COLONIAL TRUST VI
485BPOS, 1996-10-11
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                                               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. 11                                [  X  ]


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

      Amendment No. 13                                               [  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 October 28, 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 U.S. Fund for Growth)
            -----------------------------------------------------

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

   
October 28, 1996
    


COLONIAL U.S. FUND
FOR GROWTH


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 U.S. Fund for Growth (Fund), a diversified  portfolio of Colonial Trust
VI (Trust),  an open-end management  investment company,  seeks growth exceeding
the S&P 500 Index (Standard & Poor's Index of 500 common stocks) performance.

The Fund is managed by the Adviser, an investment adviser since 1931.  Portfolio
management  has been  delegated to State Street Global  Advisors,  a division of
State Street Bank and Trust Company (Sub-Adviser).

   
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 October 28, 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.
    
   
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                                         2
The Fund's Financial History                                3
The Fund's Investment Objective                             4
How the Fund Pursues its Objective and Certain Risk
Factors                                                     4
How the Fund Measures its Performance                       5
How the Fund is Managed                                     6
How the Fund Values its Shares                              7
Distributions and Taxes                                     7
How to Buy Shares                                           7
How to Sell Shares                                          9
How to Exchange Shares                                      10
Telephone Transactions                                      10
12b-1 Plans                                                 11
Organization and History                                    11
    

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.


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 annual expenses
for an  investment  in each  Class of the  Fund's  shares.  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  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                                                          0.80%            0.80%              0.80%
12b-1 fees                                                              0.25             1.00               1.00
Other expenses                                                          0.40             0.40               0.40
                                                                        ----             ----               ----
Total operating expenses                                                1.45%            2.20%              2.20%
                                                                        ====             ====               ====
</TABLE>
    
   
Total expenses,  excluding  brokerage,  interest,  taxes, 12b-1 distribution and
service fees and extraordinary expenses, are, until further notice,  voluntarily
limited by the Adviser to 1.25% of average net assets.
    

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                                                    $ 71             $ 72            $ 22         $ 42         $32
3 years                                                    101               99              69           78          78(9)
5 years                                                    132              138             118         127          127
10 years                                                   221              234(8)          234(8)        261        261
</TABLE>
    
   
(6)      Assumes redemption at period end.
    
(7)      Assumes no redemption.
   
(8)      Class B shares convert to Class A shares after approximately 8 years; 
         therefore, years 9 and 10 reflect Class A share expenses.
    
   
(9)      Class D shares  do not  incur a  contingent  deferred  sales  charge on
         redemptions made after one year.
    



THE FUND'S FINANCIAL HISTORY (a)
   
The  following  schedule  of  financial   highlights  for  a  share  outstanding
throughout  each year 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>

                                                                                 Year ended June 30
                                                         -----------------------------------------------------------------------
                                                                   1996                                    1995                     
                                                          ----------------------------------------------------------------------
                                                           Class A      Class B      Class D      Class A    Class B  Class D(c)
<S>                                                         <C>        <C>          <C>           <C>       <C>       <C>      
Net asset value - Beginning of period                       $13.260    $13.180      $13.240       $11.460   $11.400   $11.460  
INCOME FROM INVESTMENT OPERATIONS:
  Net investment income                                       0.121      0.017        0.016         0.165     0.075     0.074   
  Net realized and unrealized gain (loss)                     2.292      2.265        2.268         2.530     2.513     2.534   
    Total from Investment Operations                          2.413      2.282        2.284         2.695     2.588     2.608   
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
  From net investment income                                 (0.118)    (0.017)      (0.029)       (0.160)   (0.073)   (0.093)  
  From net realized gains                                    (1.085)    (1.085)      (1.085)       (0.735)   (0.735)   (0.735)  
   Total Distributions Declared
   to Shareholders                                           (1.203)    (1.102)      (1.114)       (0.895)   (0.808)   (0.828)  
Net asset value - End of period                             $14.470    $14.360      $14.410       $13.260   $13.180   $13.240  
Total return(e)                                              18.85%    17.91%        17.84%        24.84%    23.94%    24.01%   
RATIOS TO AVERAGE NET ASSETS
Expenses                                                      1.45%(g)  2.20%(g)      2.20%(g)      1.46%     2.21%     2.21%   
Fees waived by the Adviser                                      ---      ---           ---           ---       ---       ---    
Net investment income                                         0.87%(g)  0.12%(g)      0.12%(g)      1.37%     0.62%     0.62%   
Portfolio turnover                                              89%       89%           89%           84%       84%       84%   
Average commission rate (h)                                  $0.046    $0.046        $0.046          ---       ---       ---    
Net assets at end of period (000)                          $168,554  $306,718        $8,458      $124,171  $218,201    $3,028  
_________________________________
</TABLE>
<TABLE>
<CAPTION>


                                                                       Year ended June 30
                                                         -----------------------------------------------
                                                                1994                    1993(b)
                                                         -----------------------------------------------
                                                         Class A   Class B     Class A      Class B
<S>                                                      <C>        <C>        <C>          <C>     
Net asset value - Beginning of period                    $11.820    $11.770    $10.000      $10.000 
INCOME FROM INVESTMENT OPERATIONS:
  Net investment income                                    0.142      0.053     0.103(d)     0.020(d)
  Net realized and unrealized gain (loss)                 (0.119)    (0.122)    1.784        1.763 
    Total from Investment Operations                       0.023     (0.069)    1.887        1.783 
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
  From net investment income                              (0.138)    (0.056)   (0.067)      (0.013)
  From net realized gains                                 (0.245)    (0.245)     ---          ---
   Total Distributions Declared
   to Shareholders                                        (0.383)    (0.301)   (0.067)      (0.013)
Net asset value - End of period                          $11.460    $11.400   $11.820      $11.770 
Total return(e)                                            0.05%     (0.71)%   18.90%(f)    17.84%(f)
RATIOS TO AVERAGE NET ASSETS
Expenses                                                   1.49%      2.24%     1.50%        2.25%
Fees waived by the Adviser                                  ---        ---      0.01%        0.01%
Net investment income                                      1.19%      0.44%     0.93%        0.18%
Portfolio turnover                                          117%       117%       98%          98%
Average commission rate (h)                                 ---        ---       ---          ---
Net assets at end of period (000)                        $97,180   $150,121   $44,009      $89,737
_________________________________
</TABLE>




(a)      Per share data was calculated using average shares outstanding during 
         the period.
(b)      The Fund commenced investment operations on July 1, 1992.
(c)      Class D shares were initially offered on July 1, 1994.  Per share 
         amounts reflect activity from that date.
(d)      Net of fees and expenses waived or borne by the Adviser which amounted
         to $0.001 and $0.001, respectively.
   
(e)      Total return at net asset value assuming all distributions reinvested 
         and no initial sales charge or contingent deferred sales charge.
    
(f)      Had the Adviser not waived or reimbursed a portion of expenses, total 
         return would have been reduced.
   
(g)      The benefits derived from custody credits and directed brokerage 
         arrangements had no impact.  Prior years' ratios are net of benefits 
         received, if any.
    
   
(h)      For the fiscal years beginning on or after September 1, 1995, a fund is
         required to disclose its average commission rate per share for trades 
         on which commissions are charged.
    

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.






THE FUND'S INVESTMENT OBJECTIVE


The Fund seeks growth exceeding the S&P 500 Index performance.

   
HOW THE FUND PURSUES ITS OBJECTIVE AND CERTAIN RISK FACTORS
    
   
The Fund normally invests at least 65% of its total assets in U.S. common stocks
(and up to 10% in American  Depository  Receipts (receipts issued in the U.S. by
banks or trust companies  evidencing  ownership of underlying foreign securities
(ADRs))  that  the  Sub-Adviser   believes  have  superior  earnings  and  value
characteristics  selected  from a universe  which meets certain  guidelines  for
liquidity and available investment information. Quantitative  standards,  
designed to identify  above  average  intrinsic  value relative to price and 
favorable  earnings trends, are used to select securities. The  State  Street  
Bank  Stock  Valuation  Universe  consists  of  about  1,000 securities that the
Sub-Adviser  believes have the highest  capitalization  and liquidity  and are  
followed by the largest  number of analysts in the U.S.  The Fund  intends  to  
invest  in the  securities  in the State  Street  Bank  Stock Valuation Universe
ranked highest by the  Sub-Adviser  based on the criteria of "Value" and 
momentum of Wall Street  "Sentiment."  "Value"  compares a company's assets, 
projected income growth and cash flow growth,  while  "Sentiment" ranks the 
stocks by the strength and  consistency of changes in Wall Street  analysts'
earning  estimates.  The S&P 500 Index is a  market-value  weighted index of 500
common  stocks  publicly  traded in the open stock market chosen on the basis of
market value and industry diversification. Standard & Poor's Corporation and the
S&P 500 Index are not  affiliated  with,  nor do they sponsor or recommend,  the
Fund or the  Trust.  The Fund  will not  concentrate  more than 25% of its total
assets in any one industry. The Fund's investments are not limited to securities
in the S&P 500 Index and will not precisely match the composition of the S&P 500
Index,  but may be managed to  correlate  with the sectors,  capitalization  and
volatility of the S&P Index.  Portfolio securities may be sold without regard to
time held, causing a portfolio  turnover rate substantially  higher than that of
most funds,  resulting in higher  brokerage  commissions and custodian fees, and
potential tax consequences to shareholders from capital gain distributions.
    
       
   
Foreign   Investments.   Investments  in  sponsored  and  unsponsored   American
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.
    
   
Temporary/Defensive  Investments.  Temporarily available cash may be invested in
certificates of deposit,  bankers'  acceptances,  high quality 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 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.
    

Generally  the  Fund  will  maintain  less  than  5% of  total  assets  in  cash
equivalents  to  meet  current  cash  flow  needs.  The  Fund  may  also  invest
temporarily available cash in money market investment companies,  subject to the
limits of the Investment  Company Act of 1940. This will involve the duplicative
payment  of a  portion  of  the  expenses,  including  advisory  fees,  of  such
investment companies.

   
Securities Loans. The Fund may lend securities to certain institutions (that the
Sub-Adviser  considers  qualified) to increase income. The loans will not exceed
30% of total assets. Securities lending involves the risk of loss to the Fund if
the  borrower  defaults.  The  Fund  will place cash or  high  quality,  liquid 
debt securities having a value at least equal to the amount of collateral 
received on the loan in a segregated account with its custodian.
    
       
   
Borrowing  of Money.  The Fund may  borrow  money from  banks for  temporary  or
emergency  purposes up to 10% of its net assets;  however,  it will not purchase
additional portfolio 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  current  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 and the Sub-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 accounting and administrative  personnel and
services,  office  space and other  equipment  and  services,  and  oversees the
activities  of the  Sub-Adviser,  for a fee at the  annual  rate of 0.80% of the
Fund's  average daily net assets  annually.  The fee is higher than that of most
mutual  funds.  Under a separate  sub-advisory  agreement,  the  Sub-Adviser  is
entitled  to be paid a monthly fee by the Adviser at the annual rate of 0.50% of
the first $50 million of the Fund's average daily net assets,  0.40% of the next
$150  million  of the  Fund's  average  daily net assets and 0.35% of the Fund's
average  daily  net  assets  in  excess of $200  million.  The  Sub-Adviser  has
voluntarily  agreed to waive a portion of its fee so that its actual  annual fee
will not exceed 0.32% of the Fund's  average daily net assets.  This waiver does
not reduce the amounts payable by the Fund to the Adviser.  See the Statement of
Additional Information for more information.
    

The  Sub-Adviser,  subject to the  supervision  of the Trustees and the Adviser,
directs the  investments  of the Fund in accordance  with the Fund's  investment
objective, policies and restrictions. Jeffrey P. Adams, Assistant Vice President
of the Sub-Adviser,  is primarily  responsible for the day-to-day management and
investment  decisions  for  the  Fund  and is  supported  by a  group  of  other
investment  professionals  that assist in the  management of the Fund. Mr. Adams
joined the Sub-Adviser in 1989.

   
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  Sub-Adviser  places  all  orders  for the  purchase  and sale of  portfolio
securities.  In selecting  broker-dealers,  the Adviser and the  Sub-Adviser may
consider research and brokerage services furnished to them and their affiliates.
Subject to seeking best execution,  the Adviser and the Sub-Adviser may consider
sales of shares of the Fund (and of certain other  Colonial  funds) in selecting
broker-dealers for portfolio security transactions.

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 semiannually 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  (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
                                  as % of            Firm
                            ---------------------   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  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:
    


                                    Contingent Deferred
      Years 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%  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  monthly an annual service fee
of 0.25% of the Fund's net assets  attributed to each Class of shares.  The Fund
also pays the  Distributor  an annual  distribution  fee of 0.75% of the average
daily 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
represents the entire interest in a separate portfolio of the Trust.

   
The Trust is not  required  to hold  annual  shareholder  meetings,  but special
meetings may be called for certain purposes.  Shareholders  receive one vote for
each Fund share.  Shares of the 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

Sub-Adviser
State Street Bank and Trust Company
Two International Place
Boston, MA 02110

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.



   
October 28, 1996
    



COLONIAL U.S. FUND
FOR GROWTH

PROSPECTUS



Colonial U.S. Fund for Growth seeks growth exceeding the S&P 500 Index (Standard
& Poor's Index of 500 common stocks) performance.

   
For more detailed information about the Fund, call the Adviser at 1-800-248-2828
for the October 28, 1996 Statement of Additional Information.
    






FUND  SHARES ARE NOT  DEPOSITS OR  OBLIGATIONS  OF, OR  GUARANTEED,  ENDORSED OR
INSURED BY, ANY BANK OR GOVERNMENT AGENCY.


                    [COLONIAL FLAG LOGO]

                    Colonial Mutual Funds
_________________________________________________________________
Please send your completed application to:
                              
                        Colonial Investors Service Center, Inc.
                        P.O. Box 1722
                        Boston, Massachusetts 02105-1722

New Account Application/Revision to Existing Account

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

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

___ Please check here if this is a revision.

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

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

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

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

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

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

______________________________________
Name of account owner

______________________________________
Name of joint account owner

______________________________________
Street address

______________________________________
Street address

______________________________________
City, State, and Zip

______________________________________
Daytime phone number

______________________________________
Social Security  # or Taxpayer I.D. #

Are you a U.S. citizen? ___Yes    ___No

______________________________________
If no, country of permanent residence


______________________________________
Owner's date of birth

______________________________________
Account number (if existing account)

2 -----Colonial Fund(s) You Are Purchasing--------
Your investment will be made in Class A shares if no class is indicated.
Certificates are not available for Class B or D shares. If no distribution
option is selected, distributions will be reinvested in additional Fund
shares. Please consult your financial adviser to determine which class of
shares best suits your needs.

Fund                    Fund                    Fund

________________        ___________________     _____________________

$_______________        $__________________     $____________________
Amount                   Amount                  Amount  

Class
___ A Shares ___ B Shares (less than $250,000) ___ C Shares (Adjustable Rate
                                                    U.S. Government Fund only)

___ D Shares (less than $500,000, available on certain funds; see prospectus)


Method of Payment

Choose one

___Check payable to the Fund

___Bank wired on   ____/____/____
(Date) Wire/Trade confirmation #__________________

Ways to Receive Your Distributions

Choose one

___Reinvest dividends and capital gains

___Dividends and capital gains in cash

___Dividends in cash; reinvest capital gains

___Automatic Dividend Diversification See section 5A, inside

___Direct Deposit via Colonial Cash Connection Complete Bank Information
   in section 4B.  I understand that my bank must be a member of the 
   Automated Clearing House (ACH).

Distributions of $10.00 or less will automatically be reinvested in additional
fund shares. 


3---Your Signature & Taxpayer I.D. Number Certification----

Each person signing on behalf of an entity represents that his/her actions are
authorized.

I have received and read each appropriate Fund prospectus and understand that
its terms are incorporated by reference into this application.  I understand
that this application is subject to acceptance. I understand that certain
redemptions may be subject to a contingent deferred sales charge.  It is agreed 
that the Fund, all Colonial Companies and their officers, directors, agents, and
employees will not be liable for any loss, liability, damage, or expense for 
relying upon this application or any instruction believed genuine.  

I certify, under penalties of perjury, that:

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

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

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

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

_______________________________________________
Capacity, if applicable       Date

X______________________________________________
 Signature

_______________________________________________
Capacity, if applicable       Date

4--------Ways to Withdraw from Your Fund-------

It may take up to 30 days to activate the following features. Complete only
the section(s) that apply to the features you would like.

A. Systematic Withdrawal Plan (SWP)
You can receive monthly, quarterly, or semiannual checks from your account in
any amount you select, with certain limitations. Your redemption checks can
be sent to you at the address of record for your account, to your bank
account, or to another person you choose. The value of the shares in your
account must be at least $5,000 and you must reinvest all of your
distributions. Checks will be processed on the 10th calendar day of the month
or the following business day.  If you receive your SWP payment via electronic 
funds transfer (EFT), you may request it to be processed any day of the month.  
Withdrawals in excess of 12% annually of your current account value will not be 
accepted. Redemptions made in addition to SWP payments may be subject to a 
contingent deferred sales charge for Class B or Class D shares. Please consult
your financial or tax adviser before electing this option.

Funds for Withdrawal:

___________________    
 Name of fund 

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

Frequency  (choose one)
__Monthly           __Quarterly         __Semiannually

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

___________________    
 Name of fund 

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

Frequency  (choose one)
__Monthly           __Quarterly         __Semiannually

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


Payment Instructions
Send the payment to (choose one):
__My address of record.
__My bank account via EFT. Please complete the Bank Information section below.  
  All EFT transactions will be made two business days after the processing date.
  Your bank must be a member of the Automated Clearing House system.
__The payee listed at right.  If more than one payee, provide the name,
  address, payment amount, and frequency for other payees (maximum of 5) on
  a separate sheet.  If you are adding this service to an existing account,
  please sign below and have your signature(s) guaranteed.

______________________________________________
Name of payee

______________________________________________
Address of payee

______________________________________________
City

______________________________________________
State                    Zip

______________________________________________
Payee's bank account number, if applicable


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

1.  Fast Cash
You are automatically eligible for this service.  You or your financial
adviser can withdraw up to $50,000 from your account and have it sent to your
address of record. For your protection, this service is only available on
accounts that have not had an address change within 30 days of the redemption
request.

2.  Telephone Redemption
__I would like the Telephone Redemption privilege either by federal fund wire
  or EFT. Telephone redemptions over $1,000 will be sent via federal fund wire,
  usually on the next business day ($7.50 will be deducted).  Redemptions of
  $1,000 or less will be sent by check to your designated bank.

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

Colonial's and the Fund's liability is limited when following telephone
instructions; a shareholder may suffer a loss from an unauthorized transaction
reasonably believed by Colonial to have been authorized.

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

____________________________________________________________
Bank name           City           Bank account number

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

X__________________________________
Signature of account owner(s)

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

5-----Ways to Make Additional Investments--------

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

A. Automatic Dividend Diversification
Please diversify my portfolio by investing distributions from one fund into 
another Colonial fund. These investments will be made in the same share class 
and without sales charges. Accounts must be identically registered.  I have
carefully read the prospectus for the fund(s) listed below.

____________________________
 From fund

____________________________
Account number (if existing)

____________________________
To fund

____________________________
Account number (if existing)


____________________________
 From fund

____________________________
Account number (if existing)

____________________________
To fund

____________________________
Account number (if existing)


B. Automated Dollar Cost Averaging
This program allows you to automatically have money from any Colonial fund in
which you have a balance of at least $5,000 exchanged into the same share
class of up to four other identically registered Colonial accounts, on a
monthly basis. The minimum amount for each exchange is $100. Please complete
the section below.

____________________________________
Fund from which shares will be sold

$_________________________
 Amount to redeem monthly

1____________________________________
 Fund to invest shares in

$_________________________
 Amount to invest monthly

2____________________________________
 Fund to invest shares in

$_________________________
 Amount to invest monthly


C. Fundamatic/On-Demand EFT Purchase
Fundamatic automatically transfers the specified amount from your bank
checking account to your Colonial fund account by electronic funds transfer on 
any specified day of the month. You will receive the applicable price two 
business days after the receipt of your request.  Your bank needs to be a member
of the Automated Clearing House System.  Please attach a blank check marked 
"VOID."  Also, complete the section below.

1____________________________________
 Fund name

_________________________________
Account number

$_____________________        _________________
Amount to transfer            Month to start


2___________________________________
 Fund name

 ________________________________
 Account number
$_____________________        _________________
Amount to transfer            Month to start
__On-Demand Purchase (will be automatically established if you choose 
  Fundamatic)
__Fundamatic Frequency
__Monthly or   __Quarterly

Check one:

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

Authorization to honor checks drawn by Colonial Investors Service Center,
Inc.  Do Not Detach.  Make sure all depositors on the bank account sign to
the far right.  Please attach a blank check marked "VOID" here.  See reverse
for bank instructions.

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

______________________________________
Bank name

______________________________________
Bank street address

______________________________________
Bank street address

______________________________________
City            State          Zip

______________________________________
Bank account number

______________________________________
Bank routing #

X_____________________________________
 Depositor's Signature(s)
 Exactly as appears on bank records

X_____________________________________
 Depositor's Signature(s)
 Exactly as appears on bank records

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

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

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

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

_____________________________________
 Name on account

_____________________________________
Account number

_____________________________________
 Name on account

_____________________________________
Account number

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

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

7-------------Financial Service Firm---------------------
To be completed by a Representative of your financial service firm.

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

_____________________________________
Representative's name

_____________________________________
Representative's number

_____________________________________
Representative's phone number

_____________________________________
Account # for client at financial
 service firm

_____________________________________
Branch office address

_____________________________________
City

_____________________________________
State               Zip

_____________________________________
Branch office number

_____________________________________
Name of financial service firm

_____________________________________
Main office address

_____________________________________
Main office address

_____________________________________
City

_____________________________________
State               Zip


X____________________________________
 Authorized signature

8----------Request for a Combined Quarterly Statement Mailing-----------
Colonial can mail all of your quarterly statements in one envelope. This 
option simplifies your record keeping and helps reduce fund expenses.

__I want to receive a combined quarterly mailing for all my accounts.  Please
  indicate accounts to be linked.______________________

                 Fundamatic (See Reverse Side)
Applications must be received before the start date for processing.

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

To the Bank Named on the Reverse Side:

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

SH-938B-0396



<PAGE>


                                COLONIAL TRUST VI

      Cross Reference Sheet (Colonial Small Stock Fund Classes A, B, D)
      -----------------------------------------------------------------

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


   
October 28, 1996
    

COLONIAL SMALL STOCK 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 Small Stock Fund (Fund),  a diversified  portfolio of Colonial Trust VI
(Trust),  an open-end management  investment company,  seeks long-term growth by
investing primarily in smaller  capitalization  equities. The Fund is managed by
the Adviser, an investment adviser since 1931.

This Prospectus  explains concisely what you should know before investing in the
Class A, Class B or Class D shares of the Fund.  Read it carefully and retain it
for future reference.

   
More detailed information about the Fund is in the October 28, 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.

   
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 the Class A,  Class B and Class D shares of the
Fund.  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 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                                     0.60%                       0.60%                     0.60%
12b-1 fee                                          0.25                        1.00                      1.00
Other expenses                                     0.53                        0.53                      0.53
                                                   ----                        ----                      ----
Total operating expenses                           1.38%                       2.13%                     2.13% (6)
                                                   ====                        ====                      ====
    
</TABLE>
   
(6) Differs from financial statements due to the effect of annualization.
    

Example
The  following  Example  shows  the  cumulative   expenses   attributable  to  a
hypothetical $1,000 investment in the Class A, Class B and Class D 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:                                                             (7)          (8)             (7)         (8)
<C>                                                <C>              <C>             <C>          <C>          <C>
1 year                                             $  71            $  72           $  22        $  41        $  31
3 years                                            $  99            $  97           $  67        $  76        $  76(10)
5 years                                            $ 128            $ 134           $ 114        $ 123        $ 123
10 years                                           $ 213            $ 227(9)        $ 227(9)     $ 253        $ 253
    
</TABLE>

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


THE FUND'S FINANCIAL HISTORY(a)
   
The following schedules of financial highlights for a Class A, Class B and Class
D share outstanding  throughout each period 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.  The Fund adopted the  objective  of seeking  long-term
growth and became  actively  managed on November 2, 1992. The data presented for
the  Fund  prior  to  November  2,  1992,  represent  operations  under  earlier
objectives  and policies of the Fund's  predecessor,  Colonial Small Stock Index
Trust.
    
<TABLE>
<CAPTION>
                                                                                      CLASS A
                                              --------------------------------------------------------------------------------------
                                                                                  Year ended June 30
                                              --------------------------------------------------------------------------------------
                                                           1996           1995      1994       1993       1992      1991      1990
<S>                                                     <C>            <C>       <C>        <C>        <C>       <C>       <C>    
Net asset value - Beginning of period                   $22.260        $16.670   $15.860    $12.330    $11.570   $13.560   $13.540
                                                        -------        -------   -------    -------    -------   -------   -------
INCOME FROM INVESTMENT OPERATIONS:
  Net investment income (loss)                            0.036 (c)     0.002     (0.047)    (0.083)    (0.127)    0.045     0.048
  Net realized and unrealized gain (loss)
    on investments                                        5.479         5.588      0.587      3.613      0.887    (1.992)    0.017
                                                          -----         -----      -----      -----      -----    ------     -----
    Total from investment operations                      5.515         5.590      0.810      3.530      0.760    (1.947)    0.065
                                                          -----         -----      -----      -----      -----    ------     -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income                                 ----         ----       ----       ----       ----     (0.043)   (0.045)
From net realized gains on investments                   (1.295)        ----       ----       ----       ----      ----      ----
                                                          -----    
     Total distributions declared to shareholders        (1.295)        ----       ----       ----       ----     (0.043)   (0.045)
                                                          -----        ------     ------     ------     ------    ------    ------ 
Net asset value - End of period                         $26.480       $22.260    $16.670    $15.860    $12.330   $11.570   $13.560
                                                        =======       =======    =======    =======    =======   =======   =======
Total return (e)                                         25.31%        33.53%      5.11%     28.63%      6.57%   (14.34)%    0.49%
                                                        =======       =======    =======    =======    =======   =======   =======
RATIOS TO AVERAGE NET ASSETS:
Expenses                                                  1.38%(g)      1.45%      1.56%      1.88%      2.13%     1.91%     1.67%
Interest expenses                                         ----          ----       ----       0.01%      0.06%     0.03%     0.02%
Net investment income (loss)                              0.15%(g)      0.01%     (0.27%)    (0.60%)    (0.91%)    0.33%     0.35%
Fees and expenses waived or borne by the adviser          ----          ----       ----       ----       ----      ----      ----
Portfolio turnover                                          46%           64%        35%        29%         0%       79%       17%
Average commission rate (h)                             $0.044          ----       ----       ----       ----      ----      ----
Net assets at end of period (000)                      $89,924        $40,661   $24,760    $23,716     $22,002   $28,943   $42,888
_________________________________
 
</TABLE>
<TABLE>
<CAPTION>
                                                                     CLASS A
                                              ---------------------------------------------------------

                                                                   Year Ended June 30
                                              ---------------------------------------------------------
                                                           1989        1988        1987(b)
<S>                                                     <C>         <C>           <C>    
Net asset value - Beginning of period                   $12.940     $13.810       $12.140
                                                        -------     -------       -------
INCOME FROM INVESTMENT OPERATIONS:
  Net investment income (loss)                            0.061       0.066(d)      0.057(d)
  Net realized and unrealized gain (loss)
    on investments                                        0.929      (0.357)        1.643
                                                          -----       -----          -----
    Total from investment operations                      0.990      (0.291)        1.700
                                                          -----       -----          -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income                               (0.060)     (0.074)       (0.030)
From net realized gains on investments                   (0.330)     (0.505)         ---
                                                         ------      ------        ------
    Total distributions declared to shareholders         (0.390)     (0.579)       (0.030)
                                                         ------      ------        ------
Net asset value - End of period                         $13.540     $12.940       $13.810
                                                        =======     =======       =======
Total return (e)                                          8.07%      (2.18)% (f)   14.04%(f)
                                                        =======     =======       =======
RATIOS TO AVERAGE NET ASSETS:
Expenses                                                  1.69%       1.48%(d)      1.33%(d)
Interest expenses                                         ----        0.01%         0.02%
Net investment income (loss)                              0.48%       0.54%(d)      0.61%(d)
Fees and expenses waived or borne by the adviser          ----        0.23%         0.66%
Portfolio turnover                                          25%         42%           34%
Average commission rate (h)                               ----        ----           ----
Net assets at end of period (000)                       $46,415     $44,596       $38,193
_________________________________
</TABLE>

    (a)  Per share data were calculated using average shares outstanding during
         the period.
    (b)  Investment operations commenced July 25, 1986 and ratios for the period
         are annualized.
    (c)  Includes distribution from Advo, Inc., which amounted to $0.047 per
         share.
    (d)  Net of fees and expenses  waived or borne by the Adviser which  
         amounted to $0.028 and $0.062 in fiscal 1988 and 1987, respectively.
    (e) Total return at net asset value assuming all  distributions  reinvested
        and no initial or contingent  deferred sales charges.
    (f) Had the Adviser not waived or borne certain  expenses,  the Fund's total
        return would have been lower.
    (g) The benefits  derived from custody credits and directed  brokerage
        arrangements had no impact. Prior years' ratios are net of benefits
        received, if any.
    (h) For fiscal years beginning on or after September 1, 1995, a fund is
        required to  disclose  its  average  commission  rate per share  for
        trades on which commissions are charged.

<PAGE>

<TABLE>
THE FUND'S FINANCIAL HISTORY(a) (CONT'D)
<CAPTION>
                                                                                    CLASS B
                                                                  -------------------------------------------------------------
                                                                                    Year ended
                                                                                      June 30
                                                                  -------------------------------------------------------------
                                                                         1996             1995            1994           1993 (b)
<S>                                                                       <C>              <C>             <C>            <C>
Net asset value - Beginning of period                                     $21.840          $16.470         $15.790        $13.010
                                                                          -------          -------         -------        -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)                                               (0.147(d))       (0.139)         (0.176)        (0.100)
Net realized and unrealized gain (loss) on investments                      5.372            5.509           0.856          2.880
                                                                            -----            -----           -----          -----
    Total from investment operations                                        5.225            5.370           0.680          2.780
                                                                            -----            -----           -----          -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net realized gain on investments                                      (1.295)            ----            ----           ----
                                                                           ------           ------          ------         ------
Net asset value - End of period                                           $25.770          $21.840         $16.470        $15.790
                                                                          =======          =======         =======        =======
Total return(e)                                                            24.44%           32.60%           4.31%         21.73(f)
                                                                          =======          =======         =======        =======
RATIOS TO AVERAGE NET ASSETS
Expenses                                                                    2.13%(g)         2.20%           2.31%          2.63%(h)
Interest expense                                                            ----             ----            ----           0.01%
Net investment income (loss)                                               (0.60)%(g)       (0.74)%         (1.02)%        (1.35)(h)
Portfolio turnover                                                            46%              64%             35%            29%
Average commission rate(i)                                                $0.044             ----            ----           ----
Net assets at end of period (000)                                        $96,158           $29,458          $8,489         $1,665
_________________________________
</TABLE>
<TABLE>
THE FUND'S FINANCIAL HISTORY(a) (CONT'D)
<CAPTION>
                                                                       CLASS D
                                                                  -------------------
                                                                    Period ended
                                                                       June 30
                                                                  -------------------
                                                                        1996 (c)
<S>                                                                      <C>
Net asset value - Beginning of period                                    $22.550
                                                                         -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)                                              (0.072)(d)
Net realized and unrealized gain (loss) on investments                     3.922
                                                                           -----
    Total from investment operations                                       3.850
                                                                           -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net realized gain on investments                                       ----
                                                                           -----
Net asset value - End of period                                          $26.400
                                                                         =======
Total return(e)                                                           17.07%(f)
                                                                         =======
RATIOS TO AVERAGE NET ASSETS
Expenses                                                                   2.15%(g)(h)
Interest expense                                                           ----
Net investment income (loss)                                               (0.54)%(g)(h)
Portfolio turnover                                                           46%
Average commission rate(i)                                                $0.044
Net assets at end of period (000)                                         $2,585
_________________________________
</TABLE>

    (a)  Per share data was calculated using average shares outstanding during
         the period
    (b)  Class B shares were intially offered on November 9, 1992.  Per share
         amounts and total return (not annualized) reflect activity from that
         date.
    (c)  Class D shares were intially offered on January 15, 1996.  Per share
         amounts reflect activity from that date.
    (d)  Includes distribution from ADVO, Inc., which amounted to $0.047 per
         share.
    (e)  Total return at net asset value assuming all distributions reinvested
         and no initial or contingent deferred sales charges.
    (f)  Not annualized.
    (g)  The benefits dreived from cutody credits and directed brokerage
         arrangements had no impact.  Prior years' ratios are net of benefits
         received, if any.
    (h)  Annualized
    (i)  For fiscal years beginning on or after September 1, 1995, a fund is
         required to disclose its average commission rate per share for trades
         on which commissions are charged.

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.

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks long-term growth by investing primarily in smaller capitalization
equities.

HOW THE FUND PURSUES ITS OBJECTIVE AND CERTAIN RISK FACTORS

The Fund normally invests at least 65% of its total assets in U.S. common stocks
selected  from the  universe  of stocks  traded on the New York Stock  Exchange,
American  Stock  Exchange and the Nasdaq Stock Market with market values between
$20 million and $1 billion (Small Stocks). In selecting investments, the Adviser
uses a  disciplined  process  intended to create a diversified  portfolio  whose
performance  (before  expenses)  will  exceed the Small Stock  universe's  while
maintaining  risk   characteristics  that  are  generally  consistent  with  the
universe.  However, there is no assurance that the portfolio's  performance will
match that of the universe, or that the Fund will achieve its objective.

Small Stocks may offer greater  opportunities for capital  appreciation than the
securities of 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.  Small  Stocks  may  trade  less
frequently,  in  smaller  volumes,  and  fluctuate  more  sharply  in value than
securities of larger companies.

Other Investment Practices.  The Fund may engage in the following investment
practices, some of which are described in more detail in the Statement of
Additional Information.

Index  Futures.  The Fund  may  purchase  and  sell  U.S.  stock  index  futures
contracts,   which  may  be  considered  to  be  derivative   securities.   Such
transactions  will be entered into to invest cash temporarily in anticipation of
a market advance,  but not to hedge against market declines.  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
U.S.  stock index futures  contract is a type of  instrument  akin to a group of
securities  representative  of the  underlying  U.S.  stock  index.  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.  Transactions  in  futures  may not  precisely
achieve the goal of gaining market  exposure to the extent there is an imperfect
correlation  between  price  movements of the  contracts  and of the  underlying
securities.  In addition,  if the Adviser's prediction on stock market movements
is  inaccurate,  the  Fund may be worse  off  than if it had not  purchased  the
futures contract.

   
Temporary/Defensive  Investments.  Temporarily available cash may be invested in
certificates of deposit,  bankers'  acceptances,  high quality 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.
    
   
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 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 worker's 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
0.60% of the Fund's average net assets for fiscal year 1996.
    

James P. Haynie, Vice President of the Adviser, has managed the Fund since 1993.
Prior to  joining  the  Adviser in 1993,  Mr.  Haynie  was a Vice  President  at
Massachusetts  Financial  Services  Company and a  Portfolio  Manager at Trinity
Investment Management.

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.
    

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 are valued as of
the close  (normally  4:00 p.m.  Eastern  time) of the New York  Stock  Exchange
(Exchange) 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 semi-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 your  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  (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.
    
   
The Fund also  offers  Class Z shares  which  are  offered  through  a  separate
Prospectus  only  to  (i)  certain  institutions  (including  certain  insurance
companies and banks investing for their own account,  trusts,  endowment  funds,
foundations  and investment  companies)  and defined  benefit  retirement  plans
investing  a minimum  of $5  million  in the Fund and (ii) the  Adviser  and its
affiliates. .
    
   
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
[S]                               [C]         [C]       [C]
Less than $50,000                 6.10%       5.75%     5.00%
$50,000 to less than $100,000     4.71%       4.50%     3.75%
$100,000 to less than $250,000    3.63%       3.50%     2.75%
$250,000 to less than $500,000    2.56%       2.50%     2.00%
$500,000 to less than $1,000,000  2.04%       2.00%     1.75%
$1,000,000 or more                0.00%       0.00%     0.00%

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

Amount Purchased                         Commission
[S]                                        [C]
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 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
                 [S]                   [C]
                 0-1                   5.00%
                 1-2                   4.00%
                 2-3                   3.00%
                 3-4                   3.00%
                 4-5                   2.00%
                 5-6                   1.00%
             More than 6               0.00%

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

12B-1 PLANS

   
Under 12b-1  Plans,  the Fund pays the  Distributor  monthly a service fee at an
annual rate of 0.25% of the Fund's net assets attributed to its Class A, Class B
and  Class D  shares.  The Fund  also  pays  the  Distributor  monthly  a annual
distribution  fee at an annual  rate of 0.75% of the  average  daily 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 was organized in 1991 as a Massachusetts business trust.  The Fund
represents the entire interest in a separate portfolio of the Trust.

   
The Trust is not  required  to hold  annual  shareholder  meetings,  but special
meetings may be called for certain  purposes.  Shareholdersreceive  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
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.

   
October 28, 1996
    

COLONIAL SMALL
STOCK FUND

PROSPECTUS


Colonial  Small Stock Fund seeks  long-term  growth by  investing  primarily  in
smaller capitalization equities.


   
For more detailed information about the Fund, call the Adviser at 1-800-248-2828
for the October 28, 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 Small Stock Fund Class Z)
          ---------------------------------------------------------

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; Back Cover

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

   9.                                     Not Applicable




   
October 28, 1996
    

COLONIAL SMALL STOCK FUND

CLASS Z SHARES

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 Small Stock Fund (Fund),  a diversified  portfolio of Colonial Trust VI
(Trust),  an open-end management  investment company,  seeks long-term growth by
investing primarily in smaller  capitalization  equities. The Fund is managed by
the Adviser, an investment adviser since 1931.

This Prospectus  explains concisely what you should know before investing in the
Class Z  shares  of the  Fund.  Read  it  carefully  and  retain  it for  future
reference.
                                                                              

Class Z shares may be  purchased  only by (i)  certain  institutions  (including
certain insurance  companies and banks investing for their own account,  trusts,
endowment  funds,  foundations  and investment  companies)  and defined  benefit
retirement  plans  investing  a minimum  of $5  million in the Fund and (ii) the
Adviser and its affiliates.

   
More detailed  information about the Fund is in the October 28, 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.
    
   

Contents                                            Page
Summary of Expenses
The Fund's Financial History
The Fund's Investment Objective
How the Fund Pursues its Objective
How the Fund Measures ts 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
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 the Class Z shares of the Fund.  See "How the Fund
is Managed" for a more  complete  description  of the Fund's  various  costs and
expenses.
    

   
Shareholder Transaction Expenses (1)(2)

Maximum Initial Sales Charge Imposed on a Purchase
  (as a % of offering price)                                  0.00%
Maximum Contingent Deferred Sales Charge
  (as a % of offering price)                                  0.00%
    
   
(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.

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




Management fee                                               0.60%
12b-1 fee                                                    0.00
Other expenses                                               0.53
                                                             ----
Total expenses                                               1.13%
                                                             ====
    


Example
The  following  Example  shows  the  cumulative   expenses   attributable  to  a
hypothetical $1,000 investment in the Class Z shares of the Fund for the periods
specified, assuming a 5% annual return with or without 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.

   
Period:

1 year                                                        $  11
3 years                                                       $  36
5 years                                                       $  62
10 years                                                      $ 135
    











THE FUND'S FINANCIAL HISTORY(a)
   
The following  schedule of financial  highlights for a Class Z share outstanding
throughout  the period has been examined 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>


                                                                                       CLASS Z
                                                                                   ---------------------
                                                                                       Period ended
                                                                                        June 30
                                                                                   ---------------------
                                                                                          1996 (b)
<S>                                                                                         <C>     
Net asset value - Beginning of period                                                       $24.790 
                                                                                            ------- 
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)                                                                  0.096(c)
Net realized and unrealized gain (loss) on investments                                        2.959
                                                                                              -----
    Total from investment operations                                                          3.055
                                                                                              -----
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net realized gain on investments                                                        (1.295)
                                                                                             ------ 
Net asset value - End of period                                                             $26.550 
                                                                                            ======= 
Total return(d)                                                                              12.81%(e)
                                                                                             =====    
RATIOS TO AVERAGE NET ASSETS
Expenses                                                                                      1.13%(f)(g)
Net investment income (loss)                                                                  0.41%(f)(g)
Portfolio turnover                                                                              46%
Average commission rate(h)                                                                   $0.044
Net assets at end of period (000)                                                            $3.616
_________________________________

</TABLE>


  (a) Per share data were calculated using average shares outstanding during the
      period.
  (b) Class Z shares were initially  offered on July 31, 1995. Per share amounts
      reflect  activity from that date. 
  (c) Includes  distribution  from Advo, Inc.  which  amounted  to $0.047  per  
      share.  
  (d) Total  return at net asset  value assuming all  distributions  reinvested 
      and no initial or contingent  deferred sales charges.
  (e)  Not annualized.
  (f)  The  benefits  derived  from  custody  credits  and  directed   brokerage
       arrangements had no impact.  Prior years' ratios are net of benefits
       received, if any. 
  (g)  Annualized.  
  (h) For fiscal years beginning on or after September 1, 1995, a fund is 
      required to disclose its average  commission rate per share
      for trades on which commissions are charged.

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 long-term growth by investing primarily in smaller capitalization
equities.


HOW THE FUND PURSUES ITS OBJECTIVE

The Fund normally invests at least 65% of its total assets in U.S. common stocks
selected  from the  universe  of stocks  traded on the New York Stock  Exchange,
American  Stock  Exchange and the Nasdaq Stock Market with market values between
$20 million and $1 billion (Small Stocks). In selecting investments, the Adviser
uses a  disciplined  process  intended to create a diversified  portfolio  whose
performance  (before  expenses)  will  exceed the Small Stock  universe's  while
maintaining  risk   characteristics  that  are  generally  consistent  with  the
universe.  However, there is no assurance that the portfolio's  performance will
exceed that of the universe, or that the Fund will achieve its objective.

Small Stocks may offer greater  opportunities for capital  appreciation than the
securities of 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.  Small  Stocks  may  trade  less
frequently,  in  smaller  volumes,  and  fluctuate  more  sharply  in value than
securities of larger companies.

Other Investment Practices.  The Fund may engage in the following investment 
practices, some of which are described in more detail in the Statement of 
Additional Information.

Index  Futures.  The Fund  may  purchase  and  sell  U.S.  stock  index  futures
contracts.  Such transactions will be entered into to invest cash temporarily in
anticipation of a market advance,  but not to hedge against market  declines.  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.  Transactions in
futures may not  precisely  achieve the goal of gaining  market  exposure to the
extent  there  is an  imperfect  correlation  between  price  movements  of  the
contracts  and of the  underlying  securities.  In  addition,  if the  Adviser's
prediction on stock market  movements is  inaccurate,  the Fund may be worse off
than if it had not purchased the futures contract.

   
Temporary/Defensive  Investments.  Temporarily available cash may be invested in
certificates of deposit,  bankers'  acceptances,  high quality 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.
    
   
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
investment  objective,  shareholders should consider whether the Fund remains an
appropriate  investment  in light of their  financial  position  and needs.  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. Average annual
total  returns are  calculated in accordance  with the  Securities  and Exchange
Commission's  formula and assume the  reinvestment of all  distributions.  Other
total returns  differ from the average annual total return only in that they may
relate to  different  time  periods and may  represent  aggregate  as opposed to
average annual total returns.

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.  Distribution  rate is  calculated  by dividing  the most
recent  twelve  months'  distributions  by the net asset value at the end of the
period. 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 is in turn 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 paid the Adviser
0.60% of the Fund's average net assets for fiscal year 1996.
    

James P. Haynie, Vice President of the Adviser, has managed the Fund since 1993.
Prior to  joining  the  Adviser in 1993,  Mr.  Haynie  was a Vice  President  at
Massachusetts  Financial  Services  Company and a  Portfolio  Manager at Trinity
Investment Management.

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
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.


HOW THE FUND VALUES ITS SHARES

   
Per share net asset value is  calculated  by dividing  the total net asset value
attributable  to Class Z shares  by the  number  of Class Z shares  outstanding.
Shares of the Fund are valued as of the close (normally 4:00 p.m.  Eastern time)
of the New  York  Stock  Exchange  (Exchange)  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 semi-annually and any net realized gain at least annually.
    
   
Distributions  are  invested  in  additional  Class Z shares 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  Class Z shares at net asset value. To change
your election, call the Transfer Agent for information. Whether you receive your
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

Class Z shares  are  offered  continuously  at net asset  value  without a sales
charge.  Orders received in good form prior to the 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.  Certificates will not be issued for Class Z shares.  The Fund may refuse
any purchase order for its shares. See the Statement of Additional Information.

   
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.
    
       
   
Shareholder  Services. A variety of shareholder services are available.  
For more information about these services or your account, call
1-800-345-6611.
    
   
Other Classes of Shares.   In addition to Class Z shares, the Fund offers three 
other classes of shares, Classes A, B and D, through a separate Prospectus.
    
       
       
   
Which Class is more beneficial to an investor depends on the amount and intended
length of the  investment.  In general,  anyone  eligible  to  purchase  Class Z
shares, which do not bear 12b-1 fees or contingent deferred sales charges,should
do so in preference over other classes.
    

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.  Initial
or contingent  deferred  sales charges may be reduced or eliminated  for certain
persons or  organizations  purchasing  Fund shares alone or in combination  with
certain other Colonial  funds.  See the Statement of Additional  Information for
more information.


HOW TO SELL SHARES

   
Shares of the Fund may be sold on any day the Exchange is open,  either directly
to the Fund or through your financial service firm. Sale proceeds  generally are
sent within seven days  (usually on the next  business day after your request is
received in good form).  However,  for shares recently  purchased by check,  the
Fund will 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 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  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 the Transfer Agent and may charge for this service.
   
General.  The sale of shares is a taxable  transaction  for income tax purposes.
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

   
Class Z shares may be  exchanged  at net asset  value into the Class A shares of
any other  Colonial  fund.  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.
    


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 advisors are not obligated to transact by telephone.
    


ORGANIZATION AND HISTORY

The Trust was organized in 1991 as a Massachusetts business trust.  The Fund 
represents the entire interest in a separate portfolio of the Trust.

   
The Trust is not  required  to hold  annual  shareholder  meetings,  but special
meetings may be called for certain purposes.  Shareholders  receive one vote for
each Fund share.  Shares of the 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.
    
       
       







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
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.

   
October 28, 1996
    

COLONIAL SMALL
STOCK FUND

CLASS Z SHARES

PROSPECTUS


Colonial  Small Stock Fund seeks  long-term  growth by  investing  primarily  in
smaller capitalization equities.


   
For more detailed information about the Fund, call the Adviser at 1-800-248-2828
for the October 28, 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. 10 as it relates to the Prospectuses of
Colonial  Aggressive  Growth  Fund,  Colonial  Equity  Income Fund and  Colonial
International  Equity Fund,  filed with the Commission on September 27, 1996, is
incorporated herein by reference.






                                COLONIAL TRUST VI

            Cross Reference Sheet (Colonial U.S. Fund for Growth)
            -----------------------------------------------------

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;
                                          Sub-Adviser

   17.                                    Fund Charges and Expenses;
                                          Management of the Colonial Funds;
                                          Sub-Adviser

   18.                                    Shareholder Meetings; Shareholder
                                          Liability

   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 U.S. FUND FOR GROWTH
                       Statement of Additional Information
   
                                October 28, 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 U.S.
Fund for Growth  (Fund).  This SAI is not a  prospectus  and is  authorized  for
distribution  only when  accompanied  or preceded by the  Prospectus of the Fund
dated October 28, 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                                           
      Sub-Adviser                                                         
      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                                                        
    

                                     Part 1
                          COLONIAL U.S. FUND FOR GROWTH
                       Statement of Additional Information
   
                                October 28, 1996
    
   
DEFINITIONS

          "Trust"                        Colonial Trust VI
          "Trust"                        Colonial U.S. Fund for Growth
          "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
          "State Street" or "Sub         State Street Global Advisors, the 
           Adviser"                      Fund's Sub-Adviser
          
    

INVESTMENT OBJECTIVE AND POLICIES
   
The Fund's Prospectus  describes the Fund's  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:
    

         Repurchase Agreements
         Money Market Instruments
         Securities Loans
         Short-Term Trading
         Foreign Securities

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.

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 while borrowings
      exceed 5% of net assets;
2.    Only own real estate acquired as the result of owning  securities;  the
      value of such real estate may not exceed 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 (i) through  lending of  securities  not exceeding 30% of total
      assets, (ii) through the purchase of debt instruments or similar evidences
      of  indebtedness  typically sold privately to financial  institutions  and
      (iii) 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 voting securities of an issuer
      if, as a result of such purchase,  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 the Fund 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 Fund 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 then be invested in the securities of issuers 
      which are restricted as to disposition;
8.    Purchase or sell  commodity  contracts if the total  initial  margin and 
      premiums on the  contracts  exceeds 5% of its total assets;
9.    Invest more than 15% of its net assets in illiquid  assets (i.e.,  assets 
      which may not be sold in the ordinary course at approximately the price at
      which they are valued by the Fund); 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 for this purpose.

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, the issuer is the entity whose revenues support the
security.

   
PORTFOLIO TURNOVER
The Fund cannot accurately  predict portfolio turnover rate, but the Adviser and
State Street anticipate that it will not exceed 100%. A 100% turnover rate would
occur if all of the securities in the portfolio were sold and either repurchased
or replaced within one year. High portfolio  turnover  involves  correspondingly
greater brokerage  commission and other transaction  costs,  which will be borne
directly by the Fund.
    
   
                               Year ended June 30
                               ------------------

                               1996          1995
                               ----          ----
                               89%           84%
    
   
FUND CHARGES AND EXPENSES

Under the Fund's management  agreement,  the Fund pays the Adviser a monthly fee
based on the  average  net assets of the Fund,  determined  at the close of each
business  day  during the month,  at the  annual  rate of 0.80%,  subject to any
voluntary reduction that the Adviser may agree to from time to time.
    
<TABLE>
Recent Fees paid to the Adviser, CISI and CISC (dollars in thousands)
<CAPTION>

                                                                        Year ended June 30
                                                                        ------------------

   
                                                     1996                   1995                     1994
                                                     ----                   ----                     ----
<S>                                                 <C>                    <C>                      <C>   
Management fee                                      $3,342                 $2,266                   $1,626
Bookkeeping fee                                        156                    109                       81
Shareholder service and transfer agent fee           1,262                    864                      598
12b-1 fee
     Service fee (Classes A , B and D)               1,045                    707                      511(a)
     Distribution fee (Class B)                      1,978                  1,319                      957
     Distribution fee (Class D)                         42                     11                        0
    
</TABLE>

(a) Applicable to Class A and Class B shares only. Class D shares were initially
offered on July 1, 1994.
<TABLE>
Brokerage Commissions (dollars in thousands)
<CAPTION>

                                                                     Year ended June 30
                                                                     ------------------

   
                                                     1996                   1995                   1994
                                                     ----                   ----                   ----
<S>                                                 <C>                    <C>                     <C>  
Total commissions                                    $ 803                  $ 576                  $ 608
Directed transactions (b)                           18,970                 16,594                 13,253
Commissions on directed transactions                    24                     29                     16
    
</TABLE>

(b) See  "Management of the Colonial Funds - Portfolio  Transactions - Brokerage
and research  services" in Part 2 of this SAI.

   
Trustees' Fees
For the fiscal year ended June 30, 1996 and the calendar year ended December 31,
1995, the Trustees received the following compensation for serving as Trustees:
    
<TABLE>
<CAPTION>
   
                            Aggregate                   Total Compensation From
                            Compensation                Trust and Fund Complex
                            From Fund For The           Paid To The Trustees For
                            Fiscal Year Ended           The Calendar Year Ended
Trustee                     June 30, 1996               December 31, 1995(c)
- -------                     -------------                --------------------

<S>                             <C>                         <C>               
Robert J. Birnbaum(d)         $   2,017                     $  71,250
Tom Bleasdale                   2,221(e)                       98,000 (f)
Lora S. Collins                 2,037                          91,000
James E. Grinnell(d)              2,050                        71,250
William D. Ireland, Jr.         2,547                         113,000
Richard W. Lowry(d)               2,056                        71,250
William E. Mayer                2,010                          91,000
James L. Moody, Jr.             2,297(g)                       94,500(h)
John J. Neuhauser               2,033                          91,000
George L. Shinn                 2,292                         102,500
Robert L. Sullivan              2,249                         101,000
Sinclair Weeks, Jr.             2,570                         112,000
    
</TABLE>
   
(c)     At December  31, 1995,  the Colonial  Funds  complex  consisted of 33 
        open-end and 5 closed-end  management investment company portfolios.
    
   
(d)     Elected as a Trustee of the Colonial Funds complex on April 21, 1995.
    
   
(e)     Includes $929 payable in later years as deferred compensation.
    
   
(f)     Includes $49,000 payable in later years as deferred compensation.
    
   
(g)     Total compensation of $2,297 will be payable in later years as deferred 
        compensation.
    
   
(h)     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 (i):
    
<TABLE>
<CAPTION>
                                                                  
                                                            Total Compensation
                        Total Compensation From             From Liberty Funds I
                        Liberty Funds II For The            For The Calendar Year
                        Period January 1, 1995              Ended December 31,
Trustee                 through March 26, 1995              1995(j)
- -------                 ----------------------              -------
                                                            
<S>                      <C>                                    <C> 
Robert J. Birnbaum       $2,900                                 $ 16,675
James E. Grinnell         2,900                                   22,900
Richard W. Lowry          2,900                                   26,250(k)
    
</TABLE>
   
(i)    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  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.
    
       
       
   
(j)     At December 31, 1995, the Liberty Funds I 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).
    
       
   
(k)     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.  (Newport  Pacific) and Stein Roe and Farnham
        Incorporated, each an affiliate of the Adviser.
    

Ownership of the Fund
   
At September  30,  1996,  the Trustees and officers of the Fund as a group owned
approximately 287,619 Class A shares representing 2.49% of the outstanding Class
A  shares  of the  Fund.  Mr.  Stern,  who is an  officer  of  the  Trust,  held
272,265 Class A shares,  representing 2.36% of the then outstanding  shares. 
This holding  consisted  entirely of shares held by him and certain  employees 
of the Adviser as  Co-Trustees  of The Colonial  Group,  Inc.  Profit Sharing
Plan with respect to which they share voting and investment power.
    
   
At October 4, 1996, Merrill Lynch,  Pierce,  Fenner & Smith, Inc., 4800 Deer 
Lake Drive,  East,  Jacksonville,  FL 32216 owned 648,807  Class A shares,  
2,126,650 Class B shares and 59,147 Class D shares  representing  5.61%,  9.93% 
and 9.55%, respectively,  of the total  outstanding  Class A, Class B and Class 
D shares of the Fund.
    
   
At September 30, 1996,  there were  13,193 Class A, 30,379 Class B and 562 
Class D record holders of the Fund.
    
<TABLE>
Sales Charges (dollars in thousands)
<CAPTION>
   
                                                      Class A Shares

                                                      Year ended June 30
                                                      -------------------


                                               1996           1995          1994
                                               ----           ----          ----
<S>                                             <C>            <C>          <C>
Aggregate initial sales charges on Fund
share sales                                    $940           $601         $976
Initial sales charges retained by CISI          139             75           97
    
</TABLE>

       
<TABLE>
<CAPTION>
   

                                                         Class B Shares               Class D Shares

                                                       Year ended June 30             Year ended June 30
                                                       ------------------             ------------------


                                                 1996          1995         1994      1996         1995
                                                 ----          ----         ----      ----          ----
<S>                                              <C>           <C>          <C>      <C>            <C>
Aggregate contingent deferred sales charges
(CDSC) on Fund redemptions                       $138          $501         $289     $0(l)          $3(m)
    
</TABLE>

   
(l)  Rounds to less than $1,000.
    
   
(m)  Class D shares were initially offered on July 1, 1994.
    

SUB-ADVISER
   
Under a Sub-Advisory  Agreement  (Agreement) among State Street, the Adviser and
the Trust, State Street subject to the Adviser's and the Trustees'  supervision,
directs the  investment  of the Fund in  accordance  with the Fund's  investment
objective,  policies  and  restrictions.  For these  services,  State  Street is
entitled to receive from the Adviser a monthly fee at an annual rate of 0.50% of
the first $50 million of the Fund's average daily net assets,  0.40% of the next
$150 million of average  daily net assets and 0.35% of average  daily net assets
in  excess of $200  million.  State  Street  has  voluntarily  agreed to waive a
portion  of its fee so that its actual  annual fee will not exceed  0.32% of the
Fund's average daily net assets.  For the fiscal year ended June 30, 1996, State
Street received 0.40% of the Fund's average daily net assets.
    

The  Agreement  provides that State Street shall not be subject to any liability
to the Trust or the Fund, or to any shareholder of the Trust or the Fund for any
act or omission in the course of, or connected with,  rendering  services to the
Trust or the Fund in the  absence  of  willful  misfeasance,  bad  faith,  gross
negligence or reckless disregard of its duties on the part of State Street.

The Agreement may be terminated at any time on 60 days' written  notice to State
Street 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 or on 60 days' written notice
to the Adviser and the Trust by State Street.  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.

Portfolio Transactions
   
Investment  decisions.  State  Street  is the  largest  provider  of  securities
processing and  recordkeeping  services for U.S. mutual funds and pension funds.
State Street is a wholly-owned subsidiary of State Street Boston Corporation,  a
publicly held bank holding company. State Street Global Advisors, the investment
management division of State Street, was established in 1978, and specializes in
quantitative   investment   products  and  is  the  largest   U.S.   manager  of
international  pension  assets.  State Street  Global  Advisors,  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, Dubai, Munich, Montreal and Paris.
    

Clients advised by State Street sometimes invest in securities in which the Fund
also invests.  If the Fund and such other clients desire to buy or sell the same
portfolio  securities,  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 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  State Street as sub-adviser to the Fund outweighs the  disadvantages,
if any, which might result from these practices.

Selection of  broker-dealers.  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,  State Street may consider sales of shares of the Fund as a factor in
the selection of broker-dealers to execute securities transactions for the Fund.

State Street places the transactions of the Fund with broker-dealers selected by
State Street and, if  applicable,  negotiates  commissions.  Broker-dealers  may
receive brokerage commissions on portfolio transactions, including the effecting
of  closing  purchase  and sale  transactions.  The Fund  from time to time also
executes portfolio  transactions with such broker-dealers  acting as principals.
The Fund does not intend to deal exclusively  with any particular  broker-dealer
or group of broker-dealers.

It is State Street's policy always to seek best execution, which is to place the
Fund's transactions where the Fund 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.

Brokerage and research services. Subject to such practice of always seeking best
execution, securities transactions of the Fund may be executed by broker-dealers
who also provide  brokerage  and research  services (as defined  below) to State
Street.  State  Street may use all,  some or none of such  research  services in
providing  investment  advisory  services to each of its clients,  including the
Fund. To the extent that such  services are used by State  Street,  they tend to
reduce State Street's expenses.  In State Street's opinion,  it is impossible to
assign an exact dollar value for such services.

Subject to such policies as the Trustees may  determine,  State Street may cause
the Fund to pay a broker-dealer  which provides  brokerage and research services
to State Street an amount of commission for effecting a securities  transaction,
including a closing purchase or sale transaction,  for the Fund 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).  State  Street  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 State Street's
overall responsibilities to the Fund and all its other clients.


       

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  monthly  an  annual  service  fee of 0.25%  of the net  assets
attributed to each Class of shares and a  distribution  fee at an annual rate of
0.75% of the average daily 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  including  its
affiliates  (including  the Adviser) to the extent that such  payments  might be
construed to be indirect financing of 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 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  persons 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  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 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 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, which are not subject to the distribution fee.

   
<TABLE>
Sales-related  expenses  (for the fiscal year ended June 30, 1996)  (dollars in 
thousands)  of CISI  relating to the Fund, were as follows:
<CAPTION>


                                                                Class A Shares      Class B Shares     Class D Shares


<S>                                                                  <C>                <C>                  <C>
Fees to FSFs                                                         $332               $2,787               $55
Cost of sales material relating to the Fund (including
printing and mailing expenses)                                         81                  180                17
Allocated travel, entertainment and other promotional
expenses(including advertising)                                       105                  233                20
    
</TABLE>


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

              0.70%                      (0.01)%                     (0.01)%
    

   
The Fund's average annual total returns at June 30, 1996 were:
<TABLE>
<CAPTION>


                                                            Class A Shares


                                                                       Period July 1, 1992
                                                                   (commencement of investment
                                                                           operations)
                                            1 Year                     through June 30, 1996
                                            ------                     ---------------------
                                            
                                                                      

<S>                                         <C>                               <C>   
 With sales charge of 5.75%                 12.02%                            13.56%
 Without sales charge                       18.85%                            15.25%
    
</TABLE>



<TABLE>
<CAPTION>
   
                                                   Class B Shares


                                                                       Period July 1, 1992
                                                                   (commencement of investment
                                                                            operations)
                                                1 Year                 through June 30, 1996
                                                ------                 ---------------------
                                                
                                                                      

<S>                                            <C>                               <C>         
With applicable CDSC                           12.91%(5.00% CDSC)                 13.83%(3.00% CDSC)
Without CDSC                                   17.91%                             14.34%
    
</TABLE>
<TABLE>
<CAPTION>
   
                                                             Class D Shares

                                                                             Period July 1, 1994
                                                                   (commencement of investment operations)
                                           1 Year                           through June 30, 1996
                                           ------                           ---------------------
<S>                                        <C>                                      <C>                              
With applicable CDSC                       15.66%(1.00% CDSC)                       20.25% (1.00% CDSC)
Without CDSC                               17.84%                                   20.85%
    
</TABLE>

   
The Fund's  Class A, Class B and Class D  distribution  rates at June 30,  1996,
which  are based on  distributions  for the  twelve  months  then  ended and the
maximum offering price, were 0.77%, 0.12% and 0.20%, 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 Trust'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 
on pages 6 to 23 of 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 institutions 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 third-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  Securities  and
Exchange  Commission'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  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  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 Fund     Principal Occupation During Past Five Years
- ----------------                ---      ------------------     -------------------------------------------

<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 Officer 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 5  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 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 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 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  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  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 
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 Global Advisors, 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.
    
   
Participants in non-Colonial  prototype  Retirement Plans (other than IRAs) also
are charged a $10 annual fee unless the plan  maintains an omnibus  account with
CISC.  Participants in Colonial  prototype Plans (other than IRAs) who liquidate
the total value of their account will also be charged a $15 close-out processing
fee payable to CISC. The fee is in addition to any applicable CDSC. The fee will
not apply if the  participant  uses the proceeds to open a Colonial IRA Rollover
account in any fund, or if the Plan maintains an omnibus account.
    

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>


                                                             
                                   APPENDIX II
                                      1995
<TABLE>
<CAPTION>

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>
                            INVESTMENT PORTFOLIO
                        JUNE 30, 1996 (IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCKS - 98.0%                                      SHARES      VALUE
- -----------------------------------------------------------------------------
CONSTRUCTION - 0.0%
 Heavy Construction - Non Building Construction
<S>                                                         <C>   <C>        
 Halliburton Co.                                               1  $        67
                                                                  ------------

- -----------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 14.4%
 DEPOSITORY INSTITUTIONS - 7.8%
 BankAmerica Corp.                                           103       7,795
 Chase Manhattan Corp.                                        45       3,171
 Comerica, Inc.                                               86       3,838
 First Union Corp.                                           178      10,842
 J.P. Morgan & Co., Inc.                                      13       1,083
 NationsBank Corp.                                           133      10,956
                                                                  -----------
                                                                      37,685
                                                                  -----------

 INSURANCE AGENTS & BROKERS - 0.6%
 Marsh & McLennan Cos., Inc.                                  31       2,972
                                                                  -----------

 INSURANCE CARRIERS - 2.5%
 American Re Corp.                                           120       5,363
 Old Republic International Corp.                            141       3,038
 Travelers Group, Inc.                                        69       3,127
 Wellpoint Health Networks, Inc., Class A                     12         379
                                                                  -----------
                                                                      11,907
                                                                  -----------

 NONDEPOSITORY CREDIT INSTITUTIONS - 0.1%
 Beneficial Corp.                                             11         606
                                                                  -----------

 SECURITY BROKERS & DEALERS - 3.4%
 A.G. Edwards, Inc.                                           48       1,307
 Bear Stearns Cos., Inc.                                     362       8,551
 Lehman Brothers Holdings, Inc.                              266       6,588
                                                                  -----------
                                                                      16,446
                                                                  -----------

- -----------------------------------------------------------------------------
MANUFACTURING - 57.6%
 CHEMICALS & ALLIED PRODUCTS - 15.1%
 Abbott Laboratories                                          17         744
 Albemarle Corp.                                              93       1,697
 Bristol-Myers Squibb Co.                                    151      13,599
 Clorox Co.                                                   39       3,430
 Eastman Chemical Co.                                         59       3,579
 Georgia Gulf Corp.                                           25         725
 Johnson & Johnson                                           174       8,603
 Merck & Co., Inc.                                           225      14,515
</TABLE>

                                       6

<PAGE>


<TABLE>
<CAPTION>
                         Investment Portfolio/June 30, 1996
- -----------------------------------------------------------------------------

<S>                                                         <C>   <C>       
 Procter & Gamble Co.                                         88  $    7,948
 Rohm & Haas Co.                                              97       6,074
 Schering-Plough Corp.                                       185      11,596
 Terra Industries, Inc.                                       56         692
                                                                  -----------
                                                                      73,202
                                                                  -----------

 ELECTRONIC & ELECTRICAL EQUIPMENT - 1.9%
 Cypress Semiconductor Corp. (a)                              63         751
 Integrated Device Technology, Inc. (a)                       44         463
 Komag, Inc. (a)                                             277       7,306
 Read-Rite Corp. (a)                                          35         492
                                                                  -----------
                                                                       9,012
                                                                  -----------

 FOOD & KINDRED PRODUCTS - 6.1%
 Archer Daniels Midland Co.                                  165       3,161
 Campbell Soup Co.                                             6         451
 Heinz (H.J.) Co.                                              2          55
 IBP, Inc.                                                   222       6,144
 Lancaster Colony Corp.                                       27       1,020
 PepsiCo, Inc.                                               415      14,666
 Phillip Morris Co., Inc.                                     37       3,858
                                                                  -----------
                                                                      29,355
                                                                  -----------

 FURNITURE & FIXTURES - 1.0%
 Johnson Controls, Inc.                                        9         605
 Leggett & Platt, Inc.                                       154       4,276
                                                                  -----------
                                                                       4,881
                                                                  -----------

 MACHINERY & COMPUTER EQUIPMENT - 10.9%
 Applied Materials, Inc. (a)                                 238       7,262
 Case Corp.                                                   52       2,472
 Caterpillar, Inc.                                            21       1,402
 Cisco Systems, Inc. (a)                                      24       1,359
 Compaq Computer Corp. (a)                                    78       3,842
 Dell Computer Corp. (a)                                     181       9,183
 Dover Corp.                                                   6         263
 Hewlett-Packard Co.                                          62       6,177
 Kennametal, Inc.                                             15         510
 Lam Research Corp. (a)                                      156       4,059
 Novellus Systems, Inc. (a)                                   25         882
 Storage Technology Corp. (a)                                 99       3,798
 Tecumseh Products Co.,                                            
  Class A                                                     20       1,059
 Western Digital Corp. (a)                                   405      10,573
                                                                  -----------
                                                                      52,841
                                                                  -----------
</TABLE>

                                       7

<PAGE>



<TABLE>
<CAPTION>
                         Investment Portfolio/June 30, 1996
- -----------------------------------------------------------------------------
COMMON STOCKS - CONT.                                      SHARES      VALUE
- -----------------------------------------------------------------------------
MANUFACTURING - CONT.
 MEASURING & ANALYZING INSTRUMENTS - 2.5%
<S>                                                         <C>   <C>       
 KLA Instruments Corp. (a)                                     7  $      153
 Litton Industries, Inc. (a)                                   9         391
 Millipore Corp.                                             142       5,930
 Raytheon Co.                                                 12         609
 Tektronix, Inc.                                             102       4,565
 Xerox Corp.                                                  12         626
                                                                  -----------
                                                                      12,274
                                                                  -----------

 MISCELLANEOUS MANUFACTURING - 1.0%
 Callaway Golf Co.                                           112       3,737
 Jostens, Inc. (a)                                            59       1,169
                                                                  -----------
                                                                       4,906
                                                                  -----------

 PETROLEUM REFINING - 8.9%
 Amoco Corp.                                                  63       4,567
 Atlantic Richfield Co.                                       45       5,273
 Exxon Corp.                                                 202      17,584
 Mobil Corp.                                                  64       7,187
 Pennzoil Co.                                                 29       1,318
 USX-Marathon Group                                          345       6,941
                                                                  -----------
                                                                      42,870
                                                                  -----------

 PRINTING & PUBLISHING - 1.1%
 Tribune Co.                                                  53       3,813
 Washington Post Co.                                           5       1,652
                                                                  -----------
                                                                       5,465
                                                                  -----------

 STONE, CLAY, GLASS & CONCRETE - 1.8%
 Owens-Corning Fiberglas Corp. (a)                           196       8,432
                                                                  -----------

 TRANSPORTATION EQUIPMENT - 7.3%
 Chrysler Corp.                                              201      12,443
 Ford Motor Co.                                              348      11,267
 McDonnell Douglas Corp.                                     180       8,711
 Teledyne, Inc.                                               76       2,735
                                                                  -----------
                                                                      35,156
                                                                  -----------

- -----------------------------------------------------------------------------
RETAIL TRADE - 5.2%
 APPAREL & ACCESSORY STORES - 2.9%
 TJX Companies, Inc.                                         286       9,649
 Woolworth Corp.                                             198       4,444
                                                                  -----------
                                                                      14,093
                                                                  -----------
</TABLE>

                                       8

<PAGE>




<TABLE>
<CAPTION>
                         Investment Portfolio/June 30, 1996
- -----------------------------------------------------------------------------

 GENERAL MERCHANDISE STORES - 2.1%
<S>                                                         <C>   <C>       
 Consolidated Stores Corp. (a)                                19  $      680
 Dayton Hudson Corp.                                          27       2,815
 Dillard Department Stores, Inc.                             170       6,194
 Mercantile Stores Co., Inc.                                   2         135
                                                                  -----------
                                                                       9,824
                                                                  -----------

 MISCELLANEOUS RETAIL - 0.0%
 Eckerd Corp. (a)                                              4          86
                                                                  -----------

 RESTAURANTS - 0.2%
 Luby's Cafeterias, Inc.                                      42         998
                                                                  -----------

- -----------------------------------------------------------------------------
SERVICES - 1.6%
 Business Services - 1.5%
 BMC Software, Inc. (a)                                       20       1,183
 Computer Associates International, Inc.                      22       1,560
 Interpublic Group of Cos., Inc.                              91       4,284
                                                                  -----------
                                                                       7,027
                                                                  -----------

 Health Services - 0.1%
 Tenet Healthcare Corp. (a)                                   27         581
                                                                  -----------

- -----------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 18.9%
 AIR TRANSPORTATION - 2.3%
 Delta Air Lines, Inc.                                        15       1,245
 Northwest Airlines Corp. Class A (a)                        107       4,215
 UAL, Inc. (a)                                               109       5,870
                                                                  -----------
                                                                      11,330
                                                                  -----------

 COMMUNICATIONS - 9.7%
 Alltel Corp.                                                 25         760
 Ameritech Corp.                                             175      10,408
 BellSouth Corp.                                             174       7,360
 Century Telephone Enterprises, Inc.                         102       3,245
 Compuware Corp. (a)                                          40       1,596
 GTE Corp.                                                    21         926
 NYNEX Corp.                                                  38       1,810
 Pacific Telesis Group, Inc.                                  43       1,465
 Southern New England                                              
  Telecommunications Corp.                                    20         857
 Southwestern Bell Corp.                                     188       9,279
 Sprint Corp.                                                222       9,337
                                                                  -----------
                                                                      47,043
                                                                  -----------
</TABLE>

                                       9

<PAGE>



<TABLE>
<CAPTION>
                         Investment Portfolio/June 30, 1996
- -----------------------------------------------------------------------------
COMMON STOCKS - CONT.                                      SHARES      VALUE
- -----------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - CONT.
 ELECTRIC, GAS & SANITARY SERVICES - 0.4%
<S>                                                       <C>     <C>       
 Enova Corp.                                                  86  $    1,991
                                                                  ------------

 ELECTRIC SERVICES - 1.6%
 Boston Edison Co.                                             7         168
 Central & South West Corp.                                  182       5,264
 Consolidated Edison Co. of New York                          22         644
 Northern States Power Co.                                     2         118
 Ohio Edison Co.                                              81       1,776
                                                                  -----------
                                                                       7,970
                                                                  -----------

 GAS SERVICES - 2.9%
 Consolidated Natural Gas Co.                                 96       5,026
 National Fuel Gas Co.                                         7         248
 Williams Companies, Inc.                                    172       8,529
                                                                  -----------
                                                                      13,803
                                                                  -----------

 RAILROAD - 0.0%
 Illinois Central Corp.                                        1          21
                                                                  -----------

 WATER TRANSPORTATION - 2.0%
 Tidewater, Inc.                                             225       9,859
                                                                  -----------

- -----------------------------------------------------------------------------
WHOLESALE TRADE - 0.3%
 NONDURABLE GOODS - 0.3%
 McKesson Corp.                                               13         610
 Supervalu, Inc.                                              29         907
                                                                  -----------
                                                                       1,517
                                                                  -----------

TOTAL COMMON STOCKS (cost of $398,897)                               474,220
                                                                  -----------

PREFERRED STOCKS - 0.0%                          
- -----------------------------------------------------------------------------
MANUFACTURING - 0.0%                             
 TRANSPORTATION EQUIPMENT                        
 Teledyne, Inc. Series E (cost of $11)                         1          12
                                                                  -----------

TOTAL INVESTMENTS - 98.0% (cost of $398,908)(b)                      474,232
                                                                  -----------

SHORT-TERM OBLIGATIONS - 1.8%                                PAR
- -----------------------------------------------------------------------------
 Repurchase agreement with Chase
 Securities Inc., dated 6/28/96, due 7/01/96
 at 5.40% collateralized by U.S. Treasury notes
 with various maturities to 1998, market value $8,771
 (repurchase proceeds $8,583)                             $8,579       8,579
                                                                  -----------
</TABLE>

                                       10

<PAGE>


<TABLE>
<CAPTION>
                         Investment Portfolio/June 30, 1996
- -----------------------------------------------------------------------------

<S>                                                                  <C>     
OTHER ASSETS & LIABILITIES, NET - 0.2%                               $    919
- ------------------------------------------------------------------------------

NET ASSETS - 100.0%                                                  $483,730
                                                                  ------------

NOTES TO INVESTMENT PORTFOLIO:                   
- -----------------------------------------------------------------------------
</TABLE>

 (a) Non-incoming producing.
 (b) Cost for federal income tax purposes is approximately the same.


See notes to financial statements.

                                       11

<PAGE>
                        STATEMENT OF ASSETS & LIABILITIES
                                  JUNE 30, 1996

<TABLE>
  (in thousands except for per share amounts and footnotes)
  ASSETS
<S>                                                                  <C>                 <C>
Investments at value (cost $398,908)                                                     $ 474,232
Short-term obligations                                                                       8,579
                                                                                         ---------
                                                                                           482,811
Receivable for:
  Fund shares sold                                                   $     959
  Dividends                                                                593
  Interest                                                                   4
  Deferred organization expense                                             18
Other                                                                        6               1,580
                                                                     ---------           ---------
    Total Assets                                                                           484,391

LIABILITIES
Payable for:
  Fund shares repurchased                                                  526
  Distributions                                                             91
Accrued:
  Deferred Trustees fees                                                     3
  Transfer agent Out-of-Pocket fees                                         20
  Other                                                                     21
                                                                     ---------
    Total Liabilities                                                                          661
                                                                                         ---------

NET ASSETS                                                                               $ 483,730
                                                                                         ---------
Net asset value & redemption price per share - Class A
($168,554/11,653)                                                                        $   14.47
                                                                                         ---------

Maximum offering price per share - Class A
($14.47/0.9425)                                                                          $   15.35(a)
                                                                                         ---------

Net asset value & offering price per share - Class B
($306,718/21,363)                                                                        $   14.36(b)
                                                                                         ---------

Net asset value & redemption price per share - Class D
($8,458/587)                                                                             $   14.41(b)
                                                                                         ---------

Maximum offering price per share - Class D
($14.41/0.9900)                                                                          $   14.56
                                                                                         ---------

COMPOSITION OF NET ASSETS
Capital paid in                                                                          $ 387,485
Overdistributed net investment income                                                           (3)
Accumulated net realized gains                                                              20,924
Net unrealized appreciation                                                                 75,324
                                                                                         ---------
                                                                                         $ 483,730
                                                                                         ---------
</TABLE>

(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.

See notes to financial statements.

                                       12

<PAGE>

                             STATEMENT OF OPERATIONS
                        FOR THE YEAR ENDED JUNE 30, 1996


<TABLE>
(in thousands)
INVESTMENT INCOME
<S>                                                        <C>            <C>    
Dividends                                                                 $ 9,043
Interest                                                                      644
                                                                          -------
                                                                            9,687

EXPENSES
Management fee                                              $ 3,342
Service fee                                                   1,045
Distribution fee - Class B                                    1,978
Distribution fee - Class D                                       42
Transfer agent                                                1,262
Bookkeeping fee                                                 156
Trustees fee                                                     30
Custodian fee                                                    22
Audit fee                                                        32
Legal fee                                                        13
Registration fee                                                 88
Reports to shareholders                                          17
Amortization of deferred
    organization expense                                         18
Other                                                            27         8,072
                                                            -------       -------
       Net Investment Income                                                1,615
                                                                          -------

NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain                                                          40,109
Net unrealized appreciation                                                27,088
                                                                          -------
       Net Gain                                                            67,197
                                                                          -------

Net Increase in Net Assets from Operations                                $68,812
                                                                          -------
</TABLE>



  See notes to financial statements.

                                       13

<PAGE>

                       STATEMENT OF CHANGES IN NET ASSETS


<TABLE>
<CAPTION>
                                                                  YEAR ENDED
(in thousands)                                                      JUNE 30
                                                          --------------------------
INCREASE (DECREASE) IN NET ASSETS                            1996             1995
Operations:
<S>                                                       <C>              <C>      
Net investment income                                     $   1,615        $   2,546
Net realized gain                                            40,109           13,643
Net unrealized appreciation                                  27,088           47,177
                                                          ---------        ---------
    Net Increase from Operations                             68,812           63,366
Distributions:
From net investment income - Class A                         (1,271)          (1,420)
From net realized gains - Class A                           (10,933)          (6,157)
From net investment income - Class B                           (325)          (1,133)
From net realized gains - Class B                           (19,657)         (10,279)
From net investment income - Class D                            (13)             (16)
From net realized gains - Class D                              (409)             (76)
                                                          ---------        ---------
                                                             36,204           44,285
                                                          ---------        ---------
Fund Share Transactions:
Receipts for shares sold - Class A                           44,237           25,072
Value of distributions reinvested - Class A                  11,527            7,015
Cost of shares repurchased - Class A                        (24,333)         (21,509)
                                                          ---------        ---------
                                                             31,431           10,578
                                                          ---------        ---------

Receipts for shares sold - Class B                           81,529           53,700
Value of distributions reinvested - Class B                  18,826           10,796
Cost of shares repurchased - Class B                        (34,620)         (24,021)
                                                          ---------        ---------
                                                             65,735           40,475
                                                          ---------        ---------

Receipts for shares sold - Class D                            5,591            2,741
Value of distributions reinvested - Class D                     409               90
Cost of shares repurchased - Class D                         (1,040)             (70)
                                                          ---------        ---------
                                                              4,960            2,761
                                                          ---------        ---------
    Net Increase from Fund Share
      Transactions                                          102,126           53,814
                                                          ---------        ---------
        Total Increase                                      138,330           98,099
NET ASSETS
Beginning of period                                         345,400          247,301
                                                          ---------        ---------
End of period (net of overdistributed and including
  undistributed net investment income of $3 and
  $32, respectively)                                      $ 483,730        $ 345,400
                                                          ---------        ---------
</TABLE>

Continued on next page.



See notes to financial statements.


                                       14

<PAGE>
                       STATEMENT OF CHANGES IN NET ASSETS
                                   (continued)

<TABLE>
<CAPTION>
                                                                    Year ended
                                                                     June 30
                                                          ----------------------------
                                                            1996                 1995
<S>                                                        <C>                  <C>  
NUMBER OF FUND SHARES
Sold - Class A                                              3,189                2,049
Issued for distributions reinvested - Class A                 851                  614
Repurchased - Class A                                      (1,750)              (1,779)
                                                           ------               ------
                                                            2,290                  884
                                                           ------               ------

Sold - Class B                                              5,910                4,431
Issued for distributions reinvested - Class B               1,403                  957
Repurchased - Class B                                      (2,509)              (2,000)
                                                           ------               ------
                                                            4,804                3,388
                                                           ------               ------

Sold - Class D                                                403                  227
Issued for distributions reinvested - Class D                  30                    8
Repurchased - Class D                                         (75)                  (6)
                                                           ------               ------
                                                              358                  229
                                                           ------               ------
</TABLE>
See notes to financial statements.


                                       15

<PAGE>
                         NOTES TO FINANCIAL STATEMENTS
                                 JUNE 30, 1996

NOTE 1.  ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial U.S. Fund for Growth (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 growth exceeding
the performance of the Standard & Poor's 500 index of 500 common stocks. 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 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 and 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.

                                       16

<PAGE>
                  Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------

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 per share 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.

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.

DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses of $90,095 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.

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.

NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) oversees the
Fund's management 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. State Street Bank and Trust Company (the sub-adviser) furnishes the Fund
with investment management and received an effective fee rate from the Adviser
of 0.40% for the year ended June 30, 1996.

                                       17

<PAGE>
                  Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------

NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
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 year ended June 30, 1996, the Fund has been
advised that the Distributor retained net underwriting discounts of $139,177 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $137,949 and $315 on Class B and Class D share redemptions,
respectively.

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 the
service fees, distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 1.25% annually of the Fund's average net
assets.

For the year ended June 30, 1996, the Fund's operating expenses did not exceed
the 1.25% expense limit.

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.

                                       18

<PAGE>
                  Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------

NOTE 3.  PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended June 30, 1996, purchases and sales of
investments, other than short-term obligations, were $436,865,135 and
$362,373,880, respectively.

Unrealized appreciation (depreciation) at June 30, 1996 based on cost of
investments for federal income tax purposes was:

           Gross unrealized appreciation     $91,466,986
           Gross unrealized depreciation     (16,142,827)
               Net unrealized appreciation   $75,324,159

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 year ended June 30, 1996.

                                       19

<PAGE>
                            FINANCIAL HIGHLIGHTS (a)
         Selected data for a share of each class outstanding throughout each
         period are as follows:

<TABLE>
<CAPTION>
                                                                                    Year ended June 30
                                                          ------------------------------------------------------------------
                                                                                          1996
                                                             Class A                    Class B                   Class D
                                                          ------------                ------------                ----------

<S>                                                      <C>                         <C>                         <C>       
Net asset value -
  Beginning of period                                     $     13.260                $     13.180                $   13.240
                                                          ------------                ------------                ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
  income                                                         0.121                       0.017                     0.016
Net realized and
unrealized gain                                                  2.292                       2.265                     2.268
                                                          ------------                ------------                ----------
   Total from Investment
      Operations                                                 2.413                       2.282                     2.284
                                                          ------------                ------------                ----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
  income                                                        (0.118)                     (0.017)                   (0.029)
From net realized
  gains                                                         (1.085)                     (1.085)                   (1.085)
                                                          ------------                ------------                ----------
 Total Distributions
  Declared to
  Shareholders                                                  (1.203)                     (1.102)                   (1.114)
                                                          ------------                ------------                ----------
Net asset value -
   End of period                                          $     14.470                $     14.360                $   14.410
                                                          ------------                ------------                ----------
Total return (c)                                                 18.85%                      17.91%                    17.84%
                                                          ------------                ------------                ----------

RATIOS TO AVERAGE NET ASSETS
Expenses                                                         1.45%(d)                   2.20%(d)                 2.20%(d)
Net investment
  income                                                         0.87%(d)                   0.12%(d)                 0.12%(d)
Portfolio turnover                                                 89%                         89%                     89%
Average commission rate (e)                               $      0.046                $      0.046                $  0.046
Net assets at end
of period (000)                                           $    168,554                $    306,718                $  8,458
</TABLE>

         (a)   Per share data was calculated using average shares outstanding
               during the period.
         (b)   Class D shares were initially offered on July 1, 1994. Per share
               amounts reflect activity from that date.
         (c)   Total return at net asset value assuming all distributions
               reinvested and no initial sales charge or contingent deferred
               sales charge.
         (d)   The benefits derived from custody credits and directed brokerage
               arrangements had no impact. Prior years' ratios are net of
               benefits received, if any.
         (e)   For the fiscal years beginning on or after September 1, 1995, a
               fund is required to disclose its average commission rate per
               share for trades on which commissions are charged.


                                       20

<PAGE>
                        FINANCIAL HIGHLIGHTS (a) - CONT.


<TABLE>
<CAPTION>
                         Year ended June 30
- -------------------------------------------------------------------
                                1995
   Class A                    Class B                   Class D (b)
- ------------                ------------                ----------


<C>                         <C>                         <C>       
$     11.460                $     11.400                $   11.460
- ------------                ------------                ----------


       0.165                       0.075                     0.074

       2.530                       2.513                     2.534
- ------------                ------------                ----------

       2.695                       2.588                     2.608
- ------------                ------------                ----------


      (0.160)                     (0.073)                   (0.093)

      (0.735)                     (0.735)                   (0.735)
- ------------                ------------                ----------


      (0.895)                     (0.808)                   (0.828)
- ------------                ------------                ----------

$     13.260                $     13.180                $   13.240
- ------------                ------------                ----------
       24.84%                      23.94%                    24.01%
- ------------                ------------                ----------


        1.46%                       2.21%                     2.21%

        1.37%                       0.62%                     0.62%
          84%                         84%                       84%
           -                           -                         -
- ------------                ------------                ----------
$    124,171                $    218,201                $    3,028
</TABLE>




                                       21

<PAGE>
                        FINANCIAL HIGHLIGHTS (a) - CONT.




<TABLE>
<CAPTION>
                                                                                          Year ended June 30
                                                        ------------------------------------------------------------------------
                                                                      1994                                 1993(B)
                                                          Class A           Class B             Class A                Class B
                                                        -----------       ------------        -----------            -----------

<S>                                                     <C>               <C>                 <C>                    <C>        
Net asset value -
  Beginning of period                                   $    11.820       $     11.770        $    10.000            $    10.000
                                                        -----------       ------------        -----------            -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
  income                                                      0.142              0.053              0.103(c)               0.020(c)
Net realized and
unrealized gain                                              (0.119)            (0.122)             1.784                  1.763
                                                        -----------       ------------        -----------            -----------
   Total from Investment
      Operations                                              0.023             (0.069)             1.887                  1.783
                                                        -----------       ------------        -----------            -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
  income                                                     (0.138)            (0.056)            (0.067)                (0.013)
From net realized
  gains                                                      (0.245)            (0.245)                 -                      -
                                                        -----------       ------------        -----------            -----------
 Total Distributions
  Declared to
  Shareholders                                               (0.383)            (0.301)            (0.067)                (0.013)
                                                        -----------       ------------        -----------            -----------
Net asset value -
   End of period                                        $    11.460       $     11.400        $    11.820            $    11.770
                                                        -----------       ------------        -----------            -----------
Total return (d)                                               0.05%             (0.71)%            18.90%(e)              17.84%(e)
                                                        -----------       ------------        -----------            -----------

RATIOS TO AVERAGE NET ASSETS
Expenses                                                       1.49%              2.24%              1.50%                  2.25%
Fees waived by the
  adviser                                                                                            0.01%                  0.01%
Net investment
  income                                                       1.19%              0.44%              0.93%                  0.18%
Portfolio turnover                                              117%               117%                98%                    98%
Net assets at end
of period (000)                                         $    97,180       $    150,121        $    44,009            $    89,737
</TABLE>

(a)   Per share data was calculated using average shares outstanding
      during the period.

(b)   The Fund commenced investment operations on July 1, 1992.

(c)   Net of fees and expenses waived or borne by the Adviser which
      amounted to $0.001 and $0.001, respectively.

(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.


                                       22

<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS

          T0 THE TRUSTEES OF COLONIAL TRUST VI AND THE SHAREHOLDERS OF
                          COLONIAL U.S FUND FOR GROWTH

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 U.S. Fund for Growth (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 periods
indicated, 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 audits. We conducted our audits 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 audits, which included confirmation of portfolio positions
at June 30, 1996 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.



PRICE WATERHOUSE LLP
Boston, Massachusetts
August 12, 1996

                                       23                                

<PAGE>


                                COLONIAL TRUST VI

              Cross Reference Sheet (Colonial Small Stock 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; Shareholder
                                          Liability

   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 SMALL STOCK FUND
                       Statement of Additional Information
   
                                October 28, 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
Small Stock Fund (Fund).  This SAI is not a  prospectus  and is  authorized  for
distribution only when accompanied or preceded by a Prospectus of the Fund dated
October 28, 1996.  The SAI should be read together with a Prospectus.  Investors
may obtain a free copy of a 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
    













<PAGE>


                                     PART 1
                            COLONIAL SMALL STOCK FUND
                       Statement of Additional Information
   
                                October 28, 1996
    
DEFINITIONS
      "Trust"    Colonial Trust VI
      "Fund"     Colonial Small Stock 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  Prospectuses  describe  its  investment  objective  and  investment
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 Prospectuses:
    
   
  Small Companies
  Short-Term Debt Instruments
  Repurchase Agreements
  Futures Contracts and Related Options
    
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.

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,  it will not
   purchase  additional  portfolio  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  does 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 voting securities of an issuer if, as a result of
   purchase,  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  then be  invested  in  securities  of  issuers  
   which  are restricted as to disposition;
8. Purchase or sell  commodity  contracts if the total initial  margin and 
   premiums on the contracts would exceed 5% of its total assets;
9. Invest more than 15% of its net assets in illiquid assets; 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 value,  would exceed 5% 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 without value.

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, the issuer is the entity whose revenues support the
security.

PORTFOLIO TURNOVER

   
The  Fund  cannot  accurately  predict  portfolio  turnover,   but  the  Adviser
anticipates  that it will not exceed 100%. A 100%  turnover  rate would occur if
all of the  securities  in the  portfolio  were sold and either  repurchased  or
replaced  within one year.  High  portfolio  turnover  involves  correspondingly
greater brokerage  commission and other transaction  costs, which would be borne
directly by the Fund.
    
   
               Years ended June 30
            
            1996               1995
             46%                64%
    

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 0.60%
(subject to any voluntary reductions the Adviser may agree to periodically).
    


Recent Fees paid to the Adviser, CISI and CISC (dollars in thousands)



                               Year ended June 30

                               1996      1995         1994
                               ----      ----         ----
   
[S]                            [C]        [C]         [C] 
Management fee                 $734       $279        $179
Bookkeeping fee                  52         28          27
Shareholder service and
  transfer agent fee            409        154          96
12b-1 fees:
  Service fee (Classes A,B,D)   300        118          75
  Distribution fee (Class B)    436        128          34
  Distribution fee *(Class D)     3        N/A         N/A

    
   
* Class D shares were initially offered on January 15, 1996.
    
   

Brokerage Commissions (dollars in thousands)




                                      1996        1995       1994
                                      ----        ----       ----

[S]                                    [C]        [C]        [C]   
Total commissions                      $192       $   94        ---
Directed transactions**                $---       $6,217     $4,807
Commissions on directed transactions   $---       $   17     $  317

    
   
** See "Management of the Colonial  Funds-Portfolio  Transactions-Brokerage  and
Research Services" in Part 2 of this SAI.
    



<PAGE>

   
Trustees and Trustees Fees

For the fiscal year ended June 30, 1996,  and the calendar  year ended  December
31,  1995,  the  Trustees  received the  following  compensation  for serving as
Trustees:
    


    
                                                                Total
                                                                Compensation
                     Aggregate                                  from Trust and
                    Compensation                                Fund Complex
                     from Fund                                  Paid to
                      for                                       the Trustees
 Trustee             Fiscal Year                                for the
                                                                Calendar Year
                                                                Ended December
                                                                31, 1995 (c)
                                                         
[S]                     [C]                                         [C]   
Robert J. Birnbaum(a)  $1,049                                       $71,250
Tom Bleasdale           1,146(b)                                     98,000(d)
Lora S. Collins         1,052                                        91,000
James  E.  Grinnell(a)  1,064                                        71,250
William D. Ireland, Jr. 1,316                                       113,000
Richard   W.  Lowry (a) 1,063                                        71,250
William E. Mayer        1,034                                        91,000
James L. Moody, Jr.     1,185(e)                                     94,500(f)
John J. Neuhauser       1,048                                        91,000
George L. Shinn         1,186                                       120,500
Robert L. Sullivan      1,164                                       101,000
Sinclair Weeks, Jr.     1,327                                       112.000
    
   
(a)   Elected to the Colonial Funds complex on April 21, 1995.
    
   
(b)   Includes $479 payable in later years as deferred compensation.
    
   
(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 $1,185 for the fiscal year ended June 30, 1996 will
   be payable in later years as deferred compensation.
    
   
(f)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 (g):
    
   
                         Total
                     Compensation                      Total
                     From Liberty                   Compensation
                     Funds II For                   From Liberty
                      The Period                  Funds I For The
                      January 1,                   Calendar Year
                     1995 through                 Ended December
  Trustee             March 26, 1995                  31, 1995(h)
                                                    

[S]                      [C]                           [C]    
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  as 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 I were advised by Liberty Asset
   Management Company (LAMCO).  LAMCO is an indirect wholly-owned subsidiary of
   Liberty Financial Companies, Inc. (Liberty Financial).
    
   
(i)Includes  $3,500  paid to Mr.  Lowry  for  service  as a Trustee  of  Liberty
   Newport  World   Portfolio   (formerly   know  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 September 30, 1996, the officers and Trustees as a group  beneficially  owned
less than 1% of the  Class  A,Class B and Class D shares of the Fund and 100% of
the Class Z shares.  The Class Z share  holding  consisted of shares held by The
Colonial Group, Inc. Profit Sharing Plan, of which certain officers of the Trust
are Trustees  (131,047 shares or 96.86%),  and Colonial  Management  Associates,
Inc. (4,248 shares or 3.14%).
    
   
Merrill  Lynch Pierce  Fenner & Smith,  Attn.  Book Entry,  4800 Deer Lake Drive
East,  Jacksonville,  FL 32216,  owned of record  approximately  647,678 Class B
shares or 14.88% of the Fund's then outstanding Class B shares and approximately
61,683 Class D shares or 49.03% of the Fund's then  outstanding  Class D shares,
on September 30, 1996.
    
   
At September 30, 1996,  there were 9,212 Class A, 19,178 Class B 195 Class D and
2 Class Z shareholders of record of the Fund.
    
   
Sales Charges (dollars in thousands) Class A Shares

                                           Years ended June 30

                                           1996     1995    1994

[S]                                        [C]      [C]      [C]
Aggregate charges on Fund share sales      $755     $169     $69
Sales charges retained by CISI             $110      $23     $10
    

                                 Class B Shares



   
                                       Years ended June 30
                                  1996       1995        1994
[S]                               [C]         [C]         [C]
Aggregate contingent
deferred sales charges (CDSC)
on Fund redemptions               $138        $78         $9
retained by CISI
    
   
                                 Class D Shares

                                January 15, 1996
                               (Class D shares
                              initially offered)
                            through June 30, 1996


Aggregate
(CDSCs)
on Fund redemptions        
retained by CISI             $ (rounds to less than 1)      
    

   
12b-1 Plans, CDSC and Conversion of Shares

The Fund offers four  classes of shares - Class A, Class B, Class D and Class Z.
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 for each of
Classes  A, B and D.  Under the  Plans,  the Fund pays CISI a service  fee at an
annual rate of 0.25% of average net assets  attributed to Classes A, B and D and
a distribution  fee at an annual rate of 0.75% of average net assets  attributed
to  Classes B and D. 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 of 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 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 to 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 not  interested  persons 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  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 subject to 1.00% CDSC on
redemptions  within one year after  purchase.  Class Z shares are offered at net
asset  value and are not  subject  to a CDSC.  The CDSCs  are  described  in the
Prospectus.

No CDSC will be imposed on shares derived from  reinvestment of distributions 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 which are not subject to the CDSC.
    
   
Sales-related  expenses  for the fiscal  year ended June 30,  1996,  (dollars in
thousands) of CISI relating to the Fund were as follows:
    
   
                                  Class A Shares Class B Shares  Class D Shares*

[S]                                     [C]            [C]            [C]
Fees to FSFs                            $190           $1,743         $11
Cost of sales material relating to the
   Fund (including printing and mailing
expenses)                               $ 69           $  138         $ 4
Allocated travel, entertainment
   and other promotional expenses
   (including advertising)              $ 89           $  164         $ 4
    
   
* Class D shares were initially offered on January 15, 1996.
    

INVESTMENT PERFORMANCE
   
The Fund's  Classes A, B, D and Z yields for the month  ended June 30, 1996 were
- -0.41%, -1.21% -1.23% and -0.44%% %, respectively.
    
   
The  Fund's  Class A  average  annual  total  returns  at June 30,  1996 were as
follows:
    
   
                                                     Since Inception
                            1 year        5 years    (July 25, 1986)
                            ------        -------    ---------------


[S]                         [C]           [C]             [C]  
With sales charge of 5.75%  18.10%        17.84%          9.01%
Without sales charge        25.31%        19.24%          9.66%
    
   
Returns for 5 years and since  inception  were achieved in part under  different
objectives  and policies in effect before  November 2, 1992,  also the date when
the Fund changed its name from "Colonial Small Stock Index Trust".
    
   
The  Fund's  Class B  average  annual  total  returns  at June 30,  1996 were as
follows:
    




   

                                      November 9, 1992
                             (Class B shares initially offered)
                        1 Year      through June 30, 1996

[S]                     [C]                [C]          
With applicable CDSC    19.44%(5.00% CDSC) 21.92%(3.00%CDSC)
Without CDSC            24.44%             22.41%
    
   
The Fund's Class D total returns at June 30, 1996 were as follows:

                        Class D
                   January 15, 1996
          (Class D shares initially offered)
                 through June 30, 1996
[S]                                                   [C]
With sales charge of 1.00% and
     1.00% CDSC                                       14.90%
Without sales charge or CDSC                          17.07%
    
   
The Fund's Class Z total return at June 30, 1996 was as follows:

                        Class Z
                     July 31, 1995
          (Class D shares initially offered)
                 through June 30, 1996

                        12.81%
    

   
The Fund's Classes A, B, D and Z distribution  rates at June 30, 1996,  based on
the last twelve months' distributions,  were 0.00% for each Class, respectively.
See "Performance Measures" in Part 2 of this SAI 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 Exchange Commission filings. The financial
statements incorporated by reference in this SAI have been so incorporated,  and
the financial highlights included in the Prospectuses 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 on
pages 6 through 23 of the June 30, 1996 Annual Report,  are incorporated in this
SAI by reference.
    



                         
                            INVESTMENT PORTFOLIO                        
                          JUNE 30, 1996 (IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCKS - 85.7%                               SHARES          VALUE
- -------------------------------------------------------------------------
<S>                                                 <C>            <C>
CONSTRUCTION - 1.5%
 BUILDING CONSTRUCTION - 1.5%
 Beazer Homes USA, Inc.(a)                              20         $  320
 Continental Homes Holding Corp.                        50          1,075
 Toll Brothers, Inc.(a)                                 87          1,425
                                                                   ------    
                                                                    2,820
                                                                   ------    
- -------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 10.5%
 DEPOSITORY INSTITUTIONS - 1.8%
 CCB Financial Corp.                                     7            359
 Peoples Heritage Financial Group, Inc.                 46            931
 TCF Financial Corp.                                    21            685
 Zions Bancorporation                                   19          1,382
                                                                   ------
                                                                    3,357
                                                                   ------

 INSURANCE CARRIERS - 5.8%
 American Bankers Insurance Group, Inc.                 33          1,457
 Arbatex International, Inc.(a)                         40            192
 Capital RE Corp.                                       15            536
 Enhance Financial Services Group, Inc.                 40          1,120
 Fremont General Corp.                                  75          1,725
 Horace Mann Educators Corp.                            17            540
 Penncorp Financial Group, Inc.                         50          1,588
 US Facilities Corp.                                    40            695
 United Companies Financial Corp.                       52          1,768
 Vesta Insurance Group, Inc.                            47          1,552
                                                                   ------
                                                                   11,173
                                                                   ------

 NONDEPOSITORY CREDIT INSTITUTIONS - 1.2%
 Aames Financial Corp.                                  20            717
 Olympic Financial Ltd.(a)                              25            575
 The Money Store, Inc.                                  46          1,015
                                                                   ------
                                                                    2,307
                                                                   ------

 SECURITY BROKERS & DEALERS - 1.7%
 Alex Brown, Inc.                                       53          2,994
 Morgan Keegan, Inc.                                    22            287
                                                                   ------
                                                                    3,281
                                                                   ------
MANUFACTURING - 34.7%
 APPAREL - 1.4%
 Gymboree Corp.(a)                                      32            976
 Nautica Enterprises, Inc.(a)                           62          1,783
                                                                   ------
                                                                    2,759
                                                                   ------
</TABLE>


                                        6
<TABLE>
<CAPTION>
                       Investment Portfolio/June 30, 1996
- -------------------------------------------------------------------------
<S>                                                     <C>        <C>
 CHEMICALS & ALLIED PRODUCTS - 1.7%                
 Alpharma, Inc., Class A                                25         $  497
 ICN Pharmaceuticals, Inc.(a)                           94          2,196
 NABI, Inc.(a)                                          50            475
                                                                   ------
                                                                    3,168
                                                                   ------

 ELECTRONIC & ELECTRICAL EQUIPMENT - 10.1%
 Alliance Semiconductor Corp.(a)                        40            335
 Altron, Inc.(a)                                        38            759
 Checkpoint Systems, Inc.(a)                            50          1,719
 Chips & Technologies, Inc.(a)                          70            683
 Computer Products, Inc.(a)                             25            428
 Digital Systems International, Inc.(a)                 90          1,361
 HADCO Corp.(a)                                        102          2,193
 Harman International Industries, Inc.                  16            788
 Innovex, Inc.                                          40            705
 Kemet Corp.(a)                                        130          2,600
 Lattice Semiconductor Corp.(a)                         40            965
 Sanmina Corp.(a)                                       50          1,350
 Standard Motor Products, Inc.                          15            268
 Technitrol, Inc.                                       32          1,252
 U.S. Robotics, Inc.(a)                                 46          3,933
                                                                   ------
                                                                   19,339
                                                                   ------

 FABRICATED METAL - 1.0%
 BMC Industries, Inc.                                   51          1,461
 Butler Manufacturing Co.                               13            425
                                                                   ------
                                                                    1,886
                                                                   ------

 FOOD & KINDRED PRODUCTS - 0.3%
 Robert Mondavi Corp., Class A(a)                       20            630
                                                                   ------

 FURNITURE & FIXTURES - 0.5%
 Bush Industries, Inc.                                  14            476
 LA Z Boy Chair Co.                                     16            482
                                                                   ------
                                                                      958
                                                                   ------

 LUMBER & WOOD PRODUCTS - 0.2%
 Oakwood Homes Corp.                                    22            453
                                                                   ------

 MACHINERY & COMPUTER EQUIPMENT - 4.7%
 Boca Research, Inc.(a)                                 45            821
 Cascade Communications Corp.(a)                        24          1,632
 In Focus Systems, Inc.(a)                              30            728
 JLG Industries, Inc.                                   30          2,242
 Kaydon Corp.                                           15            645
 Kysor Industrial Corp.                                  7            170
 Mylex Corp.(a)                                         20            355
</TABLE>


                                       7
                       Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
COMMON STOCKS -CONT.                                  SHARES       VALUE
- -------------------------------------------------------------------------
<S>                                                    <C>         <C>
 MACHINERY & COMPUTER EQUIPMENT -CONT.                 
 Novellus Systems, Inc.(a)                               8         $  288
 Proteon, Inc.(a)                                       49            190
 Silicon Valley Group, Inc.(a)                          54          1,020
 Toro Co.                                               29            944
                                                                   ------
                                                                    9,035
                                                                   ------

 MEASURING & ANALYZING INSTRUMENTS - 7.0%
 Advanced Technology Laboratories, Inc.(a)              98          3,559
 Bio-Rad Laboratories, Inc.,
  Class A(a)                                            38          1,346
 CredenceSystems Corp.(a)                               89          1,189
 Esterline Technologies Corp.(a)                        79          1,965
 Maxxim Medical, Inc.(a)                                23            385
 Mentor Corp.                                           36            918
 Nellcor Puritan Bennett, Inc.(a)                       16            766
 Perceptron, Inc.(a)                                    30          1,095
 Quickturn Design Systems, Inc.(a)                      39            571
 Tracor, Inc.(a)                                        25            431
 Ultratech Stepper, Inc.(a)                             32            600
 Watkins-Johnson Co.                                    22            589
                                                                   ------
                                                                   13,414
                                                                   ------

 MISCELLANEOUS MANUFACTURING - 0.4%
 International Imaging Materials, Inc.(a)               15            356
 K2, Inc.                                               17            471
                                                                   ------
                                                                      827
                                                                   ------

 PAPER PRODUCTS - 2.0%
 ACX Technologies, Inc.(a)                              96          1,900
 Mercer International, Inc.(a)                          80          1,080
 Paragon Trade Brands, Inc.(a)                          41            884
                                                                   ------
                                                                    3,864
                                                                   ------

 PRIMARY METAL - 3.4%
 Mueller Industries, Inc.(a)                            36          1,494
 Quanex Corp.                                           35            827
 Texas Industries, Inc.                                 34          2,340
 Titan Wheel International, Inc.                        68          1,088
 Wolverine Tube, Inc.(a)                                22            770
                                                                   ------
                                                                    6,519
                                                                   ------

 PRINTING & PUBLISHING - 0.5%
 Day Runner, Inc.(a)                                    40          1,035
                                                                   ------

 STONE, CLAY, GLASS & CONCRETE - 0.6%
 Global Industrial Technologies, Inc.(a)                72          1,152
                                                                   ------
</TABLE>


                                       8
                       Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
<S>                                                     <C>       <C>

 TRANSPORTATION EQUIPMENT - 0.9%
 Polaris Industries, Inc.                               25         $  836
 Varlen Corp.                                           39            815
                                                                   ------
                                                                    1,651
                                                                   ------

- -------------------------------------------------------------------------
MINING - 2.0%
 METAL MINING - 0.7%
 Cleveland-Cliffs, Inc.                                 33          1,291
                                                                   ------

 OIL & GAS EXTRACTION - 1.3%
 Benton Oil & Gas Co.(a)                                50          1,100
 Pride Petroleum Services, Inc.(a)                     100          1,425
                                                                   ------
                                                                    2,525
                                                                   ------

- -------------------------------------------------------------------------
RETAIL TRADE - 7.8%
 APPAREL & ACCESSORY STORES - 2.5%
 Claire's Stores, Inc.                                  90          2,486
 Finish Line, Inc., Class A(a)                           5            143
 Ross Stores, Inc.                                      60          2,085
                                                                   ------
                                                                    4,714
                                                                   ------

 AUTO DEALERS & GAS STATIONS - 0.3%
 Discount Auto Parts, Inc.(a)                           20            508
                                                                   ------

 BUILDING, HARDWARE & GARDEN SUPPLY  - 0.5%
 Orchard Supply Hardware Store(a)                       35          1,054
                                                                   ------

 FOOD STORES - 0.2%
 Ruddick Corp.                                          32            392
                                                                   ------

 GENERAL MERCHANDISE STORES - 0.6%
 Neiman Marcus Group, Inc.(a)                           20            540
 Waban, Inc.(a)                                         29            692
                                                                   ------
                                                                    1,232
                                                                   ------

 HOME FURNISHINGS & EQUIPMENT - 2.1%
 CompUSA, Inc.(a)                                      120          4,095
                                                                   ------

 MISCELLANEOUS RETAIL - 0.6%
 Tiffany & Co.                                          15          1,095
                                                                   ------

 RESTAURANTS - 1.0%
 Applebee's International, Inc.                         60          1,943
                                                                   ------

- -------------------------------------------------------------------------
SERVICES - 17.5%
 AMUSEMENT & RECREATION - 1.8%
 Anchor Gaming(a)                                       32          1,928
 Grand Casinos, Inc.(a)                                 60          1,545


                                                                   ------
                                                                    3,473
                                                                   ------
</TABLE>


                                       9
                       Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
COMMON STOCKS -CONT.                                  SHARES       VALUE
- -------------------------------------------------------------------------
<S>                                                   <C>          <C>
SERVICES - CONT.                                       
 AUTO REPAIR SERVICES & PARKING - 0.6%
 National Auto Credit, Inc.(a)                          52         $  591
 PHH Corporation(a)                                     10            570
                                                                   ------
                                                                    1,161
                                                                   ------

 BUSINESS SERVICES - 9.1%
 Acxiom Corp.(a)                                        42          1,433
 Advo, Inc.                                             25            259
 Borland International, Inc.(a)                         65            593
 Computer Horizons Corp.(a)                             37          1,465
 Computervision Corp.(a)                                60            600
 Control Data Systems, Inc.(a)                          74          1,582
 Logicon, Inc.                                          52          1,542
 Macromedia, Inc.(a)                                    24            525
 McAfee Associates, Inc.(a)                             41          1,985
 National Data Corp.                                    45          1,541
 Norrell Corp.                                          25          1,228
 Robert Half International, Inc.(a)                     40          1,115
 SPSS, Inc.(a)                                          30            750
 Sierra On-Line, Inc.(a)                                10            439
 Sterling Software, Inc.(a)                             23          1,775
 Uniforce Temporary Personnel, Inc.                     30            570
                                                                   ------
                                                                   17,402
                                                                   ------

 HEALTH SERVICES - 5.5%
 Apria Healthcare Group, Inc.(a)                        27            857
 Community Health Systems, Inc.(a)                      25          1,294
 Lincare Holdings, Inc.(a)                              20            785
 PHP Healthcare Corp.(a)                                10            315
 Regency Health Services, Inc.(a)                      100          1,137
 Rotech Medical Corp.(a)                               138          2,691
 Universal Health Services, Inc., Class B(a)           133          3,480
                                                                   ------
                                                                   10,559
                                                                   ------

 MOTION PICTURES - 0.5%
 Regal Cinemas, Inc.(a)                                 25          1,144
                                                                   ------


- -------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 7.0%
 AIR TRANSPORTATION - 1.1%
 Alaska Air Group                                       50          1,369
 Comair Holdings, Inc.                                  27            727
                                                                   ------
                                                                    2,096
                                                                   ------
</TABLE>


                                       10
                       Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
<S>                                                    <C>        <C>

 COMMUNICATIONS - 1.5%                                 
 U.S. Long Distance Corp.(a)                           70          $2,485
 Xpedite Systems, Inc.(a)                              11             294
                                                                   ------
                                                                    2,779
                                                                   ------

 ELECTRIC, GAS & SANITARY SERVICES - 0.2%
 Unit Corp.(a)                                         71             468
                                                                   ------

 ELECTRIC SERVICES - 1.2%
 Commonwealth Energy System Cos.                       13             324
 Sierra Pacific Resources                              50           1,269
 TNP Enterprises, Inc.                                 26             749
                                                                   ------
                                                                    2,342
                                                                   ------

 GAS SERVICES - 1.6%
 Eastern Enterprises                                   20             665
 ONEOK Inc.                                            95           2,375
                                                                   ------
                                                                    3,040
                                                                   ------

 SANITARY SERVICES - 0.2%
 Southern California Water Co.                         18             396
                                                                   ------

 TRANSPORTATION SERVICES - 0.3%
 GATX Corp.                                            12             579
                                                                   ------

 WATER TRANSPORTATION - 0.9%
 APL Ltd.                                              65           1,698
                                                                   ------

- -------------------------------------------------------------------------
WHOLESALE TRADE - 4.7%
 DURABLE GOODS - 3.5%
 Bell Industries, Inc.                                 33             556
 Fisher Scientific International                       53           1,991
 Kent Electronics Corp.(a)                             40           1,250
 Marshall Industries(a)                                22             616
 Pioneer Standard Electronics, Inc.                    27             353
 Wyle Electronics Co.                                  62           2,057
                                                                   ------
                                                                    6,823
                                                                   ------

 NONDURABLE GOODS - 1.2%
 Cardinal Health, Inc.                                 14           1,016
 Universal Corp.                                       50           1,325
                                                                   ------
                                                                    2,341
                                                                   ------


TOTAL INVESTMENTS (cost of $132,137)(b)                           164,778
                                                                  -------
</TABLE>


                                       11
                       Investment Portfolio/June 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 13.5%                          PAR          VALUE
- --------------------------------------------------------------------------
<S>                                                  <C>          <C>
Repurchase agreement with Chase 
Securities Inc., dated 6/28/96, due 7/01/96 
at 5.40% collateralized by U.S. Treasury notes 
with various maturities to 1998, market value
$26,492 (repurchase proceeds $25,925)                $25,913      $ 25,913

OTHER ASSETS & LIABILITIES, NET - 0.8%                              1,592
- --------------------------------------------------------------------------
 NET ASSETS - 100.0%                                              $192,283
                                                                  --------
</TABLE>

NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------

 (a) Non-incoming producing.
 (b) Cost for federal income tax purposes is $132,145.



See notes to financial statements.


                                       12
                        STATEMENT OF ASSETS & LIABILITIES
                                  JUNE 30, 1996
  (in thousands except for per share amounts and footnotes)

<TABLE>
<S>                                         <C>             <C>
ASSETS                                 
Investments at value (cost $132,137)                         $164,778
Short-term obligations                                         25,913
                                                             --------
                                                              190,691
Receivable for:
  Fund shares sold                          $1,206
  Dividends                                     65
  Interest                                      12
Receivable from custodian bank                 753
Other                                           17              2,053
                                            ------           --------
    Total Assets                                              192,744

LIABILITIES
Payable for:
  Fund shares repurchased                      415
Accrued:
   Service fee                                  20
   Transfer Agent Out-of-Pocket fees            10
  Deferred Trustees fees                         2
  Other                                         14
                                               ---
    Total Liabilities                                             461
                                                             --------
  NET ASSETS                                                 $192,283
                                                             --------
  Net asset value & redemption price per share - Class A
  ($89,924/3,395)                                            $  26.48
                                                             --------  

  Maximum offering price per share - Class A
  ($26.48/0.9425)                                            $  28.10   (a)
                                                             --------

  Net asset value & offering price per share - Class B
  ($96,158/3,732)                                            $  25.77   (b)
                                                             --------

  Net asset value & redemption price per share - Class D
  ($2,585/98)                                                $  26.40   (b)
                                                             --------

  Maximum offering price per share - Class D
  ($26.40/0.9900)                                            $  26.67
                                                             --------

  Net asset value, offering and redemption
   price per share - Class Z ($3,616/136)                    $  26.55
                                                             --------


  COMPOSITION OF NET ASSETS
  Capital paid in                                            $156,625
  Accumulated net realized gains                                3,017
  Net unrealized appreciation                                  32,641
                                                             --------
                                                             $192,283
                                                             --------
<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.


                                       13
                             STATEMENT OF OPERATIONS
                        FOR THE YEAR ENDED JUNE 30, 1996


<TABLE>
<S>                                                          <C>       <C>
  (in thousands)
  INVESTMENT INCOME
  Dividends                                                            $  748
  Special dividend from Advo, Inc.                                        250
  Interest                                                                872
                                                                       ------
                                                                        1,870

  EXPENSES
  Management fee                                             $734
  Service fee - Class A, Class B, Class D                     300
  Distribution fee - Class B                                  436
  Distribution fee - Class D                                    3
  Transfer agent                                              409
  Bookkeeping fee                                              52
  Trustees fee                                                 15
  Custodian fee                                                10
  Audit fee                                                    31
  Legal fee                                                    12
  Registration fee                                             87
  Reports to shareholders                                      15
  Other                                                        12       2,116
                                                            -----       -----
         Net Investment Loss                                             (246)
                                                                        -----

  NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
  Net realized gain                                                     6,194
  Net unrealized appreciation                                          16,571
                                                                      -------
         Net Gain                                                      22,765
                                                                      -------

  Net Increase in Net Assets from Operations                          $22,519
                                                                      -------
</TABLE>


                                      
 See notes to financial statements.


                                       14
                       STATEMENT OF CHANGES IN NET ASSETS


<TABLE>
<CAPTION>
                                                             Year ended
(in thousands)                                                 June 30
                                                      -------------------------
INCREASE (DECREASE) IN NET ASSETS                        1996            1995
<S>                                                   <C>             <C>       
Operations:
Net investment loss                                   $    (246)      $    (124)
Net realized gain                                         6,194           3,335
Net unrealized appreciation                              16,571          11,220
                                                      ---------       ---------
    Net Increase from Operations                         22,519          14,431
Distributions:
From net investment income - Class A                       --              --
From net realized gains - Class A                        (2,786)           --
From net investment income - Class B                       --              --
From net realized gains - Class B                        (2,652)           --
From net investment income - Class Z                       --              --
From net realized gains - Class Z                          (127)           --
                                                      ---------       ---------
                                                         16,954          14,431
                                                      ---------       ---------
Fund Share Transactions (a):
Receipts for shares sold - Class A                      181,243          16,058
Value of distributions reinvested - Class A               2,440            --
Cost of shares repurchased - Class A                   (143,861)         (9,202)
                                                      ---------       ---------
                                                         39,822           6,856
                                                      ---------       ---------
Receipts for shares sold - Class B                       85,137          29,658
Value of distributions reinvested - Class B               2,027            --
Cost of shares repurchased - Class B                    (27,703)        (14,075)
                                                      ---------       ---------
                                                         59,461          15,583
                                                      ---------       ---------
Receipts for shares sold - Class D                        2,803            --
Value of distributions reinvested - Class D                --              --
Cost of shares repurchased - Class D                       (186)           --
                                                      ---------       ---------
                                                          2,617            --
                                                      ---------       ---------
Receipts for shares sold - Class Z                        3,511            --
Value of distributions reinvested - Class Z                 127            --
Cost of shares repurchased - Class Z                       (328)           --
                                                      ---------       ---------
                                                          3,310            --
                                                      ---------       ---------
    Net Increase from Fund Share
      Transactions                                      105,210          22,439
                                                      ---------       ---------
        Total Increase                                  122,164          36,870
NET ASSETS
Beginning of period                                      70,119          33,249
                                                      ---------       ---------
End of period (including undistributed
  net investment losses of none and
  $1, respectively)                                   $ 192,283       $  70,119
                                                      ---------       ---------
<FN>

  (a)   Class Z shares were initially offered on July 31, 1995 and Class D
        shares were initially offered on January 15, 1996.
</TABLE>

  Continued on next page.
  See notes to financial statements.


                                       15
                       STATEMENT OF CHANGES IN NET ASSETS
                                   (continued)

<TABLE>
<CAPTION>
                                                                 Year ended
                                                                   June 30
                                                            -------------------
                                                             1996         1995
<S>                                                         <C>          <C>
NUMBER OF FUND SHARES (a)
Sold - Class A                                               7,161          823
Issued for distributions reinvested - Class A                  101         --
Repurchased - Class A                                       (5,693)        (483)
                                                            ------       ------
                                                             1,569          340
                                                            ------       ------
Sold - Class B                                               3,410        1,587
Issued for distributions reinvested - Class B                   86         --
Repurchased - Class B                                       (1,113)        (753)
                                                            ------       ------
                                                             2,383          834
                                                            ------       ------
Sold - Class D                                                 105         --
Issued for distributions reinvested - Class D                 --           --
Repurchased - Class D                                           (7)        --
                                                            ------       ------
                                                                98         --
                                                            ------       ------
Sold - Class Z                                                 144         --
Issued for distributions reinvested - Class Z                    5         --
Repurchased - Class Z                                          (13)        --
                                                            ------       ------
                                                               136         --
                                                            ------       ------
<FN>


  (a)   Class Z shares were initially offered on July 31, 1995 and Class D
        shares were initially offered on January 15, 1996.
</TABLE>

  See notes to financial statements.


                                       16
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 1996

NOTE 1. ACCOUNTING POLICIES

ORGANIZATION: Colonial Small Stock 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 long-term growth. The Fund
may issue an unlimited number of shares. The Fund offers four classes of shares:
Class A, Class B, Class D and Class Z. 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. Class Z shares are offered continuously at net asset value. There are
certain restrictions on purchasing Class Z shares, please refer to a prospectus.

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 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 and 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 A, Class B and Class D service fee and 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.

                                       17
                   Notes to Financial Statements/June 30, 1996
  

NOTE 1. ACCOUNTING POLICIES - CONT.
  
Per share data was calculated using the average shares outstanding during the
period. In addition, Class A, Class B, and Class D net investment income per
share data reflects the service fee applicable to Class A, Class B and Class D
shares and the distribution fee applicable to Class B and Class D shares only.

Class A, 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 service
fee applicable to Class A, Class B and Class D shares and 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.

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.

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 0.60% 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.


                                       18
                   Notes to Financial Statements/June 30, 1996

NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES

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 year ended June 30, 1996, the Fund has been
advised that the Distributor retained net underwriting discounts of $109,928 on
sales of the Fund's Class A shares and received contingent deferred sales
charges (CDSC) of $137,948 and $97 on Class B and Class D share redemptions,
respectively.

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 attributable to
Class A, Class B and Class D, 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, respectively.

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.

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 year ended June 30, 1996, purchases and sales of
investments, other than short-term obligations, were $130,104,251 and
$50,185,998, respectively.

Unrealized appreciation (depreciation) at June 30, 1996, based on cost of
investments for federal income tax purposes was:

<TABLE>
<S>                                                         <C>        
             Gross unrealized appreciation                  $41,145,934
             Gross unrealized depreciation                   (8,512,521)
                                                            -----------
                 Net unrealized appreciation                $32,633,413
                                                            -----------
</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 year ended June 30, 1996.

                                       19
                            FINANCIAL HIGHLIGHTS (a)

Selected data for a share of each class outstanding throughout each period are
as follows:

<TABLE>
<CAPTION>
                                                                     Year ended June 30
                                                ---------------------------------------------------------------
                                                                           1996                  
                                                 Class A         Class B        Class D  (b)       Class Z (c)
                                                --------         -------        -------            --------
<S>                                             <C>              <C>            <C>                <C>   
Net asset value - 
  Beginning of period                            $ 22.260         $21.840        $22.550            $ 24.790
                                                 --------         -------        -------            --------
INCOME FROM INVESTMENT OPERATIONS:                                                                  
Net investment                                                                                      
  income (loss)                                     0.036 (d)      (0.147) (d)    (0.072) (d)          0.096 (d)
Net realized and                                                                                    
unrealized gain                                     5.479           5.372          3.922               2.959
                                                 --------         -------        -------            --------
                                                                                                    
   Total from Investment                                                                            
      Operations                                    5.515           5.225          3.850               3.055
                                                 --------         -------        -------            --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: 
From net realized gains                            (1.295)         (1.295)            --              (1.295)
                                                 --------         -------        -------            --------
Net asset value -                                                                                   
   End of period                                 $ 26.480         $25.770        $26.400            $ 26.550
                                                 --------         -------        -------            --------
                                                                                                    
Total return (e)                                    25.31%          24.44%         17.07%  (f)         12.81% (f)
                                                 --------         -------        -------            --------
RATIOS TO AVERAGE NET ASSETS                                                                        
Expenses                                             1.38% (g)       2.13%  (g)     2.15%  (g)(h)       1.13% (g)(h)
Net investment                                                                                      
  income (loss)                                      0.15% (g)      (0.60)% (g)    (0.54)% (g)(h)       0.41% (g)(h)
Portfolio turnover                                     46%             46%            46%                46%
Average commission                                                                                  
    rate (i)                                     $  0.044         $ 0.044        $ 0.044            $  0.044
Net assets at end                                                                                   
of period (000)                                  $ 89,924         $96,158        $ 2,585            $  3,616

<FN>

(a)      Per share data was calculated using average shares outstanding during
         the period.

(b)      Class D shares were initially offered on January 15, 1996. Per share
         amount reflect activity from that date.

(c)      Class Z shares were initially offered on July 31, 1995. Per share
         amounts reflect activity from that date.

(d)      Includes distribution from Advo, Inc., which amounted to $0.047 per
         share.

(e)      Total return at net asset value assuming all distributions reinvested
         and no initial sales charge or contingent deferred sales charge.

(f)      Not annualized

(g)      The benefits derived from custody credits and directed brokerage
         arrangements had no impact. Prior years' ratios are net of benefits
         received, if any.

(h)      Annualized.

(i)      For fiscal years beginning on or after September 1, 1995, a fund is
         required to disclose its average commission rate per share for trades
         on which commissions are charged.

</TABLE>
                                       20
                        FINANCIAL HIGHLIGHTS - continued



<TABLE>
<CAPTION>
                                 Year ended June 30
          ----------------------------------------------------------------------
                      1995                                  1994
            Class A           Class B            Class A          Class B
          ------------    ----------------    --------------   --------------
<S>                       <C>                 <C>              <C>           
          $     16.670    $         16.470    $       15.860   $       15.790
          ------------    ----------------    --------------   --------------


                 0.002              (0.139)           (0.047)          (0.176)

                 5.588               5.509             0.857            0.856
          ------------    ----------------    --------------   --------------

                 5.590               5.370             0.810            0.680
          ------------    ----------------    --------------   --------------


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

          $     22.260    $         21.840    $       16.670   $       16.470
          ------------    ----------------    --------------   --------------
                 33.53%              32.60%             5.11%            4.31%
          ------------    ----------------    --------------   --------------


                  1.45%               2.20%             1.56%            2.31%

                     -                   -                 -               -

                  0.01%              (0.74)%           (0.27)%          (1.02)%
                    64%                 64%               35%              35%

          $     40,661    $         29,458    $       24,760   $        8,489
</TABLE>


- ----------------------------------------------------------------------
Federal income tax information (unaudited) 99.85% of the gain distribution paid
by the Fund in December 1995 was derived from long term gains


                                       21
                      FINANCIAL HIGHLIGHTS (a) - continued



<TABLE>
<CAPTION>
                                                                                          Year ended June 30
                                                                       --------------------------------------------------------
                                                                                     1993                    1992
                                                                         Class A              Class B(b)             Class A
                                                                       -----------            ----------            -----------
<S>                                                                    <C>                    <C>                   <C>        
         Net asset value -
                 Beginning of period                                   $    12.330            $   13.010            $    11.570
                                                                       -----------            ----------            -----------
               INCOME FROM INVESTMENT OPERATIONS:
               Net investment
                 loss                                                       (0.083)               (0.100)                (0.127)
               Net realized and
               unrealized gain                                               3.613                 2.880                  0.887
                                                                       -----------            ----------            -----------
                  Total from Investment
                     Operations                                              3.530                 2.780                  0.760
                                                                       -----------            ----------            -----------
               LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
               From net realized
                 gains                                                          --                    --                     --
                                                                       -----------            ----------            -----------
               Net asset value -
                  End of period                                        $    15.860            $   15.790            $    12.330
                                                                       -----------            ----------            -----------
               Total return (c)                                              28.63%                21.73% (d)              6.57%
                                                                       -----------            ----------            -----------

               RATIOS TO AVERAGE NET ASSETS
               Expenses                                                       1.88%                 2.63% (e)              2.13%
               Interest expense                                               0.01%                 0.01%                  0.06%
               Net investment
                 loss                                                        (0.60)%               (1.35)%(e)             (0.91)%
               Portfolio turnover                                               29%                   29%                    --
               Net assets at end
               of period (000)                                         $    23,716            $    1,665            $    22,002
<FN>


(a)      Per share data was calculated using average shares outstanding during
         the period.

(b)      Class B shares were initially offered on November 9, 1992. Per share
         data reflects activity from that date.

(c)      Total return at net asset value assuming all distributions reinvested
         and no initial sales charge or contingent deferred sales charge.

(d)      Not annualized.

(e)      Annualized.

</TABLE>
                                       22

                        REPORT OF INDEPENDENT ACCOUNTANTS

          T0 THE TRUSTEES OF COLONIAL TRUST VI AND THE SHAREHOLDERS OF
                            COLONIAL SMALL STOCK 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 Small Stock 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 periods
indicated, 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 audits. We conducted our audits 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 audits, which included confirmation of portfolio positions
at June 30, 1996 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.



PRICE WATERHOUSE LLP
Boston, Massachusetts
August 12, 1996

<PAGE>



Part B of  Post-Effective  Amendment  No. 10 as it relates to the  Statements of
Additional  Information and financial  statements of Colonial  Aggressive Growth
Fund, Colonial Equity Income Fund and Colonial  International Equity Fund, filed
with the Commission on September 27, 1996, is incorporated herein by reference.



Part C  OTHER INFORMATION

Item 24.  Financial Statements and Exhibits
- -------------------------------------------
(a)             Financial Statements:
                
                Included in Part A
                ------------------
                Summary  of  Expenses  (for  Colonial  Aggressive  Growth  Fund,
                Colonial  Equity Income Fund and Colonial  International  Equity
                Fund,   incorporated   herein   by   reference   to  Part  A  of
                Post-Effective  Amendment  No. 10 filed with the  Commission  on
                September 27, 1996) 
                
                The Fund's  Financial  History (for Colonial Aggressive Growth 
                Fund, Colonial Equity Income Fund and Colonial International  
                Equity Fund,  incorporated herein by reference to Part  A of  
                Post-Effective  Amendment  No.  10  filed  with  the
                Commission on September 27, 1996)

                Included  in Part B  
                ---------------------
                Colonial  U.S.  Fund  for  Growth  (CUSFFG)
                Investment  Portfolio,  June 30,  1996 
                Statement  of assets and liabilities,  June 30, 1996 
                Statement of operations,  Year ended June 30, 1996  
                Statement  of changes in net assets,  Years ended
                June 30, 1996 and 1995
                Notes to Financial  Statements 
                Financial Highlights 
                Report of Independent Accountants

                Colonial Small Stock Fund (CSSF) 
                Investment Portfolio,  June 30, 1996  
                Statement  of  assets  and  liabilities,   June  30,  1996
                Statement of  operations,  year ended June 30, 1996 
                Statement of changes in net assets,  Years ended 
                June 30, 1996 and 1995 
                Notes to  Financial   Statements   
                Financial   Highlights   
                Report  of Independent Accountants


                Colonial  Equity  Income  Fund  (CEIF)  (incorporated  herein by
                reference  to Part B of  Post-Effective  Amendment  No. 10 filed
                with the Commission on September 27, 1996) 
                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)(incorporated herein by 
                reference to Part B of Post-Effective Amendment No. 10 filed 
                with the Commission on September  27,  1996)  
                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) (incorporated herein
                by reference to Part B of Post-Effective  Amendment No. 10 filed
                with the Commission on September 27, 1996)
                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


<PAGE>



(b)             Exhibits (each exhibit is applicable to all
                series' of the Trust unless otherwise referenced):
      1.        Agreement and Declaration of Trust
      2.        By-Laws as amended (2/16/96)(l)
      3.        Not Applicable
      4.        Form of Share Certificate(l)
      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)(l)
      5.(e)     Management Agreement (CEIF)(l)
      5.(f)     Management Agreement (CIEF)(l)
      6.(a)     Distributor's Contract with Colonial
                Investment Services, Inc.(l)
      6.(b)     Form of Selling Agreement(l)
      6.(c)     Form of Bank and Bank Affiliated Selling Agreement(l)
      6.(d)     Form of Asset Retention Agreement(l)
      7.        Not Applicable
      8.        Custody Agreement with Boston Safe Deposit and
                Trust Company(l)
      8.(a)     Amendment to Custody Agreement with Boston
                Safe Deposit and Trust Company(l)
      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.(l)
      9.(c)     Plan pursuant to Rule 18f-3(d) under the
                Investment Company Act of 1940(l)
      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)
      11.(a)    Consent of Independent Accountants (CAGF,
                CEIF, CIEF)(l)
      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)
      16.(a)(i) Calculation of Yield Information (CUSFFG)
      16.(b)    Calculation of Performance Information (CSSF)
      16.(b)(i) Calculation of Yield Information (CSSF)
      16.(c)    Calculation of Performance Information (CAGF)(1)
      16.(c)(i) Calculation of Yield Information (CAGF)(l)
      16.(d)    Calculation of Performance Information (CEIF)(1)
      16.(d)(i) Calculation of Yield Information (CEIF)(l)
      16.(e)    Calculation of Performance Information (CIEF)(1)
      16.(e)(i) Calculation of Yield Information (CIEF)(l)
      17.(a)    Financial Data Schedule (Class A) (CUSFFG)
      17.(b)    Financial Data Schedule (Class B) (CUSFFG)
      17.(c)    Financial Data Schedule (Class D) (CUSFFG)
      17.(d)    Financial Data Schedule (Class A) (CSSF)
      17.(e)    Financial Data Schedule (Class B) (CSSF)
      17.(f)    Financial Data Schedule (Class D) (CSSF)
      17.(g)    Financial Data Schedule (Class Z) (CSSF)
      17.(h)    Financial Data Schedule (Class A) (CAGF)(l)
      17.(i)    Financial Data Schedule (Class B) (CAGF)(l)
      17.(j)    Financial Data Schedule (Class D) (CAGF)(l)
      17.(k)    Financial Data Schedule (Class A) (CEIF)(l)
      17.(l)    Financial Data Schedule (Class B) (CEIF)(l)
      17.(m)    Financial Data Schedule (Class D) (CEIF)(l)
      17.(n)    Financial Data Schedule (Class A) (CIEF)(l)
      17.(o)    Financial Data Schedule (Class B) (CIEF)(l)
      17.(p)    Financial Data Schedule (Class D) (CIEF)(l)
      18.(a)    Power of Attorney for:  Robert J. Birnbaum,
                Tom Bleasdale, Lora S. Collins, James E.
                Grinnell, William D. Ireland, Jr., Richard W.
                Lowry, William E. Mayer, James L. Moody, Jr.,
                John J. Neuhauser, George L. Shinn, Robert L.
                Sullivan and Sinclair Weeks, Jr. (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 No. 9 on Form N-1A, filed with
      the Securities and Exchange Commission on January 16,
      1996.
(l)   Incorporated by reference to the Registrant's
      Post-Effective Amendment No. 10 on Form N-1A, filed with
      the Securities and Exchange Commission on September 27,
      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 9/30/96
                                 
 Shares of beneficial interest    13,193 Class A record holders (CUSFFG)
                                  30,379 Class B record holders (CUSFFG)
                                     562 Class D record holders (CUSFFG)
                                   9,212 Class A record holders (CSSF)
                                  19,178 Class B record holders (CSSF)
                                     195 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
- ------------------  ----------   --------------------------------   -----------

Andersen, Peter     V.P.

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.

Franklin,           Sr. V.P.    
 Fred J.

Gerokoulis,         V.P.         Colonial Investment Services, 
 Stephen A.                        Inc.                          Sr. V.P.

Gibson, Stephen     Dir.;        The Colonial Group, Inc.        Exec. V.P.
 E.                 Exec. 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.       

Jacoby, Timothy J.  Sr. 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.


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

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)  [Deleted]





                                 ************


                                     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. 11 to its Registration  Statement under the Securities Act of 1933
and Amendment No. 13 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 11th day of October, 1996.

                                COLONIAL TRUST VI



                              By:    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                     October 11, 1996

    



/s/ Peter L. Lydecker       Chief Financial Officer,      October 11 , 1996
                            Chief Accounting Officer
                            and Controller

/s/ Robert J. Birnbaum      Trustee
     




/s/ Tom Bleasdale           Trustee
     




/s/ Lora S. Collins         Trustee
     




/s/ James E. Grinnell       Trustee
     




/s/ William D. Ireland, Jr. Trustee
     



/s/ Richard W. Lowry        Trustee
     




/s/ James L. Moody, Jr.      Trustee
    
                                                    Michael H. Koonce
                                                    Attorney-in-fact
                                                    October 11, 1996

/s/ John J. Neuhauser       Trustee
    




/s/ George L. Shinn         Trustee
    




/s/ Robert L. Sullivan      Trustee
    




/s/ Sinclair Weeks, Jr.     Trustee
    




                                  EXHIBIT INDEX


EXHIBIT


1.             Agreement and Declaration of Trust
11.            Consent of Independent Accountants (CUSFFG, CSSF)
16.(a)         Calculation of Performance Information (CUSFFG)
16.(a)(i)      Calculation of Yield Information (CUSFFG)
16.(b)         Calculation of Performance Information (CSSF)
16.(b)(i)      Calculation of Yield Information (CSSF)
17.(a)         Financial Data Schedule (Class A)(CUSFFG)
17.(b)         Financial Data Schedule (Class B) (CUSFFG)
17.(c)         Financial Data Schedule (Class D) (CUSFFG)
17.(d)         Financial Data Schedule (Class A) (CSSF)
17.(e)         Financial Data Schedule (Class B) (CSSF)
17.(f)         Financial Data Schedule (Class D) (CSSF)
17.(g)         Financial Data Schedule (Class Z) (CSSF)











                       AGREEMENT AND DECLARATION OF TRUST

                              OF COLONIAL TRUST VI


         AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts,  this
30th day of  December,  1991 by the  Trustees  hereunder,  and by the holders of
shares of beneficial interest to be issued hereunder as hereinafter provided.

         WITNESSETH that

         WHEREAS, this Trust has been formed to carry on the business of an 
investment company; and

         WHEREAS,  the Trustees  have agreed to manage all property  coming into
their hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.

         NOW,  THEREFORE,  the Trustees  hereby  declare that they will hold all
cash,  securities and other assets,  which they may from time to time acquire in
any manner as  Trustees  hereunder,  IN TRUST to manage and  dispose of the same
upon the following  terms and conditions for the pro rata benefit of the holders
from time to time of Shares in this Trust as hereinafter set forth.

                                    ARTICLE I

                              NAME AND DEFINITIONS

Name

         Section  1.  This  Trust  shall be known as  Colonial  Trust VI and the
Trustees  shall  conduct the  business of the Trust under that name or any other
name as they may from time to time determine.

Definitions

         Section 2.  Whenever  used  herein,  unless  otherwise  required by the
context or specifically provided:

         (a) The "Trust" refers to the Massachusetts  business trust established
by this Agreement and Declaration of Trust, as amended from time to time;

         (b)  "Trustees" refers to the Trustees of the Trust named herein or 
elected in accordance with Article IV;

         (c)  "Shares"  means  the  equal  proportionate  transferable  units of
interest into which the  beneficial  interest in the Trust shall be divided from
time to time  or,  if more  than one  series  of  Shares  is  authorized  by the
Trustees,  the equal  proportionate units into which each series of Shares shall
be divided  from time to time or, if more than one class of Shares of any series
is  authorized by the Trustees,  the equal  proportionate  units into which each
class of such series of Shares shall be divided from time to time;

         (d)  "Shareholder" means a record owner of Shares;

         (e) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;

         (f)  The  terms  "Affiliated   Person,"   "Assignment,"   "Commission,"
"Interested  Person,"  "Principal  Underwriter" and "Majority  Shareholder Vote"
(the 67% or 50%  requirement  of the third  sentence of Section  2(a)(42) of the
1940 Act, whichever may be applicable) shall have the meanings given them in the
1940 Act;

         (g)  "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time; and

         (h)  "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time.

                                   ARTICLE II

                                     PURPOSE

         The purpose of the Trust is to provide  investors a managed  investment
primarily in securities, commodities and debt instruments.

                                   ARTICLE III

                                     SHARES

Division of Beneficial Interest

         Section  1. The  Shares  of the  Trust  shall be  issued in one or more
series  as the  Trustees  may,  without  Shareholder  approval,  authorize.  The
Trustees may, without Shareholder approval, divide the Shares of any series into
two or more  classes,  Shares of each such  class  having  such  preferences  or
special or relative rights or privileges  (including  conversion rights, if any)
as the Trustees may determine and as are not inconsistent  with any provision of
this Declaration of Trust.  Each series shall be preferred over all other series
in respect of the assets  allocated to that series.  The beneficial  interest in
each series shall at all times be divided into Shares,  without par value,  each
of which shall,  except as the Trustees may  otherwise  authorize in the case of
any  series  that is  divided  into  two or more  classes,  represent  an  equal
proportionate  interest in the series with each other Share of the same  series,
none having priority or preference over another. The number of Shares authorized
shall be unlimited,  and the Shares so authorized  may be represented in part by
fractional  shares.  The  Trustees  may from time to time  divide or combine the
Shares of any series or class into a greater or lesser  number  without  thereby
changing the proportionate beneficial interests in the series or class.

Ownership of Shares

         Section 2. The  ownership  of Shares  shall be recorded on the books of
the Trust or its  transfer or similar  agent.  No  certificates  certifying  the
ownership  of  Shares  shall be  issued  except as the  Trustees  may  otherwise
determine  from time to time.  The Trustees may make such rules as they consider
appropriate for the issuance of Share  certificates,  the transfer of Shares and
similar  matters.  The  record  books of the  Trust as kept by the  Trust or any
transfer or similar agent of the Trust,  as the case may be, shall be conclusive
as to who are the  Shareholders of each series and class and as to the number of
Shares of each series and class held from time to time by each Shareholder.

Investments in the Trust; Assets of the Series

         Section 3. The Trustees shall accept investments in the Trust from such
persons  and on such terms and,  subject to any  requirements  of law,  for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as they from time to time authorize.

         All consideration received by the Trust for the issue or sale of Shares
of each  series,  together  with all  income,  earnings,  profits  and  proceeds
thereof,  including any proceeds derived from the sale,  exchange or liquidation
thereof,  and any  funds  or  payments  derived  from any  reinvestment  of such
proceeds  in  whatever  form the same may be,  shall  irrevocably  belong to the
series of Shares with  respect to which the same were  received by the Trust for
all purposes,  subject only to the rights of creditors,  and shall be so handled
upon the books of account of the Trust and are herein referred to as "assets of"
such series.

No Preemptive Rights

         Section 4.  Shareholders  shall have no  preemptive  or other  right to
receive,  purchase or subscribe for any  additional  Shares or other  securities
issued by the Trust.

Status of Shares and Limitation of Personal Liability

         Section 5. Shares shall be deemed to be personal  property  giving only
the rights provided in this  instrument.  Every  Shareholder by virtue of having
become a Shareholder shall be held to have expressly  assented and agreed to the
terms  hereof  and to have  become a party  hereto.  The death of a  Shareholder
during the  continuance of the Trust shall not operate to terminate the same nor
entitle the  representative  of any deceased  Shareholder to an accounting or to
take any action in court or  elsewhere  against the Trust or the  Trustees,  but
only to the rights of said decedent under this Trust.  Ownership of Shares shall
not entitle the  Shareholder  to any title in or to the whole or any part of the
Trust  property or right to call for a partition  or division of the same or for
an accounting,  nor shall the ownership of Shares  constitute  the  Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the  Trust,  shall have any power to bind  personally  any  Shareholder,  nor
except as  specifically  provided  herein to call upon any  Shareholder  for the
payment  of any sum of money or  assessment  whatsoever  other  than such as the
Shareholder may at any time personally agree to pay.








                                   ARTICLE IV

                                  THE TRUSTEES

Election

         Section  1. The  number  of  Trustees  shall be fixed by the  Trustees,
except that,  subsequent  to any sale of Shares  pursuant to a public  offering,
there shall be not less than three  Trustees.  Any  vacancies  occurring  in the
Board of Trustees may be filled by the Trustees if,  immediately  after  filling
any such vacancy,  at least two-thirds of the Trustees then holding office shall
have been elected to such office by the  Shareholders.  In the event that at any
time less than a majority of the Trustees  then  holding  office were elected to
such  office  by  the  Shareholders,  the  Trustees  shall  call  a  meeting  of
Shareholders for the purpose of electing  Trustees.  Each Trustee elected by the
Shareholders  or  by  the  Trustees  shall  serve  until  the  next  meeting  of
Shareholders  called for the purpose of electing Trustees and until the election
and  qualification  of his or her  successor,  or until he or she  sooner  dies,
resigns or is removed. The initial Trustees,  each of whom shall serve until the
first meeting of Shareholders at which Trustees are elected and until his or her
successor is elected and qualified,  or until he or she sooner dies,  resigns or
is removed,  shall be John A. McNeice, Jr. and such other persons as the Trustee
or  Trustees  then in office  shall,  prior to any sale of Shares  pursuant to a
public offering,  appoint. By vote of a majority of the Trustees then in office,
the Trustees may remove a Trustee with or without  cause.  At any meeting called
for the purpose, a Trustee may be removed, with or without cause, by vote of the
holders of two-thirds of the outstanding Shares.

Effect of Death, Resignation, etc. of a Trustee

         Section 2. The death, declination,  resignation, retirement, removal or
incapacity of the Trustees,  or any one of them,  shall not operate to annul the
Trust or to revoke any  existing  agency  created  pursuant to the terms of this
Declaration of Trust.

Powers

         Section 3. Subject to the provisions of this  Declaration of Trust, the
business of the Trust shall be managed by the Trustees,  and they shall have all
powers  necessary  or  convenient  to  carry  out that  responsibility.  Without
limiting the  foregoing,  the Trustees may adopt By-Laws not  inconsistent  with
this Declaration of Trust providing for the conduct of the business of the Trust
and may amend and repeal  them to the extent  that such  By-Laws do not  reserve
that  right  to the  Shareholders;  they  may fill  vacancies  in their  number,
including  vacancies resulting from increases in their number, and may elect and
remove such  officers  and appoint and  terminate  such agents as they  consider
appropriate;  they may appoint from their own number, and terminate,  any one or
more  committees  consisting  of two or more  Trustees,  including  an executive
committee which may, when the Trustees are not in session,  exercise some or all
of the power and authority of the Trustees as the Trustees may  determine;  they
may appoint an advisory  board,  the members of which shall not be Trustees  and
need not be  Shareholders;  they may employ one or more custodians of the assets
of the Trust and may authorize such  custodians to employ  subcustodians  and to
deposit  all or any part of such  assets in a system or systems  for the central
handling of securities, retain a transfer agent or a Shareholder services agent,
or both,  provide for the  distribution  of Shares by the Trust,  through one or
more principal underwriters or otherwise, set record dates for the determination
of Shareholders  with respect to various  matters,  and in general delegate such
authority  as they  consider  desirable  to any  officer  of the  Trust,  to any
committee  of the  Trustees  and to any agent or employee of the Trust or to any
such custodian or underwriter.

         Without  limiting  the  foregoing,  the  Trustees  shall have power and
authority:

         (a)  To invest and reinvest cash, and to hold cash uninvested;

         (b)  To sell, exchange, lend, pledge, mortgage, hypothecate, write 
options on and lease any or all of the assets of the Trust;

         (c) To vote or give assent,  or exercise any rights of ownership,  with
respect to stock or other  securities  or  property;  and to execute and deliver
proxies or powers of attorney to such  person or persons as the  Trustees  shall
deem proper,  granting to such person or persons such power and discretion  with
relation to securities or property as the Trustees shall deem proper;

         (d)  To exercise powers and rights of subscription or otherwise which 
in any manner arise out of ownership of securities;

         (e) To hold any  security  or  property  in a form not  indicating  any
trust, whether in bearer,  unregistered or other negotiable form, or in the name
of the Trustees or of the Trust or in the name of a custodian,  subcustodian  or
other depository or a nominee or nominees or otherwise;

         (f) Subject to the  provisions  of Article III,  Section 3, to allocate
assets,  liabilities and expenses of the Trust to a particular  series of Shares
or to apportion the same among two or more series, provided that any liabilities
or expenses  incurred by a particular  series of Shares shall be payable  solely
out of the assets of that series;  and to the extent necessary or appropriate to
give effect to the  preferences and special or relative rights and privileges of
any classes of Shares, to allocate assets, liabilities, income and expenses of a
series to a particular  class of Shares of that series or to apportion  the same
among two or more classes of Shares of that series;

         (g) To consent to or  participate  in any plan for the  reorganization,
consolidation  or merger of any corporation or issuer,  any security of which is
or was held in the Trust; to consent to any contract, lease, mortgage,  purchase
or  sale  of  property  by such  corporation  or  issuer,  and to pay  calls  or
subscriptions with respect to any security held in the Trust;

         (h) To join with other security  holders in acting through a committee,
depository,  voting trustee or otherwise,  and in that connection to deposit any
security  with, or transfer any security to, any such  committee,  depository or
trustee,  and to delegate to them such power and authority  with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper,  and to agree to pay,  and to pay,  such  portion  of the  expenses  and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;

         (i) To compromise,  arbitrate or otherwise adjust claims in favor of or
against  the Trust on any matter in  controversy,  including  but not limited to
claims for taxes;

         (j)  To enter into joint ventures, general or limited partnerships and 
any other combinations or associations;

         (k)  To borrow funds;

         (l) To  endorse  or  guarantee  the  payment  of  any  notes  or  other
obligations  of any person;  to make  contracts  of guaranty or  suretyship,  or
otherwise assume  liability for payment thereof;  and to mortgage and pledge the
Trust property or any part thereof to secure any of or all of such obligations;

         (m) To  purchase  and pay  for  entirely  out of  Trust  property  such
insurance  as they may deem  necessary  or  appropriate  for the  conduct of the
business, including, without limitation,  insurance policies insuring the assets
of the Trust  and  payment  of  distributions  and  principal  on its  portfolio
investments,  and  insurance  policies  insuring  the  Shareholders,   Trustees,
officers,   employees,   agents,  investment  advisers  or  managers,  principal
underwriters or independent  contractors of the Trust  individually  against all
claims and  liabilities of every nature  arising by reason of holding,  being or
having held any such office or position,  or by reason of any action  alleged to
have been taken or omitted by any such person as Shareholder,  Trustee, officer,
employee,  agent,  investment  adviser  or  manager,  principal  underwriter  or
independent  contractor,  including  any  action  taken or  omitted  that may be
determined  to  constitute  negligence,  whether or not the Trust would have the
power to indemnify such person against such liability; and

         (n) To pay pensions for faithful service,  as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension,  profit-sharing,  share
bonus,  share  purchase,  savings,  thrift and other  retirement,  incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and  annuity  contracts  as a means  of  providing  such  retirement  and  other
benefits, for any or all of the Trustees,  officers, employees and agents of the
Trust.

         The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments  by Trustees.  Except as otherwise
provided  herein or from time to time in the By-Laws,  any action to be taken by
the Trustees may be taken by a majority of the Trustees  present at a meeting of
the  Trustees  (a  quorum  being  present),  within  or  without  Massachusetts,
including  any  meeting  held  by  means  of a  conference  telephone  or  other
communications  equipment  by means of which all  persons  participating  in the
meeting can hear each other at the same time,  and  participation  by such means
shall  constitute  presence in person at a meeting,  or by written consents of a
majority of the Trustees then in office.

Payment of Expenses by Trust

         Section 4. The  Trustees are  authorized  to pay or to cause to be paid
out of the  principal  or income of the Trust,  or partly out of  principal  and
partly out of income, as they deem fair, all expenses,  fees, charges, taxes and
liabilities  incurred or arising in connection  with the Trust, or in connection
with the  management  thereof,  including,  but not  limited  to, the  Trustees'
compensation  and such  expenses  and  charges  for the  services of the Trust's
officers,  employees,  investment  adviser or  manager,  principal  underwriter,
auditor, counsel, custodian, transfer agent, Shareholder services agent and such
other agents or independent contractors, and such other expenses and charges, as
the Trustees may deem necessary or proper to incur, provided,  however, that all
expenses, fees, charges, taxes and liabilities incurred or arising in connection
with a particular  series of Shares,  as determined  by the  Trustees,  shall be
payable solely out of the assets of that series.


Ownership of Assets of the Trust

         Section 5.  Title to all of the assets of each  series of Shares and of
the Trust shall at all times be considered as vested in the Trustees.

Advisory, Management and Distribution

         Section 6.  Subject  to a  favorable  Majority  Shareholder  Vote,  the
Trustees  may,  at any time and from time to time,  contract  for  exclusive  or
nonexclusive  advisory  and/or  management  services  with  Colonial  Management
Associates, Inc., a Massachusetts corporation, or any other corporation,  trust,
association or other organization (the "Adviser"), every such contract to comply
with such requirements and restrictions as may be set forth in the By-Laws;  and
any such contract may contain such other terms interpretive of or in addition to
said  requirements  and  restrictions as the Trustees may determine,  including,
without  limitation,  authority to determine from time to time what  investments
shall be purchased,  held,  sold or exchanged  and what portion,  if any, of the
assets of the Trust shall be held uninvested, and to make changes in the Trust's
investments.  The Trustees may also, at any time and from time to time, contract
with  the  Adviser  or  any  other  corporation,  trust,  association  or  other
organization,  appointing it exclusive or nonexclusive  distributor or principal
underwriter for the Shares, every such contract to comply with such requirements
and  restrictions as may be set forth in the By-Laws;  and any such contract may
contain such other terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine.

         The fact that:

         (i) any of the  Shareholders,  Trustees  or  officers of the Trust is a
shareholder,  director,  officer, partner, trustee, employee,  manager, adviser,
principal underwriter or distributor or agent of or for any corporation,  trust,
association or other  organization,  or of or for any parent or affiliate of any
organization,  with which an  advisory  or  management  contract,  or  principal
underwriter's or distributor's  contract,  or transfer,  shareholder services or
other  agency  contract  may have  been or may  hereafter  be made,  or that any
organization,  or any parent or affiliate  thereof,  is a Shareholders or has an
interest in the Trust, or that

         (ii) any corporation,  trust,  association or other  organization  with
which  an  advisory  or  management  contract  or  principal   underwriter's  or
distributor's  contract,  or  transfer,  Shareholder  services  or other  agency
contract  may  have  been or may  hereafter  be made  also  has an  advisory  or
management contract,  or principal  underwriter's or distributor's  contract, or
transfer,  shareholder  services or other agency contract with one or more other
corporations, trusts, associations or other organizations, or has other business
or interests

shall  not  affect  the  validity  of  any  such  contract  or  disqualify   any
Shareholder,  Trustee or officer of the Trust from voting upon or executing  the
same or create any liability or accountability to the Trust or its Shareholders.






                                    ARTICLE V

                    SHAREHOLDERS' VOTING POWERS AND MEETINGS

Voting Powers

         Section 1. The  Shareholders  shall have power to vote only (i) for the
election of Trustees as provided in Article IV,  Section 1, (ii) with respect to
any  Adviser as provided  in Article  IV,  Section 6, (iii) with  respect to any
termination  of this Trust to the extent and as provided in Article IX,  Section
4, (iv) with respect to any amendment of this Declaration of Trust to the extent
and as  provided  in  Article  IX,  Section  7,  (v) to the same  extent  as the
stockholders  of a  Massachusetts  business  corporation  as to whether or not a
court  action,   proceeding  or  claim  should  not  be  brought  or  maintained
derivatively  or as a class  action on behalf of the Trust or the  Shareholders,
and (vi) with respect to such additional matters relating to the Trust as may be
required by law, this  Declaration of Trust,  the By-Laws or any registration of
the Trust with the Securities and Exchange  Commission (or any successor agency)
or any state, or as the Trustees may consider necessary or desirable. Each whole
Share  shall be entitled to one vote as to any matter on which it is entitled to
vote and each fractional  Share shall be entitled to a proportionate  fractional
vote.  Notwithstanding  any other provision of this Declaration of Trust, on any
matter  submitted  to a vote of  Shareholders,  all  Shares  of the  Trust  then
entitled  to vote  shall be voted in the  aggregate  as a single  class  without
regard to series or class;  except (1) when required by the 1940 Act or when the
Trustees  shall have  determined  that the matter  affects one or more series or
classes  materially  differently,  Shares shall be voted by individual series or
class;  and (2) when the Trustees have  determined  that the matter affects only
the interests of one or more series or classes,  then only  Shareholders of such
series  or  classes  shall  be  entitled  to vote  thereon.  There  shall  be no
cumulative voting in the election of Trustees.  Shares may be voted in person or
by proxy. A proxy with respect to Shares held in the name of two or more persons
shall be valid if  executed by any one of them unless at or prior to exercise of
the proxy the Trust receives a specific  written notice to the contrary from any
one of them. A proxy  purporting to be executed by or on behalf of a Shareholder
shall be deemed  valid  unless  challenged  at or prior to its  exercise and the
burden of proving  invalidity  shall rest on the  challenger.  Until  Shares are
issued,  the Trustees may exercise all rights of  Shareholders  and may take any
action required by law, this  Declaration of Trust or the By-Laws to be taken by
Shareholders.

Voting Power and Meetings

         Section 2.  Meetings of  Shareholders  of the Trust or of any series or
class may be called by the  Trustees  or such other  person or persons as may be
specified  in the  By-Laws  and held from time to time for the purpose of taking
action upon any matter  requiring the vote or the authority of the  Shareholders
of the Trust or any series or class as herein  provided or upon any other matter
deemed by the Trustees to be necessary or desirable. Meetings of Shareholders of
the Trust or of any  series or class  shall be  called by the  Trustees  or such
other  person  or  persons  as may be  specified  in the  By-Laws  upon  written
application.  The Shareholders shall be entitled to at least seven days' written
notice of any meeting of the Shareholders.

Quorum and Required Vote

         Section 3. Thirty percent (30%) of the Shares entitled to vote shall be
a quorum for the transaction of business at a Shareholders' meeting, except that
where any provision of law or of this  Declaration  of Trust permits or requires
that holders of any series or class shall vote as a series or class, then thirty
percent (30%) of the aggregate number of Shares of that series or class entitled
to vote  shall be  necessary  to  constitute  a quorum  for the  transaction  of
business  by that  series  or  class.  Any  lesser  number,  however,  shall  be
sufficient  for  adjournments.  Any  adjourned  session or sessions  may be held
within a reasonable time after the date set for the original meeting without the
necessity  of further  notice.  Except  when a larger  vote is  required  by any
provision of this Declaration of Trust or the By-Laws,  a majority of the Shares
voted shall decide any questions and a plurality shall elect a Trustee, provided
that  where any  provision  of law or of this  Declaration  of Trust  permits or
requires  that the  holders  of any  series or class  shall  vote as a series or
class,  then a majority of the Shares of that series or class vote on the matter
(or a plurality  with  respect to the  election of a Trustee)  shall decide that
matter insofar as that series or class is concerned.

Action by Written Consent

         Section  4. Any action  taken by  Shareholders  may be taken  without a
meeting if a majority  of  Shareholders  entitled to vote on the matter (or such
larger proportion  thereof as shall be required by any express provision of this
Declaration  of Trust or the By-Laws)  consent to the action in writing and such
written  consents  are filed with the records of the  meetings of  Shareholders.
Such  consent  shall be treated for all purposes as a vote taken at a meeting of
Shareholders.

Additional Provisions

         Section 5. The By-Laws may include further provisions for Shareholders'
votes and meetings and related matters.

                                   ARTICLE VI

                   DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES,
                      AND DETERMINATION OF NET ASSET VALUE

Distributions

         Section 1. The Trustees may, but need not, each year  distribute to the
Shareholders of each series or class such income and gains, accrued or realized,
as the Trustees may determine,  after providing for actual and accrued  expenses
and  liabilities  (including  such  reserves  as  the  Trustees  may  establish)
determined in accordance with good accounting practices. The Trustees shall have
full  discretion  to determine  which items shall be treated as income and which
items as capital and their determination shall be binding upon the Shareholders.
Distributions of each year's income of each series,  if any be made, may be made
in one or more payments, which shall be in Shares, in cash or otherwise and on a
date or dates and as of a record date or dates  determined by the  Trustees.  At
any time and from time to time in their discretion,  the Trustees may distribute
to the  Shareholders of any one or more series or classes as of a record date or
dates determined by the Trustees,  in Shares, in cash or otherwise,  all or part
of any gains  realized on the sale or  disposition  of property of the series or
otherwise,  or all or part of any other  principal of the Trust  attributable to
the series.  In the case of any series not divided  into two or more  classes of
Shares,  each  distribution  pursuant  to this  Section 1 shall be made  ratably
according to the number of Shares of the series held by the several Shareholders
on the applicable  record date thereof,  provided that no  distribution  need be
made on Shares purchased  pursuant to orders  received,  or for which payment is
made, after such time or times as the Trustees may determine. In the case of any
series  divided into two or more  classes,  each  distribution  pursuant to this
Section 1 may be made in whole or in such parts as the Trustees may determine to
the  Shareholders  of any  one or more  classes,  and  the  distribution  to the
Shareholders  of any class  shall be made  ratably  according  to the  number of
Shares of the class  (but need not be made  ratably  according  to the number of
Shares of the series,  considered  without  regard to class) held by the several
Shareholders on the record date thereof,  provided that no distribution  need be
made on Shares purchased  pursuant to orders  received,  or for which payment is
made,  after  such  time or  times  as the  Trustees  may  determine.  Any  such
distribution  paid in Shares  will be paid at the net  asset  value  thereof  as
determined in accordance with Section 7 of this Article VI.

Redemptions and Repurchases

         Section 2. Any holder of Shares of the Trust may by  presentation  of a
written request, together with his or her certificates, if any, for such Shares,
in proper form for transfer, at the office of the Trust or at a principal office
of a transfer agent appointed by the Trust, redeem his or her Shares for the net
asset value thereof determined and computed in accordance with the provisions of
this Section 2 and the provisions of Section 7 of this Article VI.

         Upon receipt by the Trust or its transfer agent of such written request
for  redemption of Shares,  such Shares shall be redeemed at the net asset value
per share of the  appropriate  series  next  determined  after  such  Shares are
tendered  in proper  order for  transfer to the Trust or  determined  as of such
other time fixed by the  Trustees  as may be  permitted  or required by the 1940
Act,  provided  that no such tender  shall be required in the case of Shares for
which a certificate or certificates have not been issued,  and in such case such
Shares  shall be redeemed  at the net asset  value per share of the  appropriate
series next  determined  after such request has been  received or  determined at
such other time fixed by the  Trustees  as may be  permitted  or required by the
1940 Act.

         The  obligation  of the Trust to redeem  its  Shares of each  series or
class as set forth  above in this  Section 2 shall be subject to the  conditions
that during any time of emergency,  as hereinafter defined,  such obligation may
be suspended by the Trust by or under  authority of the Trustees for such period
or periods  during such time of  emergency  as shall be  determined  by or under
authority of the Trustees.  If there is such a suspension,  any  Shareholder may
withdraw  any demand  for  redemption  and any  tender of Shares  which has been
received  by the Trust  during any such  period  and any  tender of Shares,  the
applicable net asset value of which would but for such  suspension be calculated
as of a time during such period. Upon such withdrawal, the Trust shall return to
the Shareholder the certificates  therefor, if any. For the purposes of any such
suspension, "time of emergency" shall mean, either with respect to all Shares or
any series of Shares, any period during which:

         (a)  the New York Stock Exchange is closed other than for customary 
weekend and holiday closings; or

         (b) the  Trustees  or  authorized  officers  of the  Trust  shall  have
determined,  in compliance  with any  applicable  rules and  regulations  of the
Securities  and Exchange  Commission,  either that trading on the New York Stock
Exchange is  restricted,  or that an  emergency  exists as a result of which (i)
disposal by the Trust of securities owned by it is not reasonably practicable or
(ii) it is not  reasonably  practicable  for the Trust fairly to  determine  the
current value of its net assets; or

         (c)  the suspension or postponement of such obligations is permitted by
order of the Securities and Exchange Commission.

         The Trust may also purchase,  repurchase or redeem Shares in accordance
with such  other  methods,  upon such  other  terms and  subject  to such  other
conditions  as the  Trustees  may from  time to time  authorize  at a price  not
exceeding  the net asset  value of such  Shares in effect  when the  purchase or
repurchase or any contract to purchase or repurchase is made.

Payment in Kind

         Section 3. Subject to any generally  applicable  limitation  imposed by
the  Trustees,  any payment on  redemption  of Shares may, if  authorized by the
Trustees,  be made wholly or partly in kind, instead of in cash. Such payment in
kind shall be made by distributing securities or other property constituting, in
the opinion of the  Trustees,  a fair  representation  of the  various  types of
securities  and other  property then held by the series of Shares being redeemed
(but not  necessarily  involving a portion of each of the series'  holdings) and
taken at their  value used in  determining  the net asset value of the Shares in
respect of which payment is made.

Redemptions at the Option of the Trust

         Section 4. The Trust shall have the right at its option and at any time
to redeem Shares of any Shareholder at the net asset value thereof as determined
in accordance with Section 7 of Article VI of this  Declaration of Trust: (i) if
at such time such  Shareholder  owns  fewer  Shares  than,  or Shares  having an
aggregate net asset value of less than, an amount  determined  from time to time
by the Trustees;  or (ii) to the extent that such  Shareholder  owns Shares of a
particular  series  of  Shares  equal to or in  excess  of a  percentage  of the
outstanding  Shares  of  that  series  (determined   without  regard  to  class)
determined  from time to time by the Trustees;  or (iii) to the extent that such
Shareholder  owns Shares of the Trust  representing a percentage  equal to or in
excess of such percentage of the aggregate  number of outstanding  Shares of the
Trust or the aggregate net asset value of the Trust determined from time to time
by the Trustees.

Dividends, Distributions, Redemptions and Repurchases

         Section 5. No dividend or distribution (including,  without limitation,
any  distribution  paid upon  termination  of the Trust or of any  series)  with
respect to, nor any redemption or repurchase of, the Shares of any series (or of
any class)  shall be  effected  by the Trust  other than from the assets of such
series (or of the series of which such class is a part).

Additional Provisions Relating to Redemptions and Repurchases

         Section 6. The  completion of  redemption of Shares shall  constitute a
full  discharge of the Trust and the Trustees  with respect to such shares,  and
the Trustees  may require that any  certificate  or  certificates  issued by the
Trust to evidence  the  ownership  of such Shares  shall be  surrendered  to the
Trustees for cancellation or notation.



Determination of Net Asset Value

         Section 7. The term "net asset  value" of the Shares of each  series or
class shall mean: (i) the value of all the assets of such series or class;  (ii)
less the total liabilities of such series or class;  (iii) divided by the number
of Shares of such series or class outstanding,  in each case at the time of each
determination.  The "number of Shares of such series or class  outstanding"  for
the purposes of such computation shall be exclusive of any Shares of such series
or class to be redeemed and not then redeemed as to which the  redemption  price
has been determined,  but shall include Shares of such series or class presented
for repurchase and not then repurchased and Shares of such series or class to be
redeemed  and not then  redeemed as to which the  redemption  price has not been
determined  and  Shares  of such  series  or class  the  sale of which  has been
confirmed.  Any  fractions  involved in the  computation  of net asset value per
share shall be adjusted to the nearer cent unless the Trustees  shall  determine
to adjust such fractions to a fraction of a cent.

         The  Trustees,  or any  officer  or  officers  or agent  of this  Trust
designated for the purpose by the Trustees,  shall determine the net asset value
of the Shares of each series or class,  and the Trustees  shall fix the times as
of which the net asset  value of the  Shares  of each  series or class  shall be
determined and shall fix the periods during which any such net asset value shall
be effective as to sales, redemptions and repurchases of, and other transactions
in, the Shares of such series or class, except as such times and periods for any
such  transaction may be fixed by other  provisions of this Declaration of Trust
or by the By-Laws.

         In  valuing  the  portfolio  investments  of any  series  or class  for
determination  of net asset value per share of such series or class,  securities
for which  market  quotations  are readily  available  shall be valued at prices
which,  in the opinion of the  Trustees,  or any officer or officers or agent of
the Trust designated for the purpose by the Trustees,  most nearly represent the
market value of such securities, which may, but need not, be the most recent bid
price obtained from one or more of the market makers for such securities;  other
securities and assets shall be valued at fair value as determined by or pursuant
to the direction of the Trustees. Notwithstanding the foregoing, short-term debt
obligations, commercial paper and repurchase agreements may be, but need not be,
valued on the basis of quoted  yields for  securities  of  comparable  maturity,
quality and type,  or on the basis of amortized  cost. In  determination  of net
asset value of any series or class, dividends receivable and accounts receivable
for  investments  sold and for Shares  sold shall be stated at the amounts to be
received therefor;  and income receivable accrued daily on bonds and notes owned
shall be stated at the amount to be  received.  Any other assets shall be stated
at fair value as determined  by the Trustees or such officer,  officers or agent
pursuant to the Trustees'  authority,  except that no value shall be assigned to
good will,  furniture,  lists,  reports,  statistics or other noncurrent  assets
other than real estate.  Liabilities of any series or class for accounts payable
for  investments  purchased and for Shares  tendered for redemption and not then
redeemed as to which the redemption price has been determined shall be stated at
the amounts payable  therefor.  In determining the net asset value of any series
or class, the person or persons making such determination on behalf of the Trust
may  include in  liabilities  such  reserves,  estimated  accrued  expenses  and
contingencies  as such person or persons may in its, his or their best  judgment
deem fair and reasonable under the circumstances. Any income dividends and gains
distributions payable by the Trust shall be deducted as of such time or times on
the record date therefor as the Trustees shall determine.

         The manner of  determining  the net assets of any series or class or of
determining  the net asset  value of the  Shares of any series or class may from
time to time be  altered  as  necessary  or  desirable  in the  judgment  of the
Trustees  to  conform  to  any  other  method  prescribed  or  permitted  by any
applicable law or regulation.

         Determinations  under  this  Section  7  made  in  good  faith  and  in
accordance  with the  provisions of the 1940 Act shall be binding on all parties
concerned.

                                   ARTICLE VII

              COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES

Compensation

         Section  1. The  Trustees  as such  shall  be  entitled  to  reasonable
compensation  from the  Trust;  they may fix the  amount of their  compensation.
Nothing  herein  shall in any way  prevent  the  employment  of any  Trustee for
advisory,  management,  legal, accounting,  investment banking or other services
and payment for the same by the Trust.

Limitation of Liability

         Section 2. The Trustees shall not be responsible or liable in any event
for any  neglect or  wrongdoing  of any  officer,  agent,  employee,  adviser or
principal  underwriter of the Trust,  nor shall any Trustees be responsible  for
the act or omission of any other  Trustee,  but nothing herein  contained  shall
protect any Trustee  against any liability to which he or she would otherwise be
subject by reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.

         Every  note,  bond,  contract,   instrument,   certificate,   Share  or
undertaking  and every other act or thing  whatsoever  executed or done by or on
behalf of the Trust or the Trustees or any of them in connection  with the Trust
shall be  conclusively  deemed  to have  been  executed  or done only in or with
respect  to  their or his or her  capacity  as  Trustees  or  Trustee,  and such
Trustees or Trustee shall not be personally liable thereon.

                                  ARTICLE VIII

                                 INDEMNIFICATION

Trustees, Officers, etc.

         Section 1. The Trust shall  indemnify each of its Trustees and officers
(including  persons who serve at the Trust's  request as directors,  officers or
trustees  of  another  organization  in which the Trust  has any  interest  as a
shareholder,  creditor  or  otherwise)  (hereinafter  referred  to as a "Covered
Person")  against all  liabilities  and  expenses,  including but not limited to
amounts  paid in  satisfaction  of  judgments,  in  compromise  or as fines  and
penalties,  and  counsel  fees  reasonably  incurred  by any  Covered  Person in
connection  with  the  defense  or  disposition  of any  action,  suit or  other
proceeding,  whether civil or criminal,  before any court or  administrative  or
legislative  body, in which such Covered Person may be or may have been involved
as a party or  otherwise  or with  which  such  person  may be or may have  been
threatened,  while in office or  thereafter,  by reason of being or having  been
such a Trustee or officer,  except that no Covered  Person shall be  indemnified
against any  liability  to the Trust or its  Shareholders  to which such Covered
Person would  otherwise be subject by reason of wilful  misfeasance,  bad faith,
gross negligence or reckless  disregard of the duties involved in the conduct of
such Covered Person's office.  Expenses,  including  counsel fees so incurred by
any  such  Covered  Person  (but  excluding  amounts  paid  in  satisfaction  of
judgments,  in  compromise or as fines or  penalties),  may be paid from time to
time by the Trust in advance of the final  disposition of any such action,  suit
or proceeding  upon receipt of any  undertaking  by or on behalf of such Covered
Person to repay amounts so paid to the Trust if it is ultimately determined that
indemnification of such expenses is not authorized under this Article,  provided
that (a) such Covered Person shall provide security for his undertaking, (b) the
Trust shall be insured against losses arising by reason of such Covered Person's
failure to fulfill his  undertaking  or (c) a majority of the  Trustees  who are
disinterested  persons  and who  are not  Interested  Persons  (provided  that a
majority of such  Trustees  then in office act on the  matter),  or  independent
legal  counsel  in a  written  opinion,  shall  determine,  based on a review of
readily  available  facts  (but not a full  trial-type  inquiry),  that there is
reason  to  believe  such  Covered  Person   ultimately   will  be  entitled  to
indemnification.

Compromise Payment

         Section  2. As to any  matter  disposed  of  (whether  by a  compromise
payment, pursuant to a consent decree or otherwise) without an adjudication in a
decision  on the  merits  by a court,  or by any  other  body  before  which the
proceeding  was brought,  that such Covered Person is liable to the Trust or its
Shareholders by reason of wilful  misfeasance,  bad faith,  gross  negligence or
reckless  disregard  of the  duties  involved  in the  conduct  of such  Covered
Person's  office,  indemnification  shall be provided if (a)  approved as in the
best interest of the Trust, after notice that it involves such  indemnification,
by at least a majority of the Trustees who are disinterested persons and are not
interested Persons (provided that a majority of such Trustees then in office act
on the matter),  upon a determination,  based upon a review of readily available
facts (but not a full trial-type inquiry) that such Covered Person is not liable
to the Trust or its  Shareholders  by reason of wilful  misfeasance,  bad faith,
gross negligence or reckless  disregard of the duties involved in the conduct of
such Covered Person's office,  or (b) review of readily available facts (but not
a full  trial-type  inquiry) to the effect that such  indemnification  would not
protect such  Covered  Person  against any  liability to the Trust to which such
Covered Person would otherwise be subject by reason of wilful  misfeasance,  bad
faith,  gross  negligence  or reckless  disregard of the duties  involved in the
conduct of his office.  Any approval  pursuant to this Section shall not prevent
the recovery from any Covered  Person of any amount paid to such Covered  Person
in accordance  with this Section as  indemnification  if such Covered  Person is
subsequently  adjudicated  by a court of  competent  jurisdiction  to have  been
liable to the Trust or its  Shareholders  by reason of wilful  misfeasance,  bad
faith,  gross  negligence  or reckless  disregard of the duties  involved in the
conduct of such Covered Person's office.

Indemnification Not Exclusive

         Section 3. The right of  indemnification  hereby  provided shall not be
exclusive of or affect any other rights to which any such Covered  Person may be
entitled.  As used in this Article VIII, the term "Covered Person" shall include
such person's heirs, executors and administrators,  and a "disinterested person"
is a person  against whom none of the  actions,  suits or other  proceedings  in
question  or another  action,  suit or other  proceeding  on the same or similar
grounds is then or has been  pending.  Nothing  contained in this article  shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees  and  officers,  and other  persons  may be  entitled  by  contract  or
otherwise  under  law,  nor the  power of the  Trust to  purchase  and  maintain
liability insurance on behalf of such persons. 

Shareholders

         Section 4. In case any Shareholder or former  Shareholder shall be held
to be  personally  liable  solely by reason of his or her being or having been a
Shareholder  and not because of his or her acts or  omissions  or for some other
reason, the Shareholder or former  Shareholder (or his or her heirs,  executors,
administrators or other legal  representatives  or, in the case of a corporation
or other entity,  its corporate or other general successor) shall be entitled to
be held harmless from and indemnified  against all loss and expense arising from
such liability, but only out of the assets of the particular series of shares of
which he or she is or was a Shareholder.

                                   ARTICLE IX

                                  MISCELLANEOUS

Trustees, Shareholders, etc. Not Personally Liable; Notice

         Section 1. All persons extending credit to,  contracting with or having
any claim against the Trust or a particular  series of Shares shall look only to
the  assets of the Trust or the assets of that  particular  series of Shares for
payment under such credit,  contract or claim;  and neither the Shareholders nor
the  Trustees,  nor any of the Trust's  officers,  employees or agents,  whether
past,  present or future,  shall be personally liable therefor.  Nothing in this
Declaration  of Trust shall  protect any Trustee  against any liability to which
such Trustee  would  otherwise be subject by reason of wilful  misfeasance,  bad
faith,  gross  negligence  or reckless  disregard of the duties  involved in the
conduct of the office of Trustee.

         Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any  officers or officer  shall give notice that
this  Declaration  of  Trust  is on file  with  the  Secretary  of  State of The
Commonwealth  of  Massachusetts  and shall  recite that the same was executed or
made by or on  behalf  of the  Trust or by them as  Trustees  or  Trustee  or as
officers  or  officer  and not  individually  and that the  obligations  of such
instrument are not binding upon any of them or the Shareholders individually but
are binding only upon the assets and property of the Trust, and may contain such
further  recital  as he or she or they may deem  appropriate,  but the  omission
thereof shall not operate to bind any Trustees or Trustee of officers or officer
or Shareholders or Shareholder individually.

Trustee's Good Faith Action, Expert Advice, No Bond or Surety

         Section 2. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone  interested.  A Trustee shall be liable
for his or her own wilful  misfeasance,  bad faith, gross negligence or reckless
disregard  of the duties  involved in the conduct of the office of Trustee,  and
for nothing else,  and shall not be liable for errors of judgment or mistakes of
fact or law.  The  Trustees  may take  advice of counsel or other  experts  with
respect to the meaning and operation of this  Declaration of Trust, and shall be
under no liability for any act or omission in accordance with such advice or for
failing to follow such advice.  The  Trustees  shall not be required to give any
bond as such, nor any surety if a bond is required.




Liability of Third Persons Dealing with Trustees

         Section 3. No person  dealing with the Trustees  shall be bound to make
any inquiry concerning the validity of any transaction made or to be made by the
Trustees  or to  see  to  the  application  of any  payments  made  or  property
transferred to the Trust or upon its order.

Duration and Termination of Trust

         Section 4.  Unless  terminated  as  provided  herein,  the Trust  shall
continue without  limitation of time. The Trust may be terminated at any time by
vote of  Shareholders  holding at least  two-thirds of the Shares of each series
entitled to vote or by the Trustees by written notice to the  Shareholders.  Any
series of Shares may be terminated at any time by vote of  Shareholders  holding
at least  two-thirds  of the Shares of such  series  entitled  to vote or by the
Trustees by written notice to the Shareholders of such series.

         Upon  termination  of the Trust or of any one or more series of Shares,
after  paying or  otherwise  providing  for all  charges,  taxes,  expenses  and
liabilities,  whether due or accrued or  anticipated as may be determined by the
Trustees,  the Trust shall in  accordance  with such  procedures as the Trustees
consider  appropriate  reduce the remaining assets to distributable form in cash
or shares or other securities,  or any combination  thereof,  and distribute the
proceeds to the  Shareholders of the series involved,  ratably  according to the
number of Shares of such series held by the several  Shareholders of such series
on the date of termination, except to the extent otherwise required or permitted
by the  preferences and special or relative rights and privileges of any classes
of Shares of that series,  provided that any distribution to the Shareholders of
a  particular  class of Shares  shall be made to such  Shareholders  pro rata in
proportion to the number of Shares of such class held by each of them.

Filing of Copies, References, Headings

         Section  5.  The  original  or a copy  of this  instrument  and of each
amendment  hereto  shall  be kept at the  office  of the  Trust  where it may be
inspected by any  Shareholder.  A copy of this  instrument and of each amendment
hereto  shall  be  filed  by the  Trust  with  the  Secretary  of  State  of The
Commonwealth of Massachusetts  and with the Clerk of the City of Boston, as well
as any other  governmental  office  where  such  filing may from time to time be
required.  Anyone dealing with the Trust may rely on a certificate by an officer
of the Trust as to whether or not any such  amendments  have been made and as to
any matters in connection with the Trust hereunder; and, with the same effect as
if it were the original, may rely on a copy certified by an officer of the Trust
to be a copy of this  instrument or of any such  amendments.  In this instrument
and in any such amendment,  references to this  instrument,  and all expressions
such as  "herein,"  "hereof" and  "hereunder,"  shall be deemed to refer to this
instrument  as amended or affected by any such  amendments.  Headings are placed
herein for convenience of reference only and shall not be taken as a part hereof
or control or affect the  meaning,  construction  or effect of this  instrument.
This  instrument  may be executed in any number of  counterparts,  each of which
shall be deemed an original.

Applicable Law

         Section 6. This  Declaration  of Trust is made in The  Commonwealth  of
Massachusetts,  and it is created  under and is to be governed by and  construed
and administered according to the laws of said Commonwealth.  The Trust shall be
of the type commonly called a Massachusetts business trust, and without limiting
the  provisions  hereof,  the Trust may exercise all powers which are ordinarily
exercised by such a trust.

Amendments

         Section 7. This  Declaration  of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when  authorized
so to do by a vote of Shareholders  holding a majority of the Shares entitled to
vote,  except that an  amendment  which shall  affect the holders of one or more
series or classes of Shares but not the  holders of all  outstanding  series and
classes shall be authorized  by vote of the  Shareholders  holding a majority of
the Shares  entitled  to vote of each series and class  affected  and no vote of
Shareholders  of a series or class not affected  shall be  required.  
Amendments having  the  purpose  of  changing  the name of the  Trust or of  
supplying  any omission,  curing any  ambiguity  or curing,  correcting  or  
supplementing  any defective  or  inconsistent   provision   contained  herein  
shall  not  require authorization by Shareholder vote.

         IN WITNESS  WHEREOF,  all of the  Trustees as  aforesaid  do hereto set
their hands this 30th day of December, 1991.



                                                     /s/  John A. McNeice, Jr.
                                                           


                        THE COMMONWEALTH OF MASSACHUSETTS

Boston, ss.                                                   December 30, 1991

         Then personally appeared the above-named Trustee and acknowledged the 
foregoing instrument to be his free act and deed, before me,



                                                     /s/  Diane M. Joyce
                                                          Notary Public

                                                 My commission expires:   3/2/95

(Notary's Seal)









                    CONSENT OF INDEPENDENT ACCOUNTANTS



We hereby consent to the incorporation by reference in the 
Statements of Additional Information constituting 
parts of this Post-Effective Amendment No. 11 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, Colonial
International Equity Fund, Colonial Small Stock Fund and Colonial U.S. Fund
for Growth, 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, which constitute part of this Registration Statement,
and "Independent Accountants" in the Statements of Additional Information.



PRICE WATERHOUSE LLP
- --------------------------
PRICE WATERHOUSE LLP
Boston, MA
October 10, 1996

















<TABLE>
<CAPTION>

                                                PERFORMANCE CALCULATION

                                            COLONIAL US FUND FOR GROWTH - CLASS A

                                                     Year Ended: 6/30/96

                                                     Inception Date: 7/1/92



                                                                          Since Inception
                          1 Year Ended 6/30/96                           7/1/92 to 6/30/96

                      Standard         Non-Standard                 Standard      Non-Standard

<S>                   <C>                <C>                        <C>              <C>
 Initial Inv.         $1,000.00          $1,000.00                  $1,000.00        $1,000.00
 Max. Load                 5.75%                                         5.75%

 Amt. Invested          $942.50          $1,000.00                    $942.50        $1,000.00
 Initial NAV             $13.26             $13.26                     $10.00           $10.00
 Initial Shares          71.078             75.415                     94.250          100.000

 Shares From Dist.        6.337              6.722                     20.719           21.981
 End of Period NAV       $14.47             $14.47                     $14.47           $14.47

 Total Return             12.02%             18.85%                     66.36%           76.51%

 Average Annual
  Total Return            12.02%             18.85%                     13.56%           15.25%
</TABLE>
<TABLE>
<CAPTION>
                                                   PERFORMANCE CALCULATION

                                            COLONIAL US FUND FOR GROWTH - CLASS B

                                                      Year Ended: 6/30/96

                                                      Inception Date: 7/1/92



                                                                             Since Inception
                              1 Year Ended 6/30/96                         7/1/92 to 6/30/96

                         Standard      Non-Standard                   Standard       Non-Standard

<S>                     <C>               <C>                         <C>              <C>
    Initial Inv.        $1,000.00         $1,000.00                   $1,000.00        $1,000.00

    Amt. Invested       $1,000.00         $1,000.00                   $1,000.00        $1,000.00
    Initial NAV            $13.18            $13.18                      $10.00           $10.00
    Initial Shares         75.873            75.873                     100.000          100.000

    Shares From Dist.       6.235             6.235                      19.063           19.063
    End of Period NAV      $14.36            $14.36                      $14.36           $14.36

    CDSC                     5.00%                                         3.00%
    Total Return            12.91%            17.91%                      67.97%           70.97%

    Average Annual
     Total Return           12.91%            17.91%                      13.83%           14.34%
</TABLE>
<TABLE>
<CAPTION>
                                                 PERFORMANCE CALCULATION

                                            COLONIAL US FUND FOR GROWTH - CLASS D

                                                     Year Ended: 6/30/96

                                                     Inception Date: 7/1/94



                                                                           Since Inception
                             1 Year Ended 6/30/96                        7/1/94 to 6/30/96

                        Standard       Non-Standard                 Standard       Non-Standard

<S>                     <C>              <C>                        <C>              <C> 
  Initial Inv.          $1,000.00        $1,000.00                  $1,000.00        $1,000.00
  Max. Load                  1.00%                                       1.00%

  Amt. Invested           $990.00        $1,000.00                    $990.00        $1,000.00
  Initial NAV              $13.24           $13.24                     $11.46           $11.46
  Initial Shares           74.773           75.529                     86.387           87.260

  Shares From Dist.         6.182            6.245                     14.007           14.149
  End of Period NAV        $14.41           $14.41                     $14.41           $14.41

  CDSC                       1.00%
  Total Return              15.66%           17.84%                     44.67%           46.13%

  Average Annual
   Total Return             15.66%           17.84%                     20.25%           20.85%
</TABLE>


       WLK/ 08/22/96

                           COLONIAL US FUND FOR GROWTH
                       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


       a = dividends and interest earned during
           the month ................................          $880,726

       b = expenses (exclusive of distribution fee)
           accrued during the month..................           582,740

       c = average dividend shares outstanding
           during the month .........................        33,442,363

       d = class A maximum offering price per share
           on the last day of the month .............            $15.35


            CLASS A YIELD ...........................              0.70%

            CLASS B YIELD ...........................             -0.01%

            CLASS D YIELD ...........................             -0.01%


<TABLE>
<CAPTION>

                                                      PERFORMANCE CALCULATION

                                                 COLONIAL SMALL STOCK FUND - CLASS A

                                                         Year End: 6/30/96

                                                     Inception Date: 7/25/86

                                                                                                     SINCE INCEPTION
                             1 YEAR ENDED 6/30/96             5 YEARS ENDED 6/30/96                7/25/86 TO 6/30/96

                           Standard     Non-Standard        Standard          Non-Standard     Standard        Non-Standard
                         -----------     -----------        -----------        -----------     -----------      -----------
<S>                      <C>             <C>                   <C>             <C>              <C>             <C>
    Initial Inv.         $1,000.00       $1,000.00             $1,000.00       $1,000.00        $1,000.00       $1,000.00
    Max. Load                 5.75%                                 5.75%                            5.75%

    Amt. Invested          $942.50       $1,000.00               $942.50       $1,000.00          $942.50       $1,000.00
    Initial NAV             $22.26          $22.26                $11.57          $11.57           $12.14          $12.14
    Initial Shares          42.341          44.924                81.461          86.430           77.636          82.372

    Shares From Dist.        2.260           2.398                 4.348           4.613           11.407          12.103
    End of Period NAV       $26.48          $26.48                $26.48          $26.48           $26.48          $26.48

    Total Return             18.10%          25.31%               127.22%         141.08%          135.79%         150.17%

    Average Annual
     Total Return            18.10%          25.31%                17.84%          19.24%            9.01%           9.66%

</TABLE>
<TABLE>
<CAPTION>
                                     PERFORMANCE CALCULATION

                                  COLONIAL SMALL STOCK FUND - CLASS B

                                        Year End: 6/30/96

                                      Inception Date: 11/9/92




                                                              SINCE INCEPTION
                       1 YEAR ENDED 6/30/96                 11/9/92 TO 6/30/96
                   Standard       Non-Standard          Standard        Non-Standard
                   ---------       -----------          ---------        -----------
<S>                <C>              <C>                 <C>                <C> 
 Initial Inv.      $1,000.00        $1,000.00           $1,000.00          $1,000.00

 Amt. Invested     $1,000.00        $1,000.00           $1,000.00          $1,000.00
 Initial NAV          $21.84           $21.84              $13.01             $13.01
 Initial Shares       45.788           45.788              76.864             76.864

 Shares From Dist.     2.502            2.502               4.200              4.200
 End of Period NAV    $25.77           $25.77              $25.77             $25.77

 CDSC                   5.00%                                3.00%
 Total Return          19.44%           24.44%             105.90%            108.90%

 Average Annual
  Total Return         19.44%           24.44%              21.92%             22.41%
</TABLE>
<TABLE>
<CAPTION>
                                                  PERFORMANCE CALCULATION

                                             COLONIAL SMALL STOCK FUND - CLASS D

                                                       Year End: 6/30/96

                                                    Inception Date: 1/15/96



                                                        Since Inception
                                                      1/15/96 to 6/30/96

                                                 Standard          Non-Standard
                                                 --------           ------------
<S>                                             <C>                  <C> 
  Initial Inv.                                  $1,000.00            $1,000.00
  Max. Load                                          1.00%

  Amt. Invested                                   $990.00            $1,000.00
  Initial NAV                                      $22.55               $22.55
  Initial Shares                                   43.902               44.346

  Shares From Dist.                                 0.000                0.000
  End of Period NAV                                $26.40               $26.40

  CDSC                                               1.00%
  Total Return                                      14.90%               17.07%

  Average Annual
   Total Return                                    N/A                 N/A
</TABLE>

                                   PERFORMANCE CALCULATION

                             COLONIAL SMALL STOCK FUND - CLASS Z

                                    Year End:  6/30/96

                                 Inception Date: 7/31/95



                                              Since Inception
                                             7/31/95 to 6/30/96

                                               Non-Standard

[S]                                               [C]
   Initial Inv.                                   $1,000.00


   Amt. Invested                                  $1,000.00
   Initial NAV                                       $24.79
   Initial Shares                                    40.339

   Shares From Dist.                                  2.151
   End of Period NAV                                 $26.55


   Total Return                                       12.81%

   Average Annual
    Total Return                                    N/A


       

                     COLONIAL SMALL STOCK 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


       a = dividends and interest earned during
           the month ................................          $186,237

       b = expenses (exclusive of distribution fee)
           accrued during the month..................           254,063

       c = average dividend shares outstanding
           during the month .........................         7,125,568

       d = class A maximum offering price per share
           on the last day of the month .............            $28.10


            CLASS A YIELD ...........................             -0.41%

            CLASS B YIELD ...........................             -1.21%

            CLASS D YIELD ...........................             -1.23%

            CLASS Z YIELD ...........................             -0.44%

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 US FUND FOR GROWTH, CLASS A YEAR END DEC-31-1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIA
LUS FUND FOR GROWTH, CLASS A YEAR END DEC-31-1996.
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
   <NUMBER> 1
   <NAME> COLONIAL US FUND FOR GROWTH, CLASS A
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-END>                               JUN-30-1996
<INVESTMENTS-AT-COST>                           407787
<INVESTMENTS-AT-VALUE>                          482811
<RECEIVABLES>                                     1574
<ASSETS-OTHER>                                       6
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                  484391
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                            0
<TOTAL-LIABILITIES>                                661
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                        124926
<SHARES-COMMON-STOCK>                            11653
<SHARES-COMMON-PRIOR>                            10931
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               3
<ACCUMULATED-NET-GAINS>                          21387
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                         75324
<NET-ASSETS>                                    483730
<DIVIDEND-INCOME>                                 9043
<INTEREST-INCOME>                                  644
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                    8072
<NET-INVESTMENT-INCOME>                           1615
<REALIZED-GAINS-CURRENT>                         40109
<APPREC-INCREASE-CURRENT>                        27088
<NET-CHANGE-FROM-OPS>                            68812
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                         1271
<DISTRIBUTIONS-OF-GAINS>                         10933
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                            389
<NUMBER-OF-SHARES-REDEEMED>                       1750
<SHARES-REINVESTED>                                851
<NET-CHANGE-IN-ASSETS>                          128330
<ACCUMULATED-NII-PRIOR>                            234
<ACCUMULATED-GAINS-PRIOR>                         7874
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                             3342
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                   8072
<AVERAGE-NET-ASSETS>                            147927
<PER-SHARE-NAV-BEGIN>                            13.26
<PER-SHARE-NII>                                  0.121
<PER-SHARE-GAIN-APPREC>                          2.292
<PER-SHARE-DIVIDEND>                             0.118
<PER-SHARE-DISTRIBUTIONS>                        1.085
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              14.47
<EXPENSE-RATIO>                                      0
<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 US FUND FOR GROWTH, CLASS B YEAR END DEC-31-1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLOINIAL
US FUND FOR GROWTH, CLASS B YEAR END DEC-31-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
   <NUMBER> 1
   <NAME> COLONIAL US FUND FOR GROWTH, CLASS B
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-END>                               JUN-30-1996
<INVESTMENTS-AT-COST>                           407487
<INVESTMENTS-AT-VALUE>                          482811
<RECEIVABLES>                                     1574
<ASSETS-OTHER>                                       6
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                  484391
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                            0
<TOTAL-LIABILITIES>                                661
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                        254375
<SHARES-COMMON-STOCK>                            21363
<SHARES-COMMON-PRIOR>                            19718
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               3
<ACCUMULATED-NET-GAINS>                          21387
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                         75324
<NET-ASSETS>                                    483730
<DIVIDEND-INCOME>                                 9043
<INTEREST-INCOME>                                  644
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                    8072
<NET-INVESTMENT-INCOME>                           1615
<REALIZED-GAINS-CURRENT>                         40109
<APPREC-INCREASE-CURRENT>                        27088
<NET-CHANGE-FROM-OPS>                            68812
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                          325
<DISTRIBUTIONS-OF-GAINS>                         19657
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                           5910
<NUMBER-OF-SHARES-REDEEMED>                       2509
<SHARES-REINVESTED>                               1403
<NET-CHANGE-IN-ASSETS>                          138330
<ACCUMULATED-NII-PRIOR>                            234
<ACCUMULATED-GAINS-PRIOR>                         7874
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                             3342
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                   8072
<AVERAGE-NET-ASSETS>                            263625
<PER-SHARE-NAV-BEGIN>                            13.18
<PER-SHARE-NII>                                  0.017
<PER-SHARE-GAIN-APPREC>                          2.265
<PER-SHARE-DIVIDEND>                             0.017
<PER-SHARE-DISTRIBUTIONS>                        1.085
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              14.36
<EXPENSE-RATIO>                                      0
<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 US FUND FOR GROWTH, CLASS D YEAR END DEC-31-1996 ANDI IS
QUALFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
US FUND FOR GROWTH, CLASS D YEAR END DEC-31-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
   <NUMBER> 1
   <NAME> COLONIAL US FUND FOR GROWTH, CLASS D
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-END>                               JUN-30-1996
<INVESTMENTS-AT-COST>                           407487
<INVESTMENTS-AT-VALUE>                          482811
<RECEIVABLES>                                     1574
<ASSETS-OTHER>                                       6
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                  484391
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                            0
<TOTAL-LIABILITIES>                                661
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                          7721
<SHARES-COMMON-STOCK>                              587
<SHARES-COMMON-PRIOR>                              421
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               3
<ACCUMULATED-NET-GAINS>                          21387
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                         75324
<NET-ASSETS>                                    483730
<DIVIDEND-INCOME>                                 9043
<INTEREST-INCOME>                                  644
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                    8072
<NET-INVESTMENT-INCOME>                           1615
<REALIZED-GAINS-CURRENT>                         40109
<APPREC-INCREASE-CURRENT>                        27088
<NET-CHANGE-FROM-OPS>                            68812
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                           13
<DISTRIBUTIONS-OF-GAINS>                           409
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                            403
<NUMBER-OF-SHARES-REDEEMED>                         75
<SHARES-REINVESTED>                                 30
<NET-CHANGE-IN-ASSETS>                          138330
<ACCUMULATED-NII-PRIOR>                            234
<ACCUMULATED-GAINS-PRIOR>                         7874
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                             3342
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                   8072
<AVERAGE-NET-ASSETS>                              5656
<PER-SHARE-NAV-BEGIN>                            13.24
<PER-SHARE-NII>                                  0.016
<PER-SHARE-GAIN-APPREC>                          2.268
<PER-SHARE-DIVIDEND>                             0.029
<PER-SHARE-DISTRIBUTIONS>                        1.085
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              14.41
<EXPENSE-RATIO>                                      0
<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 SMALL STOCK FUND, CLASS A YEAR END JUN-30-1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
SMALL STOCK FUND, CLASS A YEAR END JUN-30-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
   <NUMBER> 2
   <NAME> COLONIAL SMALL STOCK 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>                           158050
<INVESTMENTS-AT-VALUE>                          190691
<RECEIVABLES>                                     2036
<ASSETS-OTHER>                                      17
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                  192744
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                          461
<TOTAL-LIABILITIES>                                461
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                             0
<SHARES-COMMON-STOCK>                             3395
<SHARES-COMMON-PRIOR>                             1826
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                           3017
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                         32641
<NET-ASSETS>                                    192283
<DIVIDEND-INCOME>                                  998
<INTEREST-INCOME>                                  872
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                    2116
<NET-INVESTMENT-INCOME>                          (246)
<REALIZED-GAINS-CURRENT>                          6194
<APPREC-INCREASE-CURRENT>                        16571
<NET-CHANGE-FROM-OPS>                            22519
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                          2786
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                           7161
<NUMBER-OF-SHARES-REDEEMED>                       5693
<SHARES-REINVESTED>                                101
<NET-CHANGE-IN-ASSETS>                          122164
<ACCUMULATED-NII-PRIOR>                            (1)
<ACCUMULATED-GAINS-PRIOR>                         2386
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                              734
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                   2116
<AVERAGE-NET-ASSETS>                                 0
<PER-SHARE-NAV-BEGIN>                            22.26
<PER-SHARE-NII>                                  0.036
<PER-SHARE-GAIN-APPREC>                          5.479
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                        1.295
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              26.48
<EXPENSE-RATIO>                                   1.38
<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 SMALL STOCK FUND, CLASS B YEAR END JUN-30-1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
SMALL STOCK FUND, CLASS B YEAR END JUN-30-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
   <NUMBER> 2
   <NAME> COLONIAL SMALL STOCK 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>                           158050
<INVESTMENTS-AT-VALUE>                          190691
<RECEIVABLES>                                     2036
<ASSETS-OTHER>                                      17
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                  192744
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                          461
<TOTAL-LIABILITIES>                                461
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                             0
<SHARES-COMMON-STOCK>                             3732
<SHARES-COMMON-PRIOR>                             1349
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                           3017
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                         32641
<NET-ASSETS>                                    192283
<DIVIDEND-INCOME>                                  998
<INTEREST-INCOME>                                  872
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                    2116
<NET-INVESTMENT-INCOME>                          (246)
<REALIZED-GAINS-CURRENT>                          6194
<APPREC-INCREASE-CURRENT>                        16571
<NET-CHANGE-FROM-OPS>                            22519
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                          2652
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                           3410
<NUMBER-OF-SHARES-REDEEMED>                       1113
<SHARES-REINVESTED>                                 86
<NET-CHANGE-IN-ASSETS>                          122164
<ACCUMULATED-NII-PRIOR>                            (1)
<ACCUMULATED-GAINS-PRIOR>                         2386
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                              734
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                   2116
<AVERAGE-NET-ASSETS>                                 0
<PER-SHARE-NAV-BEGIN>                            21.84
<PER-SHARE-NII>                                (0.147)
<PER-SHARE-GAIN-APPREC>                          5.372
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                        1.295
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              25.77
<EXPENSE-RATIO>                                   2.13
<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 SMALL STOCK FUND, CLASS D YEAR END JUN-30-1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
SMALL STOCK FUND, CLASS D YEAR END JUN-30-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
   <NUMBER> 2
   <NAME> COLONIAL SMALL STOCK 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>                           158050
<INVESTMENTS-AT-VALUE>                          190691
<RECEIVABLES>                                     2036
<ASSETS-OTHER>                                      17
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                  192744
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                          461
<TOTAL-LIABILITIES>                                461
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                             0
<SHARES-COMMON-STOCK>                               98
<SHARES-COMMON-PRIOR>                                0
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                           3017
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                         32641
<NET-ASSETS>                                    192283
<DIVIDEND-INCOME>                                  998
<INTEREST-INCOME>                                  872
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                    2116
<NET-INVESTMENT-INCOME>                          (246)
<REALIZED-GAINS-CURRENT>                          6194
<APPREC-INCREASE-CURRENT>                        16571
<NET-CHANGE-FROM-OPS>                            22519
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                            105
<NUMBER-OF-SHARES-REDEEMED>                          7
<SHARES-REINVESTED>                                  0
<NET-CHANGE-IN-ASSETS>                          122164
<ACCUMULATED-NII-PRIOR>                            (1)
<ACCUMULATED-GAINS-PRIOR>                         2386
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                              734
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                   2116
<AVERAGE-NET-ASSETS>                                 0
<PER-SHARE-NAV-BEGIN>                            22.55
<PER-SHARE-NII>                                (0.072)
<PER-SHARE-GAIN-APPREC>                          3.922
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              26.40
<EXPENSE-RATIO>                                   2.15
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANICAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF COLONIAL SMALL STOCK FUND, CLASS Z YEAR END JUN-30-1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS OF COLONIAL
SMALL STOCK FUND, CLASS Z YEAR END JUN-30-1996
</LEGEND>
<CIK> 0000883163
<NAME> COLONIAL TRUST VI
<SERIES>
   <NUMBER> 2
   <NAME> COLONIAL SMALL STOCK FUND, CLASS Z
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          JUN-30-1996
<PERIOD-END>                               JUN-30-1996
<INVESTMENTS-AT-COST>                           158050
<INVESTMENTS-AT-VALUE>                          190164
<RECEIVABLES>                                     2036
<ASSETS-OTHER>                                      17
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                  192744
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                          461
<TOTAL-LIABILITIES>                                461
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                             0
<SHARES-COMMON-STOCK>                              136
<SHARES-COMMON-PRIOR>                                0
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                           3017
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                         32641
<NET-ASSETS>                                    192283
<DIVIDEND-INCOME>                                  998
<INTEREST-INCOME>                                  872
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                    2116
<NET-INVESTMENT-INCOME>                          (246)
<REALIZED-GAINS-CURRENT>                          6194
<APPREC-INCREASE-CURRENT>                        15671
<NET-CHANGE-FROM-OPS>                            22519
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                           127
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                            144
<NUMBER-OF-SHARES-REDEEMED>                         13
<SHARES-REINVESTED>                                  5
<NET-CHANGE-IN-ASSETS>                          122164
<ACCUMULATED-NII-PRIOR>                            (1)
<ACCUMULATED-GAINS-PRIOR>                         2386
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                              734
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                   2116
<AVERAGE-NET-ASSETS>                                 0
<PER-SHARE-NAV-BEGIN>                            24.79
<PER-SHARE-NII>                                  0.096
<PER-SHARE-GAIN-APPREC>                          2.959
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                        1.295
<RETURNS-OF-CAPITAL>                                0.
<PER-SHARE-NAV-END>                              26.55
<EXPENSE-RATIO>                                   1.13
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        


</TABLE>


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