funds will not issue certificates.
Shareholders may send any certificates which have been previously acquired to
CISC for deposit to their account.
SPECIAL PURCHASE PROGRAMS/INVESTOR SERVICES
The following special purchase programs/investor services may be changed or
eliminated at any time.
Fundamatic Program. As a convenience to investors, shares of most Colonial funds
may be purchased through the Colonial Fundamatic Program. Preauthorized monthly
bank drafts or electronic funds transfer for a fixed amount of at least $50 are
used to purchase a Colonial fund's shares at the public offering price next
determined after CISI receives the proceeds from the draft (normally the 5th or
the 20th of each month, or the next business day thereafter). If your Fundamatic
purchase is by electronic funds transfer, you may request the Fundamatic
purchase for any day. Further information and application forms are available
from FSFs or from CISI.
Automated Dollar Cost Averaging (Classes A, B and D). Colonial's Automated
Dollar Cost Averaging program allows you to exchange $100 or more on a monthly
basis from any Colonial fund in which you have a current balance of at least
$5,000 into the same class of shares of up to four other Colonial funds.
Complete the Automated Dollar Cost Averaging section of the Application. The
designated amount will be exchanged on the third Tuesday of each month. There is
no charge for exchanges made pursuant to the Automated Dollar Cost Averaging
program. Exchanges will continue so long as your Colonial fund balance is
sufficient to complete the transfers. Your normal rights and privileges as a
shareholder remain in full force and effect. Thus you can buy any fund, exchange
between the same Class of shares of funds by written instruction or by telephone
exchange if you have so elected and withdraw amounts from any fund, subject to
the imposition of any applicable CDSC.
Any additional payments or exchanges into your Colonial fund will extend the
time of the Automated Dollar Cost Averaging program.
An exchange is a capital sale transaction for federal income tax purposes.
You may terminate your program, change the amount of the exchange (subject to
the $100 minimum), or change your selection of funds, by telephone or in
writing; if in writing by mailing your instructions to Colonial Investors
Service Center, Inc. P.O. Box 1722, Boston, MA 02105-1722.
You should consult your FSF or investment adviser to determine whether or not
the Automated Dollar Cost Averaging program is appropriate for you.
CISI offers several plans by which an investor may obtain reduced initial or
contingent deferred sales charges . These plans may be altered or discontinued
at any time. See "Programs For Reducing or Eliminating Sales Charges" for more
information.
Tax-Sheltered Retirement Plans. CISI offers prototype tax-qualified plans,
including Individual Retirement Accounts (IRAs), and Pension and Profit-Sharing
Plans for individuals, corporations, employees and the self-employed. The
minimum initial Retirement Plan investment is $25. The First National Bank of
Boston is the Trustee of CISI prototype plans and charges a $10 annual fee.
Detailed information concerning these Retirement Plans and copies of the
Retirement Plans are available from CISI.
Consultation with a competent financial and tax adviser regarding these Plans
and consideration of the suitability of fund shares as an investment under the
Employee Retirement Income Security Act of 1974 or otherwise is recommended.
Telephone Address Change Services. By calling CISC, shareholders or their FSF of
record may change an address on a recorded telephone line. Confirmations of
address change will be sent to both the old and the new addresses. Telephone
redemption privileges are suspended for 30 days after an address change is
effected.
Colonial Cash Connection. Dividends and any other distributions, including
Systematic Withdrawal Plan (SWP) payments, may be automatically deposited to a
shareholder's bank account via electronic funds transfer. Shareholders wishing
to avail themselves of this electronic transfer procedure should complete the
appropriate sections of the Application.
Automatic Dividend Diversification. The automatic dividend diversification
reinvestment program (ADD) generally allows shareholders to have all
distributions from a fund automatically invested in the same class of shares of
another Colonial fund. An ADD account must be in the same name as the
shareholder's existing open account with the particular fund. Call CISC for more
information at 1-800- 422-3737.
PROGRAMS FOR REDUCING OR ELIMINATING SALES CHARGES
Right of Accumulation and Statement of Intent (Class A and Class T shares only)
(Class T shares can only be purchased by the shareholders of Colonial Newport
Tiger Fund who already own Class T shares). Reduced sales charges on Class A and
T shares can be effected by combining a current purchase with prior purchases of
Class A, B, C, D, T and Z shares of the Colonial funds. The applicable sales
charge is based on the combined total of:
1. the current purchase; and
2. the value at the public offering price at the close of business on
the previous day of all Colonial funds' Class A shares held by the
shareholder (except shares of any Colonial money market fund, unless
such shares were acquired by exchange from Class A shares of another
Colonial fund other than a money market fund and Class B, C, D, T
and Z shares).
CISI must be promptly notified of each purchase which entitles a shareholder to
a reduced sales charge. Such reduced sales charge will be applied upon
confirmation of the shareholder's holdings by CISC. A Colonial fund may
terminate or amend this Right of Accumulation.
Any person may qualify for reduced sales charges on purchases of Class A and T
shares made within a thirteen-month period pursuant to a Statement of Intent
("Statement"). A shareholder may include, as an accumulation credit toward the
completion of such Statement, the value of all Class A, B, C D, T and Z shares
held by the shareholder on the date of the Statement in Colonial funds (except
shares of any Colonial money market fund, unless such shares were acquired by
exchange from Class A shares of another non-money market Colonial fund). The
value is determined at the public offering price on the date of the Statement.
Purchases made through reinvestment of distributions do not count toward
satisfaction of the Statement.
During the term of a Statement, CISC will hold shares in escrow to secure
payment of the higher sales charge applicable to Class A or T shares actually
purchased. Dividends and capital gains will be paid on all escrowed shares and
these shares will be released when the amount indicated has been purchased. A
Statement does not obligate the investor to buy or a fund to sell the amount of
the Statement.
If a shareholder exceeds the amount of the Statement and reaches an amount which
would qualify for a further quantity discount, a retroactive price adjustment
will be made at the time of expiration of the Statement. The resulting
difference in offering price will purchase additional shares for the
shareholder's account at the applicable offering price. As a part of this
adjustment, the FSF shall return to CISI the excess commission previously paid
during the thirteen-month period.
If the amount of the Statement is not purchased, the shareholder shall remit to
CISI an amount equal to the difference between the sales charge paid and the
sales charge that should have been paid. If the shareholder fails within twenty
days after a written request to pay such difference in sales charge, CISC will
redeem that number of escrowed Class A shares to equal such difference. The
additional amount of FSF discount from the applicable offering price shall be
remitted to the shareholder's FSF of record.
Additional information about and the terms of Statements of Intent are available
from your FSF, or from CISC at 1-800-345-6611.
Colonial Asset Builder Investment Program (this section currently applies only
to the Class A shares of Colonial Growth Shares Fund and The Colonial Fund, each
a series of Colonial Trust III). A reduced sales charge applies to a purchase of
certain Colonial funds' Class A shares under a statement of intent for the
Colonial Asset Builder Investment Program. The Program offer may be withdrawn at
any time without notice. A completed Program may serve as the initial investment
for a new Program, subject to the maximum of $4,000 in initial investments per
investor. Shareholders in this program are subject to a 5% sales charge. CISC
will escrow shares to secure payment of the additional sales charge on amounts
invested if the Program is not completed. Escrowed shares are credited with
distributions and will be released when the Program has ended. Shareholders are
subject to a 1% fee on the amount invested if they do not complete the Program.
Prior to completion of the Program, only scheduled Program investments may be
made in a Colonial fund in which an investor has a Program account. The
following services are not available to Program accounts until a Program has
ended:
Systematic Withdrawal Plan Share Certificates
Sponsored Arrangements Exchange Privilege
$50,000 Fast Cash Colonial Cash Connection
Right of Accumulation Automatic Dividend Diversification
Telephone Redemption Reduced Sales Charges for any "person"
Statement of Intent
*Exchanges may be made to other Colonial funds offering the Program.
Because of the unavailability of certain services, this Program may not be
suitable for all investors.
The FSF receives 3% of the investor's intended purchases under a Program at the
time of initial investment and 1% after the 24th monthly payment. CISI may
require the FSF to return all applicable commissions paid with respect to a
Program terminated within six months of inception, and thereafter to return
commissions in excess of the FSF discount applicable to shares actually
purchased.
Since the Asset Builder plan involves continuous investment regardless of the
fluctuating prices of funds shares, investors should consult their FSF to
determine whether it is appropriate. The Plan does not assure a profit nor
protect against loss in declining markets.
Reinstatement Privilege. An investor who has redeemed Class A, B, D or T shares
may, upon request, reinstate within one year a portion or all of the proceeds of
such sale in shares of the same Class of any Colonial fund at the NAV next
determined after CISC receives a written reinstatement request and payment. Any
CDSC paid at the time of the redemption will be credited to the shareholder upon
reinstatement. The period between the redemption and the reinstatement will not
be counted in aging the reinstated shares for purposes of calculating any CDSC
or conversion date. Investors who desire to exercise this privilege should
contact their FSF or CISC. Shareholders may exercise this Privilege an unlimited
number of times. Exercise of this privilege does not alter the Federal income
tax treatment of any capital gains realized on the prior sale of fund shares,
but to the extent any such shares were sold at a loss, some or all of the loss
may be disallowed for tax purposes. Consult your tax adviser.
Privileges of Colonial Employees or Financial Service Firms (in this section,
the "Adviser" refers to Colonial Management Associates, Inc. in its capacity as
the Adviser or Administrator to the Colonial Funds). Class A shares of certain
funds may be sold at NAV to the following individuals whether currently employed
or retired: Trustees of funds advised or administered by the Adviser; directors,
officers and employees of the Adviser, CISI and other companies affiliated with
the Adviser; registered representatives and employees of FSFs (including their
affiliates) that are parties to dealer agreements or other sales arrangements
with CISI; and such persons' families and their beneficial accounts.
Sponsored Arrangements. Class A and Class T shares (Class T shares can only be
purchased by the shareholders of Colonial Newport Tiger Fund who already own
Class T shares) of certain funds may be purchased at reduced or no sales charge
pursuant to sponsored arrangements, which include programs under which an
organization makes recommendations to, or permits group solicitation of, its
employees, members or participants in connection with the purchase of shares of
the fund on an individual basis. The amount of the sales charge reduction will
reflect the anticipated reduction in sales expense associated with sponsored
arrangements. The reduction in sales expense, and therefore the reduction in
sales charge, will vary depending on factors such as the size and stability of
the organization's group, the term of the organization's existence and certain
characteristics of the members of its group. The Colonial funds reserve the
right to revise the terms of or to suspend or discontinue sales pursuant to
sponsored plans at any time.
Class A and Class T shares (Class T shares can only be purchased by the
shareholders of Colonial Newport Tiger Fund who already own Class T shares) of
certain funds may also be purchased at reduced or no sales charge by clients of
dealers, brokers or registered investment advisers that have entered into
agreements with CISI pursuant to which the Colonial funds are included as
investment options in programs involving fee-based compensation arrangements.
Net Asset Value Exchange Privilege (in this section, the "Adviser" refers to
Colonial Management Associates, Inc. in its capacity as the Adviser or
Administrator to the Colonial Funds). Class A shares of certain funds may also
be purchased at reduced or no sales charge by investors moving from another
mutual fund complex or a discretionary account and by participants in certain
retirement plans. In lieu of the commissions described in the Prospectus, the
Adviser will pay the FSF a quarterly service fee which is the service fee
established for each applicable Colonial fund.
Waiver of Contingent Deferred Sales Charges (CDSCs) (in this section, the
"Adviser" refers to Colonial Management Associates, Inc. in its capacity as the
Adviser or Administrator to the Colonial Funds) (Classes A, B, and D) CDSCs may
be waived on redemptions in the following situations with the proper
documentation:
1. Death. CDSCs may be waived on redemptions within one year
following the death of (i) the sole shareholder on an individual
account, (ii) a joint tenant where the surviving joint tenant is
the deceased's spouse, or (iii) the beneficiary of a Uniform Gifts
to Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or
other custodial account. If, upon the occurrence of one of the
foregoing, the account is transferred to an account registered
in the name of the deceased's estate, the CDSC will be waived on
any redemption from the estate account occurring within one year
after the death. If the Class B shares are not redeemed within
one year of the death, they will remain subject to the
applicable CDSC, when redeemed from the transferee's account. If
the account is transferred to a new registration and then a
redemption is requested, the applicable CDSC will be charged.
2. Systematic Withdrawal Plan (SWP). CDSCs may be waived on
redemptions occurring pursuant to a monthly, quarterly or
semi-annual SWP established with the Adviser, to the extent the
redemptions do not exceed, on an annual basis, 12% of the
account's value, so long as at the time of the first SWP
redemption the account had had distributions reinvested for a
period at least equal to the period of the SWP (e.g., if it is a
quarterly SWP, distributions must have been reinvested at least for
the three month period prior to the first SWP redemption);
otherwise CDSCs will be charged on SWP redemptions until this
requirement is met; this requirement does not apply if the SWP is
set up at the time the account is established, and distributions
are being reinvested. See below under "Investors Services" -
Systematic Withdrawal Plan.
3. Disability. CDSCs may be waived on redemptions occurring within one
year after the sole shareholder on an individual account or a joint
tenant on a spousal joint tenant account becomes disabled (as
defined in Section 72(m)(7) of the Internal Revenue Code). To be
eligible for such waiver, (i) the disability must arise after the
purchase of shares and (ii) the disabled shareholder must have been
under age 65 at the time of the initial determination of
disability. If the account is transferred to a new registration and
then a redemption is requested, the applicable CDSC will be
charged.
4. Death of a trustee. CDSCs may be waived on redemptions occurring
upon dissolution of a revocable living or grantor trust following
the death of the sole trustee where (i) the grantor of the trust is
the sole trustee and the sole life beneficiary, (ii) death occurs
following the purchase and (iii) the trust document provides for
dissolution of the trust upon the trustee's death. If the account
is transferred to a new registration (including that of a successor
trustee), the applicable CDSC will be charged upon any subsequent
redemption.
5. Returns of excess contributions. CDSCs may be waived on redemptions
required to return excess contributions made to retirement plans or
individual retirement accounts, so long as the FSF agrees to return
the applicable portion of any commission paid by Colonial.
6. Qualified Retirement Plans. CDSCs may be waived on redemptions
required to make distributions from qualified retirement plans
following (i) normal retirement (as stated in the Plan document) or
(ii) separation from service. CDSCs also will be waived on SWP
redemptions made to make required minimum distributions from
qualified retirement plans that have invested in Colonial funds for
at least two years.
The CDSC also may be waived where the FSF agrees to return all or an agreed upon
portion of the commission earned on the sale of the shares being redeemed.
HOW TO SELL SHARES
Shares may also be sold on any day the Exchange is open, either directly to the
Fund or through the shareholder's FSF. 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 send
proceeds only after the check has cleared (which may take up to 15 days).
To sell shares directly to the Fund, send a signed letter of instruction or
stock power form to CISC, 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 FSFs, CISC, and many banks. Additional documentation is required
for sales by corporations, agents, fiduciaries, surviving joint owners and
individual retirement account holders. Call CISC for more information
1-800-345-6611.
FSFs must receive requests before the time at which the Fund's shares are valued
to receive that day's price, are responsible for furnishing all necessary
documentation to CISC and may charge for this service.
Systematic Withdrawal Plan
If a shareholder's Account Balance is at least $5,000, the shareholder may
establish a SWP. A specified dollar amount or percentage of the then current net
asset value of the shareholder's investment in any Colonial fund designated by
the shareholder will be paid monthly, quarterly or semi-annually to a designated
payee. The amount or percentage the shareholder specifies generally may not, on
an annualized basis, exceed 12% of the value, as of the time the shareholder
makes the election of the shareholder's investment. Withdrawals from Class B and
Class D shares of the fund under a SWP will be treated as redemptions of shares
purchased through the reinvestment of fund distributions, or, to the extent such
shares in the shareholder's account are insufficient to cover Plan payments, as
redemptions from the earliest purchased shares of such fund in the shareholder's
account. No CDSCs apply to a redemption pursuant to a SWP of 12% or less, even
if, after giving effect to the redemption, the shareholder's Account Balance is
less than the shareholder's base amount. Qualified plan participants who are
required by Internal Revenue Code regulation to withdraw more than 12%, on an
annual basis, of the value of their Class B and Class D share account may do so
but will be subject to a CDSC ranging from 1% to 5% of the amount withdrawn. If
a shareholder wishes to participate in a SWP, the shareholder must elect to have
all of the shareholder's income dividends and other fund distributions payable
in shares of the fund rather than in cash.
A shareholder or a shareholder's FSF of record may establish a SWP account by
telephone on a recorded line. However, SWP checks will be payable only to the
shareholder and sent to the address of record. SWPs from retirement accounts
cannot be established by telephone.
A shareholder may not establish a SWP if the shareholder holds shares in
certificate form. Purchasing additional shares (other than through dividend and
distribution reinvestment) while receiving SWP payments is ordinarily
disadvantageous because of duplicative sales charges. For this reason, a
shareholder may not maintain a plan for the accumulation of shares of the fund
(other than through the reinvestment of dividends) and a SWP at the same time.
SWP payments are made through share redemptions, which may result in a gain or
loss for tax purposes, may involve the use of principal and may eventually use
up all of the shares in a shareholder's account.
A fund may terminate a shareholder's SWP if the shareholder's Account Balance
falls below $5,000 due to any transfer or liquidation of shares other than
pursuant to the SWP. SWP payments will be terminated on receiving satisfactory
evidence of the death or incapacity of a shareholder. Until this evidence is
received, CISC will not be liable for any payment made in accordance with the
provisions of a SWP.
The cost of administering SWPs for the benefit of shareholders who participate
in them is borne by the fund as an expense of all shareholders.
Shareholders whose positions are held in "street name" by certain FSFs may not
be able to participate in a SWP. If a shareholder's Fund shares are held in
"street name", the shareholder should consult his or her FSF to determine
whether he or she may participate in a SWP.
Telephone Redemptions. All Colonial Funds shareholders and/or their financial
advisers (except for Colonial Newport Tiger Cub Fund and Colonial Newport Japan
Fund) are automatically eligible to redeem up to $50,000 of the fund's shares by
calling 1-800-422-3737 toll free any business day between 9:00 a.m. and the
close of trading of the Exchange (normally 4:00 p.m. Eastern time). Transactions
received after 4:00 p.m. Eastern Time will receive the next business day's
closing price. Telephone redemption privileges for larger amounts and for the
Colonial Newport Tiger Cub Fund and the Colonial Newport Japan Fund may be
elected on the Application. CISC will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine. Telephone redemptions
are not available on accounts with an address change in the preceding 30 days
and proceeds and confirmations will only be mailed or sent to the address of
record unless the redemption proceeds are being sent to a pre-designated bank
account. Shareholders and/or their financial advisers will be required to
provide their name, address and account number. Financial advisers will also be
required to provide their broker number. All telephone transactions are
recorded. A loss to a shareholder may result from an unauthorized transaction
reasonably believed to have been authorized. No shareholder is obligated to
execute the telephone authorization form or to use the telephone to execute
transactions.
Checkwriting (in this section, the "Adviser" refers to Colonial Management
Associates, Inc. in its capacity as the Adviser or Administrator of the Colonial
Funds) (Available only on the Class A and Class C shares of certain Colonial
funds) Shares may be redeemed by check if a shareholder completed an Application
and Signature Card. The Adviser will provide checks to be drawn on The First
National Bank of Boston (the "Bank"). These checks may be made payable to the
order of any person in the amount of not less than $500 nor more than $100,000.
The shareholder will continue to earn dividends on shares until a check is
presented to the Bank for payment. At such time a sufficient number of full and
fractional shares will be redeemed at the next determined net asset value to
cover the amount of the check. Certificate shares may not be redeemed in this
manner.
Shareholders utilizing checkwriting drafts will be subject to the Bank's rules
governing checking accounts. There is currently no charge to the shareholder for
the use of checks. The shareholder should make sure that there are sufficient
shares in his or her open account to cover the amount of any check drawn since
the net asset value of shares will fluctuate. If insufficient shares are in the
shareholder's open account, the check will be returned marked "insufficient
funds" and no shares will be redeemed; the shareholder will be charged a $15
service fee for each check returned. It is not possible to determine in advance
the total value of an open account because prior redemptions and possible
changes in net asset value may cause the value of an open account to change.
Accordingly, a check redemption should not be used to close an open account.
Non Cash Redemptions. For redemptions of any single shareholder within any
90-day period exceeding the lesser of $250,000 or 1% of a Colonial fund's net
asset value, a Colonial fund may make the payment or a portion of the payment
with portfolio securities held by that Colonial fund instead of cash, in which
case the redeeming shareholder may incur brokerage and other costs in selling
the securities received.
DISTRIBUTIONS
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,
but will be invested in additional shares of the same Class of the Fund at net
asset value. Undelivered distribution checks returned by the post office will be
invested in your account.
Shareholders may reinvest all or a portion of a recent cash distribution without
a sales charge. A shareholder request must be received within 30 calendar days
of the distribution. A shareholder may exercise this privilege only once. No
charge is currently made for reinvestment.
Shares of most funds that pay daily dividends will normally earn dividends
starting with the date the fund receives payment for the shares and will
continue through the day before the shares are redeemed, transferred or
exchanged. The daily dividends for Colonial Municipal Money Market Fund will be
earned starting with the day after that fund receives payments for the shares.
HOW TO EXCHANGE SHARES
Shares of the Fund may be exchanged for the same class of shares of the other
continuously offered Colonial funds (with certain exceptions) on the basis of
the NAVs per share at the time of exchange. Class T and Z shares may be
exchanged for Class A shares of the other Colonial funds. The prospectus of each
Colonial fund describes its investment objective and policies, and shareholders
should obtain a prospectus and consider these objectives and policies carefully
before requesting an exchange. Shares of certain Colonial funds are not
available to residents of all states. Consult CISC before requesting an
exchange.
By calling CISC, shareholders or their FSF of record may exchange among accounts
with identical registrations, provided that the shares are held on deposit.
During periods of unusual market changes and shareholder activity, shareholders
may experience delays in contacting CISC by telephone to exercise the telephone
exchange privilege. Because an exchange involves a redemption and reinvestment
in another Colonial fund, completion of an exchange may be delayed under unusual
circumstances, such as if the fund suspends repurchases or postpones payment for
the fund shares being exchanged in accordance with federal securities law. CISC
will also make exchanges upon receipt of a written exchange request and, share
certificates, if any. If the shareholder is a corporation, partnership, agent,
or surviving joint owner, CISC will require customary additional documentation.
Prospectuses of the other Colonial funds are available from the Colonial
Literature Department by calling 1-800-248-2828.
A loss to a shareholder may result from an unauthorized transaction reasonably
believed to have been authorized. No shareholder is obligated to use the
telephone to execute transactions.
You need to hold your Class A and Class T shares for five months before
exchanging to certain funds having a higher maximum sales charge. Consult your
FSF or CISC. In all cases, the shares to be exchanged must be registered on the
records of the fund in the name of the shareholder desiring to exchange.
Shareholders of the other Colonial open-end funds generally may exchange their
shares at NAV for the same class of shares of the fund.
An exchange is a capital sale transaction for federal income tax purposes. The
exchange privilege may be revised, suspended or terminated at any time.
SUSPENSION OF REDEMPTIONS
A Colonial fund may not suspend shareholders' right of redemption or postpone
payment for more than seven days unless the Exchange is closed for other than
customary weekends or holidays, or if permitted by the rules of the SEC during
periods when trading on the Exchange is restricted or during any emergency which
makes it impracticable for the fund to dispose of its securities or to determine
fairly the value of its net assets, or during any other period permitted by
order of the SEC for protection of investors.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the
Declaration disclaims shareholder liability for acts or obligations of the fund
and the Trust and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by the fund or the
Trust's Trustees. The Declaration provides for indemnification out of fund
property for all loss and expense of any shareholder held personally liable for
the obligations of the fund. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances (which are
considered remote) in which the fund would be unable to meet its obligations and
the disclaimer was inoperative.
The risk of a particular fund incurring financial loss on account of another
fund of the Trust is also believed to be remote, because it would be limited to
circumstances in which the disclaimer was inoperative and the other fund was
unable to meet its obligations.
SHAREHOLDER MEETINGS
As described under the caption "Organization and History" in the Prospectus of
each Colonial fund, the fund will not hold annual shareholders' meetings. The
Trustees may fill any vacancies in the Board of Trustees except that the
Trustees may not fill a vacancy if, immediately after filling such vacancy, less
than two-thirds of the Trustees then in office would have been elected to such
office by the shareholders. In addition, at such times as less than a majority
of the Trustees then in office have been elected to such office by the
shareholders, the Trustees must call a meeting of shareholders. Trustees may be
removed from office by a written consent signed by a majority of the outstanding
shares of the Trust or by a vote of the holders of a majority of the outstanding
shares at a meeting duly called for the purpose, which meeting shall be held
upon written request of the holders of not less than 10% of the outstanding
shares of the Trust. Upon written request by the holders of 1% of the
outstanding shares of the Trust stating that such shareholders of the Trust, for
the purpose of obtaining the signatures necessary to demand a shareholders'
meeting to consider removal of a Trustee, request information regarding the
Trust's shareholders, the Trust will provide appropriate materials (at the
expense of the requesting shareholders). Except as otherwise disclosed in the
Prospectus and this SAI, the Trustees shall continue to hold office and may
appoint their successors.
At any shareholders' meetings that may be held, shareholders of all series would
vote together, irrespective of series, on the election of Trustees or the
selection of independent accountants, but each series would vote separately from
the others on other matters, such as changes in the investment policies of that
series or the approval of the management agreement for that series.
PERFORMANCE MEASURES
Total Return
Standardized average annual total return. Average annual total return is the
actual return on a $1,000 investment in a particular class of shares of the
fund, made at the beginning of a stated period, adjusted for the maximum sales
charge or applicable CDSC for the class of shares of the fund and assuming that
all distributions were reinvested at NAV, converted to an average annual return
assuming annual compounding.
Nonstandardized total return. Nonstandardized total returns differ from
standardized average annual total returns only in that they may relate to
nonstandardized periods, represent aggregate rather than average annual total
returns or in that the sales charge or CDSC is not deducted.
Yield Money market. A money market fund's yield and effective yield is
computed in accordance with the SEC's formula for money market fund yields.
Non money market. The yield for each class of shares is determined by (i)
calculating the income (as defined by the SEC for purposes of advertising yield)
during the base period and subtracting actual expenses for the period (net of
any reimbursements), and (ii) dividing the result by the product of the average
daily number of shares of the Colonial fund entitled to dividends for the period
and the maximum offering price of the fund on the last day of the period, (iii)
then annualizing the result assuming semi-annual compounding. Tax-equivalent
yield is calculated by taking that portion of the yield which is exempt from
income tax and determining the equivalent taxable yield which would produce the
same after tax yield for any given federal and state tax rate, and adding to
that the portion of the yield which is fully taxable. Adjusted yield is
calculated in the same manner as yield except that expenses voluntarily borne or
waived by Colonial have been added back to actual expenses.
Distribution rate. The distribution rate for each class of shares is calculated
by annualizing the most current period's distributions and dividing by the
maximum offering price on the last day of the period. Generally, the fund's
distribution rate reflects total amounts actually paid to shareholders, while
yield reflects the current earning power of the fund's portfolio securities (net
of the fund's expenses). The fund's yield for any period may be more or less
than the amount actually distributed in respect of such period.
The fund may compare its performance to various unmanaged indices published by
such sources as listed in Appendix II.
The fund may also refer to quotations, graphs and electronically transmitted
data from sources believed by the Adviser to be reputable, and publications in
the press pertaining to a fund's performance or to the Adviser or its
affiliates, including comparisons with competitors and matters of national and
global economic and financial interest. Examples include Forbes, Business Week,
Money Magazine, The Wall Street Journal, The New York Times, The Boston Globe,
Barron's National Business & Financial Weekly, Financial Planning, Changing
Times, Reuters Information Services, Wiesenberger Mutual Funds Investment
Report, Lipper Analytical Services Corporation, Morningstar, Inc., Sylvia
Porter's Personal Finance Magazine, Money Market Directory, SEI Funds Evaluation
Services, FTA World Index and Disclosure Incorporated.
All data are based on past performance and do not predict future results.
<PAGE>
APPENDIX I
DESCRIPTION OF BOND RATINGS
S&P
AAA The highest rating assigned by S&P indicates an extremely strong capacity to
repay principal and interest.
AA bonds also qualify as high quality. Capacity to repay principal and pay
interest is very strong, and in the majority of instances, they differ from AAA
only in small degree.
A bonds have a strong capacity to repay principal and interest, although they
are somewhat more susceptible to the adverse effects of changes in circumstances
and economic conditions.
BBB bonds are regarded as having an adequate capacity to repay principal and
interest. Whereas they normally exhibit protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to repay principal and interest than for bonds in the A category.
BB, B, CCC, and CC bonds are regarded, on balance, as predominantly speculative
with respect to capacity to pay interest and principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation and CC
the highest degree. While likely to have some quality and protection
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C ratings are reserved for income bonds on which no interest is being paid.
D bonds are in default, and payment of interest and/or principal is in arrears.
Plus(+) or minus (-) are modifiers relative to the 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 comments on the
likelihood of, or the risk of default upon failure of, such completion. The
investor should exercise 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:
Amortization schedule (the larger the final maturity relative to other
maturities, the more likely the issue will be rated as a note).
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 to 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 the Municipal Bond ratings set forth above.
<PAGE>
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 a 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 protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than in Aaa securities. Those bonds in the
Aa through B groups that Moody's believes possess the strongest investment
attributes are designated by the symbol Aa1, A1 and Baa1.
A bonds possess many of the 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 that
suggest a susceptibility to impairment sometime in the future.
Baa bonds are considered as medium grade, 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 over the future. Uncertainty of position characterizes these
bonds.
B bonds generally lack characteristics of the 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. They may be in default or there may be present
elements of danger with respect to principal or interest.
Ca bonds are speculative in a high degree, often in default or having other
marked shortcomings.
C bonds are the lowest rated class of bonds and 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 the 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.
<PAGE>
<TABLE>
<CAPTION>
APPENDIX II
1995
SOURCE CATEGORY RETURN (%)
<S> <C> <C>
Donoghue Tax-Free Funds 3.39
Donoghue U.S. Treasury Funds 5.19
Dow Jones Industrials 36.95
Morgan Stanley Capital International EAFE Index 11.22
Morgan Stanley Capital International EAFE GDP Index 11.16
Libor Six-month Libor N/A
Lipper Adjustable Rate Mortgage 4.73
Lipper California Municipal Bond Funds 18.32
Lipper Connecticut Municipal Bond Funds 16.58
Lipper Closed End Bond Funds 20.83
Lipper Florida Municipal Bond Funds 17.84
Lipper General Bond Fund 20.83
Lipper General Municipal Bonds 16.84
Lipper General Short-Term Tax-Exempt Bonds 7.43
Lipper Global Funds 16.05
Lipper Growth Funds 30.79
Lipper Growth & Income Funds 30.82
Lipper High Current Yield Bond Funds 16.44
Lipper High Yield Municipal Bond Debt 15.98
Lipper Fixed Income Funds 15.19
Lipper Insured Municipal Bond Average 17.59
Lipper Intermediate Muni Bonds 12.89
Lipper Intermediate (5-10) U.S. Government Funds 15.75
Lipper Massachusetts Municipal Bond Funds 16.82
Lipper Michigan Municipal Bond Funds 16.89
Lipper Mid Cap Funds 32.04
Lipper Minnesota Municipal Bond Funds 15.39
Lipper U.S. Government Money Market Funds 5.26
Lipper Natural Resources 18.80
Lipper New York Municipal Bond Funds 16.73
Lipper North Carolina Municipal Bond Funds 17.51
Lipper Ohio Municipal Bond Funds 16.81
Lipper Small Company Growth Funds 31.55
Lipper U.S. Government Funds 17.34
Lipper Pacific Region Funds-Ex-Japan 1.95
Shearson Lehman Composite Government Index 18.33
Shearson Lehman Government/Corporate Index 19.25
Shearson Lehman Long-term Government Index 30.90
S&P 500 S&P 37.54
S&P Utility Index S&P 42.39
S&P Barra Growth 38.13
S&P Barra Value 37.00
S&P Midcap 400 28.56
First Boston High Yield Index 17.38
Swiss Bank 10 Year U.S. Government (Corporate Bond) 22.24
Swiss Bank 10 Year United Kingdom (Corporate Bond) 16.19
Swiss Bank 10 Year France (Corporate Bond) 26.72
Swiss Bank 10 Year Germany (Corporate Bond) 25.74
Swiss Bank 10 Year Japan (Corporate Bond) 17.83
Swiss Bank 10 Year Canada (Corporate Bond) 25.04
Swiss Bank 10 Year Australia (Corporate Bond) 19.42
Morgan Stanley Capital International 10 Year Hong Kong (Equity) 23.83
Morgan Stanley Capital International 10 Year Belgium (Equity) 20.67
Morgan Stanley Capital International 10 Year Austria (Equity) 10.85
Morgan Stanley Capital International 10 Year France (Equity) 15.30
Morgan Stanley Capital International 10 Year Netherlands (Equity) 19.33
Morgan Stanley Capital International 10 Year Japan (Equity) 12.82
Morgan Stanley Capital International 10 Year Switzerland (Equity) 17.06
Morgan Stanley Capital International 10 Year United Kingdom (Equity) 15.02
Morgan Stanley Capital International 10 Year Germany (Equity) 10.66
Morgan Stanley Capital International 10 Year Italy (Equity) 7.78
Morgan Stanley Capital International 10 Year Sweden (Equity) 19.43
Morgan Stanley Capital International 10 Year United States (Equity) 14.82
Morgan Stanley Capital International 10 Year Australia (Equity) 15.13
Morgan Stanley Capital International 10 Year Norway (Equity) 10.72
Morgan Stanley Capital International 10 Year Spain (Equity) 17.91
Morgan Stanley Capital International World GDP Index 18.14
-----
Morgan Stanley Capital International Pacific Region Funds Ex-Japan 12.95
Inflation Consumer Price Index N/A
FHLB-San Francisco 11th District Cost-of-Funds Index N/A
Federal Reserve Six-Month Treasury Bill N/A
Federal Reserve One-Year Constant-Maturity Treasury Rate N/A
Federal Reserve Five-Year Constant-Maturity Treasury Rate N/A
Frank Russell & Co. Russell 2000 28.45
Frank Russell & Co. Russell 1000 Value 38.35
Frank Russell & Co. Russell 1000 Growth 37.19
Bloomberg NA NA
Credit Lyonnais NA NA
Statistical Abstract of the U.S. NA NA
World Economic Outlook NA NA
</TABLE>
*in U.S. currency
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO
JUNE 30, 1996 (IN THOUSANDS)
COMMON STOCKS - 93.9% COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
CONSTRUCTION - 3.8%
BUILDING CONSTRUCTION - 3.3%
Empresas ICA Sociedad Controladora S.A.
de C.V. Mx 4 $ 56
Fujita Corp. Ja 37 172
Koninklijke Volker Stevin NV Ne 1 101
Maeda Corp. Ja 18 179
------
508
------
HEAVY CONSTRUCTION - NON BUILDING CONSTRUCTION - 0.5%
Stork N.V. Ne 3 77
------
- -----------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 22.5%
DEPOSITORY INSTITUTIONS - 5.4%
Australia & New Zealand Banking Group Ltd. Au 17 81
Corporacion Bancaria de Espana SA Sp 4 170
Den Danske Bank De 1 54
Guoco Group Ltd. HK 25 119
Hokkaido Takushoku Bank (a) Ja 70 212
Merita Ltd., Class A (a) Fi 21 44
Westpac Banking Corp. Au 35 153
------
833
------
HOLDING & OTHER INVESTMENT OFFICES - 7.7%
Chile Fund, Inc. (b) 11 260
Korea Fund, Inc. (b) 12 245
New South Africa Fund, Inc. (b) 2 23
Skandia Forsakrings AB Sw 7 185
Thai Fund (b) 10 239
The Malaysia Fund, Inc. (b) 12 232
------
1,184
------
INSURANCE AGENTS & BROKERS - 1.4%
Baloise Holding Ltd. Sz (c) 217
------
INSURANCE CARRIERS - 5.4%
International Nederlanden Groep Ne 9 261
Lloyds Abbey Life PLC UK 22 173
QBE Insurance Group Ltd. Au 16 95
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1996
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Schweizerische Lebensversicherungs und
Rentenanstalt Sz (c) $ 139
Union des Assurances Federales Fr 1 173
------
841
------
NONDEPOSITORY CREDIT INSTITUTIONS - 1.0%
Nippon Shinpan Co. Ja 22 156
------
REAL ESTATE - 1.6%
Cheung Kong (Holdings) Ltd. HK 12 86
New World Development Co. Ltd. HK 35 162
------
248
------
- -----------------------------------------------------------------------------
MANUFACTURING - 38.5%
CHEMICALS & ALLIED PRODUCTS - 9.2%
Christian Dior SA Fr 1 169
Galencia Holding AG Sz (c) 163
Hoechst AG G 7 236
Imperial Chemical Industries PLC UK 11 134
Medeva PLC UK 43 168
Sanofi SA Fr 2 172
Takeda Chemical Industries Ltd. Ja 11 194
Toyo Ink MFG Ja 31 177
------
1,413
------
ELECTRONIC & ELECTRICAL EQUIPMENT - 8.7%
Allgon AB, Class B Sw 10 168
Matsushaita Electric Industrial Co. Ja 10 186
Mitsubishi Electric Corp. Ja 23 160
Philips Electronics NV Ne 4 130
Pioneer Electronics Corp. Ja 9 214
Stanley Electric Co. Ltd. Ja 21 145
TDK Corp. Ja 3 179
Telefonaktiebolaget LM Ericsson,
Class B Sw 7 157
------
1,339
------
FABRICATED METAL - 0.6%
Van Der Horst Ltd. Si 20 94
------
FOOD & KINDRED PRODUCTS - 3.6%
Burns Philip & Co. Ltd. Au 38 71
Fraser & Neave Ltd. Si 14 145
Groupe Danone Fr 1 166
Nestle SA Sz (c) 171
------
553
------
</TABLE>
5
<PAGE>
<TABLE>
Investment Portfolio/June 30, 1996
<CAPTION>
- -----------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING - CONT.
MACHINERY & COMPUTER EQUIPMENT - 2.7%
Hitachi Ltd. Ja 18 $ 167
Komatsu Ltd. Ja 19 187
Tandberg Data A/S (a) No 6 57
------
411
------
MEASURING & ANALYZING INSTRUMENTS - 1.0%
Fuji Photo Film Co. Ltd. Ja 5 158
------
PETROLEUM REFINING - 1.1%
British Petroleum Ltd. UK 20 175
------
PRIMARY METAL - 2.0%
ALFA SA de CV Mx 44 199
NKF Holding N.V. (a) Ne 3 103
------
302
------
PRINTING & PUBLISHING - 0.2%
Moore Corp. Ltd. (b) 2 36
------
STONE, CLAY, GLASS & CONCRETE - 1.0%
Holderbank Financiere Glarus-BR Sz (c) 159
------
TEXTILE MILL PRODUCTS - 1.4%
Chargeurs International (a) Fr 1 31
Japan Wool Textile Co. Ja 19 184
------
215
------
TOBACCO PRODUCTS - 2.7%
B.A.T. Industries PLC UK 33 257
Hanson PLC UK 58 162
------
419
------
TRANSPORTATION EQUIPMENT - 4.3%
Mazda Motor (a) Ja 43 214
Toyota Motor Corp. Ja 18 450
------
664
------
- -----------------------------------------------------------------------------
MINING & ENERGY - 2.1%
OIL & GAS EXTRACTION
Brascan Ltd. Ca 9 175
Pioneer International Ltd. Au 54 157
------
332
------
- -----------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1996
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL TRADE - 2.4%
FOOD STORES - 1.2%
Tesco PLC UK 40 $ 183
------
MISCELLANEOUS RETAIL - 1.2%
Imasco Ltd. Ca 9 180
------
- -------------------------------------------------------------------------------
SERVICES - 3.3%
BUSINESS SERVICES - 1.2%
Securitas AB, Class B Sw 9 188
------
HEALTH SERVICES - 1.0%
Astria AB, Class B Sw 4 157
------
HOTELS, CAMPS & LODGING - 1.1%
Club Mediterrane SA Fr 2 161
------
- -------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 17.5%
AIR TRANSPORTATION - 0.9%
Lufthansa AG G 1 141
------
COMMUNICATIONS - 5.2%
British Telecommunications PLC UK 32 172
PATHE SA (a) Fr 1 164
Tele Denmark A/S ADR (b) 3 79
Telecom Italia SPA It 106 228
Telefonica de Espana Sp 8 155
------
798
------
ELECTRIC, GAS & SANITARY SERVICES - 1.8%
Hyder PLC UK 14 154
Westcoast Energy, Inc. Ca 9 130
------
284
------
ELECTRIC SERVICES - 3.5%
China Light & Power Co. Ltd. HK 19 86
Hong Kong Electric Holdings Ltd. HK 25 76
Oestereichisch Elektrizitatswirtschafts AG Aus 2 184
Union Electrica Fenosa SA Sp 31 197
------
543
------
GAS SERVICES - 0.5%
Hong Kong & China Gas Co. Ltd. HK 50 80
------
</TABLE>
7
<PAGE>
<TABLE>
Investment Portfolio/June 30, 1996
<CAPTION>
- -------------------------------------------------------------------------------
COMMON STOCKS - CONT. COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - CONT.
Motor Freight & Warehousing - 1.0%
Seino Transportation Ja 10 $ 158
-------
SANITARY SERVICES - 4.6%
Anglian Water PLC UK 19 174
Severn Trent Water PLC UK 18 152
Southern Water PLC UK 15 233
United Utilities PLC UK 17 144
-------
703
-------
- -------------------------------------------------------------------------------
WHOLESALE TRADE - 3.8%
DURABLE GOODS - 2.9%
CSR Ltd. Au 25 87
First Pacific Co. Ltd. HK 118 181
Ryosan Co. Ja 7 181
-------
449
-------
NONDURABLE GOODS - 0.9%
NV Koninklijke KNP BT Ne 6 144
-------
TOTAL COMMON STOCKS (cost of $14,127) 14,503
-------
WARRANTS - 0.0%
- -------------------------------------------------------------------------------
Gas Services
Hong Kong & China Gas Co.Ltd.
(cost rounds to less than one) HK 4 1
-------
TOTAL INVESTMENTS - 93.9% (cost of $14,127)(d) 14,504
-------
SHORT-TERM OBLIGATIONS - 5.3% PAR
- -------------------------------------------------------------------------------
Repurchase agreement with Chase Securities, Inc.,
dated 06/28/96, due 07/01/96 at 5.400%
collateralized by U.S. Treasury notes with
various maturities to 1998, market value
$839 (repurchase proceeds $821) $ 821 821
-------
OTHER ASSETS & LIABILITIES, NET - 0.8% 118
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $15,443
-------
</TABLE>
8
<PAGE>
<TABLE>
Investment Portfolio/June 30, 1996
- -----------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
- -----------------------------------------------------------------------------
(a) Non-income producing.
(b) This security is subject to the risks of the various countries in which the
issuer is investing. (See Notes to Financial Statements: Note 3 - Other.)
(c) Rounds to less than one.
(d) Cost for federal income tax purposes is the same.
<CAPTION>
Summary of Securities
by Country Country Value % of Total
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Japan Ja $ 3,673 25.3
United Kingdom UK 2,281 15.7
Multi-national (b) 1,114 7.7
France Fr 1,036 7.1
Sweden Sw 855 5.9
Switzerland Sz 849 5.9
Netherlands Ne 816 5.6
Hong Kong HK 791 5.5
Australia Au 644 4.4
Spain Sp 522 3.6
Canada Ca 485 3.3
Germany G 377 2.6
Mexico Mx 255 1.8
Singapore Si 239 1.6
Italy It 228 1.6
Austria Aus 184 1.3
Norway No 57 0.4
Denmark De 54 0.4
Finland Fi 44 0.3
------- -----
$14,504 100.0
======= =====
</TABLE>
Certain securities are listed by country of underlying exposure but may
trade predominantly on other exchanges.
Acronym Name
------- ----
ADR American Depository Receipt
See notes to financial statements.
9
<PAGE>
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
JUNE 30, 1996
<CAPTION>
(in thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $14,127) $14,504
Short-term obligations 821
-------
15,325
-------
Cash held in foreign banks (cost $5) $ 5
Receivable for:
Dividends 45
Foreign tax reclaims 12
Expense reimbursement due from Adviser 8
Deferred organization expenses 50
Other 2 122
--- -------
Total Assets 15,447
LIABILITIES
Accrued other 4
Total Liabilities --- 4
-------
NET ASSETS $15,443
-------
Net asset value & redemption price per share -
Class A ($14,929/1,450) $ 10.30
-------
Maximum offering price per share - Class A
($10.30/0.9425) $ 10.93(a)
-------
Net asset value & offering price per share -
Class B ($257/25) $ 10.28(b)
-------
Net asset value & redemption price per share -
Class D ($257/25) $ 10.28(b)
-------
Maximum offering price per share - Class D
($10.28/0.9900) $ 10.38
-------
COMPOSITION OF NET ASSETS
Capital paid in $14,988
Undistributed net investment income 39
Accumulated net realized gain 39
Net unrealized appreciation 377
-------
$15,443
-------
- ----------
<FN>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
</TABLE>
See notes to financial statements.
10
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1996 (a)
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $131
Interest 19
----
Total investment income (net of nonrebatable
foreign taxes withheld at source which
amounted to $18) 150
EXPENSES
Management fee $ 36
Service fee 10
Distribution fee - Class B (b)
Distribution fee - Class D (b)
Transfer agent 10
Bookkeeping fee 7
Custodian fee 8
Legal fee 2
Amortization of deferred
organization expenses 3
---
76
Fees waived by the Adviser (8) 68
--- ----
Net Investment Income 82
----
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 39
Foreign currency transactions (68)
Net Realized Loss --- (29)
Net unrealized appreciation during
the period 500
----
Net Gain 471
----
Net Increase in Net Assets from Operations $553
----
- ----------
<FN>
(a) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
(b) Rounds to less than one.
</TABLE>
See notes to financial statements.
11
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Period ended
(in thousands) June 30 (a)
------------
INCREASE (DECREASE) IN NET ASSETS 1996
<S> <C>
Operations:
Net investment income $ 82
Net realized loss (29)
Net unrealized appreciation 500
-------
Net Increase from Operations 553
Fund Share Transactions:
Receipts for shares sold - Class A --
Receipts for shares sold - Class B --
Receipts for shares sold - Class D --
-------
Net Increase from Fund
Share Transactions --
-------
Total Increase 553
NET ASSETS
Beginning of period 14,890
-------
End of period (including undistributed
net investment income of $39) $15,443
-------
NUMBER OF FUND SHARES
Sold - Class A --
-------
Sold - Class B --
-------
Sold - Class D --
-------
- ----------
<FN>
(a) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
</TABLE>
See notes to financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1. ACCOUNTING POLICIES
===============================================================================
ORGANIZATION: Colonial International Equity Fund (the Fund), a series
of Colonial Trust VI, is a diversified portfolio of a Massachusetts
business trust registered under the Investment Company Act of 1940, as
amended, as an open-end, management investment company. The Fund's
objective is to seek total return through a combination of long-term
growth of capital and income. The Fund may issue an unlimited number
of shares. The Fund offers three classes of shares: Class A, Class B
and Class D. Class A shares are sold with a front-end sales charge and
Class B shares are subject to an annual distribution fee and
contingent deferred sales charge. Class B shares will convert to Class
A shares when they have been outstanding approximately eight years.
Class D shares are subject to a reduced front-end sales charge, a
contingent deferred sales charge on redemptions made within one year
after purchase, and a continuing distribution fee.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates. The information contained in this report is from
the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission through the period ended June 30,
1996. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities are valued at
the last sale price or, in the case of unlisted or listed securities
for which there were no sales during the day, at current quoted bid
prices.
Debt securities generally are valued by a pricing service based upon
market transactions for normal, institutional-size trading units of
similar securities. When management deems it appropriate, an
over-the-counter or exchange bid quotation is used.
Forward currency contracts are valued based on the weighted value of
the exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued
at amortized cost.
The value of all assets and liabilities quoted in foreign currencies
are translated into U.S. dollars at that day's exchange rates.
Portfolio positions which cannot be valued as set forth above are
valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
13
<PAGE>
Notes to Financial Statements/June 30, 1996
- -------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
===============================================================================
Cost is determined and gains (losses) are based upon the specific
identification method for both financial statement and federal income
tax purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All
income, expenses (other than the Class B and Class D distribution
fees), realized and unrealized gains (losses) are allocated to each
class proportionately on a daily basis for purposes of determining the
net asset value of each class.
Per share data was calculated using the average shares outstanding
during the period. In addition, Class B and Class D net investment
income per share data reflects the the distribution fee applicable to
Class B and Class D shares only.
Class B and Class D ratios are calculated by adjusting the expense and
net investment income ratios for the Fund for the entire period by the
distribution fees applicable to Class B and Class D shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as
a regulated investment company and to distribute all of its taxable
income, no federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is
recorded on the accrual basis. Original issue discount is accreted to
interest income over the life of a security with a corresponding
increase in the cost basis, premium and market discount are not
amortized or accreted.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses of $53,332
in connection with its organization, initial registration with the
Securities and Exchange Commission and with various states, and the
initial public offering of its shares. These expenses were deferred
and are being amortized on a straight-line basis over five years.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on
the ex-date.
The amount and character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. Reclassifications are
made to the Fund's capital accounts to reflect income and gains
available for distribution (or available capital loss carryfowards)
under income tax regulations.
FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains
(losses) on foreign currency transactions includes the fluctuation in exchange
14
<PAGE>
Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------
rates on gains (losses) between trade and settlement dates on
securities transactions, gains (losses) arising from the disposition
of foreign currency and currency gains (losses) between the accrual
and payment dates on dividends and interest income and foreign
withholding taxes.
The Fund does not distinguish that portion of gains (losses) on
investments which is due to changes in foreign exchange rates from
that which is due to changes in market prices of the investments. Such
fluctuations are included with the net realized and unrealized gains
(losses) on investments.
FORWARD CURRENCY CONTRACTS: The Fund may enter into forward currency
contracts to purchase or sell foreign currencies at predetermined
exchange rates in connection with the settlement of purchases and
sales of securities. The Fund may also enter into forward currency
contracts to hedge certain other foreign currency denominated assets.
The contracts are used to minimize the exposure to foreign exchange
rate fluctuations during the period between trade and settlement date
of the contracts. All contracts are marked-to-market daily, resulting
in unrealized gains (losses) which become realized at the time the
forward currency contracts are closed or mature. Realized and
unrealized gains (losses) arising from such transactions are included
in net realized and unrealized gains (losses) on foreign currency
transactions. Forward currency contracts do not eliminate fluctuations
in the prices of the Fund's portfolio securities. While the maximum
potential loss from such contracts is the aggregate face value in U.S.
dollars at the time the contract was opened, exposure is typically
limited to the change in value of the contract (in U.S. dollars) over
the period it remains open. Risks may also arise if counterparties
fail to perform their obligations under the contracts.
OTHER: Corporate actions are recorded on the ex-date (except for
certain foreign securities which are recorded as soon after ex-date as
the Fund becomes aware of such), net of nonrebatable tax withholdings.
Where a high level of uncertainty as to collection exists, income on
securities is recorded net of all tax withholdings with any rebates
recorded when received.
The Fund's custodian takes possession through the federal book-entry
system of securities collateralizing repurchase agreements. Collateral
is marked-to-market daily to ensure that the market value of the
underlying assets remains sufficient to protect the Fund. The Fund may
experience costs and delays in liquidating the collateral if the
issuer defaults or enters bankruptcy.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
===============================================================================
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is
the investment Adviser of the Fund and furnishes accounting and other
15
<PAGE>
Notes to Financial Statements/June 30, 1996
- -------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
===============================================================================
services and office facilities for a monthly fee equal to 0.95%
annually of the Fund's average net assets.
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services
for $27,000 per year plus 0.035% of the Fund's average net assets over
$50 million.
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer
Agent), an affiliate of the Adviser, provides shareholder services for a
monthly fee equal to 0.25% annually of the Fund's average net assets and
receives a reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial
Investment Services, Inc. (the Distributor), an affiliate of the
Adviser, is the Fund's principal underwriter. For the period ended
June 30, 1996, the Fund has been advised that the Distributor retained
no net underwriting discounts on sales of the Fund's Class A shares
and received no contingent deferred sales charges on Class B and Class
D share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the
Distributor a service fee equal to 0.25% annually of the Fund's net
assets, as of the 20th of each month. The plan also requires the
payment of a distribution fee to the Distributor equal to 0.75%
annually of the average net assets attributable to Class B shares and
Class D shares, only.
The CDSC andutheafeesgreceived2fromothe 12b-1 plan are used
principally as repaymentctomthehDistributor foruamounts paid by the
Distributor to dealers who sold such shares.
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive
fees and bear certain Fund expenses to the extent that total expenses
(exclusive of service fees, distribution fees, brokerage commissions,
interest, taxes, and extraordinary expenses, if any) exceed 1.50%
annually of the Fund's average net assets.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan
which may be terminated at any time. Obligations of the plan will be
paid solely out of the Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
===============================================================================
INVESTMENT ACTIVITY: During the period ended June 30, 1996, purchases
and sales of investments, other than short-term obligations, were
$607,659 and $671,964, respectively.
16
<PAGE>
Notes to Financial Statements/June 30, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unrealized appreciation (depreciation) at June 30, 1996, based on cost
of investments for both financial statement and federal income tax
purposes was:
<S> <C>
Gross unrealized appreciation $ 746,526
Gross unrealized depreciation (369,615)
---------
Net unrealized appreciation $ 376,911
=========
</TABLE>
OTHER: There are certain additional risks involved when investing in
foreign securities that are not inherent with investments in domestic
securities. These risks may involve foreign currency exchange rate
fluctuations, adverse political and economic developments and the
possible prevention of foreign currency exchange or the imposition of
other foreign governmental laws or restrictions.
The Fund may focus its investments in certain industries, subjecting
it to greater risk than a fund that is more diversified.
NOTE 4. LINE OF CREDIT
===============================================================================
The Fund may borrow up to 10% of its net assets under a line of credit
for temporary or emergency purposes. Any borrowings bear interest at
one of the following options determined at the inception of the loan:
(1) federal funds rate plus 1/2 of 1%, (2) the lending bank's base
rate or (3) IBOR offshore loan rate plus 1/2 of 1%. There were no
borrowings under the line of credit during the period ended June 30,
1996.
NOTE 5. OTHER RELATED PARTY TRANSACTIONS
===============================================================================
At June 30, 1996, Colonial Management Associates, Inc., owned 100%
of the Fund's shares outstanding.
NOTE 6. OTHER OPERATIONAL AND CAPITAL ACTIVITY
===============================================================================
For the period March 25, 1996 through March 31, 1996, the Fund had net
investment income of $12,879 and unrealized depreciation of $122,953.
The following is a summary of capital activity from March 25, 1996
through March 31, 1996.
Shares
Receipts for shares sold - Class A $14,500,000 1,450,000
Receipts for shares sold - Class B $ 2,500,000 25,000
Receipts for shares sold - Class D $ 2,500,000 25,000
17
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (b)
Selected data for a share of each class outstanding throughout the
period are as follows:
<CAPTION>
Period ended
June 30
==============================================
1996 (c)
Class A Class B Class D
======= ======= =======
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 9.930 $ 9.930 $ 9.930
======= ======= =======
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a) 0.055 0.035 0.035
Net realized and
unrealized gain 0.315 0.315 0.315
------- ------- -------
Total from Investment
Operations 0.370 0.350 0.350
------- ------- -------
Net asset value -
End of period $10.300 $10.280 $10.280
======= ======= =======
Total return (d)(e) 3.73%(f) 3.52%(f) 3.52%(f)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.75%(g)(h) 2.50%(g)(h) 2.50%(g)(h)
Fees and expenses waived
or borne by the Adviser 0.22%(g)(h) 0.22%(g)(h) 0.22%(g)(h)
Net investment
income 2.17%(g)(h) 1.42%(g)(h) 1.42%(g)(h)
Portfolio turnover 4%(f) 4%(f) 4%(f)
Average commission rate $ 0.013 $ 0.013 $ 0.013
Net assets at end
of period (000) $14,929 $ 257 $ 257
<FN>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$ 0.006 $ 0.006 $ 0.006
(b) Per share data was calculated using average shares outstanding during the period.
(c) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
(d) Total return at net asset value assuming all distributions reinvested and no initial
sales charge or contingent deferred sales charge.
(e) If the Adviser had not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) Annualized.
(h) The benefits derived from custody credits and directed brokerage arrangements had
no impact.
</TABLE>
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST VI AND THE SHAREHOLDERS OF
COLONIAL INTERNATIONAL EQUITY FUND
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in
all material respects, the financial position of Colonial International Equity
Fund (a series of Colonial Trust VI) at June 30, 1996, the results of its
operations, the changes in its net assets and the financial highlights for the
period from March 31, 1996 (effective date of registration) through June 30,
1996, in conformity with generally accepted accounting principles. These
financial statements and the financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit, which included confirmation of
portfolio positions at June 30, 1996 by correspondence with the custodian,
provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 12, 1996
19
<PAGE>
COLONIAL TRUST VI
Cross Reference Sheet (Colonial Equity Income Fund)
Item Number of Form N-1A Location or Caption in the Statement of
Additional Information
Part B
10. Cover Page
11. Table of Contents
12. Not Applicable
13. Investment Objective and
Policies; Fundamental Investment
Policies; Other Investment Policies;
Portfolio Turnover; Miscellaneous
Investment Practices
14. Fund Charges and Expenses;
Management of the Colonial Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses;
Management of the Colonial Funds
17. Fund Charges and Expenses;
Management of the Colonial Funds
18. Shareholder Meetings
19. How to Buy Shares; Determination
of Net Asset Value; Suspension
of Redemptions; Special Purchase
Programs/Investor Services; Programs
For Reducing or Eliminating Sales
Charges; How to Sell Shares; How to
Exchange Shares
20. Taxes
21. Fund Charges and Expenses;
Management of the Colonial Funds
22. Fund Charges and Expenses;
Investment Performance;
Performance Measures
23. Independent Accountants
COLONIAL EQUITY INCOME FUND
Statement of Additional Information
September 30, 1996
This Statement of Additional Information (SAI) contains information which may be
useful to investors but which is not included in the Prospectus of Colonial
Equity Income Fund (Fund). This SAI is not a prospectus and is authorized for
distribution only when accompanied or preceded by the Prospectus of the Fund
dated September 30, 1996. This SAI should be read together with the Prospectus.
Investors may obtain a free copy of the Prospectus from Colonial Investment
Services, Inc., One Financial Center, Boston, MA 02111-2621.
Part 1 of this SAI contains specific information about the Fund. Part 2 includes
information about the Colonial funds generally and additional information about
certain securities and investment techniques described in the Fund's Prospectus.
TABLE OF CONTENTS
Part 1 Page
Definitions
Investment Objective and Policies
Fundamental Investment Policies
Other Investment Policies
Portfolio Turnover
Fund Charges and Expenses
Investment Performance
Custodian
Independent Accountants
Part 2
Miscellaneous Investment Practices
Taxes
Management of the Colonial Funds
Determination of Net Asset Value
How to Buy Shares
Special Purchase Programs/Investor Services
Programs for Reducing or Eliminating Sales Charges
How to Sell Shares
Distributions
How to Exchange Shares
Suspension of Redemptions
Shareholder Liability
Shareholder Meetings
Performance Measures
Appendix I
Appendix II
EI-16/967B-0396
<PAGE>
COLONIAL EQUITY INCOME FUND
Statement of Additional Information
September 30, 1996
DEFINITIONS
"Trust" Colonial Trust VI
"Fund" Colonial Equity Income Fund
"Adviser" Colonial Management Associates, Inc., the Fund's
investment adviser
"CISI" Colonial Investment Services, Inc., the Fund's distributor
"CISC" Colonial Investors Service Center, Inc., the Fund's
shareholder services and transfer agent
INVESTMENT OBJECTIVES AND POLICIES
The Fund's Prospectus describes its investment objective and policies. Part 1 of
this SAI includes additional information concerning, among other things, the
fundamental investment policies of the Fund. Part 2 contains additional
information about the following securities and investment techniques that are
described or referred to in the Prospectus:
Foreign Securities
Money Market Instruments
Forward Commitments
Repurchase Agreements
Futures Contracts and Related Options
Foreign Currency Transactions
Except as described below under "Fundamental Investment Policies," the Fund's
investment policies are not fundamental, and the Trustees may change the
policies without shareholder approval.
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (Act) provides that a "vote of a majority of
the outstanding voting securities" means the affirmative vote of the lesser of
(1) more than 50% of the outstanding shares of the Fund, or (2) 67% or more of
the shares present at a meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy. The following fundamental
investment policies can not be changed without such a vote.
Total assets and net assets are determined at current value for purposes of
compliance with investment restrictions and policies. All percentage limitations
will apply at the time of investment and are not violated unless an excess or
deficiency occurs as a result of such investment. For the purpose of the Act
diversification requirement, an issuer is the entity whose revenues support the
security.
The Fund may:
1. Issue senior securities only through borrowing money from banks for
temporary or emergency purposes up to 10% of its net assets; however, the
Fund will not purchase additional portfolio securities (other than
short-term securities) while borrowings exceed 5% of net assets;
2. Only own real estate acquired as the result of owning securities and not
more than 5% of total assets;
3. Purchase and sell futures contracts and related options so long as the
total initial margin and premiums on the contracts do not exceed 5% of
its total assets;
4. Underwrite securities issued by others only when disposing of portfolio
securities;
5. Make loans through lending of securities not exceeding 30% of total
assets, through the purchase of debt instruments or similar evidences of
indebtedness typically sold privately to financial institutions and
through repurchase agreements; and
6. Not concentrate more than 25% of its total assets in any one industry or,
with respect to 75% of total assets, purchase any security (other than
obligations of the U.S. government and cash items including receivables)
if as a result more than 5% of its total assets would then be invested in
securities of a single issuer or purchase the voting securities of an
issuer if, as a result of such purchases, the Fund would own more than 10%
of the outstanding voting shares of such issuer.
<PAGE>
OTHER INVESTMENT POLICIES
As non-fundamental investment policies which may be changed without a
shareholder vote, the Fund may not:
1. Purchase securities on margin, but it may receive short-term credit to
clear securities transactions and may make initial or maintenance margin
deposits in connection with futures transactions;
2. Have a short securities position, unless the Fund owns, or owns rights
(exercisable without payment) to acquire, an equal amount of such
securities;
3. Own securities of any company if the Trust knows that officers and
Trustees of the Trust or officers and directors of the Adviser who
individually own more than 0.5% of such securities together own more than
5% of such securities;
4. Invest in interests in oil, gas or other mineral exploration or
development programs, including leases;
5. Purchase any security resulting in the Fund having more than 5% of its
total assets invested in securities of companies (including
predecessors) less than three years old;
6. Pledge more than 33% of its total assets;
7. Purchase any security if, as a result of such purchase, more than 10% of
its total assets would be invested in securities which are restricted as
to disposition;
8. Invest more than 15% of its net assets in illiquid assets;
9. Purchase or sell real estate (including limited partnership interests)
although it may purchase and sell (a) securities which are secured by real
estate and (b) securities of companies which invest or deal in real
estate; provided, however, that nothing in this restriction shall limit
the Fund's ability to acquire or take possession of or sell real estate
which it has obtained as a result of enforcement of its rights and
remedies in connection with securities it is otherwise permitted to
acquire; and
10. Invest in warrants if, immediately after giving effect to any such
investment, the Fund's aggregate investment in warrants, valued at the
lower of cost or market, would exceed 5% of the value of the Fund's net
assets. Included within that amount, but not to exceed 2% of the value
of the Fund's net assets, may be warrants which are not listed on the
New York Stock Exchange or the American Stock Exchange. Warrants
acquired by the Fund in units or attached to securities will be deemed
to be without value.
PORTFOLIO TURNOVER
Period March 31, 1996
(commencement of investment operations)
through June 30, 1996
16%
FUND CHARGES AND EXPENSES
Under the Fund's management agreement, the Fund pays the Adviser a monthly fee
based on the average daily net assets of the Fund at the annual rate of 0.80%,
subject to any voluntary reduction that the Adviser may agree to from time to
time.
Recent Fees paid to the Adviser, CISI and CISC (dollars in thousands) (before
voluntary reductions)
Period March 31, 1996
(commencement of investment
operations) through June 30,
1996
Management fee $6
Bookkeeping fee 7
Shareholder service and 2
transfer agent fee
12b-1 fees:
Service fee (Classes A, 2
B and D)
Distribution fee (Class B) (a)
Distribution fee (Class D) (a)
(a) Rounds to less than $1
Brokerage Commissions (dollars in thousands)
Period March 31, 1996
(commencement of
investment operations)
through June 30, 1996
Total commissions $2
Directed transactions (b) 0
Commissions on directed 0
transactions
(b) See "Management of the Colonial Funds - Portfolio Transactions Brokerage and
research services" in Part 2 of this SAI.
Trustees Fees
For the period ended June 30, 1996 and the calendar year ended December 31,
1995, the Trustees received the following compensation for serving as Trustees:
Total
Aggregate Compensation
Compensation From Trust and
From Fund Fund Complex
For The Paid to the
Period Trustees For
Trustee Ended June The Calendar
30, 1996 Year Ended
December 31,
1995(c)
Robert J. Birnbaum $0 $ 71,250
Tom Bleasdale 0 $ 98,000 (d)
Lora S. Collins 0 $ 91,000
James E. Grinnell 0 $ 71,250
William D.
Ireland, Jr 0 $ 113,000
Richard W. Lowry 0 $ 71,250
William E. Mayer 0 $ 91,000
James L. Moody, Jr. 0 $ 94,500(e)
John J. Neuhauser 0 $ 91,000
George L. Shinn 0 $ 102,500
Robert L. Sullivan 0 $ 101,000
Sinclair Weeks, Jr. 0 $ 112,000
(c) At December 31, 1995, the Colonial Funds complex consisted of 33 open-end
and 5 closed-end management investment company portfolios.
(d) Includes $49,000 payable in later years as deferred compensation.
(e) Total compensation of $94,500 for the calendar year ended December 31,
1995, will be payable in later years as deferred compensation
The following table sets forth the amount of compensation paid to Messrs.
Birnbaum, Grinnell and Lowry in their capacities as Trustees or Directors of
the Liberty All-Star Equity Fund and Liberty All-Star Growth Fund, Inc.
(formerly known as The Charles Allmon Trust, Inc.) (together, Liberty Funds I)
for service during the calendar year ended December 31, 1995, and of Liberty
Financial Trust (now known as Colonial Trust VII) and LFC Utilities Trust
(together, Liberty Funds II) for the period January 1, 1995 through March 26,
1995 (f):
Total Compensation Total
From Liberty Funds Compensation
I For The Period From Liberty
January 1, 1995 Funds II For The
Trustee through March 26, Calendar Year
1995 Ended December
31, 1995 (g)
Robert J.
Birnbaum(h) $2,900 $16,675
James E.
Grinnell(h) 2,900 22,900
Richard W.
Lowry(h) 2,900 26,250 (i)
(f) On March 27, 1995, four of the portfolios in the Liberty Financial Trust
(now known as Colonial Trust VII) were merged into existing Colonial funds
and a fifth was reorganized into a new portfolio of Colonial Trust III.
Prior to their election as Trustees of the Colonial Funds, Messrs.
Birnbaum, Grinnell and Lowry served as Trustees of Liberty Funds II; they
continue to serve as Trustees or Directors of Liberty Funds I.
(g) At December 31, 1995, the Liberty Funds were advised by Liberty Asset
Management Company (LAMCO). LAMCO is an indirect wholly-owned subsidiary of
Liberty Financial Companies, Inc. (an intermediate parent of the Adviser).
(h) Elected as a Trustee of the Colonial Funds complex on April 21,
1995.
(i) Includes $3,500 paid to Mr. Lowry for service as Trustee of Liberty Newport
World Portfolio (formerly known as Liberty All-Star World Portfolio)
(Liberty Newport) during the calendar year ended December 31, 1995. At
December 31, 1995, Liberty Newport was managed by Newport Pacific
Management, Inc. and Stein Roe & Farnham Incorporated, each an affiliate of
the Adviser.
Ownership of the Fund
At August 30, 1996, Keyport Life Insurance Company (Keyport), a Rhode Island
corporation, owned 100% of the outstanding shares of each Class of the Fund and,
therefore, may be deemed to "control" the Fund. Keyport is located at 125 High
Street, Boston, MA 02110-2712.
Sales Charge (dollars in thousands)
Class A Shares Class D Shares
Period March 31, 1996 Period March 31, 1996
(commencement of (commencement of investments
investment operations) operations) through June 30,
through June 30, 1996 1996
Aggregate initial sales
charges on Fund
share sales 0 0
Initial sales charges
retained by CISI 0 0
Class B Shares Class D Shares
Period March 31, 1996 Period March 31, 1996
(commencement of (commencement of
investment operations) investment operations)
through June 30, 1996 through June 30, 1996
Aggregate contingent
deferred sales 0 0
charge (CDSC) on Fund
redemptions
12b-1 Plans, CDSC and Conversion of Shares
The Fund offers three classes of shares - Class A, Class B and Class D. The Fund
may in the future offer other classes of shares. The Trustees have approved
12b-1 Plans (Plans) pursuant to Rule 12b-1 under the Act. Under the Plans, the
Fund pays CISI a service fee at an annual rate of 0.25% of the average net
assets attributed to each Class of shares and a distribution fee at an annual
rate of 0.75% of the average net assets attributed to Class B and Class D
shares. CISI may use the entire amount of such fees to defray the costs of
commissions and service fees paid to financial service firms (FSFs) and for
certain other purposes. Since the distribution and service fees are payable
regardless of the amount of CISI's expenses, CISI may realize a profit from the
fees.
The Plans authorize any other payments by the Fund to CISI and its affiliates
(including the Adviser) to the extent that such payments might be construed to
be indirectly financing the distribution of Fund shares.
The Trustees believe the Plans could be a significant factor in the growth and
retention of Fund assets resulting in a more advantageous expense ratio and
increased investment flexibility which could benefit each class of Fund
shareholders. The Plans will continue in effect from year to year so long as
continuance is specifically approved at least annually by a vote of the
Trustees, including the Trustees who are not interested persons of the Trust and
have no direct or indirect financial interest in the operation of the Plans or
in any agreements related to the Plans (independent Trustees), cast in person at
a meeting called for the purpose of voting on the Plans. The Plans may not be
amended to increase the fee materially without approval by vote of a majority of
the outstanding voting securities of the relevant class of shares and all
material amendments of the Plans must be approved by the Trustees in the manner
provided in the foregoing sentence. The Plans may be terminated at any time by
vote of a majority of the independent Trustees or by vote of a majority of the
outstanding voting securities of the relevant class of shares. The continuance
of the Plans will only be effective if the selection and nomination of the
Trustees who are non-interested Trustees is effected by such non-interested
Trustees.
Class A shares are offered at net asset value plus varying sales charges which
may include a contingent deferred sales charge (CDSC). Class B shares are
offered at net asset value and are subject to a CDSC if redeemed within six
years after purchase. Class D shares are offered at net asset value plus a 1.00%
initial sales charge and are subject to a 1.00% CDSC on redemptions within one
year after purchase. The CDSCs are described in the Prospectus.
No CDSC will be imposed on shares derived from reinvestment of distributions on
or amounts representing capital appreciation. In determining the applicability
and rate of any CDSC, it will be assumed that a redemption is made first of
shares representing capital appreciation, next of shares representing
reinvestment of distributions and finally of other shares held by the
shareholder for the longest period of time.
Eight years after the end of the month in which a Class B share is purchased,
such share and a pro rata portion of any shares issued on the reinvestment of
distributions will be automatically converted into Class A shares having an
equal value.
Sales-related expenses (dollars in thousands) of CISI relating to the Fund for
the period March 31, 1996 (commencement of investment operations) through June
30, 1996 were:
Class A Shares Class B Shares Class D Shares
Fees to FSFs $0 $0 $0
Cost of sales material relating to
the Fund (including
printing and mailing expenses) $0 $0 $0
Allocated travel, entertainment and
other promotional
expenses (including advertising) $0 $0 $0
INVESTMENT PERFORMANCE
The Fund's Class A, Class B and Class D yields for the month ended June 30, 1996
were:
Class A Shares Class B Shares Class D Shares
Adjusted Adjusted Adjusted
Yield Yield Yield Yield Yield Yield
1.41% (0.70)% 0.76% (1.48)% 0.75% (1.47)%
The Fund's total returns at June 30, 1996 were:
Class A Shares
Period March 31,
1996 (effective
date of
registration)
through June 30,
1996
With sales charge of 5.75% (2.53)%
Without sales charge 3.42%
Class B Shares Class D Shares
Period March 31, Period March 31, 1996
1996 (effective (effective date of
date of registration) through
registration) June 30, 1996
through June 30,
1996
With CDSC (1.78)% (5.00% CDSC) 1.19% (1.00% CDSC)
Without CDSC 3.22% 3.22%
The Fund's Class A, Class B and Class D distribution rates at June 30, 1996,
based on the most recent quarter's distributions and the maximum offering price
at the end of the quarter, were 0, 0 and 0, respectively.
See Part 2 of this SAI, "Performance Measures", for how calculations are made.
CUSTODIAN
Boston Safe Deposit and Trust Company is the Fund's custodian. The custodian is
responsible for safeguarding the Fund's cash and securities, receiving and
delivering securities and collecting the Fund's interest and dividends.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP are the Fund's independent accountants providing audit and
tax return preparation services and assistance and consultation in connection
with the review of various SEC filings. The financial statements incorporated by
reference in this SAI and the financial highlights included in the Prospectus
have been so included, in reliance upon the report of Price Waterhouse LLP given
on the authority of said firm as experts in accounting and auditing.
The financial statements and Report of Independent Accountants appearing in the
June 30, 1996 Annual Report, are incorporated in this SAI by reference.
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
JUNE 30, 1996 (IN THOUSANDS)
<CAPTION>
COMMON STOCKS - 89.8% SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
AGRICULTURE, FORESTRY & FISHING - 0.4%
AGRICULTURE - CROPS - 0.4%
RJR Nabisco Holdings Corp. (a) $ 12
----
- --------------------------------------------------------------------------------
CONSTRUCTION - 0.3%
HEAVY CONSTRUCTION - NON BUILDING CONSTRUCTION - 0.3%
Halliburton Co. (a) 11
----
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 17.1%
DEPOSITORY INSTITUTIONS - 7.7%
BankAmerica Corp. 1 68
Comerica, Inc. 2 71
Commerce Bancshares, Inc. (a) 14
Star Banc Corp. (a) 20
Zions Bancorp. 1 65
----
238
----
INSURANCE CARRIERS - 2.3%
Cigna Corp. 1 71
----
NONDEPOSITORY CREDIT INSTITUTIONS - 1.5%
Beneficial Corp. 1 45
----
SECURITY BROKERS & DEALERS - 5.6%
Morgan Stanley Group, Inc. 1 64
Paine Webber Group, Inc. 2 57
Salomon, Inc. 1 40
T. Rowe Price Associates (a) 12
----
173
----
- --------------------------------------------------------------------------------
MANUFACTURING - 45.4%
CHEMICALS & ALLIED PRODUCTS - 14.3%
American Home Products Corp. 1 84
Avon Products, Inc. 1 63
Bristol-Myers Squibb Co. 1 72
Clorox Co. (a) 18
Monsanto Co. 1 16
Pfizer, Inc. (a) 14
Rhone-Poulenc Rorer, Inc. 1 74
Rohm & Haas Co. (a) 12
Schering-Plough Corp. 1 75
Warner-Lambert Co. (a) 11
----
439
----
</TABLE>
6
<PAGE>
<TABLE>
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
FABRICATED METAL - 3.6%
Harsco Corp. 1 $ 40
Stanley Works 2 71
----
111
----
FOOD & KINDRED PRODUCTS - 2.4%
Phillip Morris Co., Inc. 1 73
----
FURNITURE & FIXTURES - 1.9%
Hillenbrand Industries, Inc. 2 60
----
MACHINERY & COMPUTER EQUIPMENT - 1.5%
Baker Hughes, Inc. 1 16
Pentair, Inc. 1 15
Pitney Bowes, Inc. (a) 14
----
45
----
MEASURING & ANALYZING INSTRUMENTS - 1.7%
Eastman Kodak Co. (a) 8
Honeywell, Inc. 1 33
Mallinckrodt Group, Inc. (a) 12
----
53
----
PAPER PRODUCTS - 0.4%
Avery Dennison Corp. (a) 11
----
PETROLEUM REFINING - 8.2%
Ashland Oil, Inc. 2 67
Kerr-McGee Corp. (a) 12
Murphy Oil Corp. 1 54
Pennzoil Co. 1 28
Phillips Petroleum Co. (a) 13
Texaco, Inc. 1 67
Valero Energy Corp. 1 13
----
254
----
PRINTING & PUBLISHING - 4.2%
Gannett Co., Inc. 1 64
Washington Post Co. (a) 65
----
129
----
TOBACCO PRODUCTS - 0.4%
UST, Inc. (a) 14
----
</TABLE>
7
<PAGE>
<TABLE>
Investment Portfolio/June 30, 1996
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - CONT.
TRANSPORTATION EQUIPMENT - 6.8%
Chrysler Corp. 1 $ 62
Ford Motor Co. 1 16
TRW, Inc. 1 63
United Technologies Corp. 1 69
----
210
----
- --------------------------------------------------------------------------------
RETAIL TRADE - 4.8%
FOOD STORES - 1.3%
Giant Food, Inc. 1 39
----
GENERAL MERCHANDISE STORES - 3.5%
Mercantile Stores Co., Inc. 1 64
Sears, Roebuck & Co. 1 44
----
108
----
- --------------------------------------------------------------------------------
SERVICES - 3.2%
BUSINESS SERVICES - 2.8%
Equifax, Inc. 1 16
Omnicom Group, Inc. 2 70
----
86
----
ENGLISH, ACCOUNTING, RESEARCH & MANAGEMENT - 0.4%
Dun & Bradstreet Corp. (a) 13
----
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC ,
GAS & SANITARY SERVICES - 18.6%
COMMUNICATIONS - 2.2%
Southern New England
Telecommunications Corp. 2 67
----
ELECTRIC, GAS & SANITARY SERVICES - 1.7%
Illinova Corp. 1 14
MidAmerican Energy Co. 1 12
Pan Energy Corp. (a) 13
Teco Energy, Inc. 1 13
----
52
----
ELECTRIC SERVICES - 8.5%
Allegheny Power System, Inc. 2 68
Boston Edison Co. 1 13
Carolina Power & Light Co. (a) 15
DQE, Inc. 1 14
Florida Progress Corp. (a) 14
Idaho Power Co. 1 16
</TABLE>
8
<PAGE>
<TABLE>
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Kansas City Power & Light Co. 1 $ 14
NIPSCO Industries, Inc. (a) 16
New England Electric System (a) 11
Portland General Corp. (a) 12
Scana Corp. 1 14
Texas Utilities Co. (a) 13
Unicom Corp. (a) 6
Union Electric Co. (a) 12
Washington Water Power Co. 1 13
Western Resources, Inc. (a) 12
------
263
------
GAS SERVICES - 6.2%
Consolidated Natural Gas Co. 1 73
MCN Corp. 1 15
NICOR, Inc. 1 23
National Fuel Gas Co. (a) 14
People's Energy Corp. 2 67
------
192
------
TOTAL INVESTMENTS - 89.8% (cost of $2,680) (b) 2,769
<CAPTION>
------
SHORT-TERM OBLIGATIONS - 8.3% PAR
- --------------------------------------------------------------------------------
Repurchase agreement with Chase Securities,
Inc., dated 6/28/96, due 07/01/96 at 5.400%
collateralized by U.S. Treasury notes with
various maturities to 1998, market value $261,
(repurchase proceeds $255) $255 255
------
OTHER ASSETS & LIABILITIES, NET - 1.9% 60
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $3,084
------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
<FN>
(a) Rounds to less than one.
(b) Cost for federal income tax purposes is the same.
</TABLE>
See notes to financial statements.
9
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
<CAPTION>
(in thousands except for per share amounts and footnotes)
ASSETS
<S> <C> <C>
Investments at value (cost $2,680) $2,769
Short-term obligations 255
------
3,024
Dividend receivable $ 8
Expense reimbursement
due from Adviser 2
Deferred organization expenses 51
Other 1 62
--- ------
Total Assets 3,086
LIABILITIES
Accrued other 2
---
Total Liabilities 2
------
NET ASSETS $3,084
======
Net asset value & redemption price per share -
Class A ($2,570/250) $10.28
======
Maximum offering price per share - Class A
($10.28/0.9425) $10.91(a)
======
Net asset value & offering price per share -
Class B ($257/25) $10.26(b)
======
Net asset value & redemption price per share -
Class D ($257/25) $10.26(b)
======
Maximum offering price per share - Class D
($10.26/0.9900) $10.36
======
COMPOSITION OF NET ASSETS
Capital paid in $2,995
Undistributed net investment income 20
Accumulated net realized loss (20)
Net unrealized appreciation 89
------
$3,084
======
<FN>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
</TABLE>
See notes to financial statements.
10
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1996 (a)
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 20
Interest 5
----
Total investment income 25
EXPENSES
Management fee $ 6
Service fee 2
Distribution fee - Class B 1
Distribution fee - Class D 1
Transfer agent 2
Bookkeeping fee 7
Registration fee (b)
Custodian fee 1
Legal fee 2
Amortization of deferred
organization expenses 3
Other (b)
----
25
Fees waived or borne by the Adviser (12) 13
---- ----
Net Investment Income 12
----
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss (20)
Net unrealized appreciation during
the period 109
Net Gain 89
----
Net Increase in Net Assets from Operations $101
====
<FN>
(a) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
(b) Rounds to less than one.
</TABLE>
See notes to financial statements.
11
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Period ended
(in thousands) June 30
------------
INCREASE (DECREASE) IN NET ASSETS 1996 (a)
<S> <C>
Operations:
Net investment income $ 12
Net realized loss (20)
Net unrealized appreciation 109
------
Net Increase from Operations 101
Fund Share Transactions :
Receipts for shares sold - Class A ----
Receipts for shares sold - Class B ----
Receipts for shares sold - Class D ----
------
Net Increase from Fund Share
Transactions 0
------
Total Increase 101
NET ASSETS
------
Beginning of period 2,983
End of period (including undistributed
net investment income of $20) $3,084
======
NUMBER OF FUND SHARES
Sold - Class A ----
------
Sold - Class B ----
------
Sold - Class D ----
------
<FN>
(a) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
</TABLE>
See notes to financial statements.
12
<PAGE>
Notes to Financial Statements/June 3O, 1996
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Equity Income Fund (the Fund), a series of Colonial Trust
VI, is a diversified portfolio of a Massachusetts business trust, registered
under the Investment Company Act of 1940, as amend, as an open-end, management
investment company. The Fund's objective is to seek current income and long-
term growth. The Fund may issue an unlimited number of shares. The Fund offers
three classes of shares: Class A, Class B and Class D. Class A shares are sold
with a front-end sales charge and Class B shares are subject to an annual
distribution fee and a contingent deferred sales charge. Class B shares will
convert to Class A shares when they have been outstanding approximately eight
years. Class D shares are subject to a reduced front-end sales charge, a
contingent deferred sales charge on redemptions made within one year after
purchase, and a continuing distribution fee.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The information contained in
this report is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission through the period ended June 30, 1996. The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities are valued at the last
sale price or, in the case of unlisted or listed securities for which there
were no sales during the day, at current quoted bid prices.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
Portfolio positions which cannot be valued as set forth above are valued at fair
value under procedures approved by the Trustees.
Security tranactions are accounted for on the date the securities are purchased,
sold or mature.
13
<PAGE>
Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
Cost is determined and gains (losses) are based upon the specific indentifi-
cation method for both financial statements and federal income tax purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B and Class D distribution fees), realized and
unrealized gains (losses) are allocated to each class proportionately on a daily
basis for purposes of determining the net asset value of each class.
Per share data was calculated using the average shares outstanding during the
period. In addition, Class B and Class D net investment income per share data
reflects the distribution fee applicable to Class B and Class D shares only.
Class B and Class D ratios are calculated by adjusting the expense and net
investment income ratios for the Fund for the entire period by the distribution
fees applicable to Class B and Class D shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; premium
and market discount are not amortized or accreted.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses of $53,387 in
connection with its organization, initial registration with the Securities and
Exchange Commission and with various states, and the initial public offering of
its shares. These expenses were deferred and are being amortized on a
straight-line basis over five years.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on
the ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
accounts to reflect income and gains available for distribution (or available
capital loss carryforwards) under income tax regulations.
FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains (losses) on
foreign currency tranactions include the fluctuation in exchange rates on gains
(losses) between trade and settlement dates on securities transactions, gains
(losses) arising from the disposition of foreign currency and currency gains
(losses) between the accural and payment dates on dividends and interest income
and foreign withholding taxes.
14
<PAGE>
Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) on investments.
FORWARD CURRENCY CONTRACTS: The Fund may enter into forward currency contracts
to purchase or sell foreign currency at predetermined exchange rates in
connection with the settlement of purchases and sales of securities. The Fund
may also enter into forward curency contracts to hedge certain other foreign
currency denominated assets. The contracts are used to minimize the exposure to
foreign exchange rate fluctuations during the period between trade and
settlement date of the contracts. All contracts are marked-to-market daily,
resulting in unrealized gains (losses) which become realized at the time the
forward currency contracts are closed or mature. Realized and unrealized gains
(losses) arising from such transactions are included in net realized and
unrealized gains (losses) on foreign currency transactions. Forward currency
contracts do not eliminate fluctuations in the prices fo the Fund's portfolio
securities. While the maximum potential loss from such contracts is the
aggregate face value in U.S. dollars at the time the contract was opened,
exposure is typically limited to the change in value of the contract (in U.S.
dollars) over the period it remains open. Risks may also arise if counterparties
fail to perform their obligations under the contracts.
OTHER: Corporate actions are recorded on the ex-date (except for certain
foreign securities which are recorded as soon after ex-date as the Fund becomes
aware of such), net of nonrebatable tax withholdings. Where a high level of
uncertainty as to collection exists, income on securities is recorded net of all
tax withholdings with any rebates recorded when received.
The Fund's custodian takes possession through the federal book-entry system
of securities collateralizing repurchase agreements. Collateral is marked-to-
market daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays
in liquidating the collateral if the issuer defaults or enters bankruptcy.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is the
investment Adviser of the Fund and furnishes accounting and other services
and office facilities for a monthly fee equal to 0.80% annually of the Fund's
average net assets.
BOOKKEEPTING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
15
<PAGE>
Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer
Agent), an affiliate of the Adviser, provides shareholder services for
a monthly fee equal to 0.25% annually of the Fund's average net assets
and receives a reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. For the period ended June 30, 1996, the Fund has been
advised that the Distributor retained no net underwriting discounts on sales of
the Fund's Class A shares and received no contingent deferred sales charges on
Class B and Class D share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.25% annually of the Fund's net assets as of the 20th of
each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% annually of the average net assets attributable to
Class B shares and Class D shares only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service fees, distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 1.30% annually of the Fund's average net
assets.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the period March 31, 1996 through June 30, 1996,
purchases and sales of investments, other than short-term obligations, were
$544,254 and $436,376, respectively.
Unrealized appreciation (depreciation) at June 30, 1996, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $114,217
Gross unrealized depreciation (25,763)
--------
Net unrealized appreciation $ 88,454
========
16
<PAGE>
Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------
OTHER: There are certain additional risks involved when investing in foreign
securities that are not inherent with investments in domestic securities. These
risks may involve foreign currency exchange rate fluctuations, adverse political
and economic developments and the possible prevention of foreign currency
exchange or the imposition of other foreign governmental laws or restrictions.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
NOTE 4. LINE OF CREDIT
- --------------------------------------------------------------------------------
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the period ended June 30, 1996.
NOTE 5. OTHER RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
At June 30, 1996, Keyport Life Insurance Company owned 100 % of the Fund's
shares outstanding.
NOTE 6. OTHER OPERATIONAL AND CAPITAL ACTIVITY
- --------------------------------------------------------------------------------
For the period March 25, 1996 through March 31, 1996, the Fund had net
investment income of $2,655 and unrealized depreciation of $20,247. The
following is a summary of capital activity from March 25, 1996 through March 31,
1996.
Shares
Receipts for shares sold - Class A $2,500,000 250,000
Receipts for shares sold - Class B $ 250,000 25,000
Receipts for shares sold - Class D $ 250,000 25,000
17
<PAGE>
FINANCIAL HIGHLIGHTS (b)
<TABLE>
Selected data for a share of each class outstanding throughout the
period are as follows:
<CAPTION>
Period ended
June 30
-------------------------------------------------
1996 (c)
Class A Class B Class D
------- ------- -------
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 9.940 $ 9.940 $ 9.940
======= ======= =======
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a) 0.044 0.024 0.024
Net realized and
unrealized gain 0.296 0.296 0.296
------- ------- -------
Total from Investment
Operations 0.340 0.320 0.320
------- ------- -------
Net asset value -
End of period $10.280 $10.260 $10.260
======= ======= =======
Total return (d)(e) 3.42%(f) 3.22%(f) 3.22%(f)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.55%(g)(h) 2.30%(g)(h) 2.30%(g)(h)
Fees and expenses waived
or borne by the Adviser 1.55%(g)(h) 1.55%(g)(h) 1.55%(g)(h)
Net investment
income 1.77%(g)(h) 1.02%(g)(h) 1.02%(g)(h)
Portfolio turnover 16%(f) 16%(f) 16%(f)
Average commission rate $ 0.031 $ 0.031 $ 0.031
Net assets at end
of period (000) $ 2,570 $ 257 $ 257
<FN>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to
$ 0.039 $ 0.039 $ 0.039
(b) Per share data was calculated using average shares outstanding during the
period.
(c) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
(d) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(e) If the Adviser had not waived or reimbursed a portion of expenses, total
return would have been reducd.
(f) Not annualized.
(g) Annualized.
(h) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
</TABLE>
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES OF COLONIAL TRUST VI AND THE SHAREHOLDERS OF
COLONIAL EQUITY INCOME FUND
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Equity Income Fund (a
series of Colonial Trust VI) at June 30, 1996, the results of its operations,
the changes in its net assets and the financial highlights for the period from
March 31, 1996 (effective date of registration) through June 30, 1996, in
conformity with generally accepted accounting principles. These financial
statements and the financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of portfolio positions at June 30, 1996 by
correspondence with the custodian, provides a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 12, 1996
<PAGE>
COLONIAL TRUST VI
Cross Reference Sheet (Colonial Aggressive Growth Fund)
Item Number of Form N-1A Location or Caption in the Statement of
Additional Information
Part B
10. Cover Page
11. Table of Contents
12. Not Applicable
13. Investment Objective and Policies;
Fundamental Investment Policies; Other
Investment Policies; Portfolio
Turnover; Miscellaneous
Investment Practices
14. Fund Charges and Expenses; Management
of the Colonial Funds
15. Fund Charges and Expenses
16. Fund Charges and Expenses; Management
of the Colonial Funds
17. Fund Charges and Expenses;
Management of the Colonial Funds
18. Shareholder Meetings
19. How to Buy Shares; Determination
of Net Asset Value; Suspension
of Redemptions; Special Purchase
Programs/Investor Services; Programs
For Reducing or Eliminating Sales
Charges; How to Sell Shares; How to
Exchange Shares
20. Taxes
21. Fund Charges and Expenses; Management
of the Colonial Funds
22. Fund Charges and Expenses;
Investment Performance;
Performance Measures
23. Independent Accountants
COLONIAL AGGRESSIVE GROWTH FUND
Statement of Additional Information
September 30, 1996
This Statement of Additional Information (SAI) contains information which may be
useful to investors but which is not included in the Prospectus of Colonial
Aggressive Growth Fund (Fund). This SAI is not a prospectus and is authorized
for distribution only when accompanied or preceded by the Prospectus of the Fund
dated September 30, 1996. This SAI should be read together with the Prospectus.
Investors may obtain a free copy of the Prospectus from Colonial Investment
Services, Inc., One Financial Center, Boston, MA 02111-2621.
Part 1 of this SAI contains specific information about the Fund. Part 2 includes
information about the Colonial funds generally and additional information about
certain securities and investment techniques described in the Fund's Prospectus.
TABLE OF CONTENTS
Part 1 Page
Definitions
Investment Objective and Policies
Fundamental Investment Policies
Other Investment Policies
Portfolio Turnover
Fund Charges and Expenses
Investment Performance
Custodian
Independent Accountants
Part 2
Miscellaneous Investment Practices
Taxes
Management of the Colonial Funds
Determination of Net Asset Value
How to Buy Shares
Special Purchase Programs/Investor Services
Programs for Reducing or Eliminating Sales Charges
How to Sell Shares
Distributions
How to Exchange Shares
Suspension of Redemptions
Shareholder Liability
Shareholder Meetings
Performance Measures
Appendix I
Appendix II
AG-16/687C-0996
<PAGE>
COLONIAL AGGRESSIVE GROWTH FUND
Statement of Additional Information
September 30, 1996
DEFINITIONS
"Trust" Colonial Trust VI
"Fund" Colonial Aggressive Growth Fund
"Adviser" Colonial Management Associates, Inc., the Fund's
investment adviser
"CISI" Colonial Investment Services, Inc., the Fund's distributor
"CISC" Colonial Investors Service Center, Inc., the Fund's
shareholder services and transfer agent
INVESTMENT OBJECTIVE AND POLICIES
The Fund's Prospectus describes its investment objective and policies. Part 1 of
this SAI includes additional information concerning, among other things, the
fundamental investment policies of the Fund. Part 2 contains additional
information about the following securities and investment techniques that are
described or referred to in the Prospectus:
Small Companies
Foreign Securities
Forward Commitments
Repurchase Agreements
Options on Securities
Futures Contracts and Related Options
Foreign Currency Transactions
Except as described below under "Fundamental Investment Policies," the Fund's
investment policies are not fundamental, and the Trustees may change the
policies without shareholder approval.
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (Act) provides that a "vote of a majority of
the outstanding voting securities" means the affirmative vote of the lesser of
(1) more than 50% of the outstanding shares of the Fund, or (2) 67% or more of
the shares present at a meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy. The following fundamental
investment policies can not be changed without such a vote.
Total assets and net assets are determined at current value for purposes of
compliance with investment restrictions and policies. All percentage limitations
will apply at the time of investment and are not violated unless an excess or
deficiency occurs as a result of such investment. For the purpose of the Act's
diversification requirement, an issuer is the entity whose revenues support the
security.
The Fund may:
1. Issue senior securities only through borrowing money from banks for
temporary or emergency purposes up to 10% of its net assets; however, the
Fund will not purchase additional portfolio securities (other than
short-term securities) while borrowings exceed 5% of net assets;
2. Only own real estate acquired as the result of owning securities and not
more than 5% of total assets;
3. Purchase and sell futures contracts and related options so long as the
total initial margin and premiums on the contracts do not exceed 5% of its
total assets;
4. Underwrite securities issued by others only when disposing of portfolio
securities;
5. Make loans through lending of securities not exceeding 30% of total assets,
through the purchase of debt instruments or similar evidences of
indebtedness typically sold privately to financial institutions and through
repurchase agreements; and
6. Not concentrate more than 25% of its total assets in any one industry or,
with respect to 75% of total assets, purchase any security (other than
obligations of the U.S. government and cash items including receivables) if
as a result more than 5% of its total assets would then be invested in
securities of a single issuer or purchase the voting securities of an issuer
if, as a result of such purchases, the Fund would own more than 10% of the
outstanding voting shares of such issuer.
<PAGE>
OTHER INVESTMENT POLICIES
As non-fundamental investment policies which may be changed without a
shareholder vote, the Fund may not:
1. Purchase securities on margin, but it may receive short-term credit to
clear securities transactions and may make initial or maintenance margin
deposits in connection with futures transactions;
2. Have a short securities position, unless the Fund owns, or owns rights
(exercisable without payment) to acquire, an equal amount of such
securities;
3. Own securities of any company if the Trust knows that officers and Trustees
of the Trust or officers and directors of the Adviser who individually own
more than 0.5% of such securities together own more than 5% of such
securities;
4. Invest in interests in oil, gas or other mineral exploration or
development programs, including leases;
5. Pledge more than 33% of its total assets;
6. Purchase any security if, as a result of such purchase, more than 10% of
its total assets would be invested in securities which are restricted as
to disposition;
7. Invest more than 15% of its net assets in illiquid assets;
8. Purchase or sell real estate (including limited partnership interests)
although it may purchase and sell (a) securities which are secured by real
estate and (b) securities of companies which invest or deal in real estate;
provided, however, that nothing in this restriction shall limit the Fund's
ability to acquire or take possession of or sell real estate which it has
obtained as a result of enforcement of its rights and remedies in connection
with securities it is otherwise permitted to acquire; and
9. Invest in warrants if, immediately after giving effect to any such
investment, the Fund's aggregate investment in warrants, valued at the
lower of cost or market, would exceed 5% of the value of the Fund's net
assets. Included within that amount, but not to exceed 2% of the value of
the Fund's net assets, may be warrants which are not listed on the New
York Stock Exchange or the American Stock Exchange. Warrants acquired by
the Fund in units or attached to securities will be deemed to be without
value.
PORTFOLIO TURNOVER
Period March 31, 1996
(effective date of registration)
through June 30, 1996
0%
FUND CHARGES AND EXPENSES
Under the Fund's management agreement, the Fund pays the Adviser a monthly fee
based on the average daily net assets of the Fund at the annual rate of
0.85%, subject to any voluntary reduction that the Adviser may agree to from
time to time.
Recent Fees paid to the Adviser, CISI and CISC (dollars in thousands)(a)(before
voluntary reductions)
Period March 31, 1996
(effective date of registration)
through June 30, 1996
Management fee $7
Bookkeeping fee 7
Shareholder service and
transfer agent fee 2
12b-1 fees:
Service fee 2
Distribution fee
(Class B) 1
Distribution fee
(Class D) 1
(a) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
Brokerage Commissions (dollars in thousands)
Period March 31, 1996
(effective date of registration)
through June 30, 1996
Total commissions $1
Directed transactions (b) 0
Commissions on directed
transactions 0
(b) See "Management of the Colonial Funds - Portfolio Transactions Brokerage and
research services" in Part 2 of this SAI.
Trustees Fees
For the period ended June 30, 1996 and the calendar year ended December 31,
1995, the Trustees received the following compensation for serving as
Trustees:
Total
Aggregate Compensation
Compensation From Trust and
From Fund Fund Complex
For Paid To The
The Period Trustees For
Ended The Calendar
Trustee June 30, Year Ended
1996 December 31,
1995(c)
Robert J.Birnbaum (f) $0 $71,250
Tom Bleasdale 0 98,000(d)
Lora S. Collins 0 91,000
James E. Grinnell (f) 0 71,250
William D. Ireland, Jr. 0 113,000
Richard W.Lowry (f) 0 71,250
William E. Mayer 0 91,000
James L. Moody,Jr. 0 94,500(e)
John J. Neuhauser 0 91,000
George L. Shinn 0 102,500
Robert L. Sullivan 0 101,000
Sinclair Weeks,Jr. 0 112,000
(c) At December 31, 1995, the Colonial Funds complex consisted of 33 open-end
and 5 closed-end management investment company portfolios.
(d) Includes $49,000 payable in later years as deferred compensation.
(e) Total compensation of $94,500 for the calendar year ended December 31,
1995, will be payable in later years as deferred compensation.
(f) Elected as a Trustee of the Colonial Funds complex on April 21,1995.
The following table sets forth the amount of compensation paid to Messrs.
Birnbaum, Grinnell and Lowry in their capacities as Trustees or Directors of the
Liberty All-Star Equity Fund and Liberty All-Star Growth Fund, Inc. (formerly
known as The Charles Allmon Trust, Inc.) (together, Liberty Funds I) for service
during the calendar year ended December 31, 1995, and of Liberty Financial Trust
(now known as Colonial Trust VII) and LFC Utilities Trust (together, Liberty
Funds II) for the period January 1, 1995 through March 26, 1995 (g):
Total Compensation From Total Compensation From
Liberty Funds I For The Liberty Funds II For The
Trustee Period January 1, 1995 Calendar Year Ended
through March 26, 1995 December 31, 1995 (h)
Robert J. Birnbaum $2,900 $16,675
James E. Grinnell 2,900 22,900
Richard W. Lowry 2,900 26,250 (i)
(g) On March 27, 1995, four of the portfolios in the Liberty Financial Trust
(now known as Colonial Trust VII) were merged into existing Colonial funds
and a fifth was reorganized into a new portfolio of Colonial Trust III.
Prior to their election as Trustees of the Colonial Funds, Messrs.
Birnbaum, Grinnell and Lowry served as Trustees of Liberty Funds II; they
continue to serve as Trustees or Directors of Liberty Funds I.
(h) At December 31, 1995, the Liberty Funds were advised by Liberty Asset
Management Company (LAMCO). LAMCO is an indirect wholly-owned subsidiary of
Liberty Financial Companies, Inc. (an intermediate parent of the Adviser).
(i) Includes $3,500 paid to Mr. Lowry for service as Trustee of Liberty Newport
World Portfolio (formerly known as Liberty All-Star World Portfolio)
(Liberty Newport) during the calendar year ended December 31, 1995. At
December 31, 1995, Liberty Newport was managed by Newport Pacific
Management, Inc. and Stein Roe & Farnham Incorporated, each an affiliate of
the Adviser.
Ownership of the Fund
At August 30, 1996, Keyport Life Insurance Company (Keyport), a Rhode Island
corporation, owned 100% of the outstanding shares of each Class of the Fund and,
therefore, may be deemed to "control" the Fund. Keyport is located at 125 High
Street, Boston, MA 02110-2712.
Sales Charges (dollars in thousands)
Class A Shares
Period March 31, 1996
(effective date of registration)
through June 30, 1996
Aggregate initial sales
charges on Fund share sales $0
Initial sales charges
retained by CISI 0
Class B Shares
Period March 31, 1996
(effective date of registration)
through June 30, 1996
Aggregate contingent deferred
sales charges (CDSC) on Fund
redemptions retained by CISI $0
Class D Shares
Period March 31, 1996
(effective date of registration)
through June 30, 1996
Aggregate CDSC on Fund
redemptions retained by CISI $0
12b-1 Plans, CDSC and Conversion of Shares
The Fund offers three classes of shares - Class A, Class B and Class D. The Fund
may in the future offer other classes of shares. The Trustees have approved
12b-1 Plans (Plans) pursuant to Rule 12b-1 under the Act. Under the Plans, the
Fund pays CISI a service fee at an annual rate of 0.25% of the average net
assets attributed to each Class of shares and a distribution fee at an annual
rate of 0.75% of the average net assets attributed to Class B and Class D
shares. CISI may use the entire amount of such fees to defray the costs of
commissions and service fees paid to financial service firms (FSFs) and for
certain other purposes. Since the distribution and service fees are payable
regardless of the amount of CISI's expenses, CISI may realize a profit from the
fees.
The Plans authorize any other payments by the Fund to CISI and its affiliates
(including the Adviser) to the extent that such payments might be construed to
be indirectly financing the distribution of Fund shares.
The Trustees believe the Plans could be a significant factor in the growth and
retention of Fund assets resulting in a more advantageous expense ratio and
increased investment flexibility which could benefit each class of Fund
shareholders. The Plans will continue in effect from year to year so long as
continuance is specifically approved at least annually by a vote of the
Trustees, including the Trustees who are not interested persons of the Trust and
have no direct or indirect financial interest in the operation of the Plans or
in any agreements related to the Plans (independent Trustees), cast in person at
a meeting called for the purpose of voting on the Plans. The Plans may not be
amended to increase the fee materially without approval by vote of a majority of
the outstanding voting securities of the relevant class of shares and all
material amendments of the Plans must be approved by the Trustees in the manner
provided in the foregoing sentence. The Plans may be terminated at any time by
vote of a majority of the independent Trustees or by vote of a majority of the
outstanding voting securities of the relevant class of shares. The continuance
of the Plans will only be effective if the selection and nomination of the
Trustees who are non-interested Trustees is effected by such non-interested
Trustees.
Class A shares are offered at net asset value plus varying sales charges which
may include a CDSC. Class B shares are offered at net asset value and are
subject to a CDSC if redeemed within six years after purchase. Class D shares
are offered at net asset value plus a 1.00% initial sales charge and are subject
to a 1.00% CDSC on redemptions within one year after purchase.
The CDSCs are described in the Prospectus.
No CDSC will be imposed on shares derived from reinvestment of distributions on
or amounts representing capital appreciation. In determining the applicability
and rate of any CDSC, it will be assumed that a redemption is made first of
shares representing capital appreciation, next of shares representing
reinvestment of distributions and finally of other shares held by the
shareholder for the longest period of time.
Eight years after the end of the month in which a Class B share is purchased,
such share and a pro rata portion of any shares issued on the reinvestment of
distributions will be automatically converted into Class A shares having an
equal value.
Sales-related expenses (dollars in thousands) of CISI relating to the Fund for
the period March 31, 1996 (effective date of registration) through June
30, 1996 were:
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class D Shares
<S> <C> <C> <C>
Fees to FSFs $0 $0 $0
Cost of sales material relating
to the Fund (including printing
and mailing expenses) $0 $0 $0
Allocated travel, entertainment
and other promotional expenses
(including advertising) $0 $0 $0
</TABLE>
INVESTMENT PERFORMANCE
The Fund's yields for the month ended June 30, 1996 were:
Class A Shares Class B Shares Class D Shares
Adjusted Adjusted Adjusted
Yield Yield Yield Yield Yield Yield
(0.60)% (2.58)% (1.37)% (3.47)% (1.36)% (3.43)%
The Fund's total returns at June 30, 1996 were:
Class A Shares
Period March 31, 1996
(effective date of registration)
through June 30, 1996
With sales charge of
5.75% 5.34%
Without sales charge 11.77%
Class B Shares
Period March 31, 1996
(effective date of registration)
through June 30, 1996
With applicable CDSC 6.57%
Without CDSC 11.57%
Class D Shares
Period March 31, 1996
(effective date of registration)
through June 30, 1996
With applicable CDSC 9.46%
Without CDSC 11.57%
The Fund's Class A, Class B and Class D distribution rates at June 30, 1996,
based on the most recent twelve months' distributions, and the maximum offering
price at the end of the twelve month period, were: 0%.
See Part 2 of this SAI, "Performance Measures," for how calculations are made.
CUSTODIAN
Boston Safe Deposit and Trust Company is the Fund's custodian. The custodian is
responsible for safeguarding the Fund's cash and securities, receiving and
delivering securities and collecting the Fund's interest and dividends.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP are the Fund's independent accountants providing audit and
tax return preparation services and assistance and consultation in connection
with the review of various Securities and Exchange Commission filings. The
financial statements incorporated by reference in this SAI have been so
incorporated and the financial highlights included in the Prospectus have been
so included, in reliance upon the report of Price Waterhouse LLP given on the
authority of said firm as experts in accounting and auditing.
The financial statements and Report of Independent Accountants appearing in the
June 30, 1996 Annual Report, are incorporated in this SAI by reference.
<PAGE>
Part B of Post-Effective Amendment No. 7 as it relates to the Statement of
Additional Information and financial statements of Colonial U.S. Fund for Growth
and the financial statements of Colonial Small Stock Fund, filed with the
Commission on October 11, 1995, is incorporated herein by reference.
Part B of Post-Effective Amendment No. 8 as it relates to the Statement of
Additional Information of Colonial Small Stock Fund, filed with the Commission
on November 3, 1995, is incorporated herein by reference.
<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
JUNE 30, 1996 (IN THOUSANDS)
<CAPTION>
COMMON STOCKS - 84.7% SHARES VALUE
================================================================================
<S> <C> <C>
AGRICULTURE, FORESTRY & FISHING - 0.5%
AGRICULTURAL SERVICES - 0.5%
Veterinary Centers of America, Inc. (a) 1 $ 18
----
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 7.3%
INSURANCE CARRIERS - 2.1%
Healthsource, Inc. (a) 1 16
Loews Corp. 1 39
Oxford Health Plans, Inc. (a) (b) 17
----
72
----
NONDEPOSITORY CREDIT INSTITUTIONS - 5.2%
Aames Financial Corp. 3 119
Green Tree Financial Corp. 2 56
----
175
----
- --------------------------------------------------------------------------------
MANUFACTURING - 21.3%
APPAREL - 0.5%
Gymboree Corp. (a) 1 18
----
CHEMICALS & ALLIED PRODUCTS - 2.5%
Alpharma, Inc., Class A (b) 6
Dura Pharmaceuticals, Inc. (a) 1 39
Genzyme Corp. (a) 1 25
Nature's Sunshine Products, Inc. 1 13
----
83
----
ELECTRONIC & ELECTRICAL EQUIPMENT - 2.2%
Checkpoint Systems, Inc. (a) (b) 4
Colonial Data Technologies Corp. (a) (b) 6
HADCO Corp. (a) 1 15
Komag, Inc. (a) 2 50
----
75
----
MACHINERY & COMPUTER EQUIPMENT - 6.3%
Applied Materials, Inc. (a) (b) 12
Bay Networks, Inc. (a) (b) 8
Cisco Systems, Inc. (a) 2 96
Gateway 2000, Inc. (a) 1 20
Mylex Corp. (a) (b) 4
Silicon Valley Group, Inc. (a) 3 47
Symbol Technologies, Inc. (a) 1 27
----
214
----
</TABLE>
<PAGE>
<TABLE>
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
MEASURING & ANALYZING INSTRUMENTS - 6.1%
Advanced Technology Laboratories, Inc. (a) 3 $102
Boston Scientific Corp. (a) 2 68
Diagnostic Products Corp. (b) 15
Mentor Corp. 1 23
----
208
----
PRIMARY METAL - 1.0%
Texas Industries, Inc. 1 34
----
PRINTING & PUBLISHING - 0.6%
Harte-Hanks Communications 1 19
----
RUBBER & PLASTIC - 2.1%
Nike, Inc., Class B 1 72
----
- --------------------------------------------------------------------------------
RETAIL TRADE - 9.2%
APPAREL & ACCESSORY STORES - 2.9%
St. John Knits, Inc. 2 98
----
FOOD STORES - 1.5%
General Nutrition Companies, Inc. (a) 3 52
----
HOME FURNISHINGS & EQUIPMENT - 3.0%
CompUSA, Inc. (a) 3 102
----
MISCELLANEOUS RETAIL - 1.3%
Bed Bath & Beyond, Inc. (a) 2 43
----
RESTAURANTS - 0.5%
Foodmaker, Inc. (a) 2 17
----
- --------------------------------------------------------------------------------
SERVICES - 39.0%
AMUSEMENT & RECREATION - 4.0%
Grand Casinos, Inc. (a) 2 49
Mirage Resorts, Inc. (a) 2 86
----
135
----
BUSINESS SERVICES - 23.4%
American Management Systems, Inc. (a) 3 85
Cadence Design Systems, Inc. (a) 1 41
Cognex Corp. (a) 1 10
Cognos, Inc. (a) 2 41
HBO & Co. 2 108
Integrated Systems, Inc. (a) 1 24
Manpower, Inc. (b) 16
McAfee Associates, Inc. (a) 1 66
Microsoft Corp. (a) 1 84
National Data Corp. 2 51
</TABLE>
<PAGE>
<TABLE>
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<CAPTION>
COMMON STOCKS - CONT. SHARES VALUE
================================================================================
<S> <C> <C>
SERVICES - cont.
BUSINESS SERVICES - CONT.
Oracle Systems Corp. (a) 2 $ 89
Paychex, Inc. 1 29
Peoplesoft, Inc. (a) 1 100
Robert Half International, Inc. (a) 2 50
------
794
------
ENGINEERING, ACCOUNTING, RESEARCH & MANAGEMENT - 4.8%
CDI Corp. (a) 3 91
Corrections Corp. of America (a) 1 70
------
161
------
HEALTH SERVICES - 3.1%
Caremark International, Inc. 1 18
Concord EFS, Inc. (a) (b) 11
Mariner Health Group, Inc. (a) 1 17
PHP Healthcare Corp. (a) (b) 9
PhyCor, Inc. (a) 1 51
------
106
------
HOTELS, CAMPS & LODGING - 3.7%
Bally Entertainment Corp. (a) 1 22
Hospitality Franchise Systems, Inc., (a) 2 105
------
127
------
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 6.1%
COMMUNICATIONS - 2.2%
Infinity Broadcasting Corp., Class A (a) 3 76
------
ELECTRIC, GAS & SANITARY SERVICES - 1.3%
Newpark Resources, Inc. (a) 1 18
USA Waste Services, Inc. (a) 1 18
United Waste Systems, Inc. (a) (b) 7
------
43
------
WATER TRANSPORTATION - 2.6%
Tidewater, Inc. 2 88
------
- --------------------------------------------------------------------------------
WHOLESALE TRADE - 1.3%
DURABLE GOODS - 1.3%
BEC Group, Inc. (a) 1 4
Rexel, Inc. (a) 1 17
West Marine, Inc. (a) (b) 21
------
42
------
TOTAL INVESTMENTS - 84.7% (COST $2,478)(c) 2,872
------
</TABLE>
<PAGE>
<TABLE>
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<CAPTION>
SHORT-TERM OBLIGATIONS - 13.8% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Repurchase agreement with Chase Securities,
Inc., dated 6/28/96, due 07/01/96 at 5.400%
collateralized by U.S. Treasury notes with
various maturities to 1998, market value $477
(repurchase proceeds $467) $467 $ 467
------
OTHER ASSETS & LIABILITIES, NET - 1.5% 51
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $3,390
======
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Rounds to less than one.
(c) Cost for federal income tax purposes is the same.
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS & LIABILITIES
JUNE 30, 1996
(in thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $2,478) $2,872
Short-term obligations 467
------
3,339
Expense reimbursement
due from Adviser $ 2
Deferred organization expenses 51 53
--- ------
Total Assets 3,392
LIABILITIES
Accrued other 2
---
Total Liabilities 2
------
NET ASSETS $3,390
======
Net asset value & redemption price per share -
Class A ($2,826/250) $11.30
======
Maximum offering price per share - Class A
($11.30/0.9425) $11.99(a)
======
Net asset value & offering price per share -
Class B ($282/25) $11.28(b)
======
Net asset value & redemption price per share -
Class D ($282/25) $11.28(b)
======
Maximum offering price per share - Class D
($11.28/0.9900) $11.39
======
COMPOSITION OF NET ASSETS
Capital paid in $2,994
Undistributed net investment income 2
Net unrealized appreciation 394
------
$3,390
======
<FN>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1996 (a)
<S> <C> <C>
(in thousands)
INVESTMENT INCOME
Interest $ 7
Dividends 1
----
Total investment income 8
EXPENSES
Management fee $ 7
Service fee 2
Distribution fee - Class B 1
Distribution fee - Class D 1
Transfer agent 2
Bookkeeping fee 7
Registration fee (b)
Custodian fee 1
Legal fee 2
Amortization of deferred
organization expenses 2
Other (b)
----
25
Fees and expenses waived or
borne by the Adviser (11) 14
---- ----
Net Investment Loss (6)
----
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss (b)
Net unrealized appreciation during
the period 364
----
Net Gain 364
----
Net Increase in Net Assets from Operations $358
====
<FN>
(a) The Fund commenced investment operations on March 25, 1996. The
activity shown is from the effective date of registration (March 31,
1996) with the Securities and Exchange Commission.
(b) Rounds to less than one.
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Period ended
(in thousands) June 30
============
INCREASE (DECREASE) IN NET ASSETS 1996(a)
<S> <C>
Operations:
Net investment loss $ (6)
Net realized loss (b)
Net unrealized appreciation 364
------
Net Increase from Operations 358
Fund Share Transactions :
Receipts for shares sold - Class A --
Receipts for shares sold - Class B --
Receipts for shares sold - Class D --
------
Net Increase from Fund Share
Transactions --
------
Total Increase 358
NET ASSETS
Beginning of period 3,032
------
End of period (including undistributed
net investment income of $2) $3,390
======
NUMBER OF FUND SHARES
Sold - Class A --
------
Sold - Class B --
------
Sold - Class D --
------
<FN>
(a) The Fund commenced investment operations on March 25, 1996. The
activity shown is from the effective date of registration (March 31,
1996) with the Securities and Exchange Commission.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Aggressive Growth Fund (the Fund), a series of Colonial
Trust VI, is a diversified portfolio of a Massachusetts business trust,
registered under the Investment Company Act of 1940, as amended, as an open-end,
management investment company. The Fund's objective is to seek capital
appreciation. The Fund may issue an unlimited number of shares. The Fund offers
three classes of shares: Class A, Class B and Class D. Class A shares are sold
with a front-end sales charge and Class B shares are subject to an annual
distribution fee and a contingent deferred sales charge. Class B shares will
convert to Class A shares when they have been outstanding approximately eight
years. Class D shares are subject to a reduced front-end sales charge, a
contingent deferred sales charge on redemptions made within one year after
purchase and a continuing distribution fee.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The information contained in
this report is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission through the period ended June 30, 1996. The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities are valued at the last
sale price or, in the case of unlisted or listed securities for which there were
no sales during the day, at current quoted bid prices.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued at fair
value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
<PAGE>
Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B and Class D distribution fees), realized and
unrealized gains (losses) are allocated to each class proportionately on a daily
basis for purposes of determining the net asset value of each class.
Per share data was calculated using the average shares outstanding during the
period. In addition, Class B and Class D net investment income per share data
reflects the distribution fee applicable to Class B and Class D shares only.
Class B and Class D ratios are calculated by adjusting the expense and net
investment income ratios for the Fund for the entire period by the distribution
fees applicable to Class B and Class D shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses of $53,332 in
connection with its organization, initial registration with the Securities and
Exchange Commission and with various states, and the initial public offering of
its shares. These expenses were deferred and are being amortized on a
straight-line basis over five years.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded
on the ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
OTHER: Corporate actions are recorded on the ex-date. Interest income
is recorded on the accrual basis.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
<PAGE>
Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is
the investment Adviser of the Fund and furnishes accounting and other
services and office facilities for a monthly fee equal to 0.85% annually of the
Fund's average net assets.
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer
Agent), an affiliate of the Adviser, provides shareholder services for
a monthly fee equal to 0.25% annually of the Fund's average net assets
and receives a reimbursement for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. For the period ended June 30, 1996, the Fund has been
advised that the Distributor retained no net underwriting discounts on sales of
the Fund's Class A shares and received no contingent deferred sales charges on
Class B and Class D share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.25% annually of the Fund's net assets as of the 20th of
each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% annually of the average net assets attributable to
Class B shares and Class D shares only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service fees, distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 1.30% annually of the Fund's average net
assets.
OTHER: The Fund pays no compensation to its officers, all of whom are
employees of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
<PAGE>
Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the period March 31, 1996 through June 30, 1996,
purchases and sales of investments, other than short-term obligations, were
$14,960 and $4,400, respectively.
<TABLE>
Unrealized appreciation (depreciation) at June 30, 1996, based on cost of
investments for both financial statement and federal income tax purposes was
approximately:
<S> <C>
Gross unrealized appreciation $ 497,000
Gross unrealized depreciation (103,000)
---------
Net unrealized appreciation $ 394,000
---------
</TABLE>
OTHER: The Fund may focus its investments in certain industries, subjecting it
to greater risk than a fund that is more diversified.
NOTE 4. LINE OF CREDIT
- --------------------------------------------------------------------------------
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the period ended June 30, 1996.
NOTE 5. OTHER RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
At June 30, 1996, Keyport Life Insurance Company owned 100% of the Fund's
shares outstanding.
NOTE 6. OTHER OPERATIONAL AND CAPITAL ACTIVITY
- --------------------------------------------------------------------------------
<TABLE>
For the period March 25, 1996 through March 31, 1996, the Fund had net
investment income of $2,124 and unrealized appreciation of $30,222. The
following is a summary of capital activity from March 25, 1996 through March 31,
1996.
<CAPTION>
Shares
<S> <C> <C>
Receipts for shares sold - Class A $2,500,000 250,000
Receipts for shares sold - Class B $ 250,000 25,000
Receipts for shares sold - Class D $ 250,000 25,000
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (b)
Selected data for a share of each class outstanding throughout the
period are as follows:
<CAPTION>
Period ended June 30
--------------------------------------------
1996 (c)
Class A Class B Class D
------- ------- -------
<S> <C> <C> <C>
Net asset value -
Beginning of period $10.110 $10.110 $10.110
======= ======= =======
INCOME FROM INVESTMENT OPERATIONS:
Net investment
loss (a) (0.016) (0.036) (0.036)
Net realized and
unrealized gain 1.206 1.206 1.206
------- ------- -------
Total from Investment
Operations 1.190 1.170 1.170
------- ------- -------
Net asset value -
End of period $11.300 $11.280 $11.280
======= ======= =======
Total return (d)(e) 11.77% (f) 11.57% (f) 11.57% (f)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.55% (g)(h) 2.30% (g)(h) 2.30% (g)(h)
Fees and expenses waived
or borne by the Adviser 1.38% (g)(h) 1.38% (g)(h) 1.38% (g)(h)
Net investment
loss (0.58)%(g)(h) (1.33)%(g)(h) (1.33)%(g)(h)
Portfolio turnover 0% (f) 0% (f) 0% (f)
Average commission rate $ 0.000 $ 0.000 $ 0.000
Net assets at end
of period (000) $ 2,826 $ 282 $ 282
<FN>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to
$ 0.038 $ 0.038 $ 0.038
(b) Per share data was calculated using average shares outstanding during the period.
(c) The Fund commenced investment operations on March 25, 1996. The activity shown
is from the effective date of registration (March 31, 1996) with the Securities and
Exchange Commission.
(d) Total return at net asset value assuming all distributions reinvested and no initial
sales charge or contingent deferred sales charge.
(e) Had the Adviser not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Not annualized.
(g) Annualized.
(h) The benefits derived from custody credits and directed brokerage arrangements had
no impact.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST VI AND THE SHAREHOLDERS OF
COLONIAL AGGRESSIVE GROWTH FUND
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in
all material respects, the financial position of Colonial Aggressive Growth
Fund (a series of Colonial Trust VI) at June 30, 1996, the results of its
operations, the changes in its net assets and the financial highlights for the
period from March 31, 1996 (effective date of registration) through June 30,
1996, in conformity with generally accepted accounting principles. These
financial statements and the financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit, which included confirmation of
portfolio positions at June 30, 1996 by correspondence with the custodian,
provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 12, 1996
<PAGE>
Part C OTHER INFORMATION
Item 24.Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A
Summary of Expenses (for Colonial U.S. Fund for Growth and
the Class Z Prospectus of Colonial Small Stock Fund,
incorporated herein by reference to Part A of Post-Effective
Amendment No. 7 filed with the Commission on October 11,
1995; and for the Class A, B, D Prospectus of Colonial Small
Stock Fund, incorporated herein by reference to Part A of
Post-Effective Amendment No. 8 filed with the Commission on
November 3, 1995)
The Fund's Financial History (for Colonial U.S. Fund for
Growth and the Class Z Prospectus of Colonial Small Stock
Fund, incorporated herein by reference to Part A of
Post-Effective Amendment No. 7 filed with the Commission
on October 11, 1995; and for the Class A, B, D Prospectus of
Colonial Small Stock Fund, incorporated herein by reference
to Part A of Post-Effective Amendment No. 8 filed with the
Commission on November 3, 1995.)
Included in Part B
Colonial U.S. Fund for Growth (CUSFFG)(incorporated herein by
reference to Part B of Post-Effective Amendment No. 7 filed
with the Commission on October 11, 1995)
Investment Portfolio, June 30, 1995
Statement of assets and liabilities, June 30, 1995
Statement of operations, Year ended June 30, 1995
Statement of changes in net assets, Years ended June 30,
1995 and 1994
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial Small Stock Fund (CSSF)(incorporated herein by
reference to Part B of Post-Effective Amendment No. 7 filed
with the Commission on October 11, 1995)
Investment Portfolio, June 30, 1995
Statement of assets and liabilities, June 30, 1995
Statement of operations, year ended June 30, 1995
Statement of changes in net assets, Years ended June 30,
1995 and 1994
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Colonial Equity Income Fund (CEIF)
Investment Portfolio, June 30, 1996
Statement of assets and liabilities, June 30, 1996
Statement of operations, for the period ended June 30, 1996
Statement of changes in net assets, period ended June 30,
1996
Notes to Financial Statements, June 30, 1996
Financial Highlights
Report of Independent Accountants
Colonial Aggressive Growth Fund (CAGF)
Investment Portfolio, June 30, 1996
Statement of assets and liabilities, June 30, 1996
Statement of operations, for the period ended June 30,
1996
Statement of changes in net assets, period ended June 30
1996
Notes to Financial Statements, June 30, 1996
Financial Highlights
Report of Independent Accountants
Colonial International Equity Fund (CIEF)
Investment Portfolio, June 30, 1996
Statement of assets and liabilities, June 30, 1996
Statement of operations, for the period ended June 30,
1996
Statement of changes in net assets, period ended June 30
1996
Notes to Financial Statements, June 30, 1996
Financial Highlights
Report of Independent Accountants
(b) Exhibits (each exhibit is applicable to all series'
of the Trust unless otherwise referenced):
1. Agreement and Declaration of Trust(a)
2. By-Laws as amended (2/16/96)
3. Not Applicable
4. Form of Share Certificate
5.(a) Form of Management Agreement (CUSFFG)(i)
5.(b) Form of Management Agreement (CSSF)(h)
5.(c) Form of Sub-Advisory Agreement (CUSFFG)(i)
5.(d) Management Agreement (CAGF)
5.(e) Management Agreement (CEIF)
5.(f) Management Agreement (CIEF)
6.(a) Distributor's Contract with Colonial Investment
Services, Inc.
6.(b) Selling Agreement
6.(c) Bank and Bank Affiliated Selling Agreement
6.(d) Asset Retention Agreement
7. Not Applicable
8. Custody Agreement with Boston Safe Deposit and Trust
Company
8.(a) Amendment to Custody Agreement with Boston Safe
Deposit and Trust Company
9.(a) Amended and Restated Shareholders' Servicing and
Transfer Agent Agreement as amended (incorporated by
reference to Exhibit 9.(b) of Post-Effective Amendment
No. 10 to the Registration Statement of Colonial Trust VII
filed with the Commission on April 24, 1996)
9.(b) Pricing and Bookkeeping Agreement with Colonial
Management Associates, Inc.
9.(c) Plan pursuant to Rule 18f-3(d) under the Investment
Company Act of 1940
9.(d) Credit Agreement (incorporated by reference to
Exhibit 9.(f) of Post-Effective Amendment No. 19 to
the Registration Statement of Colonial Trust V filed
with the Commission on May 20, 1996)
10.(a) Opinion and Consent of Counsel (CUSFFG)(b)
10.(b) Opinion and Consent of Counsel (incorporated by
reference to Exhibit 10 of Pre-Effective Amendment No. 1 to
the Registration Statement of Colonial Small Stock Index
Trust filed with the Commission on June 20, 1986) (CSSF)
11. Consent of Independent Accountants (CUSFFG, CSSF)(i)
11.(a) Consent of Independent Accountants (CAGF, CEIF, CIEF)
12. Not Applicable
13.(a) Investment Letter of Colonial Management Associates,
Inc.(CUSFFG)(b)
13.(b) Investment Letter of Colonial Management Associates,
Inc. (incorporated by reference to Exhibit 13 of
Pre-Effective Amendment No. 1 to the Registration
Statement of Colonial Small Stock Index Trust filed
with the Commission on June 20, 1986)(CSSF)
14.(a) Form of Colonial Mutual Funds Money Purchase Pension
and Profit Sharing Plan Document and Trust
Agreement(g)
14.(b) Form of Colonial Mutual Funds Money Purchase Pension
and Profit Sharing Establishment Booklet(g)
14.(c) Form of Colonial Mutual Funds Individual Retirement
Account and Application(g)
14.(d) Form of Colonial Mutual Funds Simplified Employee
Plan and Salary Reduction Simplified Employee Plan(g)
14.(e) Form of Colonial Mutual Funds 401(k) Plan Document
and Trust Agreement(g)
14.(f) Form of Colonial Mutual Funds 401(k) Plan
Establishment Booklet(g)
14.(g) Form of Colonial Mutual Funds 401(k) Employee Reports
Booklet(g)
15. Form of proposed Distribution Plan adopted pursuant
to Section 12b-1 of the Investment Company Act of
1940 (incorporated by reference to the Distributor's
Contract filed as Exhibit 6(a) hereto)
16.(a) Calculation of Performance Information (CUSFFG)(i)
16.(a)(i) Calculation of Performance Information (CSSF)(j)
16.(b) Calculation of Yield Information (CUSFFG)(i)
16.(b)(i) Calculation of Yield Information (CSSF)(i)
16.(c) Calculation of Performance Information (CAGF)
16.(c)(i) Calculation of Yield Information (CAGF)
16.(d) Calculation of Performance Information (CEIF)
16.(d)(i) Calculation of Yield Information (CEIF)
16.(e) Calculation of Performance Information (CIEF)
16.(e)(i) Calculation of Yield Information (CIEF)
17.(a) Financial Data Schedule (Class A) (CUSFFG)(i)
17.(b) Financial Data Schedule (Class B) (CUSFFG)(i)
17.(c) Financial Data Schedule (Class D) (CUSFFG)(i)
17.(d) Financial Data Schedule (Class A) (CSSF)(j)
17.(e) Financial Data Schedule (Class B) (CSSF)(j)
17.(f) Financial Data Schedule (Class A) (CAGF)
17.(g) Financial Data Schedule (Class B) (CAGF)
17.(h) Financial Data Schedule (Class D) (CAGF)
17.(i) Financial Data Schedule (Class A) (CEIF)
17.(j) Financial Data Schedule (Class B) (CEIF)
17.(k) Financial Data Schedule (Class D) (CEIF)
17.(l) Financial Data Schedule (Class A) (CIEF)
17.(m) Financial Data Schedule (Class B) (CIEF)
17.(n) Financial Data Schedule (Class D) (CIEF)
18.(a) Power of Attorney for: Robert J. Birmbaum, 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.
(incorporated herein by reference to Exhibit 18 to
Post-Effective Amendment No. 42 to the Registration
Statement of Colonial Trust IV, Registration Nos.
2-62492 and 811-2865, filed with the Commission on
March 22, 1996)
(a) Incorporated by reference to the Registrant's initial Registration
Statement on Form N-1A, filed with the Securities and Exchange Commission
on January 15, 1992.
(b) Incorporated by reference to the Registrant's Pre-Effective Amendment No.
1 on Form N-1A, filed with the Securities and Exchange Commission on May
8, 1992.
(c) Incorporated by reference to the Registrant's Pre-Effective Amendment No.
2 on Form N-1A, filed with the Securities and Exchange Commission on June
12, 1992.
(d) Incorporated by reference to the Registrant's Post-Effective Amendment
No. 1 on Form N-1A, filed with the Securities and Exchange Commission on
September 1, 1992.
(e) Incorporated by reference to the Registrant's Post-Effective
Amendment No. 2 on Form N-1A, filed with the Securities and
Exchange Commission on November 19, 1992.
(f) Incorporated by reference to the Registrant's Post-Effective
Amendment No. 3 on Form N-1A, filed with the Securities and
Exchange Commission on September 21, 1993.
(g) Incorporated by reference to the Registrant's Post-Effective
Amendment No. 5 on Form N-1A, filed with the Securities and
Exchange Commission on October 11, 1994.
(h) Incorporated by reference to the Registrant's Post-Effective
Amendment No. 6 on Form N-1A, filed with the Securities and
Exchange Commission on July 28, 1995.
(i) Incorporated by reference to the Registrant's Post-Effective
Amendment No. 7 on Form N-1A, filed with the Securities and
Exchange Commission on October 11, 1995.
(j) Incorporated by reference to the Registrant's Post-Effective
Amendment No. 8 on Form N-1A, filed with the Securities and
Exchange Commission on November 3, 1995.
(k) Incorporated by reference to the Registrant's Post-Effective
Amendment N. 9 on Form N-1A, filed with the Securities and
Exchange Commission on January 16, 1996.
Item 25. Persons Controlled by or Under Common Group Control with Registrant
Not Applicable (CUSFFG, CSSF)
All of the outstanding shares of CIEF, representing all of the interests in each
of those series on the date the Registrant's Registration Statement becomes
effective, will be held by Colonial Management Associates, Inc., One Financial
Center, Boston, MA 02110.
All of the outstanding shares of CEIF and CAGF, representing all of the
interests in each of those series on the date the Registrant's Registration
Statement becomes effective, will be held by Keyport Life Insurance Company, 125
High Street, Boston, MA 02110.
<PAGE>
Item 26. Number of Holders of Securities
-------------------------------
(1) (2)
Title of Class Number of Record Holders as of 8/31/96
Shares of beneficial interest 13,133 Class A record holders (CUSFFG)
30,141 Class B record holders (CUSFFG)
560 Class D record holders (CUSFFG)
8,951 Class A record holders (CSSF)
18,494 Class B record holders (CSSF)
174 Class D record holders (CSSF)
2 Class Z record holders (CSSF)
1 Class A record holders (CIEF)
1 Class B record holders (CIEF)
1 Class D record holders (CIEF)
1 Class A record holders (CEIF)
1 Class B record holders (CEIF)
1 Class D record holders (CEIF)
1 Class A record holders (CAGF)
1 Class B record holders (CAGF)
1 Class D record holders (CAGF)
Item 27. Indemnification
See Article VIII of the Agreement and Declaration of Trust filed
as Exhibit 1 hereto.
Item 28. Business and Other Connections of Investment Adviser
The following sets forth business and other connections of
each director and officer of Colonial Management Associates, Inc.
(see next page):
ITEM 28.
- --------
Registrant's investment adviser, Colonial Management Associates, Inc., is
registered as an investment adviser under the Investment Advisers Act of 1940
(1940 Act). Colonial Advisory Services, Inc. (CASI), an affiliate of Colonial
Management Associates, Inc., is also registered as an investment adviser under
the 1940 Act. As of the end of its fiscal year, December 31, 1995, CASI had
one institutional, corporate or other account under management or supervision,
the market value of which was approximately $31.4 million. As of the end of
its fiscal year, December 31, 1995, Colonial Management Associates, Inc. was
the investment adviser and/or administrator to 38 mutual funds in the Colonial
Group of Funds, the market value of which investment companies was
approximately $16,439.3 million. Colonial Investment Services, Inc., a
subsidiary of Colonial Management Associates, Inc., is the principal
underwriter and the national distributor of all of the funds in the Colonial
Group of Funds, including the Registrant.
The following sets forth the business and other connections of each
director and officer of Colonial Management Associates, Inc.:
(1) (2) (3) (4)
Name and principal
business
addresses* Affiliation
of officers and with Period is through 7/1/96. Other
directors of investment business, profession, vocation or
investment adviser adviser employment connection Affiliation
- ------------------ ---------- -------------------------------- -----------
Archer, Joseph A. V.P.
Berliant, Allan V.P.
Bertocci, Bruno V.P. Stein Roe Global Capital Mngmt. Principal
Boatman, Bonny E. Dir.;
Sr.V.P.;
IPC Mbr.
Campbell, Kimberly V.P.
Carnabucci,
Dominick V.P.
Carroll, Sheila A. Sr.V.P.;
Dir.
Citrone, Frank V.P.
Cogger, Harold W. Dir.;Pres.; The Colonial Group, Inc. Dir.; Pres.;
Chairman; CEO; Chrm.
CEO;IPC Mbr. Colonial Trusts I through VII Pres.
Exe. Cmte. Colonial High Income
Municipal Trust Pres.
Colonial InterMarket Income
Trust I Pres.
Colonial Intermediate High
Income Fund Pres.
Colonial Investment Grade
Municipal Trust Pres.
Colonial Municipal Income
Trust Pres.
Liberty Financial Exec V.P.;
Companies, Inc. Dir.
Colonial Advisory Services, Dir. Chrm.,
Inc. CEO & Pres.
Colonial Investors Service
Center, Inc. Dir.
Collins, Anne V.P.
Conlin, Nancy V.P.; Colonial Investors Service
Asst. Center, Inc. Asst. Clerk
Sec.; The Colonial Group, Inc. Asst. Clerk
Asst Colonial Advisory Services,
Clerk and Inc. Asst. Clerk
Counsel Colonial Investment Services,
Inc. Asst. Clerk
Colonial Trusts I through VII Asst. Sec.
Colonial High Income
Municipal Trust Asst. Sec.
Colonial InterMarket Income
Trust I Asst. Sec.
Colonial Intermediate High
Income Fund Asst. Sec.
Colonial Investment Grade
Municipal Trust Asst. Sec.
Colonial Municipal Income
Trust Asst. Sec.
Cordes, Susan V.P.
Daniszewski, V.P. Colonial Investment Services,
Joseph J. Inc. V.P.
DiSilva, Linda V.P.
Ericson, Carl C. Dir; Sr. Colonial Intermediate High
V.P. Income Fund V.P.
Colonial Advisory Services,
Inc. V.P.
Evans, C. Frazier Dir.; Colonial Investment Services,
Sr.V.P. Inc. Sr. V.P.
Feingold, Andrea S. V.P. Colonial Intermediate High
Income Fund V.P.
Colonial Advisory Services,
Inc. V.P.
Feloney, Joseph L. V.P. Colonial Investment Services, A.V.P.
Inc.
Finnemore, V.P. Colonial Advisory Services,
Leslie W. Inc. V.P.
Gerokoulis, V.P. Colonial Investment Services,
Stephen A. Inc. Sr. V.P.
Harasimowicz, V.P. Colonial Investment Services,
Stephen Inc. V.P.
Harris, David V.P. Stein Roe Global Capital Mngmt. Principal
Hartford, Brian V.P.
Haynie, James P. V.P. Colonial Advisory Services,
Inc. V.P.
Johnson, Gordon V.P.
Koonce, Michael H. V.P.; Colonial Trusts I through VII Asst. Sec.
Asst. Colonial High Income
Sec.; Municipal Trust Asst. Sec.
Asst. Colonial InterMarket Income
Clerk & Trust I Asst. Sec.
Counsel Colonial Intermediate High
Income Fund Asst. Sec.
Colonial Investment Grade
Municipal Trust Asst. Sec.
Colonial Municipal Income
Trust Asst. Sec.
Colonial Investment Services,
Inc. Asst. Clerk
Colonial Investors Service
Center, Inc. Asst. Clerk
The Colonial Group, Inc. Asst. Clerk
Colonial Advisory Services,
Inc. Asst. Clerk
Lennon, John E. V.P. Colonial Advisory Services,
Inc. V.P.
Lenzi, Sharon V.P.
Lilienfeld, V.P.
Jonathan
Loring, William C. V.P.
Lydecker, Peter L. V.P.; Colonial Trusts I through VII Controller
Asst. Colonial High Income
Treasurer Municipal Trust Controller
Colonial InterMarket Income
Trust I Controller
Colonial Intermediate High
Income Fund Controller
Colonial Investment Grade
Municipal Trust Controller
Colonial Municipal Income
Trust Controller
MacKinnon, Dir.;
Donald S. Sr.V.P.
McGregor, Dir.; Colonial Investment Services, Pres.; CEO;
Jeffrey L. Sr.V.P. Inc. Dir.
Newman, Maureen V.P.
O'Neill, Charles A. Sr.V.P.; Colonial Investment Services,
Dir. Inc. Exec. V.P.
Peters, Helen F. Dir.; Colonial Advisory Services,
Sr.V.P.; Inc. Sr. V.P.
IPC Mbr.
Rao, Gita V.P.
Rie, Daniel Sr.V.P.; Colonial Advisory Services,
IPC Mbr.; Inc. Sr. V.P.
Dir.
Scoon, Davey S. Dir.; Colonial Advisory Services,
Exe.V.P.; Inc. Dir.
IPC Mbr.; Colonial High Income
Exec. Comm. Municipal Trust V.P.
Mbr. Colonial InterMarket Income
Trust I V.P.
Colonial Intermediate High
Income Fund V.P.
Colonial Investment Grade
Municipal Trust V.P.
Colonial Municipal Income
Trust V.P.
Colonial Trusts I through VII V.P.
Colonial Investors Service Dir; Pres.
Center, Inc.
The Colonial Group, Inc. COO; Ex. V.P.
Seibel, Sandra L. V.P.
Shore, Janet V.P.
Stern, Arthur O. Exe.V.P.; Colonial Advisory Services,
Dir.; Inc. Clerk
Sec.; Colonial High Income
Clrk. & Municipal Trust Secretary
Gnrl. Colonial InterMarket Income
Counsel; Trust I Secretary
IPC Mbr. Colonial Intermediate High
Income Fund Secretary
Colonial Investment Grade
Municipal Trust Secretary
Colonial Municipal Income
Trust Secretary
Colonial Trusts I through VII Secretary
Colonial Investors Service
Center, Inc. Clerk
The Colonial Group, Inc. Exec. V.P.;
Clerk; General
Counsel
Colonial Investment Services, Dir., Chrmn.
Inc. Counsel; Clrk.
Stevens, Richard V.P.
Waas, Robert S. V.P.
Wallace, John V.P.- Corp. Colonial Advisory Services,
Finance and Inc. Controller
Controller
- ------------------------------------------------
*The Principal address of all of the officers and directors of the investment
adviser is One Financial Center, Boston, MA 02111.
Item 28.
State Street Global Advisors (Sub-Adviser), a division of State
Street Bank and Trust Company, is the Registrant's Sub-Adviser.
The Sub-Adviser specializes in quantitative investment products
and is the largest U.S. manager of international pension assets.
The Sub-Adviser, with over $232 billion (U.S.) under management,
provides complete global investment management services from
offices in the United States, London, Sydney, Hong Kong, Tokyo,
Toronto, Montreal, Dubai, Munich and Paris. The following sets
forth the business and other connections of each director and
officer of the Sub-Adviser:
Positions with Positions During the
Name State Street Past Two Years
Jeffrey P. Adams Vice President Same
Steven Esielonis Vice President Same
Gustaff V. Fish, Jr. Senior Vice Same
President
Timothy B. Harbert Senior Vice Same
President
Peter M. Stonberg Vice President Same
Teydon D. Traub Managing Director Same
Tenley E. Albright,M.D. Director Chairman, Western
Resources, Inc.
Joseph A. Baute Director Consultant to Markem
Corporation
(formerly Chairman
and Chief Executive
Officer, Markem
Corporation)
I. MacAllister Booth Director Retired Chairman,
President and Chief
Executive Officer,
Polaroid Corporation
Marshall N. Carter Director Chairman and Chief
Executive Officer,
State Street Bank
and Trust Company
James I. Cash, Jr. Director Professor of
Business
Administration,
Harvard Graduate
School of Business
Truman S. Casner Director Partner, Ropes &
Gray
Nader F. Darehshori Director Chairman, President
and Chief Executive
Officer, Houghton
Mifflin Company
Arthur L. Goldstein Director Chairman and Chief
Executive Officer,
Ionics, Incorporated
Charles F. Kaye Director President,
Transportation
Investments, Inc.
John M. Kucharski Director Chairman and Chief
Executive Officer,
EG & G Inc.
Charles R. LaMantia Director President and Chief
Executive Officer,
Arthur D. Little,
Inc.
David B. Perini Director Chairman and
President, Perini
Corporation
Dennis J. Picard Director Chairman and Chief
Executive Officer,
Raytheon Company
David A. Spina Director President and Chief
Operating Officer,
State Street Bank
and Trust Company
The business address of each individual listed in the foregoing
table is c/o State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110.
<PAGE>
Item 29 Principal Underwriter
- ------- ---------------------
(a) Colonial Investment Services, Inc. a subsidiary of Colonial
Management Associates, Inc., Registrant's principal
underwriter, also acts in the same capacity to
Colonial Trust I, Colonial Trust II, Colonial Trust III, Colonial
Trust IV, Colonial Trust V and Colonial Trust VII; and
sponsor for Colony Growth Plans (public offering of which were
discontinued June 14, 1971).
(b) The table below lists each director or officer of the principal
underwriter named in the answer to Item 21.
(1) (2) (3)
Name and Principal Position and Offices Positions and
Business Address* with Principal Offices with
Underwriter Registrant
- ------------------ ------------------- --------------
Ballou, Rich Regional V.P. None
Balzano, Christine R. V.P. None
Barsokas, David Regional V.P. None
Cairns, David Regional V.P. None
Chrzanowski, Regional V.P. None
Daniel
Clapp, Elizabeth A. V.P. None
Daniszewski, V.P. None
Joseph J.
Davey, Cynthia Sr. V.P. None
Donovan, John Regional V.P. None
Eckelman, Bryan Sr. V.P. None
Emerson, Kim P. Regional V.P. None
Erickson, Cynthia G. V.P. None
Evans, C. Frazier Sr. V.P. None
Feldman, David Regional V.P. None
Feloney, Joseph L. V.P. None
Flaherty, Michael Regional V.P. None
Gerokoulis, Sr. V.P. None
Stephen A.
Goldberg, Matthew Regional V.P. None
Hannon, Lisa Regional V.P. None
Harasimowicz, V.P. None
Stephen
Hayes, Mary V.P. None
Elizabeth
Hodgkins, Joseph Regional V.P. None
Karagiannis, Sr. V.P. None
Marilyn
Kavolius, Mark Regional V.P. None
Kelley, Terry M. Regional V.P. None
Kelson, David W. Sr. V.P. None
Lloyd, Judith H. Sr. V.P. None
McGregor, Jeffrey L. Director, CEO, None
President, COO
Meriwether, Jan V.P.
Moberly, Ann R. Sr. V.P. None
Murphy, Robert F. Sr. V.P. None
O'Neill, Charles A. Exec. V.P. None
Palmer, Laura V.P. None
Potter, Cheryl Regional V.P. None
Reed, Christopher B. Regional V.P. None
Ross, Gary J. Regional V.P. None
Scott, Michael W. Sr. V.P. None
Sorrells, Sr. V.P. None
Elizabeth
Stern, Arthur O. Clerk and Secretary
Counsel, Dir.,
Chairman
VanEtten, Keith H. V.P. None
Villanova, Paul Regional V.P. None
Wallace, John V.P. None
- --------------------------
* The address for each individual is One Financial Center, Boston, MA
02111.
Item 30. Location of Accounts and Records
Registrant's accounts and records required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are in the physical possession of the following:
Registrant
Rule 31a-1(b),(4)
Rule 31a-2(a),(1)
Colonial Management Associates, Inc.
One Financial Center, Boston, Massachusetts 02111
Rule 31a-1(b),(1),(2),(3),(5),(6),(7),(8),(9),(10),(11),(12)
Rule 31a-1(d),(f)
Rule 31a-2(a),(1),(2),(c),(e)
Colonial Investment Services, Inc.
One Financial Center, Boston, Massachusetts 02111
Rule 31a-1(d)
Rule 31a-2(c)
Boston Safe Deposit and Trust Company
One Boston Place, Boston, Massachusetts 02108
Rule 31a-1(b),(2),(3)
Rule 31a-2(a)(2)
Colonial Investors Service Center, Inc.
P.O. Box 1722, Boston, Massachusetts 02105-1722
Rule 31a-1(b),(2)
Rule 31a-1(a),(2)
Item 31. Management Services
See Item 5, Part A
and Item 16, Part B.
Item 32. Undertakings
(1) Registrant undertakes to call a meeting of shareholders for the
purpose of voting upon the question of the removal of a Trustee or
Trustees when requested in writing to do so by the holders of at
least 10% of any series' outstanding shares and in connection with
such meeting to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder
communications.
(2) The Registrant undertakes to furnish free of charge to each person
to whom a prospectus is delivered, a copy of the applicable
series' annual report to shareholders containing the information
required by Item 5A of Form N-1A.
(3) The Registrant, on behalf of Colonial International Equity Fund,
Colonial Equity Income Fund and Colonial Aggressive Growth Fund,
undertakes to file a post-effective amendment, using financial
statements which need not be certified, within 4 to 6 months
from the effective date of this Registration Statement under
the Securities Act of 1933, as amended.
<PAGE>
************
NOTICE
A copy of the Agreement and Declaration of Trust of Colonial Trust VI (the
"Trust") is on file with the Secretary of The Commonwealth of Massachusetts and
notice is hereby given that the instrument has been executed on behalf of the
Trust by an officer of the Trust as an officer and by the Trust's Trustees as
trustees and not individually and the obligations of or arising out of the
instrument are not binding upon any of the Trustees, officers or shareholders
individually but are binding only upon the assets and property of the Trust.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Colonial Trust VI, certifies
that it meets all the requirements for effectiveness of the Registration
Statement pursuant to Rule 485(b) and has duly caused this Post-Effective
Amendment No. 10 to its Registration Statement under the Securities Act of 1933
and Amendment No. 12 to its Registration Statement under the Investment Company
Act of 1940, to be signed in this City of Boston and The Commonwealth of
Massachusetts on this 27th day of September, 1996.
COLONIAL TRUST VI
By: HAROLD W. COGGER
----------------
Harold W. Cogger
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment has been signed below by the following persons in their
capacities and on the date indicated.
SIGNATURES TITLE DATE
/s/ HAROLD W. COGGER President September 27, 1996
- --------------------
Harold W. Cogger
/s/ PETER L. LYDECKER Chief Financial Officer, September 27, 1996
- ---------------------
Peter L. Lydecker Chief Accounting Officer
and Controller
/s/ ROBERT J. BIRNBAUM Trustee
- ----------------------
Robert J. Birnbaum
/s/ TOM BLEASDALE Trustee
- ------------------
Tom Bleasdale
/s/ LORA S. COLLINS Trustee
- -------------------
Lora S. Collins
/s/ JAMES E. GRINNELL Trustee
- ---------------------
James E. Grinnell
/s/ WILLIAM D. IRELAND, JR. Trustee
- --------------------------
William D. Ireland, Jr.
/s/ RICHARD W. LOWRY Trustee
- ---------------------
Richard W. Lowry
/s/ WILLIAM E. MAYER Trustee
- --------------------
William E. Mayer
/s/ JAMES L MOODY, JR. Trustee
- ---------------------
James L. Moody, Jr.
MICHAEL H. KOONCE
-----------------
Michael H. Koonce
Attorney-in-fact
September 27, 1996
/s/ JOHN J. NEUHAUSER Trustee
- ---------------------
John J. Neuhauser
/s/ GEORGE L. SHINN Trustee
- -------------------
George L. Shinn
/s/ ROBERT L. SULLIVAN Trustee
- ----------------------
Robert L. Sullivan
/s/ SINCLAIR WEEKS, JR. Trustee
- ----------------------
Sinclair Weeks, Jr.
<PAGE>
EXHIBIT INDEX
EXHIBIT
2. By-Laws as amended (2/16/96)
4. Form of Share Certificate
5.(d) Management Agreement (CAGF)
5.(e) Management Agreement (CEIF)
5.(f) Management Agreement (CIEF)
6.(a) Distributor's Contract with Colonial Investment Services, Inc.
6.(b) Selling Agreement
6.(c) Bank and Bank Affiliated Selling Agreement
6.(d) Asset Retention Agreement
8. Custody Agreement with Boston Safe Deposit and Trust Company
8.(a) Amendment to Custody Agreement with Boston Safe Deposit and
Trust Company
9.(b) Pricing and Bookkeeping Agreement with Colonial Management
Associates, Inc.
9.(c) Plan pursuant to Rule 18f-3(d) under the Investment Company
Act of 1940
11.(a) Consent of Independent Accountants (CAGF, CEIF, CIEF)
16.(c) Calculation of Performance Information (CAGF)
16.(c)(i) Calculation of Yield Information (CAGF)
16.(d) Calculation of Performance Information (CEIF)
16.(d)(i) Calculation of Yield Information (CEIF)
16.(e) Calculation of Performance Information (CIEF)
16.(e)(i) Calculation of Yield Information (CIEF)
17.(f) Financial Data Schedule (Class A)(CAGF)
17.(g) Financial Data Schedule (Class B) (CAGF)
17.(h) Financial Data Schedule (Class D) (CAGF)
17.(i) Financial Data Schedule (Class A (CEIF)
17.(j) Financial Data Schedule (Class B) (CEIF)
17.(k) Financial Data Schedule (Class D) (CEIF)
17.(l) Financial Data Schedule (Class A) (CIEF)
17.(m) Financial Data Schedule (Class B) (CIEF)
17.(n) Financial Data Schedule (Class D) (CIEF)
Amended 8/14/92 - Sec. 11
Amended 10/09/92 - Section 11
Amended 2/16/96 - Section 3.1, paragraph 2
BY-LAWS
OF
COLONIAL TRUST VI
Section 1. Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject to the
Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Colonial Trust VI, a Massachusetts business
trust established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall
be located in Boston, Massachusetts.
Section 2. Shareholders
2.1 Shareholder Meetings. A meeting of the shareholders of the Trust or of any
one or more series or classes of shares may be called at any time by the
Trustees, by the president or, if the Trustees and the president shall
fail to call any meeting of shareholders for a period of 30 days after
written application of one or more shareholders who hold at least 10% of
all outstanding shares of the Trust, if shareholders of all series are
required under the Declaration of Trust to vote in the aggregate and not
by individual series at such meeting, or of any series or class, if
shareholders of such series or class are entitled under the Declaration of
Trust to vote by individual series or class at such meeting, then such
shareholders may call such meeting. If the meeting is a meeting of the
shareholders of one or more series or classes of shares, but not a meeting
of all shareholders of the Trust, then only the shareholders of such one
or more series or classes shall be entitled to notice of and to vote at
the meeting. Each call of a meeting shall state the place, date, hour and
purpose of the meeting.
2.2 Place of Meetings. All meetings of the shareholders shall be held at the
principal office of the Trust, or, to the extent permitted by the
Declaration of Trust, at such other place within the United States as
shall be designated by the Trustees or the president of the Trust.
2.3 Notice of Meetings. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be
given at least seven days before the meeting to each shareholder entitled
to vote thereat by leaving such notice with him or her or at his or her
residence or usual place of business or by mailing it, postage prepaid,
and addressed to such shareholder at his or her address as it appears in
the records of the Trust. Such notice shall be given by the secretary or
an assistant secretary or by an officer designated by the Trustees. No
notice of any meeting of shareholders need be given to a shareholder if a
written waiver of notice, executed before or after the meeting by such
shareholder or his or her attorney thereunto duly authorized, is filed
with the records of the meeting.
2.4 Ballots. No ballot shall be required for any election unless requested by
a shareholder present or represented at the meeting and entitled to vote
in the election.
2.5 Proxies. Shareholders entitled to vote may vote either in person or by
proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the secretary or other person
responsible to record the proceedings of the meeting before being voted.
Unless otherwise specifically limited by their terms, such proxies shall
entitle the holders thereof to vote at any adjournment of such meeting but
shall not be valid after the final adjournment of such meeting. The
placing of a shareholder's name on a proxy pursuant to telephonic or
electronically transmitted instructions obtained pursuant to procedures
reasonably designed to verify that such instructions have been authorized
by such shareholder shall constitute execution of such proxy by or on
behalf of such shareholder.
Section 3. Trustees
3.1 Committees and Advisory Board. The Trustees may appoint from their number
an executive committee and other committees. Except as the Trustees may
otherwise determine, any such committee may make rules for conduct of its
business. The Trustees may appoint an advisory board to consist of not
less than two nor more than five members. The members of the advisory
board shall be compensated in such manner as the Trustees may determine
and shall confer with and advise the Trustees regarding the investments
and other affairs of the Trust. Each member of the advisory board shall
hold office until the first meeting of the Trustees following the next
meeting of the shareholders and until his or her successor is elected and
qualified, or until he or she sooner dies, resigns, is removed or becomes
disqualified, or until the advisory board is sooner abolished by the
Trustees.
In addition, the Trustees may appoint a Dividend Committee of not less
than three persons, who may (but need not) be Trustees.
No special compensation shall be payable to members of the Dividend
Committee. Each member of the Dividend Committee will hold office until
the successors are elected and qualified or until the member dies,
resigns, is removed, becomes disqualified or until the Committee is
abolished by the Trustees.
3.2 Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
3.3 Special Meetings. Special meetings of the Trustees may be held at any time
and at any place designated in the call of the meeting, when called by the
president or the treasurer or by two or more Trustees, sufficient notice
thereof being given to each Trustee by the secretary or an assistant
secretary or by the officer or one of the Trustees calling the meeting.
3.4 Notice. It shall be sufficient notice to a Trustee to send notice by mail
at least forty-eight hours or by telegram at least twenty-four hours
before the meeting addressed to the Trustee at his or her usual or last
known business or residence address or to give notice to him or her in
person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver
of notice, executed by him or her before or after the meeting, is filed
with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice
to him or her. Neither notice of a meeting nor a waiver of a notice need
specify the purposes of the meeting.
3.5 Quorum. At any meeting of the Trustees one-third of the Trustees then in
office shall constitute a quorum; provided, however, a quorum shall not be
less than two. Any meeting may be adjourned from time to time by a
majority of the votes cast upon the question, whether or not a quorum is
present, and the meeting may be held as adjourned without further notice.
Section 4. Officers and Agents
4.1 Enumeration; Qualification. The officers of the Trust shall be a
president, a treasurer, a secretary and such other officers, if any, as
the Trustees from time to time may in their discretion elect or appoint.
The Trust may also have such agents, if any, as the Trustees from time to
time may in their discretion appoint. Any officer may be but none need be
a Trustee or shareholder. Any two or more offices may be held by the same
person.
4.2 Powers. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly
incident to his or her office as if the Trust were organized as a
Massachusetts business corporation and such other duties and powers as the
Trustees may from time to time designate, including without limitation the
power to make purchases and sales of portfolio securities of the Trust
pursuant to recommendations of the Trust's investment adviser in
accordance with the policies and objectives of that series of shares set
forth in its prospectus and with such general or specific instructions as
the Trustees may from time to time have issued.
4.3 Election. The president, the treasurer and the secretary shall be
elected annually by the Trustees. Other elected officers are
elected by the Trustees. Assistant officers are appointed by the
elected officers.
4.4 Tenure. The president, the treasurer and the secretary shall hold office
until their respective successors are chosen and qualified, or in each
case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office at the pleasure of the
Trustees. Each agent shall retain his or her authority at the pleasure of
the Trustees.
4.5 President and Vice Presidents. The president shall be the chief executive
officer of the Trust. The president shall preside at all meetings of the
shareholders and of the Trustees at which he or she is present, except as
otherwise voted by the Trustees. Any vice president shall have such duties
and powers as shall be designated from time to time by the Trustees.
4.6 Treasurer and Controller. The treasurer shall be the chief financial
officer of the Trust and subject to any arrangement made by the Trustees
with a bank or trust company or other organization as custodian or
transfer or shareholder services agent, shall be in charge of its valuable
papers and shall have such other duties and powers as may be designated
from time to time by the Trustees or by the president. Any assistant
treasurer shall have such duties and powers as shall be designated from
time to time by the Trustees.
The controller shall be the chief accounting officer of the Trust and
shall be in charge of its books of account and accounting records. The
controller shall be responsible for preparation of financial statements of
the Trust and shall have such other duties and powers as may be designated
from time to time by the Trustees or the president.
4.7 Secretary and Assistant Secretaries. The secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept
therefor, which books shall be kept at the principal office of the Trust.
In the absence of the secretary from any meeting of shareholders or
Trustees, an assistant secretary, or if there be none or he or she is
absent, a temporary clerk chosen at the meeting shall record the
proceedings thereof in the aforesaid books.
Section 5. Resignations and Removals
Any Trustee, officer or advisory board member may resign at any time by
delivering his or her resignation in writing to the president, the treasurer or
the secretary or to a meeting of the Trustees. The Trustees may remove any
officer elected by them with or without cause by the vote of a majority of the
Trustees then in office. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee, officer, or advisory board member
resigning, and no officer or advisory board member removed shall have any right
to any compensation for any period following his or her resignation or removal,
or any right to damages on account of such removal.
Section 6. Vacancies
A vacancy in any office may be filled at any time. Each successor shall hold
office for the unexpired term, and in the case of the presidents, the treasurer
and the secretary, until his or her successor is chosen and qualified, or in
each case until he or she sooner dies, resigns, is removed or becomes
disqualified.
Section 7. Shares of Beneficial Interest
7.1 Share Certificates. No certificates certifying the ownership of shares
shall be issued except as the Trustees may otherwise authorize. In the
event that the Trustees authorize the issuance of share certificates,
subject to the provisions of Section 7.3, each shareholder shall be
entitled to a certificate stating the number of shares owned by him or
her, in such form as shall be prescribed from time to time by the
Trustees. Such certificate shall be signed by the president or a vice
president and by the treasurer or an assistant treasurer. Such signatures
may be facsimiles if the certificate is signed by a transfer agent or by a
registrar, other than a Trustee, officer or employee of the Trust. In case
any officer who has signed or whose facsimile signature has been placed on
such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Trust with the same effect
as if he or she were such officer at the time of its issue.
In lieu of issuing certificates for shares, the Trustees or the transfer
agent may either issue receipts therefor or keep accounts upon the books
of the Trust for the record holders of such shares, who shall in either
case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and
shall be held to have expressly assented and agreed to the terms hereof.
7.2 Loss of Certificates. In the case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be
issued in place thereof, upon such terms as the Trustees may prescribe.
7.3 Discontinuance of Issuance of Certificates. The Trustees may at any time
discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the
Trust for cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
Section 8. Record Date and Closing Transfer Books
The Trustees may fix in advance a time, which shall not be more than 90 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or making of any other distribution to shareholders, as the record
date for determining the shareholders having the right to notice and to vote at
such meeting and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on such record
date shall have such right, notwithstanding any transfer of shares on the books
of the Trust after the record date; or without fixing such record date the
Trustees may for any of such purposes close the transfer books for all or any
part of such period.
Section 9. Seal
The seal of the Trust shall, subject to alteration by the Trustees, consist of a
flat-faced circular die with the word "Massachusetts" together with the name of
the Trust and the year of its organization, cut or engraved thereon; but, unless
otherwise required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument
or other paper executed and delivered by or on behalf of the Trust.
Section 10. Execution of Papers
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed by
the Trust shall be signed, and all transfers of securities standing in the name
of the Trust shall be executed, by the president or by one of the vice
presidents or by the treasurer or by whomsoever else shall be designated for
that purpose by the vote of the Trustees and need not bear the seal of the
Trust.
Section 11. Fiscal Year
Except as from time to time otherwise provided by the Trustees, President,
Secretary, Controller or Treasurer, the fiscal year of the Trust shall end on
June 30.
Section 12. Amendments
These By-Laws may be amended or repealed, in whole or in part, by a majority of
the Trustees then in office at any meeting of the Trustees, or by one or more
writings signed by such a majority.
S:\FUNDS\GENERAL\BYLAWS-6.DOC
[Front of certificate]
NUMBER SHARES
COLONIAL FUND
SHARE CERTIFICATE
THIS CERTIFIES THAT is the owner of
SEE REVERSE FOR CERTAIN DEFINITIONS
CLASS A SHARES OF BENEFICIAL INTEREST OF
COLONIAL FUND
a series of Colonial Trust , subject to the Agreement and Declaration of Trust,
of Colonial Trust , as amended, on file with the Secretary of the Commonwealth
of Massachusetts. This certificate is executed by the Trust and is not binding
upon any Trustee or officer of the Trust or shareholder of the Fund individually
but is binding only upon the assets of the Fund.
This certificate is valid only when countersigned by the Transfer Agent.
WITNESS the facsimile signatures of the Trust's duly authorized officers.
Dated
COUNTERSIGNED:
COLONIAL INVESTORS SERVICE CENTER, INC.
BY: TRANSFER AGENT
STEPHEN T. WELSH, HAROLD W. COGGER
AUTHORIZED SIGNATURE ASSISTANT TREASURER PRESIDENT
[Rear of certificate]
ABBREVIATIONS
The following abbreviations may be used on the face of this certificate
Abbreviation Equivalent Abbreviation Equivalent
- ----------------------------------------------------------------------
JT TEN As joint tenants, with TEN IN COM As tenants in common
rights of survivorship TEN BY ENT As tenants by the entirety
and not as tenants UGTA Under Uniform Gifts to
incommon Minors Act
UTMA Uniform Transfer to
Minors Act
ADM Administrator FDN Foundation
Administratrix PL Public Law
AGMT Agreement TR Trustee
CUST Custodian for UA Under Agreement
EST Estate of UW Under Will
EX Executor Executrix
FBO For the benefit of
Additional abbreviations may also be used though not in the above
list.
_______________________________________________________________________________
TRANSFER FORM
SOCIAL SECURITY OR TAXPAYER
IDENTIFICATION NUMBER OF ASSIGNEE:_______________
The undersigned assigns to
________________________________________________________
(Please print or typwrite name and address of assignee)
________________________________________________________
________________________________________________________
__________________________________________________________shares
(indicate the number of shares to be redeemed A new certificate will be issued
for any balance)
represented by this certificate and irrevocably appoints
The Secretary of the Trust______________________________________Attorney to
transfer said shares on the books of the Trust with full power of substitution.
DO NOT SIGN THIS FORM UNLESS THE ASSIGNEE IS NAMED ABOVE
Dated This request must be signed exactly
as each owner is named on this
certificate by every named owner.
SIGNATURE GUARANTEED BY Signature______________________________
(Signature guarantees are subject to
acceptance in accordance with the rules of the Transfer Agent)
- -------------------------------------------------------------------------------
REDEMPTION FORM
The undersigned requests the redemption of
_______________________________________________shares
(indicate the number of shares to be redeemed. A new certificate will be issued
for any balance)
represented by this Certificate.
This request must be signed as
each owner is named on this
certificate by every named
owner.
SIGNATURE GUARANTEED BY Signature____________________
- -----------------------------
(Signature guarantees are
subject to acceptance in
accordance with the rules of
the Transfer Agent.)
----------------------------
Address
----------------------------
34028- 94882
MANAGEMENT AGREEMENT
AGREEMENT dated as of March 31, 1996, between COLONIAL TRUST VI,
a Massachusetts business trust (Trust), with respect to COLONIAL
AGGRESSIVE GROWTH FUND (Fund), and COLONIAL MANAGEMENT
ASSOCIATES, INC., a Massachusetts corporation (Adviser).
In consideration of the promises and covenants herein, the
parties agree as follows:
1. The Adviser will manage the investment of the assets of the
Fund in accordance with its prospectus and statement of
additional information and will perform the other services
herein set forth, subject to the supervision of the Board of
Trustees of the Trust. The Adviser may delegate its
investment responsibilities to a sub-adviser.
2. In carrying out its investment management obligations, the
Adviser shall:
(a) evaluate such economic, statistical and financial
information and undertake such investment research as it
shall believe advisable; (b) purchase and sell securities and
other investments for the Fund in accordance with the
procedures described in its prospectus and statement of
additional information; and (c) report results to the Board
of Trustees of the Trust.
3. The Adviser shall furnish at its expense the following:
(a) office space, supplies, facilities and equipment; (b)
executive and other personnel for managing the affairs of the
Fund (including preparing financial information of the Fund
and reports and tax returns required to be filed with public
authorities, but exclusive of those related to custodial,
transfer, dividend and plan agency services, determination of
net asset value and maintenance of records required by
Section 31(a) of the Investment Company Act of 1940, as
amended, and the rules thereunder (1940 Act)); and (c)
compensation of Trustees who are directors, officers,
partners or employees of the Adviser or its affiliated
persons (other than a registered investment company).
4. The Adviser shall be free to render similar services to
others so long as its services hereunder are not impaired
thereby.
5. The Fund shall pay the Adviser monthly a fee at the annual
rate of 0.85% of the average daily net assets of the Fund.
6. If the operating expenses of the Fund for any fiscal year
exceed the most restrictive applicable expense limitation for
any state in which shares are sold, the Adviser's fee shall
be reduced by the excess but not to less than zero.
Operating expenses shall not include brokerage, interest,
taxes, deferred organization expenses, Rule 12b-1
distribution fees, service fees and extraordinary expenses,
if any. The Adviser may waive its compensation (and bear
expenses of the Fund) to the extent that expenses of the Fund
exceed any expense limitation the Adviser declares to be
effective.
7. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, shall continue until two
years from its date of execution and from year to year
thereafter so long as approved annually in accordance with
the 1940 Act; (b) may be terminated without penalty on
sixty days' written notice to the Adviser either by vote of
the Board of Trustees of the Trust or by vote of a majority
of the outstanding shares of the Fund; (c) shall
automatically terminate in the event of its assignment; and
(d) may be terminated without penalty by the Adviser on
sixty days' written notice to the Trust.
8. This Agreement may be amended in accordance with the 1940
Act.
9. For the purpose of the Agreement, the terms "vote of a
majority of the outstanding shares", "affiliated person" and
"assignment" shall have their respective meanings defined in
the 1940 Act and exemptions and interpretations issued by the
Securities and Exchange Commission under the 1940 Act.
10 In the absence of willful misfeasance, bad faith or gross
. negligence on the part of the Adviser, or reckless disregard
of its obligations and duties hereunder, the Adviser shall
not be subject to any liability to the Trust or the Fund, to
any shareholder of the Trust or the Fund or to any other
person, firm or organization, for any act or omission in the
course of, or connected with, rendering services hereunder.
COLONIAL TRUST VI on behalf of
COLONIAL AGGRESSIVE GROWTH FUND
By: Peter L. Lydecker
Title: Controller
COLONIAL MANAGEMENT ASSOCIATES, INC.
By: Arthur O. Stern
Title: Executive Vice President
A copy of the document establishing the Trust is filed with the
Secretary of The Commonwealth of Massachusetts. This Agreement
is executed by officers not as individuals and is not binding
upon any of the Trustees, officers or shareholders of the Trust
individually but only upon the assets of the Fund.
3
MANAGEMENT AGREEMENT
AGREEMENT dated as of March 31, 1996, between COLONIAL TRUST VI,
a Massachusetts business trust (Trust), with respect to COLONIAL
EQUITY INCOME FUND (Fund), and COLONIAL MANAGEMENT ASSOCIATES,
INC., a Massachusetts corporation (Adviser).
In consideration of the promises and covenants herein, the
parties agree as follows:
1. The Adviser will manage the investment of the assets of the
Fund in accordance with its prospectus and statement of
additional information and will perform the other services
herein set forth, subject to the supervision of the Board of
Trustees of the Trust. The Adviser may delegate its
investment responsibilities to a sub-adviser.
2. In carrying out its investment management obligations, the
Adviser shall:
(a) evaluate such economic, statistical and financial
information and undertake such investment research as it
shall believe advisable; (b) purchase and sell securities and
other investments for the Fund in accordance with the
procedures described in its prospectus and statement of
additional information; and (c) report results to the Board
of Trustees of the Trust.
3. The Adviser shall furnish at its expense the following:
(a) office space, supplies, facilities and equipment; (b)
executive and other personnel for managing the affairs of the
Fund (including preparing financial information of the Fund
and reports and tax returns required to be filed with public
authorities, but exclusive of those related to custodial,
transfer, dividend and plan agency services, determination of
net asset value and maintenance of records required by
Section 31(a) of the Investment Company Act of 1940, as
amended, and the rules thereunder (1940 Act)); and (c)
compensation of Trustees who are directors, officers,
partners or employees of the Adviser or its affiliated
persons (other than a registered investment company).
4. The Adviser shall be free to render similar services to
others so long as its services hereunder are not impaired
thereby.
5. The Fund shall pay the Adviser monthly a fee at the annual
rate of 0.80% of the average daily net assets of the Fund.
6. If the operating expenses of the Fund for any fiscal year
exceed the most restrictive applicable expense limitation for
any state in which shares are sold, the Adviser's fee shall
be reduced by the excess but not to less than zero.
Operating expenses shall not include brokerage, interest,
taxes, deferred organization expenses, Rule 12b-1
distribution fees, service fees and extraordinary expenses,
if any. The Adviser may waive its compensation (and bear
expenses of the Fund) to the extent that expenses of the Fund
exceed any expense limitation the Adviser declares to be
effective.
7. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, shall continue until two
years from its date of execution and from year to year
thereafter so long as approved annually in accordance with
the 1940 Act; (b) may be terminated without penalty on
sixty days' written notice to the Adviser either by vote of
the Board of Trustees of the Trust or by vote of a majority
of the outstanding shares of the Fund; (c) shall
automatically terminate in the event of its assignment; and
(d) may be terminated without penalty by the Adviser on
sixty days' written notice to the Trust.
8. This Agreement may be amended in accordance with the 1940
Act.
9. For the purpose of the Agreement, the terms "vote of a
majority of the outstanding shares", "affiliated person" and
"assignment" shall have their respective meanings defined in
the 1940 Act and exemptions and interpretations issued by the
Securities and Exchange Commission under the 1940 Act.
10 In the absence of willful misfeasance, bad faith or gross
. negligence on the part of the Adviser, or reckless disregard
of its obligations and duties hereunder, the Adviser shall
not be subject to any liability to the Trust or the Fund, to
any shareholder of the Trust or the Fund or to any other
person, firm or organization, for any act or omission in the
course of, or connected with, rendering services hereunder.
COLONIAL TRUST VI on behalf of
COLONIAL EQUITY INCOME FUND
By: Peter L. Lydecker
Title: Controller
COLONIAL MANAGEMENT ASSOCIATES, INC.
By: Arthur O. Stern
Title: Executive Vice President
A copy of the document establishing the Trust is filed with the
Secretary of The Commonwealth of Massachusetts. This Agreement
is executed by officers not as individuals and is not binding
upon any of the Trustees, officers or shareholders of the Trust
individually but only upon the assets of the Fund.
funds/general/contract/ceifman.doc
MANAGEMENT AGREEMENT
AGREEMENT dated as of March 31, 1996, between COLONIAL TRUST VI,
a Massachusetts business trust (Trust), with respect to COLONIAL
INTERNTIONAL EQUITY FUND (Fund), and COLONIAL MANAGEMENT
ASSOCIATES, INC., a Massachusetts corporation (Adviser).
In consideration of the promises and covenants herein, the
parties agree as follows:
1. The Adviser will manage the investment of the assets of the
Fund in accordance with its prospectus and statement of
additional information and will perform the other services
herein set forth, subject to the supervision of the Board of
Trustees of the Trust. The Adviser may delegate its
investment responsibilities to a sub-adviser.
2. In carrying out its investment management obligations, the
Adviser shall:
(a) evaluate such economic, statistical and financial
information and undertake such investment research as it
shall believe advisable; (b) purchase and sell securities and
other investments for the Fund in accordance with the
procedures described in its prospectus and statement of
additional information; and (c) report results to the Board
of Trustees of the Trust.
3. The Adviser shall furnish at its expense the following:
(a) office space, supplies, facilities and equipment; (b)
executive and other personnel for managing the affairs of the
Fund (including preparing financial information of the Fund
and reports and tax returns required to be filed with public
authorities, but exclusive of those related to custodial,
transfer, dividend and plan agency services, determination of
net asset value and maintenance of records required by
Section 31(a) of the Investment Company Act of 1940, as
amended, and the rules thereunder (1940 Act)); and (c)
compensation of Trustees who are directors, officers,
partners or employees of the Adviser or its affiliated
persons (other than a registered investment company).
4. The Adviser shall be free to render similar services to
others so long as its services hereunder are not impaired
thereby.
5. The Fund shall pay the Adviser monthly a fee at the annual
rate of 0.95% of the average daily net assets of the Fund.
6. If the operating expenses of the Fund for any fiscal year
exceed the most restrictive applicable expense limitation for
any state in which shares are sold, the Adviser's fee shall
be reduced by the excess but not to less than zero.
Operating expenses shall not include brokerage, interest,
taxes, deferred organization expenses, Rule 12b-1
distribution fees, service fees and extraordinary expenses,
if any. The Adviser may waive its compensation (and bear
expenses of the Fund) to the extent that expenses of the Fund
exceed any expense limitation the Adviser declares to be
effective.
7. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, shall continue until two
years from its date of execution and from year to year
thereafter so long as approved annually in accordance with
the 1940 Act; (b) may be terminated without penalty on
sixty days' written notice to the Adviser either by vote of
the Board of Trustees of the Trust or by vote of a majority
of the outstanding shares of the Fund; (c) shall
automatically terminate in the event of its assignment; and
(d) may be terminated without penalty by the Adviser on
sixty days' written notice to the Trust.
8. This Agreement may be amended in accordance with the 1940
Act.
9. For the purpose of the Agreement, the terms "vote of a
majority of the outstanding shares", "affiliated person" and
"assignment" shall have their respective meanings defined in
the 1940 Act and exemptions and interpretations issued by the
Securities and Exchange Commission under the 1940 Act.
10 In the absence of willful misfeasance, bad faith or gross
. negligence on the part of the Adviser, or reckless disregard
of its obligations and duties hereunder, the Adviser shall
not be subject to any liability to the Trust or the Fund, to
any shareholder of the Trust or the Fund or to any other
person, firm or organization, for any act or omission in the
course of, or connected with, rendering services hereunder.
COLONIAL TRUST VI on behalf of
COLONIAL INTERNATIONAL EQUITY FUND
By: Peter L. Lydecker
Title: Controller
COLONIAL MANAGEMENT ASSOCIATES, INC.
By: Arthur O. Stern
Title: Executive Vice President
A copy of the document establishing the Trust is filed with the
Secretary of The Commonwealth of Massachusetts. This Agreement
is executed by officers not as individuals and is not binding
upon any of the Trustees, officers or shareholders of the Trust
individually but only upon the assets of the Fund.
funds/general/contract/ciefman.doc
DISTRIBUTOR'S CONTRACT
Each Massachusetts Business Trust (Trust) designated in
Appendix 2 from time to time, acting severally, and Colonial
Investment Services, Inc. (CISI), a Massachusetts corporation,
agree effective January 15, 1996:
1. APPOINTMENT OF CISI. The Trust may offer an unlimited
number of separate investment series (Funds), each of which may
have multiple classes of shares (Shares). The Trust appoints
CISI as the principal underwriter and exclusive distributor of
Shares of Funds designated in Appendix 2. The Contract will
apply to each Fund as set forth on Appendix 2 as it may be
amended from time to time with the latest effective date and
signed.
2. SALE OF SHARES. CISI, acting as principal for its own
account and not as agent for the Trust, shall have the exclusive
right to purchase Shares and shall sell Shares in accordance with
a Fund's prospectus on a "best efforts" basis. CISI shall
purchase Shares at a price equal to the net asset value only as
needed to fill orders. CISI will receive all sales charges.
CISI will notify the Trust at the end of each business day of the
Shares of each Fund to be purchased. The Trust may at any time
refuse to sell Shares hereunder and may issue Shares directly to
shareholders as a stock split or dividend.
3. REDEMPTION OF SHARES. The Trust will redeem in accordance
with a Fund's prospectus all Shares tendered by CISI pursuant to
shareholder redemption requests. CISI will notify the Trust at
the end of each business day of the Shares of each Fund tendered.
4. COMPLIANCE. CISI will comply with applicable provisions
of the prospectus of a Fund and with applicable laws and rules
relating to the sale of Shares and indemnifies the Trust for any
damage or expense from unlawful acts by CISI and persons acting
under its direction or authority.
5. EXPENSES. The Trust will pay all expenses associated
with:
a. the registration and qualification of Shares for sale;
b. shareholder meetings and proxy solicitation;
c. Share certificates;
d. communications to shareholders; and
e. taxes payable upon the issuance of Shares to CISI.
CISI will pay all expenses associated with advertising and sales
literature including those of printing and distributing
prospectuses and shareholder reports, proxy materials and other
shareholder communications used as sales literature.
6. 12b-1 PLAN. Except as indicated in Appendix 1 which may
be revised from time to time, dated and signed, this Section 6
constitutes each Fund's distribution plan (Plan) adopted pursuant
to Rule 12b-1 (Rule) under the Investment Company Act of 1940
(Act).
A. The Fund* shall pay CISI monthly a service fee at the
annual rate of 0.25% of the net assets of its Class A and B
Shares on the 20th of each month and a distribution fee at an
annual rate of 0.75% of the average daily net assets of its
Class B Shares. Each of the Funds identified on Appendix 1 as
having a Class D share 12b-1 Plan shall pay CISI monthly a
service fee at the annual rate of 0.25% of the net assets of its
Class D shares on the 20th of each month and a distribution fee
at an annual rate of 0.75% of the average daily net assets of
its Class D shares. Each of the Funds identified on Appendix 1
as having a Class C share 12b-1 Plan shall pay CISI monthly a
service fee at the annual rate of 0.25% of the net assets of its
Class C shares on the 20th of each month and a distribution fee
at an annual rate of 0.15% of the average daily net assets of
its Class C shares. CISI may use the service and distribution
fees received from the Fund as reimbursement for commissions and
service fees paid to financial service firms which sold Fund
shares and to defray other CISI distribution and shareholder
servicing expenses, including its expenses set forth in
Paragraph 5. CISI shall provide to the Trust's Trustees, and
the Trustees shall review, at least quarterly, reports setting
forth all Plan expenditures, and the purposes for those
expenditures. Amounts payable under this paragraph are subject
to any limitations on such amounts prescribed by applicable laws
or rules.
_____________________________
* Except as indicated in Appendix 1.
B. Payments by the Trust to CISI and its affiliates
(including Colonial Management Associates, Inc.) other than
any prescribed by Section 6A which may be indirect financing
of distribution costs are authorized by this Plan.
C. The Plan shall continue in effect with respect to a
Class of shares only so long as specifically approved for
that Class at least annually as provided in the Rule. The
Plan may not be amended to increase materially the service
fee or distribution fee with respect to a Class of shares
without such shareholder approval as is required by the Rule
and any applicable orders of the Securities and Exchange
Commission, and all material amendments of the Plan must be
approved in the manner described in the Rule. The Plan may
be terminated with respect to a Class of shares at any time
as provided in the Rule without payment of any penalty. The
continuance of the Plan shall be effective only if the
selection and nomination of the Trust's Trustees who are not
interested persons (as defined under the Act) of the Trust
is effected by such non-interested Trustees as required by
the Rule.
7. CONTINUATION, AMENDMENT OR TERMINATION. This Contract (a)
supersedes and replaces any contract or agreement relating to the
subject matter hereof in effect prior to the date hereof, (b)
shall continue in effect only so long as specifically approved at
least annually by the Trustees or shareholders of the Trust and
(c) may be amended at any time by written agreement of the
parties, each in accordance with the Act. This Contract (a)
shall terminate immediately upon the effective date of any later
dated agreement relating to the subject matter hereof, and (b)
may be terminated upon 60 days notice without penalty by a vote
of the Trustees or by CMAI or otherwise in accordance with the
Act and will terminate immediately in the event of assignment (as
defined under the Act). Upon termination the obligations of the
parties under this Contract shall cease except for unfulfilled
obligations and liabilities arising prior to termination. All
notices shall be in writing and delivered to the office of the
other party.
8. AGREEMENT AND DECLARATION OF TRUST. A copy of the
document establishing the Trust is filed with the Secretary of
The Commonwealth of Massachusetts. This Contract is executed by
officers not as individuals and is not binding upon any of the
Trustees, officers or shareholders of the Trust individually but
only upon the assets of the Fund.
Agreed:
EACH TRUST DESIGNATED IN APPENDIX 2 COLONIAL INVESTMENT SERVICES, INC.
By: By:
Arthur O. Stern, Secretary For Each Trust Marilyn Karagiannis,
Senior Vice President
APPENDIX 1
THE FOLLOWING IS APPLICABLE TO THE DESIGNATED FUND'S 12b-1 PLAN:
1. For Colonial Goverment Money Market Fund and Colonial Tax-
Exempt Money Market Fund, the first sentence of Section 6A is
replaced with: "The Fund shall pay CISI monthly a service fee
at an annual rate of 0.25% of the net assets of its Class B
Shares on the 20th of each month and a distribution fee at an
annual rate of 0.75% of the average daily net assets of its
Class B shares."
2. For 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 and
Colonial Ohio Tax-Exempt Fund the first sentence of Section 6A
is replaced with: "The Fund shall pay CISI monthly (i) a
service fee at the annual rate of (A) 0.10% of the net assets
attributable to its Class A and Class B shares outstanding as
of the 20th day of each month which were issued prior to
December 1, 1994, and (B) 0.25% of the net assets attributable
to its Class A and Class B shares outstanding as of the 20th
day of each month which were issued on or after December 1,
1994, and (ii) a distribution fee at an annual rate of 0.75%
of the average daily net assets of its Class B shares."
3. For The Colonial Fund and Colonial Growth Shares Fund, the
first sentence of Section 6A is replaced with: "The Fund
shall pay CISI monthly a service fee at an annual rate of
0.15% of the net assets on the 20th of each month of its Class
A and B Shares outstanding which were issued prior to April 1,
1989, and 0.25% of the net assets on the 20th of each month of
its Class A and B Shares issued thereafter, and a distribution
fee at an annual rate of 0.75% of the average daily net assets
of its Class B Shares.
4. For Colonial Strategic Income Fund, the first sentence of
Section 6A is replaced with: "The Fund shall pay CISI monthly
a service fee at an annual rate of 0.15% of the net assets on
the 20th of each month of its Class A and B Shares outstanding
which were issued prior to January 1, 1993, and 0.25% of the
net assets on the 20th of each month of its Class A and B
Shares issued thereafter, and a distribution fee at an annual
rate of 0.75% of the average daily net assets of its Class B
Shares."
5. For Colonial Adjustable Rate U.S. Government Fund and Colonial
Intermediate Tax-Exempt Fund, the first sentence of Section 6A
is replaced with: "The Fund shall pay CISI monthly a service
fee at an annual rate of 0.20% of the net assets on the 20th
of each month of its Class A and B Shares and a distribution
fee at an annual rate of 0.65% of the average daily net assets
of its Class B Shares."
6. For Colonial Short-Term Tax-Exempt Fund, the first sentence of
Section 6A is replaced with: "The Fund shall pay CISI monthly
a service fee at an annual rate of 0.10% of the net assets on
the 20th of each month of its Class A Shares."; and the third
sentence is replaced with: "CISI may use the service fee
received from the Fund as reimbursement for service fees paid
to financial firms which sold Fund shares and to defray other
CISI shareholder servicing expenses, including its expenses
set forth in Paragragh 5."
7. For Colonial Strategic Balanced Fund, the following sentence
is added as the second sentence of Section 6A: " The Fund
shall also pay CISI an annual distribution fee not exceeding
0.30% of the average net assets attributed to its Class A
shares."
8.The Funds with Class D share 12b-1 Plans are as follows:
Colonial Strategic Balanced Fund, Colonial International Fund
for Growth, Colonial Government Money Market Fund, Colonial
U.S. Fund for Growth, Colonial Global Utilities Fund, Colonial
Newport Tiger Fund, Colonial Small Stock Fund, Colonial High
Yield Securities Fund, Colonial Aggressive Growth Fund,
Colonial Equity Income Fund, Colonial International Equity
Fund, Colonial Growth Fund, Colonial Newport Tiger Cub
Fund and Colonial Newport Japan Fund.
9.The Funds with Class C share 12b-1 Plans are as follows:
Colonial Adjustable Rate U.S. Government Fund.
10.Colonial Newport Tiger Fund does not offer a 12b-1 plan for
Class T and Class Z shares.
11.Colonial Small Stock Fund, The Colonial Fund, Colonial Newport
Tiger Cub Fund and Colonial Newport Japan Fund do not offer a
12b-1 plan for Class Z shares.
By:
Arthur O. Stern, Secretary For Each Trust
By:
Marilyn Karagiannis, Senior Vice President
Colonial Investment Services, Inc.
Dated: , 1996
APPENDIX 2
Trust Series
Colonial Trust I
Colonial High Yield Securities Fund
Colonial Income Fund
Colonial Strategic Income Fund
Colonial Growth Fund
Colonial Trust II
Colonial Government Money Market Fund
Colonial U.S. Government Fund
Colonial Adjustable Rate U.S. Government Fund
Colonial Newport Tiger Cub Fund
Colonial Newport Japan Fund
Colonial Trust III
Colonial Growth Shares Fund
The Colonial Fund
Colonial Federal Securities Fund
Colonial Global Equity Fund
Colonial Global Natural Resources Fund
Colonial International Fund for Growth
Colonial Strategic Balanced Fund
Colonial Global Utilities Fund
Colonial Trust IV
Colonial High Yield Municipal Fund
Colonial Intermediate Tax-Exempt Fund
Colonial Short-Term Tax-Exempt Fund
Colonial Tax-Exempt Fund
Colonial Tax-Exempt Insured Fund
Colonial Tax-Exempt Money Market Fund
Colonial Utilities Fund
Colonial Trust V
Colonial Massachusetts Tax-Exempt Fund
Colonial Connecticut Tax-Exempt Fund
Colonial California 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
Colonial Florida Tax-Exempt Fund
Colonial Trust VI
Colonial U.S. Fund for Growth
Colonial Small Stock Fund
Colonial Aggressive Growth Fund
Colonial Equity Income Fund
Colonial International Equity Fund
Colonial Trust VII
Colonial Newport Tiger Fund
By:
Arthur O. Stern, Secretary For Each Trust
By:
Marilyn Karagiannis, Senior Vice President
Colonial Investment Services, Inc.
Dated: , 1996
COLONIAL INVESTMENT SERVICES
SELLING AGREEMENT
One Financial Center
Boston, MA 02111
Attention: Order Room
(617) 426-3750
Order Room: (800) 441-4020
Dear Investment Colleague:
As dealer for our account, we offer to sell to you shares of each of the
mutual funds with the "Colonial" name (the "Funds"; individually, a "Fund")
for which we are the principal underwriter as defined in the Investment
Company Act of 1940 (the "Act") on the following terms:
1. Orders; Order Procedures. Orders shall be accepted only on the
terms described herein, in the Fund prospectus and statement of additional
information ("Prospectus") and by order procedures in effect from time to
time. You agree to purchase shares only from us or from your customers. All
orders are subject to acceptance or rejection by us in our sole descretion.
You shall provide us with a taxpayer identification number for each account
for which you are dealer of record.
2. Payment for Shares; Registration. Payment for Fund shares shall
be made as instructed in our confirmation to you. If timely payment is not
received, we may cancel the sale or, at our option, sell the shares back to
the Funds. We may delay registration of shares until good payment is
received. Unless other instructions are received by the settlement date,
orders accepted by us may be placed in an open account registered in your
name. If payment or instructions are not timely received, or if you do not
promptly correct errors in our confirmation, you are responsible to the Fund,
us and the Fund's transfer agent ("Agent ") for any directly related loss,
cost, damage or expense, including reasonable attorney's fees and expenses.
3. Suitability and Multiple Classes of Shares. A Fund may offer
more than one class of shares in accordance with its Prospectus; refer to the
Prospectus for availability and details. Purchases of a class of shares
shall be subject to our compliance standards. You are responsible for
determining whether a Fund, and which class of that Fund's shares, is
suitable for your client. Investors affiliated with us and with you (and
their families) have special purchase rights.
4. Sales to the Public; Redemptions; Exchanges. In sales of Fund
shares to the public you shall act as principal for your own account, not as
agent for a Fund or for us. You shall also act as principal in all purchases
of Fund shares directly from us by a shareholder for whom you are the dealer
of record and you appoint the Agent to confirm (with a copy to you) such
purchases on your behalf. You shall sell shares only: (a) to customers at
the applicable price described in the Prospectus; and (b) to us as agent for
the Fund at the redemption price. If you act as principal in purchasing
shares for redemption, you shall pay your customer the amount which you
receive from us. For Fund shares redeemed within seven business days after
purchase, you shall promptly refund to us the dealer discount (which shall be
paid to the Fund, together with any portion of the sales charge retained by
us), commission and other compensation you received on such Fund shares.
Your customer shall not be charged a contingent deferred sales charge on
shares redeemed within seven business days after purchase. You are
responsible to the Fund, us and the Agent for any loss, cost, damage or
expense (including reasonable attorney's fees and expenses) arising from our
reliance upon your instructions.
5. Compensation.
(a) You shall receive for the sale of Fund shares the compensation
described in the Prospectus. You will receive no compensation for
reinvestments in a Fund under a reinvestment privilege described in a
Prospectus. We will keep all contingent deferred sales charges.
(b) To the extent you provide shareholder services in accordance with
the then applicable shareholder services plan, you may be eligible to receive
service fees described in the Prospectus of a Fund. The current shareholder
services plan requires you to promote the sale of shares and the retention of
assets and to furnish continuing service and assistance to Fund shareholders
with respect to which service fees are paid to you. Any applicable service
fees shall be paid quarterly on Fund shares for which you are named dealer on
the records of the Agent. If the quarterly fees for any customer's account
are less than $1.00, they will not be paid. Aggregate fees (excluding fees
not paid under the preceding sentence) less than $15.00 for all your
customers' accounts for all Funds for any quarter will not be paid. Payment
of distribution and service fees generally shall be made by the middle of the
month following the close of each quarter. Our liability to you for the
payment of a distribution or service fee on a Fund for any period is limited
solely to the proceeds of that Fund's service fee received by us for such
period. This Paragraph 5(b) may be terminated for any Fund at any time
without notice.
(c) You may qualify for sales incentives offered from time to time
with respect to certain Fund sales. You may be an underwriter subject to the
Securities Act of 1933 if you receive for a sale the entire charge set forth
in a Prospectus. Other special incentives may be generally available to
firms with which we have executed a Selling Agreement. Consult us for
details.
6. Authorized Statements. No person is authorized to make any
statement concerning a Fund except those contained in the appropriate
Prospectus and in sales literature issued by us. We shall furnish
Prospectuses and sales literature upon request. You shall not allow
unauthorized statements or information designated by us for broker use only
to be used with the public. You shall deliver to us for prior approval any
Fund sales literature prepared by you for use with the public. You shall
also deliver a current Fund Prospectus to your customer in accordance with
law.
7. Colonial Warranty; Indemnification. We represent and warrant that:
(a) each Fund, its Prospectus and all sales literature issued by us
for distribution to the public will comply with all applicable state and Federal
laws, rules and regulations;
(b) each Prospectus and all sales literature issued by us will not by
statement or omission be misleading;
(c) each Fund may legally be sold in every United States jurisdiction
unless you are otherwise notified; and
(d) each Fund's investment advisor is in compliance with all applicable
state and Federal laws, rules and regulations.
We indemnify you and agree to hold you harmless against every loss, cost,
damage or expense including reasonable attorney's fees and expenses) incurred
by you as a result of our breach of the foregoing representations and
warranties if you notify us promptly after the commencement of any action
against you for which you may seek indemnity. We may participate at our own
expense in the defense of such action, or we may assume the defense of such
action with counsel satisfactory to you chosen by us. If we elect to assume
the defense, you may retain additional counsel at your option for which you
shall pay the fees and expenses. This paragraph 7 shall survive termination
of this Agreement.
8. NASD; Applicable Laws. You represent that you are a member of
the National Association of Securities Dealers, Inc. ("NASD"). You and we
shall abide by the rules and regulations of the NASD and all applicable state
and Federal laws, rules and regulations.
9. Miscellaneous. All communications shall be transmitted pursuant to
our then-current procedures and if (a) to us, must be sent to the above address
or such other address as we may specify and (b) to you, must be sent to your
address listed below, such other address as you may specify or as registered
with the NASD. Communications shall be effective when posted pre-paid by United
States mail or delivered by other means. We may change or terminate this
Agreement without notice. This Agreement replaces all prior selling agreements
and shall be effective upon the earlier of your written acceptance below or our
acceptance of your first order after this communication. This Agreement is not
assignable, except that we may transfer it to any successor underwriter of the
Funds. This Agreement shall be construed under Massachusetts Law.
COLONIAL INVESTMENT SERVICES
A Division of COLONIAL MANAGEMENT ASSOCIATES, INC.
By JEFFREY MCGREGOR, President Date
Please execute this Agreement below and return to us at the address set forth
above.
Accepted:
_______________________________________ _________________________
(Dealer's Name) (Telephone Number)
__________________________________________________________________
(Street Address)
__________________________________________________________________
(City) (State) (Zip)
__________________________________________________________________
(Authorized Signature)
_________________________________________________________________
(Name and Title)
Form D-596K-993
COLONIAL INVESTMENT SERVICES
MUTUAL FUND AGREEMENT
(for use by Banks and their affiliated NASD member firms)
One Financial Center
Boston, MA 02111
Attention: Order Room
(617) 426-3750
Order Room: (800) 441-4020
Dear Investment Colleague:
We offer to make available to your customers shares of each of the mutual
funds with the "Colonial" name (the "Funds"; individually, a "Fund") for which
we are the principal underwriter as defined in the Investment Company Act of
1940 (the "Act") on the following terms:
1. Orders: Order Procedures. Orders shall be accepted only on the
terms described herein, in the Fund prospectus and statement of additional
information ("Prospectus") and by order procedures in effect from time to
time. You agree to effect purchases of shares only from us or from your
customers. All orders are subject to acceptance or rejection by us in our
sole descretion. You shall provide us with a taxpayer identification number
for each account for which you are broker of record.
2. Payment for Shares; Registration. Payment for Fund shares shall be made
as instructed in our confirmation to you. If timely payment is not received, we
may cancel the sale or, at our option, sell the shares back to the Funds. We may
delay registration of shares until good payment is received. Unless other
instructions are received by the settlement date, orders accepted by us may be
placed in an open account registered in your name. If payment or instructions
are not timely received, or if you do not promptly correct errors in our
confirmation, you are responsible to the Fund, us and the Fund's transfer agent
("Agent") for any directly related loss, cost, damage or expense, including
reasonable attorney's fees and expenses.
3. Suitability and Multiple Classes of Shares. A Fund may offer more than
one class of shares in accordance with its Prospectus; refer to the Prospectus
for availability and details. Purchases of a class of shares shall be subject to
our compliance standards. You are responsible for determining whether a Fund,
and which class of that Fund's shares, is suitable for your customer. Investors
affiliated with us and with you (and their families) have special purchase
rights.
4. Sales to the Public; Redemptions; Exchanges. Each transaction is
for the account of the customer and not for your account; each transaction is
initiated solely upon the order of the customer. In sales of Fund shares to the
public you shall act as agent for the customer, not as agent for a Fund or for
us; the customer is your customer, not our customer. The customer shall have
beneficial ownership of the shares. You shall act as agent in all purchases of
Fund shares directly from us by the shareholder for whom you are the broker of
record and you appoint the Agent to confirm on your behalf (with a copy to you)
such purchases. You shall effect sales of shares only: (a) to customers at the
applicable price described in the Prospectus; and (b) to us as agent for the
Fund at the redemption price. When redeeming shares, you shall pay your customer
the amount which you receive from us. For Fund shares redeemed within seven
business days after purchase, you shall promptly refund to us the commission and
other compensation you received on such Fund shares. Your customer shall not be
charged a contingent deferred sales charge on shares redeemed within seven
business days after purchase. You are responsible to the Fund, us and the Agent
for any loss, cost, damage or expense (including reasonable attorney's fees and
expenses) arising from our reliance upon your instructions.
5. Compensation.
(a) You shall receive for the sale of Fund shares the compensation
described in the Prospectus. You will receive no compensation for
reinvestments in a Fund under a reinvestment privilege described in
a Prospectus. We will keep all contingent deferred sales charges.
(b) To the extent you provide shareholder services in accordance with the
then applicable shareholder services plan, you may be eligible to receive
service fees described in the Prospectus of a Fund. The current shareholder
services plan requires you to promote the sale of shares and the retention of
assets and to furnish continuing service and assistance to Fund shareholders
with respect to which service fees are paid to you. Any applicable service fees
shall be paid quarterly on Fund shares for which you are named broker on the
records of the Agent. If the quarterly fees for any customer's account are less
than $1.00, they will not be paid. Aggregate fees (excluding fees not paid under
the preceding sentence) less than $15.00 for all your customers' accounts for
all Funds for any quarter will not be paid. Payment of service fees generally
shall be made by the middle of the month following the close of each quarter.
Our liability to you for the payment of a service fee on a Fund for any period
is limited solely to the proceeds of that Fund's service fee received by us for
such period. This Paragraph 5(b) may be terminated for any Fund at any time
without notice.
(c) You may qualify for sales incentives offered from time to time with
respect to certain Fund sales. You may be an underwriter subject to the
Securities Act of 1933 if you receive for a sale the entire charge set forth in
a Prospectus. Other special incentives may be generally available to firms with
which we have executed a Selling Agreement. Consult us for details.
6. Authorized Statements. No person is authorized to make any statement
concerning a Fund except those contained in the appropriate Prospectus and in
sales literature issued by us. We shall furnish Prospectuses and sales
literature upon request. You shall not allow unauthorized statements or
information designated by us for broker use only to be used with the public. You
shall deliver to us for prior approval any Fund sales literature prepared by you
for use with the public. You shall also deliver a current Fund Prospectus to
your customer in accordance with law.
7. Colonial Warranty; Indemnification. We represent and warrant that:
(a) each Fund, its Prospectus and all sales literature issued by us
for distribution to the public will comply with all applicable state and Federal
laws, rules and regulations;
(b) each Prospectus and all sales literature issued by us will not by
statement or omission be misleading;
(c) each Fund may legally be sold in every United States jurisdiction
unless you are otherwise notified; and
(d) each Fund's investment advisor is in compliance with all applicable
state and Federal laws, rules and regulations.
We indemnify you and agree to hold you harmless against every loss, cost, damage
or expense (including reasonable attorney's fees and expenses) incurred by you
as a result of our breach of the foregoing representations and warranties if you
notify us promptly after the commencement of any action against you for which
you may seek indemnity. We may participate at our own expense in the defense of
such action, or we may assume the defense of such action with counsel
satisfactory to you chosen by us. If we elect to assume the defense, you may
retain additional counsel at your option for which you shall pay the fees and
expenses. This paragraph 7 shall survive termination of this Agreement.
8. NASD Applicable Laws.
(a) You represent that you are a member of the National Association of
Securities Dealers, Inc. ("NASD"). You and we shall abide by the rules and
regulations of the NASD and all applicable state and Federal laws, rules and
regulations.
OR
(b) You represent and warrant to us that (i) (a) you are a "bank" as such
term is defined in Section 3(a)(6) of the Exchange Act, or (b) you are a "bank
holding company" as such term is defined in the Bank Holding Company Act of
1965, as amended ("the Act"), (ii) you are duly organized, validly existing and
in good standing under the laws of the jurisdiction in which you were organized
(iii) all authorizations (if any) required for your lawful execution of this
Agreement and your performance hereunder have been obtained, and (iv) upon
execution and delivery by you, and assuming due and valid execution and delivery
by us, this Agreement will constitute a valid and binding agreement, enforceable
against you in accordance with its terms. If you are a "bank holding company"'
as such term is defined in the Act, you shall complete the Exhibit attached
hereto which sets forth the names and addresses of the "banks" on whose behalf
you are authorized to execute this Agreement. You agree to give written notice
to us promptly if you shall cease to be a "bank" as such term is defined in
Section 3(a)(6) of the Exchange Act or a "bank holding company" as such term is
defined in the Act, and this Agreement shall be deemed terminated. You and we
shall abide by the rules and regulations of the NASD and all applicable state
and Federal laws, rules and regulations.
9. Miscellaneous. All communications shall be transmitted pursuant to our
then-current procedures and if (a) to us, must be sent to the above address or
such other address as we may specify and (b) to you, must be sent to your
address listed below, such other address as you may specify or as registered
with the NASD. Communications shall be effective when posted pre-paid by United
States mail or delivered by other means. We may change or terminate this
Agreement without notice. This Agreement replaces all prior selling agreements
and shall be effective upon the earlier of your written acceptance below or our
acceptance of your first order after this communication. This Agreement is not
assignable, except that we may transfer it to any successor underwriter of the
Funds. This Agreement shall be construed under Massachusetts Law.
COLONIAL INVESTMENT SERVICES
A Division of COLONIAL MANAGMENT ASSOCIATES, INC.
By JEFFREY MCGREGOR, President Date
Please execute this Agreement below and return to us at the address set forth
above.
Accepted:
- ------------------------------------- --------------------------
(Dealer's Name) (Telephone Number)
- ---------------------------------------------------------------------
(Street Address)
- ---------------------------------------------------------------------
(City) (State) (Zip)
By __________________________________________________________________
(Authorized Signature)
- ---------------------------------------------------------------------
(Name and Title)
Form D-596K-993
ASSET RETENTION AGREEMENT
THIS ASSET RETENTION AGREEMENT is made as of January 1, 1996 between Colonial
Investment Services, Inc. ("Colonial"), and _____________________ ("Dealer").
Preliminary Statement
Dealer is a broker-dealer registered under the Securities Exchange Act of 1934
and has entered into a sales agreement (the "Sales Agreement") with Colonial for
the sale of open-end mutual funds distributed under the Colonial name (the
"Colonial Funds"). From time to time, Dealer is named as dealer of record on
Colonial Fund accounts (the "Dealer Accounts") maintained with Colonial
Investors Service Center, Inc. ("CISC"), transfer and shareholder servicing
agent for the Colonial Funds. Colonial has agreed to pay Dealer the fees
described herein, to incent Dealer, subject to its obligation to recommend
suitable investments to its customers, to maintain the Dealer Accounts as
provided herein and to increase the amount of assets held in Dealer Accounts.
Colonial and Dealer hereby agree as follows:
1. Fees. Colonial shall pay Dealer the fees specified at the time specified on
Exhibit A.
2. Registration and Identification of Dealer Accounts. Colonial agrees to cause
CISC promptly to abide by all proper instructions received by CISC in good form
instructing CISC to name Dealer as the dealer of record on particular accounts.
Notwithstanding the foregoing, only those Colonial Fund accounts as to which, at
the time of any calculation hereunder, Dealer is actually named as dealer of
record on CISC's share transfer system shall be considered "Dealer Accounts" for
purposes of such calculation.
3. Services. In consideration of the fees referred to in Section 1 above, each
of Dealer agrees (i) to insure that Colonial representatives have a level of
access to its offices, representatives and fund sales support personnel that is
equivalent to the highest level of access provided to representatives of other
mutual funds sold by Dealer's representatives, and (ii) to generally provide to
Colonial and the Colonial Funds the highest level of sales support provided to
any mutual fund sponsor or mutual fund available through Dealer's
representatives.
4. Term; Termination. This Agreement (i) shall continue in effect until
terminated, (ii) may be terminated by either party at any time upon seven days
prior notice, and (iii) may be terminated immediately by any party if such party
determines that the fees hereunder should not be paid under any effective law,
rule or regulation, or order of any court or regulatory entity.
5. Notices. All notices relating to this Agreement must be delivered in
writing to the addresses shown below or such other address as a party may
specify by notice:
To Dealer:
=========================
=========================
To Colonial:
One Financial Center
Boston, MA 02110
Attn.: President
with a copy Attn.: General Counsel
6. Miscellaneous. This Agreement:
a. may not be assigned, except that it may be assigned by Colonial to any
successor underwriter of the Colonial Funds;
b. represents the entire agreement of the parties on its subject matter and
cannot be changed except by written agreement;
c. may be executed in counterparts, all of which together shall constitute the
same agreement;
d. shall be governed by the internal law of Massachusetts without resort to
conflict of law principles; and
e. supersedes all prior arrangements or agreements (other than the Sales
Agreement) between the parties hereto dealing with or relating to the
subject matter hereof.
DEALER:_____________________ COLONIAL INVESTMENT SERVICES, INC.
By:_________________________ By:_______________________________
Name: Name:
Title: Title:
Exhibit A
Colonial shall pay Dealer a fee at the following annual rates applied to the
value of Colonial Fund shares held in Dealer Accounts as of the 20th day of the
third month in each calendar quarter during 1996 (each such 20th day being
referred to herein as a "calculation date") that (i) as of such calculation date
had been outstanding for at least twelve months, or (ii) are attributable to
reinvestment of dividends paid on shares held in Dealer Accounts established
(i.e., holding settled shares) twelve months or more prior to such calculation
date:
0.05% of the first $250 million
0.06% of the next $250 million
0.07% of the next $250 million
0.08% of the next $250 million
0.10% of amounts in excess of $1 billion
Shares originally purchased twelve months or more prior to a calculation date
and subsequently exchanged for shares in another Colonial Fund shall be treated
as having been outstanding from the original purchase date. Fees shall be paid
no later than February 15, 1997.
KOONCE\AGREE\ASSET96.DOC
AMENDMENT TO CUSTODY AGREEMENT
This Amendment, entered into as of the first day of March, 1996, by and
between each of the mutual funds listed on Appendix A attached hereto and Boston
Safe Deposit and Trust Company ("Boston Safe"), amends a certain Custody
Agreement dated May 18, 1993, as amended by certain Appendices, dated July 28,
1994 and August 4, 1994 (as amended, the "Custody Agreement"), each as between
such mutual funds and Boston Safe. Capitalized terms used herein have the
meanings ascribed to them as referred to in the Custody Agreement.
WHEREAS, currently the existing funds referenced in the Custody Agreement
are: Colonial Trust I: Colonial High Yield Securities Fund, Colonial Income
Fund and Colonial Strategic Income Fund; Colonial Trust II: Colonial Adjustable
Rate U.S.Government Fund, Colonial U.S. Government Fund and Colonial Money
Market Fund; Colonial Trust III The Colonial Fund, Colonial Federal Securities
Fund, Colonial Global Equity Fund, Colonial Growth Shares Fund, Colonial
Natural Resources Fund, Colonial International Fund for Growth and Colonial
Strategic Balanced Fund; Colonial Trust IV: Colonial Utilities Fund; Colonial
Trust VI: Colonial U.S. Fund for Growth and Colonial Small Stock Fund; Colonial
Intermediate High Income Fund; Colonial International Equity Index Trust;
Colonial U.S. Equity Index Trust; and Colonial Intermarket Income Trust I
(together, the "Existing Funds") and
WHEREAS, in accordance with the provisions of the applicable Master Trust
Agreement and Declaration of Trust, Colonial Money Market Fund has changed its
name to Colonial Government Money Market Fund, Colonial International Equity
Index Trust has been liquidated, and Colonial U.S. Equity Index Trust has been
merged into Colonial U.S. Fund for Growth; and
WHEREAS, the parties hereto desire that the following funds be added to
the Custody Agreement: Colonial Trust II: Colonial Newport Tiger Cub Fund and
Colonial Newport Japan Fund; and Colonial Trust VI: Colonial Aggressive
Growth Fund, Colonial International Equity Fund and Colonial Equity Income
Fund; and
WHEREAS, the Custody Agreement makes reference to the Existing Funds only;
NOW, THEREFORE, the parties hereby agree to amend the Custody Agreement
and restate the Existing Funds as of the date hereof as follows:
1. The phrase "as set forth on Appendix A and as amended from time to time
(together, the "Existing Funds")" is hereby inserted after the words "and not on
behalf of any other Fund)," in the first sentence of the introductory paragraph
of the Custody Agreement.
2. Section I of the Custody Agreement is hereby amended to add
the following paragraph:
"(n) "Fund" shall mean each mutual fund listed on Appendix A acting on its
own behalf with respect to this Agreement, and if it is a series fund, as such
term is used in the 1940 Act, such term shall mean each series of the Fund
hereafter created, except that appropriate documentation, satisfactory to the
Custodian, with respect to each series, including an updated Appendix A, must be
presented to the Custodian before this Agreement shall become effective with
respect to any such series."
3. Paragraph (f) of Section 11 of the Custody Agreement is hereby
amended by inserting at the end thereof:
"Notwithstanding the generality of the foregoing, however, the Custodian
shall not be liable for any losses resulting from or caused by events or
circumstances beyond its reasonable control, including, but not limited to,
losses resulting from nationalization, expropriation, devaluation, revaluation,
confiscation, seizure, cancellation, destruction or similar action by any
governmental authority, de facto or de jure; or enactment, promulgation,
imposition or enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges affecting the
Fund's property; or acts of war, terrorism, insurrection or revolution: or any
other similar act or event beyond the Custodian's control."
4. Section II of the Custody Agreement is hereby amended to add the
following paragraph:
"(k) Overdraft Facility and Security for Payment. In the event
that the Custodian is directed by Written Instruction (or Oral Instructions
confirmed in writing in accordance with Section 11(i) hereof) to make any
payment or transfer of monies on behalf of the Fund for which there would
be, at the close of business on the date of such payment or transfer,
insufficient monies held by the Custodian on behalf of the Fund, the Custodian
may, in its sole discretion,provide an overdraft (an "Overdraft") to the
Fund in an amount sufficient to allow the completion of such payment or
transfer. Any Overdraft provided hereunder: (a) shall be payable on the
next Business Day, unless otherwise agreed by the Fund and the Custodian;
and (b) shall accrue interest from the date of the Overdraft to the date of
payment in full by the Fund at a rate agreed upon in writing, from time to
time, by the Custodian and the Fund. The Custodian and the Fund acknowledge
that the purpose of such Overdraft is to temporarily finance the purchase of
Securities for prompt delivery in accordance with the terms hereof, to meet
unanticipated or unusual redemption, to allow the settlement of foreign
exchange contracts or to satisfy distributions in anticipation of receipt
of interest payments on portfolio securities or to meet other emergency
expenses not reasonably foreseeable by the Fund. The Custodian shall promptly
notify the Fund in writing (an "Overdraft Notice") of any Overdraft by
facsimile transmission or in such other manner as the Fund and the Custodian
may agree in writing. To secure payment of any Overdraft, the Fund
hereby grants to the Custodian a continuing security interest in and right of
setoff against the Securities and cash in the Fund's account from time to time
in the full amount of such Overdraft. Should the Fund fail to pay promptly any
amounts owed hereunder, the Custodian shall be entitled to use available cash in
the Fund's account and to liquidate Securities in the account as is necessary to
meet the Fund's obligations under the Overdraft. In any such case, and without
limiting the foregoing, the Custodian shall be entitled to take such other
actions(s) or exercise such other options, powers and rights as the Custodian
now or hereafter has as a secured creditor under the Massachusetts Uniform
Commercial Code or any other applicable law."
5. Paragraph (a) of Section 12 of the Custody Agreement is hereby
amended by inserting at the end thereof:
"Notwithstanding the preceding sentence, with respect to any series other
than the Existing Funds, this Agreement will become effective with respect to
such series of the Fund as of the later of the day the conditions set forth in
Section 1(n) are satisfied or the day on which such series commences its
investment operations and shall remain in force unless terminated pursuant to
the provisions of subparagraph (b) of this Section 12."
6. All other terms and conditions of the Custody Agreement shall remain
in full force and effect.
[INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
on the date set forth above.
COLONIAL TRUST I COLONIAL TRUST VI
By:___________________ By:________________
Name: Name:
Title: Title:
COLONIAL TRUST II COLONIAL INTERMEDIATE
HIGH INCOME FUND
By:_________________ By:___________________
Name: Name:
Title: Title:
COLONIAL TRUST III COLONIAL INTERMARKET
INCOME TRUST I
By:_________________ By:___________________
Name: Name:
Title: Title:
COLONIAL TRUST IV BOSTON SAFE DEPOSIT AND
TRUST COMPANY
By:_________________ By:____________________
Name: Name:Ellen Furlong
Title: Title: Vice President
APPENDIX A
To the Custody Agreement Dated May 18, 1993
Amended and Restated As of February 29, 1996
Colonial Trust I
Colonial High Yield Securities Fund Existing Fund
Colonial Income Fund Existing Fund
Colonial Strategic Income Fund Existing Fund
Colonial Trust II
Colonial Adjustable Rate U.S. Government Fund Existing Fund
Colonial U.S. Government Fund Existing Fund
Colonial Government Money Market Fund Existing Fund
(formerly Colonial Money Market Fund)
Colonial Newport Tiger Cub Fund June 15, 1996
Colonial Newport Japan Fund June 15, 1996
Colonial Trust III
The Colonial Fund Existing Fund
Colonial Federal Securities Fund Existing Fund
Colonial Global Equity Fund Existing Fund
Colonial Growth Shares Fund Existing Fund
Colonial Natural Resources Fund Existing Fund
Colonial International Equity Fund for Growth Existing Fund
Colonial Strategic Balanced Fund Existing Fund
Colonial Trust IV
Colonial Utilities Fund Existing Fund
Colonial Trust VI
Colonial U.S. Fund for Growth Existing Fund
Colonial Small Stock Fund Existing Fund
Colonial Aggressive Growth Fund March 15, 1996
Colonial International Equity Fund March 15, 1996
Colonial Equity Income Fund March 15, 1996
Colonial Intermediate High Income Fund Existing Fund
Colonial Intermarket Income Trust I Existing Fund
Colonial International Equity Index Trust Liquidated
Colonial U.S. Equity Index Trust Merged
(merged into Colonial U.S. Fund for
Growth)
THE BOSTON COMPANY
June 25, 1996
Michael H. Koonce, Esq.
Vice President and Counsel
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Re: Amendments to Custody Agreements
Dear Mr. Koonce:
Enclosed are copies of the Amendments to the Custody Agreements for
Colonial Funds and Keyport Variable Investment Trust signed on behalf of Boston
Safe.
If you have any questions, please feel free to call Chris Healy, Maura
Doherty or myself.
Thank you.
Sincerely,
Janet C. Livoti
Paralegal Manager
jcl
Enclosures
cc: M. Doherty
C. Healy
CUSTODY AGREEMENT
AGREEMENT dated as of May 18, 1993, among each of the mutual funds listed on
Appendix A hereto (each referred to herein as the "Fund", each of which is
acting on its own behalf and not on behalf of any other Fund), each Fund being a
business trust or a series thereof organized under the laws of the Commonwealth
of Massachusetts, having its principal office and place of business at One
Financial Center, Boston, Massachusetts 02111, and BOSTON SAFE DEPOSIT AND TRUST
COMPANY (the "Custodian"), a Massachusetts trust company with its principal
place of business at One Boston Place, Boston, Massachusetts 02108.
WITNESSETH:
-----------
That for and in consideration of the mutual promises hereinafter set forth, the
Fund and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
(a) "Authorized Person" shall include those persons, all of whom have been
duly authorized by, or in accordance with votes adopted by, the
Board of Trustees of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund and listed in the certification
annexed hereto as Appendix B or such other certification as may be
received by the Custodian from time to time.
(b) "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency Securities, its
successor or successors and its nominee or nominees.
(c) "Certificate" shall mean any notice, instruction or other instrument
in writing, or any other document specifically provided for,
authorized or required by this Agreement to be given to the Custodian,
which is actually received by the Custodian and signed on behalf of the
Fund by any two Authorized Persons or any two officers thereof.
(d) "Master Trust Agreement" shall mean the Agreement and Declaration of
Trust of the Fund as the same may be amended from time to time.
(e) "Depository" shall mean The Depository Trust Company ("DTC"), and/or
Participants Trust Company ("PTC") each of which is a clearing agency
registered with the Securities and Exchange Commission under Section
17(a) of the Securities Exchange Act of 1934, as amended, their
successor or successors and their nominee or nominees, in which the
Custodian is hereby specifically authorized to make deposits. The
term "Depository" shall further mean and include any other person to
be named in a Certificate authorized to act as a depository under the
1940 Act, its successor or successors and its nominee or nominees.
(f) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and
principal by the Government of the United States or agencies
or instrumentalities thereof, commercial paper, bank certificates of
deposit, bankers' acceptances and short-term corporate obligations. where
the purchase or sale of such securities normally requires settlement
in federal funds on the same day as such purchase or sale, and
repurchase and reverse repurchase agreements with respect to any of the
foregoing types of securities.
(g) "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from a person reasonably believed by the Custodian to
be an Authorized Person.
(h) "Prospectus" shall mean the Fund's current prospectus and statement of
additional information relating to the registration of the Fund's Shares
under the Securities Act of 1933, as amended.
(i) "Shares" refers to shares of beneficial interest of the Fund.
(j) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and
other securities, commodities interests and investments from time to time
owned by the Fund.
(k) "Transfer Agent" shall mean the person which performs as the transfer
agent, dividend disbursing agent and shareholder servicing agent
functions for the Fund.
(l) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person by any system whereby the receiver of
such communication is able to verify through codes or otherwise with
a reasonable degree of certainty the authenticity of the sender of such
communication.
(m) The " 1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, all as amended from time to time.
2. Appointment Of Custodian.
(a) The Fund hereby constitutes and appoints the Custodian as custodian of
all the Securities and monies at the time owned by or in the possession of
the Fund during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.
3. Compensation.
(a) The Fund will compensate the Custodian for its services rendered under
this Agreement in accordance with the fees set forth in the Fee Schedule
annexed hereto as Schedule A and incorporated herein. Such Fee Schedule
does not include reasonable out-of-pocket disbursements of the Custodian
for which the Custodian shall be entitled to bill separately. Out of-pocket
disbursements shall include. but shall not be limited to, the items
specified in the Schedule of Out-of-Pocket charges annexed hereto as
Schedule B and incorporated herein, which schedule may be modified by the
Custodian upon not less than thirty days prior written notice to the Fund.
(b) Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedule A of this Agreement a revised Fee Schedule, dated
and signed by an Authorized Officer or authorized representative of each
party hereto.
(c) The parties hereto will agree upon the compensation for acting as
custodian for any Fund or any additional separate portfolio series
hereafter established and designated, and at the time that the Custodian
commences serving as such for said Fund or separate portfolio series,
such agreement shall be reflected in a Fee Schedule for that Fund or
separate portfolio series, dated and signed by an Authorized Officer
or authorized representative of each party
hereto, which shall be attached to Schedule A of this Agreement.
(d) The Custodian will bill the Fund as soon as practicable after the end
of each calendar month, and said billing-s will be detailed in
accordance with the Fee Schedule for the Fund. The Fund will promptly
pay to the Custodian the amount of such billing.
4. Custodv of Cash and Securities.
(a)Receipt and Holding of Assets.
The Fund will deliver or cause to be delivered to the Custodian all
Securities and monies owned by it at any time during the period
of this Agreement. The Custodian will not be responsible for such
Securities and monies until actually received by it. The Fund shall
instruct the Custodian from time to time in its sole discretion, by
means of Written Instructions, or, in connection with the purchase
or sale of Money Market Securities, by means of Oral Instructions or
Written Instructions, as to the manner in which and in what
amounts Securities and monies are to be deposited on behalf of the Fund
in the Book-Entry System or the Depository; provided, however, that
prior to the deposit of Securities of the Fund in the Book-Entry System
or the Depository, including a deposit in connection with the settlement
of a purchase or sale, the Custodian shall have received a Certificate
specifically approving such deposits by the Custodian in the Book-Entry
System or the Depository. Securities and monies of the Fund deposited
in the Book- Entry System or the Depository will be represented in
accounts which include only assets held by the Custodian for
customers, including but not limited to accounts which the Custodian
acts in a fiduciary or representative capacity. The Custodian shall use
reasonable care to insure that the arrangements by which Fund assets
are maintained with a Depository are in accordance with Rule 17f-4.
(b) Accounts and Disbursements. The Custodian shall establish and maintain
separate account for the Fund and shall credit to the separate account all
monies received by it for the account of such Fund and shall disburse the
same only:
1. In payment for Securities purchased for the Fund, as provided
in Section 5 hereof,
2. In payment of dividends or distributions with respect to the
Shares,as provided in Section 7 hereof;
3. In payment of original issue or other taxes with respect to
the Shares, as provided in Section 8 hereof;
4. In payment for Shares which have been redeemed by the Fund,
as provided in Section 8 hereof;
5. Pursuant to Written Instructions, or with respect to Money
Market Securities, Oral Instructions or Written Instructions,
setting forth the name and address of the person to whom the
payment is to be made, the amount to be paid and the purpose for
which payment is to be made; or
6. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Fund, as
provided in Section 11(h) hereof.
(c) Confirmation and Statements. Promptly after the close of business on
each day, the Custodian shall furnish the Fund with confirmations and a
summary of all transfers to or from the account of the Fund during
said day. Where securities purchased by the Fund are in a fungible bulk
of securities registered in the name of the Custodian (or its nominee)
or shown on the Custodian's account on the books of the Depository or
the Book-Entry System, the Custodian shall by book entry or otherwise
identify the quantity of those securities belonging to the Fund. At
least monthly, the Custodian shall furnish the Fund with a detailed
statement of the Securities and monies held for the Fund under this
Agreement.
(d) Registration of Securities and Physical Separation. All Securities
held for the Fund which are issued or issuable only in bearer form, except
such Securities as are held in the Book Entry System, shall be held by
the Custodian in that form; all other Securities held for the Fund may
be registered in the name of the Fund, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from time to
time determine, or in the name of the Book-Entry System or the
Depository or their successor or successors, or their nominee or
nominees. The Fund reserves the right to instruct the Custodian
as to the method of registration and safekeeping of the Securities.
The Fund agrees to furnish to the Custodian appropriate instruments to
enable the Custodian to hold or deliver in proper form for transfer,
or to register in the name of its registered nominee or in the name
of the Book-Entry System or the Depository, any Securities which it
may hold for the account of the Fund and which may from time
to time be registered in the name of the Fund. The Custodian shall hold
all such Securities specifically allocated to the Fund which are not
held in the Book-Entry System or the Depository in a separate account
for the Fund in the name of the Fund physically segregated at all times
from those of any other person or persons.
(e) Segregated Accounts. Upon receipt of a Written Instruction the
Custodian will establish Segregated Accounts on behalf of the Fund
to hold liquid or other assets as it shall be directed by a Written
Instruction and shall increase or decrease the assets in such
Segregated Accounts only as it shall be directed by subsequent Written
Instruction.
(f) Collection of Income and Other Matters Affecting Securities. Unless
otherwise instructed to the contrary by a Written Instruction, the
Custodian by itself, or through the use of the Book-Entry System or
the Depository with respect to Securities therein deposited, shall
with respect to all Securities held for the Fund in accordance with this
Agreement:
1. Exercise reasonable care and diligence to promptly collect
all income due or payable;
2. Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed or
retired, or otherwise become payable. Notwithstanding the
foregoing, the Custodian shall have no responsibility to the
Fund for monitoring or ascertaining any call, redemption
or retirement dates with respect to put bonds which are owned
by the Fund and held by the Custodian or its nominees. Nor
shall the Custodian have any responsibility or liability to
the Fund for any loss by the Fund for any missed payments or
other defaults resulting therefrom; unless the Custodian
received timely notification from the Fund specifying the time,
place and manner for the presentment of any such put bond owned
by the Fund and held by the Custodian or its nominee. The
Custodian shall not be responsible and assumes no liability to
the Fund for the accuracy or completeness of any notification
the Custodian may furnish to the Fund with respect to put bonds;
3. Surrender Securities in temporary form for definitive
Securities;
4. Execute any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect; and
5. Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account
of the Fund all rights and similar Securities issued with
respect to any Securities held by the Custodian hereunder for the
Fund.
6. Promptly transmit to the Fund to the attention of the Controller
at the address listed in Section 14, Paragraph (d) hereof, any
communication relating to a security held by the Custodian for
the Fund. The Fund shall notify the Custodian in writing to whom
at the Fund any communications relating to a security should be
directed.
7. The Custodian shall promptly notify the Fund in writing by
facsimile transmission or in such other manner as such Fund and
Custodian may agree in writing if any amount payable with
respect to Securities or other assets of such Fund is not
received by the Custodian when due. In the event the Custodian
has not exercised reasonable care and diligence, it shall advance
to the appropriate Fund any amounts with respect to which
reasonable care and diligence was not exercised.
8. With respect to the collection of amounts due and payable on
foreign securities and of foreign tax reclaims, reasonable
care and diligence shall include: the pursuit of past due
items or the filing tax reclaim documentation within five
(5) business days of the day on which the payment became due
or the day on which the payment giving rise to the tax reclaim
was made, as the case may be; maintaining detailed records of
actions taken in connection with such collections and/reclaims;
setting an expected receipt date based on collection, experience
and country practice; inquiring as to status at least weekly; and
individual supervisory review of items more than fifteen (15)
business days past the expected receipt date.
(g) Delivery of Securities and Evidence of Authority. Upon receipt of a
Written Instruction and not otherwise, except for subparagraphs 5,
6, 7, and 8 of this section 4(g) which may be effected by Oral or
Written Instructions, the Custodian, directly or through the use
of the Book Entry System or the Depository, shall:
1 . Execute and deliver or cause to be executed and delivered
to such persons as may be designated in such Written Instructions,
proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities may
be exercised;
2. Deliver or cause to be delivered any Securities held for the Fund
in exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for the Fund
to any protective committee, reorganization committee or other
person in connection with the reorganization, refinancing,
merger, consolidation or recapitalization or sale of assets of
any corporation, and receive and hold under the terms of this
Agreement in the separate account for the Fund such certificates
of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the
assets specifically allocated to the separate account of the Fund
and take such other steps as shall be stated in Written Instructions
to be for the purpose of effectuating any duly authorized plan of
liquidation, reorganization,merger,consolidation or
recapitalization of the Fund;
5. Deliver Securities upon sale of such Securities for the
account of the Fund pursuant to Section 5;
6. Deliver Securities upon the receipt of payment in
connection with any repurchase agreement related to such Securities
entered into by the Fund;
7. Deliver Securities owned by the Fund to the issuer thereof or its
agent when such Securities are called, redeemed, retired or
otherwise become payable; provided, however, that in any
such case the cash or other consideration is to be
delivered to the Custodian. Notwithstanding the foregoing, the
Custodian shall have no responsibility to the Fund for monitoring
or ascertaining any call, redemption or retirement dates with
respect to the put bonds which are owned by the Fund and held by the
Custodian or its nominee. Nor shall the Custodian have any
responsibility or liability to the Fund for any loss by the Fund
for any missed payment or other default resulting therefrom;
unless the Custodian received timely notification from the Fund
specifying the time, place and manner for the presentment of any
such put bond owned by the Fund and held by the Custodian or its
nominee. The Custodian shall not be responsible and assumes
no liability to the Fund for the accuracy or completeness
of any notification the Custodian may furnish to the Fund with
respect to put bonds;
8. Deliver Securities for delivery in connection with any loans of
securities made by the Fund but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian and
the Fund which may be in the form of cash or obligations issued by
the United States Government, its agencies or instrumentalities;
9. Deliver Securities for delivery as security in connection
with any borrowings by the Fund requiring a pledge of Fund assets,
but only against receipt of amounts borrowed;
10. Deliver Securities upon receipt of Written Instructions from the
Fund for delivery to the Transfer Agent or to the holders of
Shares in connection with distributions in kind, as may be
described from time to time in the Fund's Prospectus, in
satisfaction of requests by holders of Shares for repurchase or
redemption;
11. Deliver Securities as collateral in connection with short sales
by the Fund of common stock for which the Fund owns the stock or
owns preferred stocks or debt securities convertible or
exchangeable, without payment or further consideration, into
shares of the common stock sold short;
12. Deliver Securities for any purpose expressly permitted by
and in accordance with procedures described in the Fund's
Prospectus; and
13. Deliver Securities for any other proper business purpose but
only upon receipt of, in addition to Written Instructions, a
certified copy of a resolution of the Board of Trustees signed by an
Authorized Person and certified by the Secretary of the Fund,
specifying the Securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such purpose
to be a proper business purpose, and naming the person or
persons to whom delivery of such Securities shall be made.
(h) Endorsement and Collection of Checks, Etc. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders for the
payment of money received by the Custodian for the account of the Fund.
5. Purchase and Sale of Investments of the Fund.
(a) Promptly after each purchase of Securities for the Fund, the Fund shall
deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, a Written Instruction, and (ii) with
respect to each purchase of Money Market Securities, either a Written
Instruction or Oral Instruction, in either case specifying with respect to
each purchase: (1) the name of the issuer and the title of the Securities;
(2) the number of shares or the principal amount purchased and accrued
interest, if any; (3) the date of purchase and settlement; (4) the purchase
price per unit; (5) the total amount payable upon such purchase; (6) the
name of the person from whom or the broker through whom the purchase was
made, if any; (7) whether or not such purchase is to be settled through the
Book-Entry System or the Depository; and (8) whether the Securities
purchased are to be deposited in the Book-Entry System or the Depository.
The Custodian shall receive the Securities purchased by or for the Fund and
upon receipt of Securities shall pay out of the monies held for the account
of the Fund the total amount payable upon such purchase, provided that the
same conforms to the total amount payable as set forth in such Written or
Oral Instruction.
(b) Promptly after each sale of Securities of the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities
which are not Money Market Securities, a Written Instruction, and
(ii) with respect to each sale of Money Market Securities, either
Written Instruction or Oral Instructions, in either case specifying
with respect to such sale: (1) the name of the issuer and the title of
the Securities; (2) the number of shares or principal amount sold, and
accrued interest, if any; (3) the date of sale; (4) the sale price per
unit; (5) the total amount payable to the Fund upon such sale; (6) the
name of the broker through whom or the person to whom the sale was made;
and (7) whether or not such sale is to be settled through the Book-Entry
System or the Depository. The Custodian shall deliver or cause to be
delivered the Securities to the broker or other person designated by the
Fund upon receipt of the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable to the Fund as
set forth in such Written or Oral Instruction. Subject to the foregoing,
the Custodian may accept payment in such form as shall be satisfactory to
it, and may deliver Securities and arrange for payment in accordance
with the customs prevailing among dealers in Securities.
6. Lending of Securities.
If the Fund is permitted by the terms of the Master Trust Agreement
and as disclosed in its Prospectus to lend Securities, within 24 hours
after each loan of Securities, the Fund shall deliver to the Custodian a
Written Instruction specifying with respect to each such loan: (a) the
name of the issuer and the title of the Securities; (b) the number of
shares or the principal amount loaned; (c) the date of loan and delivery;
(d) the total amount to be delivered to the Custodian, and specifically
allocated against the loan of the Securities, including the amount of cash
collateral and the premium, if any, separately identified; (e) the name
of the broker, dealer or financial institution to which the loan was made;
and (f) whether the Securities loaned are to be delivered through the
Book-Entry System or the Depository.
Promptly after each termination of a loan of Securities, the Fund
shall deliver to the Custodian a Written Instruction specifying with
respect to each such loan termination and return of Securities: (a) the
name of the issuer and the title of the Securities to be returned
(b) the number of shares or the principal amount to be returned;
(c) the date of termination; (d) the total amount to be delivered by the
Custodian (including the cash collateral for such Securities minus any
offsetting credits as described in said Written Instruction); (e)
the name of the broker, dealer or financial institution from which the
Securities will be returned; and (f) whether such return is to be
effected through the Book-Entry System or the Depository. The Custodian
shall receive all Securities returned from the broker, dealer or financial
institution to which such Securities were loaned and upon receipt thereof
shall pay the total amount payable upon such return of Securities as set
forth in the Written Instruction. Securities returned to the Custodian
shall be held as they were prior to such loan.
7. Payment of Dividends or Distributions.
(a) The Fund shall furnish to the Custodian the vote of the Board of
Trustees of the Fund certified by the Secretary or an Assistant Secretary
(i) authorizing the declaration of distributions on a specified periodic
basis and authorizing the Custodian to rely on Oral or Written Instructions
specifying the date of the declaration of such distribution, the date of
payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per Share to the
shareholders of record as of the record date and the total amount payable
to the Transfer Agent on the payment date, or (ii) setting forth the date
of declaration of any distribution by the Fund, the date of payment
thereof, the record date as of which shareholders entitled to payment shall
be determined, the amount payable per share to the shareholders of record
as of the record date and the total amount payable to the Transfer Agent on
the payment date.
(b) Upon the payment date specified in such vote, Oral Instructions, or
Written Instructions, as the case may be, the Custodian shall pay out
the total amount payable to the Transfer Agent of the Fund.
8. Sale and Redemption of Shares of the Fund.
(a) Whenever the Fund shall sell any Shares, the Fund shall deliver or
cause to be delivered to the Custodian a Written Instruction duly
specifying:
1. The name of Shares sold, trade date, and price; and
2. The amount of money to be received by the Custodian for the
sale of such Shares.
The Custodian understands and agrees that Written Instructions may be
furnished subsequent to the purchase of Shares and that the information
contained therein will be derived from the sales of Shares as reported to the
Fund by the Transfer Agent.
(b) Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account of the Fund.
(c) Upon issuance of any Shares in accordance with the foregoing
provisions of this Section 8, the Custodian shall pay all original
issue or other taxes required to be paid in connection with such
issuance upon the receipt of a Written Instruction specifying the amount
to be paid.
(d) Except as provided hereafter. whenever any Shares are redeemed, the
Fund shall cause the Transfer Agent to promptly furnish to the Custodian
Written Instructions, specifying:
1. The number of Shares redeemed; and
2. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information contained in
such Written Instructions will be derived from the redemption of Shares
as reported to the Fund by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth the
number of Shares received by the Transfer Agent for redemption and that
such Shares are valid and in good form for redemption, the Custodian
shall make payment to the Transfer Agent of the total amount specified in
a Written Instruction issued pursuant to paragraph (d) of this Section 8.
(f) Notwithstanding the above provisions regarding the redemption of
Shares, whenever such Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the
Fund, the Custodian, unless otherwise instructed by a Written
Instruction shall, upon receipt of advice from the Fund or its agent
stating that the redemption is in good form for redemption
in accordance with the check redemption procedure, honor the check
presented as part of such check redemption privilege out of the monies
specifically allocated to the Fund in such advice for such purpose.
9. Indebtedness.
(a) The Fund will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Fund borrows money for temporary
administrative or emergency purposes using Securities as collateral for
such borrowings, a notice or undertaking in the from currently employed by
any such bank setting forth the amount which such bank will loan to the
Fund against delivery of a stated amount of collateral. The Fund shall
promptly deliver to the Custodian Written Instructions stating with respect
to each such borrowing: (1) the name of the bank; (2) the amount and terms
of the borrowing, which may be set forth by incorporating by reference an
attached promissory note, duly endorsed by the Fund, or other loan
agreement; (3) the time and date, if known, on which the loan is to be
entered into (the "borrowing date"); (4) the date on which the loan becomes
due and payable; (5) the total amount payable to the Fund on the borrowing
date: (6) the market value of Securities to be delivered as collateral for
such loan, including the name of the issuer, the title and the number of
shares or the principal amount of any particular Securities; (7) whether
the Custodian is to deliver such collateral through the Book-Entry System
or the Depository; and (8) a statement that such loan is in conformance
with the 1940 Act and the Fund's Prospectus.
(b) Upon receipt of the Written Instruction referred to in subparagraph
(a) above, the Custodian shall deliver on the borrowing date the
specified collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set
forth in the Written Instruction. The Custodian may, at the option of
the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank
by virtue of any promissory note or loan agreement. The Custodian
shall deliver as additional collateral in the manner directed by the
Fund from time to time such Securities as may be specified in
Written Instruction to collateralize further any transaction described
in this Section 9. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the
Custodian shall receive from time to time such return of collateral
as may be tendered to it. In the event that the Fund fails to specify in
Written Instruction all of the information required by this Section 9,
the Custodian shall not be under any obligation to deliver any
Securities. Collateral returned to the Custodian shall be held hereunder
as it was prior to being used as collateral.
10. Persons Having Access to Assets of the Fund.
(a) No trustee or agent of the Fund, and no officer, director, employee or
agent of the Fund's investment adviser, of any sub-investment adviser
of the Fund, or of the Fund's administrator, shall have physical access
to the assets of the Fund held by the Custodian or be authorized or
permitted to withdraw any investments of the Fund, nor shall the Custodian
deliver any assets of the Fund to any such person. No officer, director,
employee or agent of the Custodian who holds any similar position with
the Fund's investment adviser with any sub-investment adviser of the
Fund or with the Fund's administrator shall have access to the assets
of the Fund.
(b) The individual employees of the Custodian duly authorized by the Board
of Directors of the Custodian to have access to the assets of the
Fund are listed in the certification annexed hereto as Appendix D. The
Custodian shall advise the Fund of any change in the individuals
authorized to have access to the assets of the Fund by written notice to
the Fund accompanied by a certified copy of the authorizing resolution
of the Custodian's Board of Directors approving such change.
(c) Nothing in this Section 10 shall prohibit any officer, employee or
agent of the Fund, or any officer, direction. employee or agent
of the investment adviser, of any sub-investment adviser of the Fund or
of the Fund's administrator, from giving Oral Instructions or Written
Instructions to the Custodian or executing a Certificate so long as it
does not result in delivery of or access to assets of the Fund prohibited
by paragraph (a) of this Section 10.
11. Concerning the Custodian.
(a) Standard of Conduct. Except as otherwise provided herein, neither the
Custodian nor its nominee shall be liable for any loss or damage,
including counsel fees, resulting from its action or emission to act or
otherwise, except for any such loss or damage arising out of its own
negligence or willful misconduct. The Custodian may, with respect to
questions of law, apply for and obtain the advice and opinion of counsel
to the Fund or of its own counsel, at the expense of the Fund,and shall
be fully protected with respect to anything done or omitted by it in good
faith in conformity with such advice or opinion. The Custodian shall be
liable to the Fund for any loss or damage resulting from the use of the
Book-Entry System or the Depository arising, by reason of any
negligence, misfeasance or misconduct on the part of the Custodian or any
of its employees or agents.
(b) Limit of Duties. Without limiting the generality of the foregoing, the
Custodian shall be under no duty or obligation to inquire into, and shall
not be liable for:
1. The validity of the issue of any Securities purchased by
the Fund, the legality of the purchase thereof, or the propriety of
the amount paid therefor;
2. The legality of the sale of any Securities by the Fund or
the propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefore;
4. The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
distribution of the Fund;
6. The legality of any borrowing for temporary or emergency
administrative purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not represented
by any check, draft, or other instrument for the payment of money,
received by it on behalf of the fund until the Custodian actually receives
and collects such money directly or by the final crediting of the
account representing the Fund's interest in the Book-Entry System or
the Depository.
(d) Amounts Due from Transfer Agent. The Custodian shall not be under any
duty or obligation to take action to effect collection of any amount due
to the Fund from the Transfer Agent nor to take any action to effect
payment or distribution by the Transfer Agent of any amount paid by the
Custodian to the Transfer Agent in accordance with this Agreement.
(e) Collection Where Payment Refused. The Custodian shall not be under any
duty or obligation to take action to effect collection of any amount,
if the Securities upon which such amount is payable are in default, or
if payment is refused after due demand or presentation, unless and
until (a) it shall be directed to take such action by a Certificate and
(b) it shall be assured to its satisfaction of reimbursement of its costs
and expenses in connection with any such action.
(f) Appointment of Agents and Sub-Custodians. The Custodian may appoint
one or more banking institutions, including but not limited to banking
institutions located in foreign countries, to act as Depository or
Depositories or as Sub-Custodian or as Sub-Custodians of Securities
and moneys at any time owned by the Fund, upon terms and conditions
specified in a Certificate. The Custodian shall use reasonable care in
selecting a Depository and/or Sub-Custodian located in than the United
States ("Foreign Sub-Custodian"), and shall oversee the a country other
maintenance of any Securities or moneys of the Fund by any Foreign
Sub-Custodian. The Custodian shall use reasonable care to insure that
any agreements entered into between it and any foreign sub-Custodian
substantially complies with Rule 17f-5under the Act and that the
arrangements by which Fund assets are maintained with such foreign
sub-custodian otherwise are in accordance with Rule 17f-5. The
Custodian shall monitor such foreign custody arrangements to insure
continued compliance with the Rule. In addition, the Custodian
shall hold the Fund harmless from, and indemnify the Fund against, any
loss that occurs as a result of the failure of any Foreign Sub-Custodian
to exercise reasonable care with respect to the safekeeping of
Securities and moneys of the Fund.
(g) No Duty to Ascertain Authority. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Fund are such as may properly be held
by the Fund under the provisions of the Master Trust Agreement and the
Prospectus.
(h) Compensation of the Custodian. The Custodian shall be entitled to
receive, and the Fund agrees to pay to the Custodian, such compensation
as may be agreed upon from time to time between the Custodian and
the Fund. The Custodian may charge against any monies held on behalf of
the Fund pursuant to this Agreement such compensation and any reasonable
expenses incurred by the Custodian in the performance of its duties
pursuant to this Agreement. The Custodian shall also be entitled to
charge against any money held on behalf of the Fund pursuant to this
Agreement the amount of any loss, damage, liability or expense reasonably
incurred with respect to the Fund, including reasonable counsel fees,
for which it shall be entitled to reimbursement under the
provisions of this Agreement.
The expenses which the Custodian may charge against such account
include, but are not limited to, the expenses of Sub-Custodians and
foreign branches of the Custodian incurred in settling transactions
outside of Boston, Massachusetts or New York City, New York involving
the purchase and sale of Securities.
(i) Reliance on Certificates and Instructions. The Custodian shall be
entitled to rely upon any Certificate, notice or other instrument in
writing received by the Custodian and reasonably believed by the Custodian
to be genuine and to be signed by appropriate persons of the Fund. The
Custodian shall be entitled to rely upon any Written Instructions or
Oral Instructions actually received by the Custodian pursuant to the
applicable Sections of this Agreement and reasonably believed by the
Custodian to be genuine and to be given by an Authorized Person. The
Fund agrees to forward to the Custodian Written Instructions from
an Authorized Person confirming such Oral Instructions in such manner so
that such Written Instructions are received by the Custodian, whether
by hand delivery, telex or otherwise, by the close of business on the
same day that Such Oral Instructions are given to the Custodian. The Fund
agrees that the fact that such confirming instructions are not received
by the Custodian shall in no way affect the validity of the
transactions or enforceability of the transactions hereby authorized
by the Fund. The Fund agrees that the Custodian shall incur no liability
to the Fund in acting upon Oral Instructions given to the Custodian
hereunder concerning such transactions provided such instructions
reasonably appear to have been received from an Authorized Person.
(j) Inspection of Books and Records. The books and records of the
Custodian shall be open to inspection and audit at reasonable times by
officers and auditors employed by the Fund and by the appropriate
employees of the Securities and Exchange Commission.
The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book- Entry
System or the Depository and with such reports oil its own systems
of internal accounting control as the Fund may reasonably request from
time to time.
12. Term and Termination.
(a) This Agreement shall become effective on the date first set forth above
(the "Effective Date") and shall Continue in effect thereafter as the
parties may mutually agree.
(b) Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of
receipt of such notice. In the event such notice is given by the Fund,
the Fund shall, on or before the termination date, deliver to the
Custodian a certified vote of the Board of Trustees of the Fund,
electing to terminate this Agreement and designating a successor
custodian or custodians. which shall be a person qualified to so act
under the 1940 Act.
In the event such notice is given by the Custodian, the Fund shall,
on or before the termination date, deliver to the Custodian a certified
vote of the Board of Trustees of the Fund, designating a successor
custodian or custodians. In the absence of such designation by the
Fund, the Custodian may designate a successor custodian, whichshall be
a person qualified to so act under the 1940 Act. If the Fund fails to
designate a successor custodian. the Fund shall upon the date
specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held
in the Book-Entry System which cannot be delivered to the Fund) and
monies then owned by the Fund, be deemed to be its own custodian and
the Custodian shall thereby be relieved of all duties and responsibilities
pursuant to this Agreement, other than the duty with respect to
Securities held in the Book-Entry System which cannot be delivered to the
Fund.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 12, this Agreement shall terminate to the extent specified
in such notice, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver directly to
the successor custodian all Securities and monies then held by the
Custodian on behalf of the Fund, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall then be
entitled.
13. Limitation of Liabilitv
The Fund and the Custodian agree that the obligations of the Fund
under this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Fund, individually, but are binding only upon the
assets and property of the Fund, as provided in the Master Trust Agreement.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Fund, and signed by an authorized officer of the Fund,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them or any shareholder of the Fund individually or to impose any
liability on any of them or any shareholder of the Fund personally, but
shall bind only the assets and property of the Fund as provided in the
Master Trust Agreement.
14. Miscellaneous.
(a) Annexed hereto as Appendix B is a certification signed by an officer of
Colonial Management Associates, Inc., in accordance with a vote adopted by
the Board of Trustees of the Fund, setting forth the names and the
signatures of the present Authorized Persons. The Fund agrees to furnish to
the Custodian a new certification in similar form in the event that any
such present Authorized Person ceases to be such an Authorized Person or in
the event that other or additional Authorized Persons are elected or
appointed. Until such new certification shall be received, the Custodian
shall be fully protected in acting under the provisions of this Agreement
upon Oral Instructions or signatures of the present Authorized Persons as
set forth in the last delivered certification.
(b) Annexed hereto as Appendix C is a certification signed by two of the
present officers of the Fund setting forth the names and the signatures
of the present officers of the Fund. The Fund agrees to furnish to the
Custodian a new certification in similar form in the event any such present
officer ceases to be an officer of the Fund or in the event that other or
additional officers are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement upon the
signature of the officers as set forth in the last delivered certification.
(c) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it at its
offices at One Boston Place, Boston, Massachusetts 02108 or at such
other place as the Custodian may from time to time designate in writing.
(d) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund, shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its offices at
One Financial Center, Boston, Massachusetts 02111, Attention: Fund
Controller with a copy to the Legal Department, Attention: General
Counsel, or at such other place as the Fund may from time to time
designate in writing.
(e) This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the same formality
as this Agreement, (i) authorized and approved by a vote of the Board of
Trustees of the Fund, or (ii) authorized and approved by such other
procedures as may be permitted or required by the 1940 Act.
(f) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the
written consent of the Custodian, or by the Custodian without the
written consent of the Fund authorized or approved by a vote of the
Board of Trustees of the Fund, and any attempted assignment without such
written consent shall be null and void.
(g) The Fund represents that a copy of the Master Trust Agreement is on
file with the Secretary of the Commonwealth of Massachusetts and with the
Boston City Clerk.
(h) This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts.
(i) The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
(j) This agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective representatives duly authorized as of the day
and year first above written.
THE FUNDS LISTED ON APPENDIX A HERETO
PETER L. LYDECKER
Title: Controller
BOSTON SAFE DEPOSIT AND
TRUST COMPANY
MERTON E. THOMPSON
Title: Senior Vice President
APPENDIX A
As of August 4, 1994
Colonial Trust I
- Colonial High Yield Securities Fund
- Colonial Income Fund
- Colonial Strategic Income Fund
Colonial Trust II
- Colonial Adjustable Rate U.S.Government Fund
- Colonial U.S. Govemment Fund
- Colonial Money Market Fund
Colonial Trust III
- The Colonial Fund
- Colonial Federal Securities Fund
- Colonial Global Equity Fund
- Colonial Growth Shares Fund
- Colonial Natural Resources Fund
- Colonial International Fund for Growth
- Colonial Strategic Balanced Fund (as of September 1, 1994)
Colonial Trust IV
- Colonial Utilities Fund
Colonial Trust V
- Colonial U.S. Fund for Growth
- Colonial Small Stock Fund
Colonial International Equity Index Trust
Colonial Intermediate High Income Fund
Colonial Intermarket Income Trust I
APPENDIX B
We, XXXXXXXXXXXX, Treasurer and XXXXXXXXXXXXXXXXXXXXXXXX, Secretary, of
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX, a business trust organized under the laws
of the Commonwealth of Massachusetts (the "Fund"), do hereby certify that:
The following individuals have been duly authorized as Authorized Persons to
give Oral Instructions and Written Instructions on behalf of the Fund and the
signatures set forth opposite there respective names are their true and correct
signatures:
Name Signature
----------------
----------------
----------------
----------------
AFFIDAVIT OF SIGNATURES
I, XXXXXXXXXXXXXXXXXXXXXXXXXXX do hereby certify that the signatures set
forth opposite the respective names of________and__________
are their true and correct signatures.
Name Signature
-----------------------
-----------------------
--------------- -----------------------
Witness
Date:__________ Date:__________________
APPENDIX C
We, XXXXXXXXXXXXXXXX, President and XXXXXXXXXXXXXXXXXXXXXXXXX Secretary of
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX, a business trust organized under the laws
of the Commonwealth of Massachusetts (the "Fund"), do hereby certify that:
The following individuals serve in the following positions with the Fund and
each individual has been duly elected or appointed to each such position and
qualified therefor in conformity with the Fund's Master Trust Agreement and the
signatures set forth opposite their respective names are their true and correct
signatures:
Name Position Signature
- ---- -------- ---------
Chairman of the
Board and Investment
Officer ______________________
President ______________________
Treasurer ______________________
Secretary ______________________
Vice President and
Investment Officer ______________________
Vice President and
Investment Officer ______________________
Vice President and
Investment Officer ______________________
Vice President and
Investment Officer ______________________
Vice President and
Investment Officer ______________________
========================
APPENDIX D - INDIVIDUALS WITH ACCESS
I, Lynne E. Larkin, Secretary of Boston Safe Deposit and Trust Company, a
Massachusetts corporation (the "Custodian"), do hereby certify that:
The following fourteen named individuals have been duly authorized by
the Executive Committee of the Board of Directors of the Custodian to have
access to the assets of the Funds listed a business trust organized under the
laws of the Commonwealth of Massachusetts on Appendix A hereto, each Fund being
held by the Custodian in its capacity as such:
Kevin E. Connolly
Marie F. Cullerton
Karen D. DeVitto
Joan M. Donahue
Eric L. Greene
Claire J. Lurie
Russell G. McAdams, II
Eleanor L. Millan
Cynthia E. Peluso
Geraldine E. Ryan
Mary A. Saimella
Virginia Shea
Daniel J. Smith
Merton E. Thompson, III
-------------------------------------
Boston Safe Deposit and Trust Company
SCHEDULE A
CUSTODY FEE SCHEDULE
I. Asset Based Fees:
.50 Basis Points if total assets are S5 Billion or less
.40 Basis Points if total assets are S5 Billion or more
II. Transaction Charges
U.S. Depository $6 per trade
U.S. Physical $25 per trade
Third party FX $20 per FX
Paydowns $3 per paydown
Option/Future $17 round trip
III. Foreign assets in all funds will be totaled by country and charged a
basis point fee depending on the country as follows: The following
transaction charges will also apply.
Fees Transactions
GROUP I MARKETS 4 BP $20
GROUP II MARKETS 7 BP $40
GROUP III MARKETS 12 BP $60
GROUP IV MARKETS 16 BP $60
GROUP V MARKETS 40 BP $100
THIRTY PARTY FX CONTRACTS $20
GROUP I GROUP II GROUP III GROUP IV GROUP V
MARKETS MARKETS MARKETS MARKETS MARKETS
CANADA AUSTRALIA BRAZIL ARGENTINA AUSTRIA
GERMANY BELGIUM DENMARK FINLAND KOREA
JAPAN IRELAND FRANCE INDONESIA LUXEMBOURG
NETHERLANDS NEW ZEALAND HONG KONG ITALY MALAYSIA
EUROCLEAR UNITED SWEDEN MEXICO NORWAY
CEDEL KINGDOM SWITZERLAND SINGAPORE PAKISTAN
THAILAND SPAIN PHILIPPINES
PORTUGAL
TURKEY
VENEZUELA
CYPRUS, GREECE, SRI LANKA AND CHILE WILL BE QUOTED SEPARATELY
IV. Jumbo Repo Charges
$7.50 per piece of collateral each way in jumbo repo account
$3.50 per incoming and outgoing wires
$1.00 per internal account transfer
In the instance where the repurchase agreement is purchased through another
custodian, wire charges and internal account transfer charges only apply.
V. Earning Credit on Balances
If funds are left uninvested at the Custodian by any of the Funds, an
earnings credit will be given at the 90 day T-Bill rate on 90 % of the
uninvested balance.
If an error occurs, caused by the staff of the Custodian, and funds are
unintentionally left by any of the Funds, a credit will be applied
to the monthly bill utilizing 100% of that day's Jumbo Repo rate.
Monthly credit balances will roll forward to offset future Custodian
charges.
Credit balances will be applied to the total Custodian bill exclusive on
any out-of pocket expenses applied.
VI. Special Services
Fees for activities of a non-recurring nature such as portfolio
consolidations orreorganization, extraordinary shipments and the
preparation of special reports will be subject to negotiation.
SCHEDULE B
Out-of-Pocket Expenses
Reimbursable out-of-pocket expenses will be added to each monthly invoice
and will include, but not be limited to, such customary items as
telephone, wire charges ($3.50 per wire), postage and insurance, and
courier services ($10.00).
Below is a list of countries in which out-of-pocket expenses are charged to the
client:
COUNTRY EXPENSE TYPE EXPENSE
Spain Cash ratio fee Free receipt .75%/360/#days 50bp *
Germany Registration for insurance 2 Deutche Mark/
companies and banks only certificate
Singapore Registration Stamp tax 2 Singapore Dollars/
board lot 0.2%
Indonesia Registration 3 USD/board lot
Switzerland Attendance at annual meeting 100 USD
Australia Stamp tax for off market 6 bp
transactions
Hong Kong Registration 30 bp
Malaysia Registration 30 bp
AMENDMENT TO CUSTODY AGREEMENT
This Amendment, entered into as of the first day of March, 1996, by and
between each of the mutual funds listed on Appendix A attached hereto and
Boston Safe Deposit and Trust Company ("Boston Safe"), amends a certain
Custody Agreement dated May 18, 1993, as amended by certain Appendices, dated
July 28, 1994 and August 4, 1994 (as amended, the "Custody Agreement"), each
as between such mutual funds and Boston Safe. Capitalized terms used herein
have the meanings ascribed to them as referred to in the Custody Agreement.
WHEREAS, currently the existing funds referenced in the Custody Agreement
are: Colonial Trust I: Colonial High Yield Securities Fund, Colonial Income Fund
and Colonial Strategic Income Fund; Colonial Trust II; Colonial Adjustable Rate
U.S. Government Fund, Colonial U.S. Government Fund and Colonial Money Market
Fund; Colonial Trust III: The Colonial Fund, Colonial Federal Securities Fund,
Colonial Global Equity Fund, Colonial Growth Shares Fund, Colonial Natural
Resources Fund, Colonial International Fund for Growth and Colonial Strategic
Balanced Fund; Colonial Trust IV: Colonial Utilities Fund; Colonial Trust VI:
Colonial U.S. Fund for Growth and Colonial Small Stock Fund; Colonial
Intermediate High Income Fund; Colonial International Equity Index Trust;
Colonial U.S. Equity Index Trust; and Colonial Intermarket Income Trust I
(together, the "Existing Funds"); and
WHEREAS, in accordance with the provisions of the applicable Master
Trust Agreement and Declaration of Trust, Colonial Money Market Fund has
changed its name to Colonial Government Money Market Fund, Colonial
International Equity Index Trust has been liquidated, and Colonial U.S.
Equity Index Trust has been merged into Colonial U.S. Fund for Growth; and
WHEREAS, the parties hereto desire that the following funds be added to the
Custody Agreement: Colonial Trust II: Colonial Newport Tiger Cub Fund and
Colonial Newport Japan Fund; and Colonial Trust VI: Colonial Aggressive Growth
Fund, Colonial International Equity Fund and Colonial Equity Income Fund; and
WHEREAS, the Custody Agreement makes reference to the Existing Funds only,
NOW, THEREFORE, the parties hereby agree to amend the Custody Agreement
and restate the Existing Funds as of the date hereof as follows:
1 . The phrase "as set forth on Appendix A and as amended from time to time
(together, the "Existing Funds")" is hereby inserted after the words "and
not on behalf of any other Fund)," in the first sentence of the
introductory paragraph of the Custody Agreement.
2. Section 1 of the Custody Agreement is hereby amended to add the
following paragraph:
"(n) "Fund" shall mean each mutual fund listed on Appendix A
acting on its own behalf with respect to this Agreement, and if it is a series
fund, as such term is used in the 1940 Act, such term shall mean each series of
the Fund hereafter created, except that appropriate documentation, satisfactory
to the Custodian, with respect to each series, including an updated Appendix A,
must be presented to the Custodian before this Agreement shall become effective
with respect to any such series."
3. Paragraph (f) of Section 11 of the Custody Agreement is hereby
amended by inserting at the end thereof:
"Notwithstanding the generality of the foregoing, however, the
Custodian shall not be liable for any losses resulting from or caused by
events or circumstances beyond its reasonable control, including, but not
limited to, losses resulting from nationalization, expropriation,
devaluation, revaluation, confiscation, seizure, cancellation, destruction or
similar action by any governmental authority, de facto or de jure; or
enactment, promulgation, imposition or enforcement by any such governmental
authority of currency restrictions, exchange controls, taxes, levies or other
charges affecting the Fund's property; or acts of war, terrorism,
insurrection or revolution; or any other similar act or event beyond the
Custodian's control."
4. Section 11 of the Custody Agreement is hereby amended to add the
following paragraph:
"(k) Overdraft Facility and Security for Payment. In, the event that
the Custodian is directed by Written Instruction (or Oral Instructions confirmed
in writing in accordance with Section 11 (i) hereof) to make any payment or
transfer of monies on behalf of the Fund for which there would be, at the close
of business on the date of such payment or transfer, insufficient monies held by
the Custodian on behalf of the Fund, the Custodian may, in its sole discretion,
provide an overdraft (an "Overdraft") to the Fund in an amount sufficient to
allow the completion of such payment or transfer. Any Overdraft provided
hereunder: (a) shall be payable on the next Business Day, unless otherwise
agreed by the Fund and the Custodian; and (b) shall accrue interest from the
date of the Overdraft to the date of payment in full by the Fund at a rate
agreed upon in writing, from time to time, by the Custodian and the Fund. The
Custodian and the Fund acknowledge that the purpose of such Overdraft is to
temporarily finance the purchase of Securities for prompt delivery in accordance
with the terms hereof, to meet unanticipated or unusual redemption, to allow the
settlement of foreign exchange contracts or to satisfy distributions in
anticipation of receipt of interest payments on portfolio securities or to meet
other emergency expenses not reasonably foreseeable by the Fund. The Custodian
shall promptly notify the Fund in writing (an "Overdraft Notice") of any
Overdraft by facsimile transmission or in such other manner as the Fund and the
Custodian may agree in writing. To secure payment of any Overdraft, the Fund
hereby grants to the Custodian a continuing security interest in and right of
setoff against the Securities and cash in the Fund's account from time to time
in the full amount of such Overdraft. Should the Fund fail to pay promptly any
amounts owed hereunder, the Custodian shall be entitled to use available cash in
the Fund's account and to liquidate Securities in the account as is necessary to
meet the Fund's obligations under the Overdraft. In any such case, and without
limiting the foregoing, the Custodian shall be entitled to take such other
actions(s) or exercise such other options, powers and rights as the Custodian
now or hereafter has as a secured creditor under the Massachusetts Uniform
Commercial Code or any other applicable law."
5. Paragraph (a) of Section 12 of the Custody Agreement is hereby
amended by inserting at the end thereof:
"Notwithstanding the preceding sentence, with respect to any series
other than the Existing Funds, this Agreement will become effective with
respect to such series of the Fund as of the later of the day the conditions
set forth in Section 1 (n) are satisfied or the day on which such series
commences its investment operations and shall remain in force unless
terminated pursuant to the provisions of subparagraph (b) of this Section 12."
6. All other terms and conditions of the Custody Agreement shall remain
in full force and effect.
[INTENTIONALLY LEFT BLANK]
IN WITNESS WEEREOF, the parties hereto have caused this Amendment to be
executed on the date set forth above.
- -
COLONIAL TRUST I COLONIAL TRUST VI
By: PETER LYDECKER By: PETER LYDECKER
Title: Controller Title: Controller
COLONIAL TRUST II COLONIAL INTERMEDIATE HIGH INCOME FUND
By: PETER LYDECKER By: PETER LYDECKER
Title: Controller Title: Controller
COLONIAL TRUST III COLONIAL INTERMARKET INCOME TRUST I
By: PETER LYDECKER By: PETER LYDECKER
Title: Controller Title: Controller
COLONIAL TRUST IV BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: PETER LYDECKER By: ELLEN FURLONG
Title: Controller Title: Vice President
APPENDIX A
To the Custody Agreement Dated May 18, 1993
Amended and Restated As of February 29, 1996
Date Commence
Investment Operations
Colonial Trust I
Colonial High Yield Securities Fund Existing Fund
Colonial Income Fund Existng Fund
Colonial Strategic Income Fund Existing Fund
Colonial Trust II
Colonial Adjustable Rate U.S. Government Fund Existing Fund
Colonial U.S. Government Fund Existing Fund
Colonial Government Money Market Fund Existing Fund
(formerly Colonial Money
Market Fund)
Colonial Newport Tiger Cub Fund June 15, 1996
Colonial Newport Japan Fund June 15, 1996
Colonial Trust III
The Colonial Fund Existing Fund
Colonial Federal Securities Fund Existing Fund
Colonial Global Equity Fund Existing Fund
Colonial Growth Shares Fund Existing Fund
Colonial Natural Resources Fund Existing Fund
Colonial International Equity Fund for Growth Existing Fund
Colonial Strategic Balanced Fund Existing Fund
Colonial Trust IV
Colonial Utilities Fund Existing Fund
Colonial Trust VI
Colonial U.S. Fund for Growth Existing Fund
Colonial Small Stock Fund Existing Fund
Colonial Aggressive Growth Fund March 15, 1996
Colonial International Equity Fund March 15, 1996
Colonial Equity Income Fund March 15, 1996
Colonial Intermediate High Income Fund Existing Fund
Colonial Intermarket Income Trust I Existing Fund
Colonial International Equity Index Trust Liquidated
Colonial U.S. Equity Index Trust (merged into Merged
Colonial U.S. Fund for Growth)
PRICING AND BOOKKEEPING AGREEMENT
AGREEMENT dated as of November 1, 1991, between each Massachusetts Business
Trust (Trust) designated in Appendix I from time to time, and Colonial
Management Associates, Inc. (Colonial), a Massachusetts corporation. This
Agreement replaces all Service Contracts relating to the performance of similar
services between Colonial and each Trust's predecessor in interest. The Trust
and Colonial agree as follows:
1. Appointment. The Trust may offer an unlimited number of series (Funds),
each of which may have multiple classes of shares (Shares). This Agreement will
apply to each Fund on the Effective Date set forth in Appendix I as amended from
time to time.
2. Services. Colonial shall (i) determine and timely communicate to persons
designated by the Trust the Fund's net asset values and offering prices per
Share; and (ii) maintain and preserve in a secure manner the accounting records
of the Fund. All records shall be the property of the Fund. Colonial will
provide disaster planning to minimize possible service interruption.
3. Audit, Use and Inspection. Colonial shall make available on its premises
during regular business hours all records of a Fund for reasonable audit, use
and inspection by the Trust, its agents and any regulatory agency having
authority over the Fund.
4. Compensation. The Trust will pay Colonial for each Fund a monthly fee of
$2,250 for the first $50 million of Fund assets, plus a monthly percentage fee
at the following annual rates: .035% on the next $950 million; .025% on the next
$1 billion; .015% on the next $1 billion; and .001% on the excess over $3
billion of the average daily net assets of the Fund for such month.
5. Compliance. Colonial shall comply with applicable provisions relating
to pricing and bookkeeping of the prospectus and statement of additional
information of a Fund and applicable laws and rules in the provision of services
under this Agreement.
6. Limitation of Liability. In the absence of willful misfeasance, bad faith
or gross negligence on the part of Colonial, or reckless disregard of its
obligations and duties hereunder, Colonial shall not be subject to any liability
to the Trust or Fund, to any shareholder of the Trust or the Fund or to any
other person, firm or organization, for any act or omission in the course of, or
connected with, rendering services hereunder.
7. Amendments. The Trust shall submit to Colonial a reasonable time in
advance of filing with the Securities and Exchange Commission copies of any
changes in its Registration Statements. If a change in documents or procedures
materially increases the cost to Colonial of performing its obligations,
Colonial shall be entitled to receive reasonable additional compensation.
8. Duration and Termination, etc. This Agreement may be changed only by
writing executed by each party. This Agreement: (a) shall continue in effect
from year to year so long as approved annually by vote of a majority of the
Trustees who are not affiliated with Colonial; (b) may be terminated at any time
without penalty by sixty days' written notice to either party; and (c) may be
terminated at any time for cause by either party if such cause remains
unremedied for a reasonable period not to exceed ninety days after receipt of
written specification of such cause. Paragraph 6 of this Agreement shall survive
termination. If the Trust designates a successor to any of Colonial's
obligations, Colonial shall, at the expense and direction of the Trust, transfer
to the successor all Trust records maintained by Colonial.
9. Miscellaneous. This Agreement shall be governed by the laws of The
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above.
<PAGE>
EACH TRUST DESIGNATED IN APPENDIX I
By:___________________________________
Richard A. Silver, Controller
COLONIAL MANAGEMENT ASSOCIATES, INC.
By:___________________________________________
Arthur O. Stern, Senior Vice President
A copy of the document establishing the Trust is filed with the Secretary of The
Commonwealth of Massachusetts. This Agreement is executed by officers not as
individuals and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually but only upon the assets of the Fund.
S:\FUNDS\GENERAL\CONTRACT\PRICING.DOC
<PAGE>
APPENDIX I
Trust Series Effective Date
Colonial Trust I Colonial High Yield Securities Fund 11/1/91
Colonial Income Fund 5/1/92
Colonial Strategic Income Fund 5/1/92
Colonial Trust II Colonial Money Market Fund 11/1/91
Colonial U.S. Government Fund 2/14/92
Colonial Adjustable Rate U.S. 10/1/92
Government Fund
Colonial Newport Tiger Cub Fund 6/3/96
Colonial Newport Japan Fund 6/3/96
Colonial Trust III Colonial Growth Shares Fund 11/1/91
The Colonial Fund 2/14/92
Colonial Federal Securities Fund 2/14/92
Colonial Global Equity Fund 2/14/92
Colonial Natural Resources Fund 2/14/92
Colonial International Fund for Growth 12/1/93
Colonial Strategic Balanced Fund 9/1/94
Colonial Trust IV Colonial High Yield Municipal Fund 6/5/92
Colonial Intermediate Tax-Exempt Fund 12/18/92
Colonial Short-Term Tax-Exempt Fund 12/18/92
Colonial Tax-Exempt Fund 11/1/91
Colonial Tax-Exempt Insured Fund 11/1/91
Colonial Tax-Exempt Money Market Fund 2/14/92
Colonial Utilities Fund 2/14/92
Colonial Trust V Colonial Massachusetts Tax-Exempt Fund 11/1/91
Colonial Connecticut Tax-Exempt Fund 11/1/91
Colonial California Tax-Exempt Fund 8/3/92
Colonial Michigan Tax-Exempt Fund 8/3/92
Colonial Minnesota Tax-Exempt Fund 8/3/92
Colonial New York Tax-Exempt Fund 8/3/92
Colonial North Carolina Tax-Exempt 8/6/93
Fund
Colonial Ohio Tax-Exempt Fund 8/3/92
Colonial Florida Tax-Exempt Fund 1/13/93
Colonial Trust VI Colonial U.S. Fund for Growth 7/1/92
Colonial Small Stock Fund 11/2/92
Colonial Aggressive Growth Fund 3/31/96
Colonial Equity Income Fund 3/31/96
Colonial International Equity Fund 3/31/96
Colonial Trust VII Colonial Newport Tiger Fund 5/1/95
By:_______________________________
Peter L. Lydecker, Controller
By:__________________________________________
Richard A. Silver, Senior Vice President
Colonial Management Associates, Inc.
Dated: June 3, 1996
S:\FUNDS\GENERAL\CONTRACT\PRICING.DOC
COLONIAL TRUST I-VII
Plan pursuant to Rule 18f-3(d) under the Investment Company Act of
1940
Effective April 22, 1996 (1)
Each series ("Fund") of Colonial Trusts I-VII (the "Trusts") may from
time to time issue one or more of the following classes of shares:
Class A shares, Class B shares, Class C shares, Class D shares, Class
T shares and Class Z shares. Each class is subject to such investment
minimums and other conditions of eligibility as set forth in the
Funds' prospectuses as from time to time in effect. The differences
in expenses among these classes of shares, and the conversion and
exchange features of each class of shares, are set forth below in this
Plan, which is subject to change, to the extent permitted by law and
by the Declaration of Trust and By-laws of each Trust, by action of
the Board of Trustees of each Trust.
Class A shares
- ---------------
Class A shares are offered at net asset value ("NAV") plus the initial
sales charges described in the Funds' prospectuses as from time to
time in effect. Initial sales charges may not exceed 6.50%, and may
be reduced or waived as permitted by Rule 22d-1 under the Investment
Company Act of 1940 (the "1940 Act") and as described in the Funds'
prospectuses from time to time in effect.
Purchases of $1 million or more of Class A shares that are redeemed
within 18 months from purchase are subject to a contingent deferred
sales charge ("CDSC") of 1% of either the purchase price or the NAV of
the shares redeemed, whichever is less. Class A shares are not
otherwise subject to a CDSC. The CDSC may be reduced or waived as
permitted by Rule 6c-10 under the 1940 Act and as described in the
Funds' prospectuses as from time to time in effect.
Class A shares pay service fees pursuant to plans adopted pursuant to
Rule 12b-1 under the 1940 Act ("12b-1 Plans") as described in the
Funds' prospectuses in effect from time to time. Such fees may not
exceed 0.25% per annum of the average daily net assets attributable to
such class. Class A shares generally do not pay distribution fees,
except that Colonial Strategic Balanced Fund pays a distribution fee
of 0.30% per annum of average daily net assets attributable to its
Class A shares.
Class A shares of any Fund may be exchanged, at the holder's option,
for Class A shares of another Fund without the payment of a sales
charge, except that (i) if Class A shares of a money market fund or of
Colonial Short-Term Tax Exempt Fund are exchanged for shares of a non-
money market fund, the exchange is at the applicable offering price
next determined (including sales charge), except for amounts on which
an initial sales charge was paid; and (ii) if shares of any other non-
money market fund are exchanged within five months after purchase for
shares of a Fund with a higher sales charge, then the difference in
sales charges must be paid on the exchange.
- ---------------------------------
(1) Colonial Trusts I-VII (the "Trusts") have been offering multiple
classes of shares, prior to the effectiveness of this Plan, pursuant
to an exemptive order of the Securities and Exchange Commission. This
Plan is intended to permit the Trusts to offer multiple classes of
shares pursuant to Rule 18f-3 under the Investment Company Act of
1940, without any change in the arrangements and expense allocations
that have been approved by the Board of Trustees of each Trust under
such order of exemption.
Class B shares
- --------------
Class B shares are offered at NAV, without an initial sales charge.
Class B shares that are redeemed within the period of time after
purchase (not more than 6 years) specified in each Fund's prospectus
as from time to time in effect are subject to a CDSC of up to 5% of
either the purchase price or the NAV of the shares redeemed, whichever
is less; such percentage may be lower for certain Funds and declines
the longer the shares are held, all as described in the Funds'
prospectuses as from time to time in effect. Class B shares purchased
with reinvested distributions are not subject to a CDSC. The CDSC is
subject to reduction or waiver in certain circumstances, as permitted
by Rule 6c-10 under the 1940 Act and as described in the Funds'
prospectuses as from time to time in effect.
Class B shares pay distribution and service fees pursuant to 12b-1
Plans as described in the Funds' prospectuses in effect from time to
time. Such fees may be in amounts up to but may not exceed,
respectively, 0.75% and 0.25% per annum of the average daily net
assets attributable to such class.
Class B shares automatically convert to Class A shares of the same
Fund eight years after purchase, except that Class B shares purchased
through the reinvestment of dividends and other distributions on Class
B shares convert proportionally to the amount of Class A shares being
converted.
Class B shares of any Fund may be exchanged, at the holder's option,
for Class B shares of another Fund, without the payment of a CDSC.
The holding period for determining the CDSC and the conversion to
Class A shares will include the holding period of the shares
exchanged. If the Class B shares received in the exchange are
subsequently redeemed, the amount of the CDSC, if any, will be
determined by the schedule of the Fund in which the original
investment was made.
Class C shares
- --------------
Class C shares are offered at NAV, without an initial sales charge or
CDSC. Class C shares pay distribution and service fees pursuant to
plans adopted pursuant to Rule 12b-1 under the 1940 Act ("12b-1
Plans"), as described in the Funds' prospectuses in effect from time
to time. Such fees may not exceed, respectively, 0.75% and 0.25% per
annum of the average daily net assets attributable to such class.
Class C shares of any Fund may be exchanged for Class C shares of any
other Fund that offers Class C shares. Only one Fund currently offers
Class C shares.
Class D shares
- --------------
Class D shares are offered at NAV plus an initial sales charge of 1%.
Class D shares that are redeemed within one year from purchase are
subject to a CDSC of 1% of either the purchase price or the NAV of the
shares redeemed, whichever is less. Class D shares purchased with
reinvested dividends or capital gain distributions are not subject to
a CDSC. The CDSC may be reduced or waived in certain circumstances as
permitted by Rule 6c-10 under the 1940 Act and as described in the
Funds' prospectuses as from time to time in effect.
Class D shares pay distribution and service fees pursuant to 12b-1
Plans, as described in the Funds' prospectuses in effect from time to
time. Such fees may be in amounts up to but may not exceed,
respectively, 0.75% and 0.25% per annum of the average daily net
assets attributable to such class.
Class D shares of any Fund may be exchanged for Class D shares of any
other Fund that offers Class D shares. The holding period for
determining whether a CDSC will be charged will include the holding
period of the shares exchanged.
Class T shares
- --------------
Class T shares are offered at NAV plus the initial sales charges
described in the Funds' prospectuses as from time to time in effect.
The sales charge may not exceed 6.50%, and may be reduced or waived as
permitted by Rule 22d-1 under the 1940 Act and as described in the
Funds' prospectuses from time to time in effect.
Purchases of $1 million or more of Class T shares that are redeemed
within 18 months from purchase are subject to a contingent deferred
sales charge ("CDSC") of 1% of either the purchase price or the NAV of
the shares redeemed, whichever is less. Class T shares are not
otherwise subject to a CDSC. The CDSC may be reduced or waived as
permitted by Rule 6c-10 under the 1940 Act and as described in the
Funds' prospectuses as from time to time in effect.
Class T shares do not pay fees pursuant to a 12b-1 Plan. Class T
shares of a Fund may only be exchanged for Class A shares of another
Fund.
Class Z shares
- --------------
Class Z shares are offered at NAV, without an initial sales charge or
CDSC. Class Z shares do not pay fees under a 12b-1 Plan. Class Z
shares of a Fund may only be exchanged for Class A shares of another
Fund.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Statement of Additional Information constituting
parts of this Post-Effective Amendment No. 10 to the registration
statement on Form N-1A (the "Registration Statement") of our reports
dated August 12, 1996, relating to the financial statements and financial
highlights appearing in the June 30, 1996 Annual Reports to Shareholders
of Colonial Aggressive Growth Fund, Colonial Equity Income Fund and Colonial
International Equity Fund, each a series of Colonial Trust VI,
which are also incorporated by reference into the Registration Statement.
We also consent to the references to us under the headings "The Fund's
Financial History" in the Prospectuses and "Independent Accountants" in
the Statements of Additional Information.
PRICE WATERHOUSE LLP
- --------------------------
PRICE WATERHOUSE LLP
Boston, MA
September 27, 1996
PERFORMANCE CALCULATION
COLONIAL AGGRESSIVE GROWTH FUND - CLASS A
Year End: 6/30/96
Inception Date: 3/30/96
SINCE INCEPTION
3/30/96 TO 6/30/96
Standard Non-Standard
----------- -------------
Initial Inv. $1,000.00 $1,000.00
Max. Load 5.75%
Amt. Invested $942.50 $1,000.00
Initial NAV $10.11 $10.11
Initial Shares 93.225 98.912
Shares From Dist. 0.000 0.000
End of Period NAV $11.30 $11.30
Total Return 5.34% 11.77%
Average Annual
Total Return N/A N/A
PERFORMANCE CALCULATION
COLONIAL AGGRESSIVE GROWTH FUND - CLASS B
Year End: 6/30/96
Inception Date: 3/30/96
SINCE INCEPTION
3/30/96 TO 6/30/96
Standard Non-Standard
--------- ------------
Initial Inv. $1,000.00 $1,000.00
Amt. Invested $1,000.00 $1,000.00
Initial NAV $10.11 $10.11
Initial Shares 98.912 98.912
Shares From Dist. 0.000 0.000
End of Period NAV $11.28 $11.28
CDSC 5.00%
Total Return 6.57% 11.57%
Average Annual
Total Return N/A N/A
PERFORMANCE CALCULATION
COLONIAL AGGRESSIVE GROWTH FUND - CLASS D
Year End: 6/30/96
Inception Date: 3/30/96
SINCE INCEPTION
3/30/96 TO 6/30/96
Standard Non-Standard
--------- -----------
Initial Inv. $1,000.00 $1,000.00
Max. Load 1.00%
Amt. Invested $990.00 $1,000.00
Initial NAV $10.11 $10.11
Initial Shares 97.923 98.912
Shares From Dist. 0.000 0.000
End of Period NAV $11.28 $11.28
CDSC 1.00%
Total Return 9.46% 11.57%
Average Annual
Total Return N/A N/A
COLONIAL AGGRESSIVE GROWTH FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 6/30/96
a-b 6
FUND YIELD = 2 ----- +1-1
c-d
ADJUSTED
YIELD YIELD*
a = dividends and interest earned during
the month $2,440 $2,440
b = expenses (exclusive of distribution fee)
accrued during the month 4,244 10,221
c = average dividend shares outstanding
during the month 300,000 300,000
d = class A maximum offering price per share
on the last day of the month $11.99 $11.99
CLASS A YIELD -0.60% -2.58%
CLASS B YIELD -1.37% -3.47%
CLASS D YIELD -1.36% -3.43%
* Without voluntary expense limit.
PERFORMANCE CALCULATION
COLONIAL EQUITY INCOME FUND - CLASS A
Year End: 6/30/96
Inception Date: 3/30/96
SINCE INCEPTION
3/30/96 TO 6/30/96
Standard Non-Standard
----------- -------------------
Initial Inv. $1,000.00 $1,000.00
Max. Load 5.75%
Amt. Invested $942.50 $1,000.00
Initial NAV $9.94 $9.94
Initial Shares 94.819 100.604
Shares From Dist. 0.000 0.000
End of Period NAV $10.28 $10.28
Total Return -2.53% 3.42%
Average Annual
Total Return N/A N/A
PERFORMANCE CALCULATION
COLONIAL EQUITY INCOME FUND - CLASS B
Year End: 6/30/96
Inception Date: 3/30/96
SINCE INCEPTION
3/30/96 TO 6/30/96
Standard Non-Standard
--------- -------------------
Initial Inv. $1,000.00 $1,000.00
Amt. Invested $1,000.00 $1,000.00
Initial NAV $9.94 $9.94
Initial Shares 100.604 100.604
Shares From Dist. 0.000 0.000
End of Period NAV $10.26 $10.26
CDSC 5.00%
Total Return -1.78% 3.22%
Average Annual
Total Return N/A N/A
PERFORMANCE CALCULATION
COLONIAL EQUITY INCOME FUND - CLASS D
Year End: 6/30/96
Inception Date: 3/30/96
SINCE INCEPTION
3/30/96 TO 6/30/96
Standard Non-Standard
--------- -------------------
Initial Inv. $1,000.00 $1,000.00
Max. Load 1.00%
Amt. Invested $990.00 $1,000.00
Initial NAV $9.94 $9.94
Initial Shares 99.598 100.604
Shares From Dist. 0.000 0.000
End of Period NAV $10.26 $10.26
CDSC 1.00%
Total Return 1.19% 3.22%
Average Annual
Total Return N/A N/A
COLONIAL EQUITY INCOME FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 6/30/96
a-b 6
FUND YIELD = 2 -----+1 -1
c-d
ADJUSTED
YIELD YIELD*
a = dividends and interest earned during
the month $7,789 $7,789
b = expenses (exclusive of distribution fee)
accrued during the month 3,943 9,704
c = average dividend shares outstanding
during the month 300,000 300,000
d = class A maximum offering price per share
on the last day of the month $10.91 $10.91
CLASS A YIELD 1.41% -0.70%
CLASS B YIELD 0.76% -1.48%
CLASS D YIELD 0.75% -1.47%
* Without voluntary expense limit.
PERFORMANCE CALCULATION
COLONIAL INTERNATIONAL EQUITY FUND - CLASS A
Year End: 6/30/96
Inception Date: 3/30/96
SINCE INCEPTION
3/30/96 TO 6/30/96
Standard Non-Standard
----------- --------------
Initial Inv. $1,000.00 $1,000.00
Max. Load 5.75%
Amt. Invested $942.50 $1,000.00
Initial NAV $9.93 $9.93
Initial Shares 94.914 100.705
Shares From Dist. 0.000 0.000
End of Period NAV $10.30 $10.30
Total Return -2.24% 3.73%
Average Annual
Total Return N/A N/A
PERFORMANCE CALCULATION
COLONIAL INTERNATIONAL EQUITY FUND - CLASS B
Year End: 6/30/96
Inception Date: 3/30/96
SINCE INCEPTION
3/30/96 TO 6/30/96
Standard Non-Standard
--------- ---------------
Initial Inv. $1,000.00 $1,000.00
Amt. Invested $1,000.00 $1,000.00
Initial NAV $9.93 $9.93
Initial Shares 100.705 100.705
Shares From Dist. 0.000 0.000
End of Period NAV $10.28 $10.28
CDSC 5.00%
Total Return -1.48% 3.52%
Average Annual
Total Return N/A N/A
PERFORMANCE CALCULATION
COLONIAL INTERNATIONAL EQUITY FUND - CLASS D
Year End: 6/30/96
Inception Date: 3/30/96
SINCE INCEPTION
3/30/96 TO 6/30/96
Standard Non-Standard
--------- ------------
Initial Inv. $1,000.00 $1,000.00
Max. Load 1.00%
Amt. Invested $990.00 $1,000.00
Initial NAV $9.93 $9.93
Initial Shares 99.698 100.705
Shares From Dist. 0.000 0.000
End of Period NAV $10.28 $10.28
CDSC 1.00%
Total Return 1.49% 3.52%
Average Annual
Total Return N/A N/A
COLONIAL INTERNATIONAL EQUITY FUND
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30-DAY BASE PERIOD ENDED 6/30/96
a-b 6
FUND YIELD = 2 ----- +1 -1
c-d
ADJUSTED
YIELD YIELD*
a = dividends and interest earned during
the month $33,029 $33,029
b = expenses (exclusive of distribution fee)
accrued during the month 22,398 25,061
c = average dividend shares outstanding
during the month 1,500,000 1,500,000
d = class A maximum offering price per share
on the last day of the month $10.93 $10.93
CLASS A YIELD 0.78% 0.58%
CLASS B YIELD 0.08% -0.13%
CLASS D YIELD 0.08% -0.13%
* Without voluntary expense limit.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL AGGRESSIVE GROWTH FUND, CLASS A YEAR END JUN-30-1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF
COLONIAL AGGRESSIVE GROWTH FUND, CLASS A YEAR END JUN-30-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
<NUMBER> 5
<NAME> COLONIAL AGGRESSIVE GROWTH FUND, CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 2945
<INVESTMENTS-AT-VALUE> 3339
<RECEIVABLES> 1
<ASSETS-OTHER> 51
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 52
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2494
<SHARES-COMMON-STOCK> 250
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 394
<NET-ASSETS> 3389
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 9
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<EXPENSES-NET> 15
<NET-INVESTMENT-INCOME> (5)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 394
<NET-CHANGE-FROM-OPS> 389
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 250
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3389
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 7
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26
<AVERAGE-NET-ASSETS> 2732
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.011)
<PER-SHARE-GAIN-APPREC> 1.311
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.30
<EXPENSE-RATIO> 1.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL AGGRESSIVE GROWTH FUND, CLASS B YEAR END JUN-30-1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF
COLONIAL AGGRESSIVE GROWTH FUND, CLASS B YEAR END JUN-30-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
<NUMBER> 5
<NAME> COLONIAL AGGRESSIVE GROWTH FUND, CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
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<INVESTMENTS-AT-VALUE> 3339
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<DIVIDEND-INCOME> 1
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<EXPENSES-NET> 15
<NET-INVESTMENT-INCOME> (5)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 394
<NET-CHANGE-FROM-OPS> 389
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3389
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26
<AVERAGE-NET-ASSETS> 273
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.031)
<PER-SHARE-GAIN-APPREC> 1.311
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.28
<EXPENSE-RATIO> 2.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS OF COLONIAL AGGRESSIVE GROWTH FUND, CLASS D YEAR END
JUN-30-1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS OF COLONIAL AGGRESSIVE GROWTH FUND, CLASS D YEAR END JUN-30-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
<NUMBER> 5
<NAME> COLONIAL AGGRESSIVE GROWTH FUND, CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 2945
<INVESTMENTS-AT-VALUE> 3339
<RECEIVABLES> 1
<ASSETS-OTHER> 51
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 52
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<PAID-IN-CAPITAL-COMMON> 250
<SHARES-COMMON-STOCK> 25
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 394
<NET-ASSETS> 3389
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 9
<OTHER-INCOME> 0
<EXPENSES-NET> 15
<NET-INVESTMENT-INCOME> (5)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 394
<NET-CHANGE-FROM-OPS> 389
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3389
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26
<AVERAGE-NET-ASSETS> 273
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.031)
<PER-SHARE-GAIN-APPREC> 1.311
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.28
<EXPENSE-RATIO> 2.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL EQUITY INCOME FUND, CLASS A YEAR END JUN-30-1996 AND IS
QUALFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
EQUITY INCOME FUND, CLASS A YEAR END JUN-30-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
<NUMBER> 4
<NAME> COLONIAL EQUITY INCOME FUND, CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 2936
<INVESTMENTS-AT-VALUE> 3024
<RECEIVABLES> 8
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 52
<TOTAL-ASSETS> 61
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2
<TOTAL-LIABILITIES> 2
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2495
<SHARES-COMMON-STOCK> 250
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 20
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 20
<ACCUM-APPREC-OR-DEPREC> 88
<NET-ASSETS> 3083
<DIVIDEND-INCOME> 21
<INTEREST-INCOME> 6
<OTHER-INCOME> 0
<EXPENSES-NET> 13
<NET-INVESTMENT-INCOME> 14
<REALIZED-GAINS-CURRENT> (19)
<APPREC-INCREASE-CURRENT> 88
<NET-CHANGE-FROM-OPS> 83
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 250
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<NET-CHANGE-IN-ASSETS> 3083
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
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<GROSS-ADVISORY-FEES> 6
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 24
<AVERAGE-NET-ASSETS> 2507
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.051
<PER-SHARE-GAIN-APPREC> 0.229
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<PER-SHARE-NAV-END> 10.28
<EXPENSE-RATIO> 1.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL EQUITY INCOME FUND, CLASS B YEAR END JUN-30-1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
EQUITY INCOME FUND, CLASS B YEAR END JUN-30-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
<NUMBER> 4
<NAME> COLONIAL EQUITY INCOME FUND, CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 2936
<INVESTMENTS-AT-VALUE> 3024
<RECEIVABLES> 8
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 52
<TOTAL-ASSETS> 61
<PAYABLE-FOR-SECURITIES> 0
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<OTHER-ITEMS-LIABILITIES> 2
<TOTAL-LIABILITIES> 2
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 250
<SHARES-COMMON-STOCK> 25
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<ACCUMULATED-NII-CURRENT> 20
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<ACCUM-APPREC-OR-DEPREC> 88
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<DIVIDEND-INCOME> 21
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<EXPENSES-NET> 13
<NET-INVESTMENT-INCOME> 14
<REALIZED-GAINS-CURRENT> (19)
<APPREC-INCREASE-CURRENT> 88
<NET-CHANGE-FROM-OPS> 83
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 25
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3083
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 24
<AVERAGE-NET-ASSETS> 250
<PER-SHARE-NAV-BEGIN> 10.00
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<PER-SHARE-NAV-END> 10.28
<EXPENSE-RATIO> 2.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL EQUITY INCOME FUND, CLASS D YEAR END JUN-30-1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
EQUITY INCOME FUND, CLASS D YEAR END JUN-30-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
<NUMBER> 4
<NAME> COLONIAL EQUITY INCOME FUND, CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 2936
<INVESTMENTS-AT-VALUE> 3024
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<OTHER-ITEMS-ASSETS> 52
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<OTHER-ITEMS-LIABILITIES> 2
<TOTAL-LIABILITIES> 2
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 250
<SHARES-COMMON-STOCK> 25
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 20
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 20
<ACCUM-APPREC-OR-DEPREC> 88
<NET-ASSETS> 3083
<DIVIDEND-INCOME> 21
<INTEREST-INCOME> 6
<OTHER-INCOME> 0
<EXPENSES-NET> 13
<NET-INVESTMENT-INCOME> 14
<REALIZED-GAINS-CURRENT> (19)
<APPREC-INCREASE-CURRENT> 88
<NET-CHANGE-FROM-OPS> 83
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3083
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 24
<AVERAGE-NET-ASSETS> 250
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.031
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<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.28
<EXPENSE-RATIO> 2.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL INTERNATIONAL EQUITY FUND, CLASS A YEAR END JUN-30-1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONAIL
INTERNATIONAL EQUITY FUND, CLASS A YEAR END JUN-30-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
<NUMBER> 3
<NAME> COLONIAL INTERNATIONAL EQUITY FUND, CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 14928
<INVESTMENTS-AT-VALUE> 15325
<RECEIVABLES> 57
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 54
<TOTAL-ASSETS> 118
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14488
<SHARES-COMMON-STOCK> 1450
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<ACCUMULATED-NII-CURRENT> 35
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<ACCUMULATED-NET-GAINS> 39
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 377
<NET-ASSETS> 15439
<DIVIDEND-INCOME> 131
<INTEREST-INCOME> 31
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<EXPENSES-NET> 71
<NET-INVESTMENT-INCOME> 91
<REALIZED-GAINS-CURRENT> (29)
<APPREC-INCREASE-CURRENT> 377
<NET-CHANGE-FROM-OPS> 439
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
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<GROSS-EXPENSE> 75
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
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AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
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AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF
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<NAME> COLONIAL TRUST VI
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