October 28, 1996, Revised August 21, 1997
COLONIAL U.S. 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 U.S. 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 large 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
Fund. Read it carefully and retain it for future reference. More detailed
information about the Fund is in the October 28, 1996, revised May 30, 1997,
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
1-800-426-3750. 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 are subject to an annual distribution fee and a
declining contingent deferred sales charge on redemptions made within six years
after purchase; and Class C shares are offered at net asset value and are
subject to an annual distribution fee and a contingent deferred sales charge on
redemptions made within one year after purchase. 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 5
How the Fund Pursues its Objective and
Certain Risk Factors 5
How the Fund Measures its Performance 6
How the Fund is Managed 7
How the Fund Values its Shares 7
Distributions and Taxes 7
How to Buy Shares 8
How to Sell Shares 10
How to Exchange Shares 10
Telephone Transactions 11
12b-1 Plan 11
Organization and History 11
- ----------------------------- --------------------------
NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE
- ----------------------------- --------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
1
<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 annual expenses
for an investment in the Class A, Class B and Class C shares of the Fund. See
"How the Fund is Managed" and "12b-1 Plan" for more complete descriptions of the
Fund's various costs and expenses.
Shareholder Transaction Expenses(1)(2)
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Maximum Initial Sales Charge Imposed on a Purchase (as a % of offering price)(3) 5.75% 0.00%(5) 0.00%(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 Buy Shares."
(2) Redemption proceeds exceeding $1,000 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 C
shares, long-term Class B and Class C shareholders may pay more in
aggregate sales charges than the maximum initial sales charge permitted by
the National Association of Securities Dealers, Inc. However, because Class
B shares automatically convert to Class A shares after approximately 8
years, this is less likely for Class B shares than for a class without a
conversion feature.
Annual Operating Expenses (as a % of average net assets)
Class A Class B Class 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%
==== ==== ====
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 of its Class A, Class B and Class C
shares of the Fund for the periods specified, assuming a 5% annual return, and,
unless otherwise noted, redemption at period end. The 5% return and expenses
used in this Example should not be considered indicative of actual or expected
Fund performance or expenses, both of which will vary:
Class A Class B Class C
Period: (6) (7) (6) (7)
1 year $ 71 $ 72 $ 22 $ 32 $ 22
3 years 101 99 69 68(9) 68(9)
5 years 132 138 118 118 118
10 years 221 234(8) 234(8) 253 253
(6) Assumes redemption at period end.
(7) Assumes no redemption.
(8) Class B shares automatically convert to Class A shares after approximately
8 years; therefore, years 9 and 10 reflect Class A share expenses.
(9) Class C shares do not incur a contingent deferred sale charge on
redemptions made after one year.
2
<PAGE>
THE FUND'S FINANCIAL HISTORY (a)
The following financial highlights for a share outstanding throughout each year
through the fiscal year ended October 31, 1996, have 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 financial highlights for the period
ended December 31, 1996, are unaudited. During the periods shown, the Fund's
portfolio was managed by a sub-adviser other than the Adviser, using different
investment policies than are now in effect. The results shown do not necessarily
represent the results that would have been achieved under the Fund's current
investment approach. No Class C shares were outstanding during the periods
shown.
<TABLE>
<CAPTION>
Unaudited
Six months ended December 31 Year ended June 30
---------------------------------------------------- ----------------------------------------
1996 1996
---------------------------------------------------- ----------------------------------------
Class A Class B Class D Class A Class B Class D
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $14.470 $14.360 $14.410 $13.260 $13.180 $13.240
-------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.056 0.001 0.001 0.121 0.017 0.016
Net realized and unrealized gain 1.344 1.329 1.339 2.292 2.265 2.268
----- ----- ----- ------ ------ -----
Total from Investment Operations 1.400 1.330 1.340 2.413 2.282 2.284
------ ------ ------ ------ ------ -----
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS:
From net investment income (0.050) -- --- (0.118) (0.017) (0.029)
From net realized gains (1.250) (1.250) (1.250) (1.085) (1.085) (1.085)
------- ------- ------- ------- ------- -------
Total Distributions Declared
to Shareholders (1.300) (1.250) (1.250) (1.203) (1.102) (1.114)
------- ------- ------- ------- ------- -------
Net asset value - End of period $14.570 $14.440 $14.500 $14.470 $14.360 $14.410
======== ======== ======== ======== ======== =======
Total return(b) 9.49%(e) 9.08%(e) 9.12%(e) 18.85% 17.91% 17.84%
======== ======== ======== ======== ======== =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.43%(f) (c) 2.18%(f) (c) 2.18%(f) (c) 1.45%(c) 2.20%(c) 2.20%(c)
Net investment income 0.76%(f) (c) 0.01%(f) (c) 0.01%(f) (c) 0.87%(c) 0.12%(c) 0.12%(c)
Portfolio turnover 64%(e) 64%(e) 64%(e) 89% 89% 89%
Average commission rate (d) $0.0345 $0.0345 $0.0345 $0.0461 $0.0461 $0.0461
Net assets at end of period (000) $180,620 $331,057 $9,334 $168,554 $306,718 $8,458
</TABLE>
- ---------------------------------
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested and
no initial sales charge or contingent deferred sales charge.
(c) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(d) 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.
(e) Not annualized.
(f) Annualized.
4
<PAGE>
THE FUND'S FINANCIAL HISTORY (CONT'D) (a)
<TABLE>
<CAPTION>
Year ended June 30
--------------------------------------------------------------------------------------------
1995 1994 1993(b)
--------------------------------------------------------------------------------------------
Class A Class B Class D(c) Class A Class B Class A Class B
------- ------- ---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period $11.460 $11.400 $11.460 $11.820 $11.770 $10.000 $10.000
-------- -------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.165 0.075 0.074 0.142 0.053 0.103(d) 0.020(d)
Net realized and unrealized gain (loss) 2.530 2.513 2.534 (0.119) (0.122) 1.784 1.763
------ ------ ------ ------- ------- ------ -----
Total from Investment Operations 2.695 2.588 2.608 0.023 (0.069) 1.887 1.783
------ ------ ------ ------ ------- ------ -----
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS:
From net investment income (0.160) (0.073) (0.093) (0.138) (0.056) (0.067) (0.013)
From net realized gains (0.735) (0.735) (0.735) (0.245) (0.245) --- ---
------- ------- ------- ------- ------- ------- ------
Total Distributions Declared
to Shareholders (0.895) (0.808) (0.828) (0.383) (0.301) (0.067) (0.013)
------- ------- ------- ------- ------- ------- -------
Net asset value - End of period $13.260 $13.180 $13.240 $11.460 $11.400 $11.820 $11.770
======== ======== ======== ======== ======== ======== =======
Total return(e) 24.84% 23.94% 24.01% 0.05% (0.71)% 18.90%(f) 17.84%(f)
====== ====== ====== ===== ======= ======== =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.46% 2.21% 2.21% 1.49% 2.24% 1.50% 2.25%
Fees waived by the Adviser --- --- --- --- --- 0.01% 0.01%
Net investment income 1.37% 0.62% 0.62% 1.19% 0.44% 0.93% 0.18%
Portfolio turnover 84% 84% 84% 117% 117% 98% 98%
Net assets at end of period (000) $124,171 $218,201 $3,028 $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.
Further performance information is contained in the Fund's Annual Report to
shareholders, which is obtainable free of charge by calling 1-800-426-3750.
4
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
The Fund seeks long-term growth by investing primarily in large capitalization
equities.
HOW THE FUND PURSUES ITS OBJECTIVE AND CERTAIN RISK FACTORS
The Fund normally invests at least 65% of its total assets in common stock of
U.S. companies with equity market capitalizations at the time of purchase in
excess of $3 billion. Up to 35% of total assets may be invested in common stock
of U.S. companies with equity market capitalizations at the time of purchase
between $1 billion and $3 billion. Up to 10% of total assets may be invested in
sponsored and unsponsored American Depositary Receipts (receipts issued in the
U.S. by banks or trust companies evidencing ownership of underlying foreign
securities (ADRs). Up to 10% of total assets may be invested in any combination
of (i) convertible debt securities (i.e., debt securities that are convertible
into common stock at the holder's option), (ii) other corporate debt securities
rated investment grade by at least two nationally recognized rating agencies,
and (iii) debt securities issued or guaranteed by the U.S. government or its
agencies. The Fund will not concentrate more than 25% of its total assets in any
one industry.
Equity Securities Generally. Equity securities generally include common and
preferred stock, warrants (rights) to purchase such stock, debt securities
convertible into such stock and sponsored and unsponsored ADRs. The Fund will
purchase equity securities that the 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 as the core of the process. Fundamental
company analysis is then used to select securities.
Debt Securities Generally. The Fund may invest in investment grade corporate
debt securities and debt securities issued or guaranteed by the U.S. government
or its agencies. The market values of U.S. government securities and corporate
debt securities generally will fluctuate inversely with changes in interest
rates.
U.S. Government Securities. U.S. government securities in which a Fund may
invest consist of (i) U.S. treasury obligations; (ii) obligations issued or
guaranteed by the U.S. government agencies and instrumentalities (agencies)
which are supported by: (a) the full faith and credit of the U.S. government,
(b) the right of the issuing agency to borrow under a line of credit with the
U.S. treasury, (c) the discretionary power of the U.S. government to purchase
obligations of the agency or (d) the credit of the agency. Agency securities
include securities commonly referred to as mortgage-backed securities, the
principal and interest on which are paid from principal and interest payments
made on pools of mortgage loans. These include securities commonly referred to
as "pass-throughs," "collateralized mortgage obligations" (CMOs), and "real
estate mortgage investment conduits" (REMICs).
Mortgage-Backed Securities. Mortgage-backed securities, including CMOs and
REMICs, evidence ownership in a pool of mortgage loans made by certain financial
institutions that may be insured or guaranteed by the U.S. government or its
agencies. CMOs are obligations issued by special-purpose trusts, secured by
mortgages. REMICs are entities that own mortgages and elect REMIC status under
the Internal Revenue Code. Both CMOs and REMICs issue one or more classes of
securities of which one (the Residual) is in the nature of equity. The Fund will
not invest in the Residual class. Principal on mortgage-backed securities, CMOs
or REMICs, may be prepaid if the underlying mortgages are prepaid. Prepayment
rates for mortgage-backed securities tend to increase as interest rates decline
(effectively shortening the security's maturity) and decrease as interest rates
rise (effectively lengthening the security's maturity). Because of the
prepayment feature, these securities may not increase in value as much as other
debt securities when interest rates fall. The Fund may be able to invest prepaid
principal only at lower yields. The prepayment of such securities purchased at a
premium may result in losses equal to the premium.
Foreign Investments. Investments in sponsored and unsponsored ADRs have special
risks related to political, economic and legal conditions outside
5
<PAGE>
of the U.S. As a result, the prices of such securities may fluctuate
substantially more than the prices of securities of issuers based in the U.S.
Special risks associated with such 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. See "Foreign
Securities" in the Statement of Additional Information for more information
about investments in ADRs.
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.
Securities Loans. The Fund may lend securities to certain institutions (that the
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 liquid 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 investment policies may be changed
without shareholder approval. The Fund will notify investors in connection with
any material change in the Fund's investment objective. If there is a change in
the investment objective or investment policies, 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 or
investment policies. 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, and
the contingent deferred sales charge applicable to the time period quoted on
Class B and Class C 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.
6
<PAGE>
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.
Colonial Investment Services, Inc. (Distributor), a subsidiary of the Adviser,
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. Each of the Adviser, the
Distributor and the Transfer Agent is an indirect subsidiary of Liberty
Financial Companies, Inc. which in turn is an indirect subsidiary of Liberty
Mutual Insurance Company (Liberty Mutual). Liberty Mutual is considered to be
the controlling entity of the Adviser and its affiliates. Liberty Mutual is an
underwriter of workers' compensation insurance and a property and casualty
insurer in the U.S.
The Adviser furnishes the Fund with investment management, accounting and
administrative personnel and services, office space and other equipment and
services at the Adviser's expense. For these services, the Fund pays the Adviser
0.80% of the Fund's average daily net assets. The fee is higher than that of
most mutual funds.
Mark Stoeckle, Vice President of the Adviser, has managed or co-managed the Fund
since November 1996. Prior to joining the Adviser in 1996, Mr. Stoeckle was a
portfolio manager at Massachusetts Financial Services Company and an investment
banker at Bear, Stearns & Co. Inc.
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 by such broker-dealers to the Adviser and its affiliates. In
recognition of the research and brokerage services provided, the Adviser may
cause the Fund to pay the selected broker-dealer a higher commission than would
have been charged by another broker-dealer not providing such services. Subject
to seeking best execution, the 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 (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 the Adviser determines, pursuant to procedures adopted by
the Trustees, that such cost approximates current 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.
7
<PAGE>
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 and Class C shares and there
are some limitations on the issuance of Class A share certificates. The Fund may
refuse any purchase order for its shares. See the Statement of Additional
Information for more information.
The Fund also offers Class Z shares, which are offered through a separate
Prospectus only to (i) 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
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.
In determining the sales charge and commission applicable to a new purchase
under the above schedules, the amount of the current purchase is added to the
current value of shares previously purchased and still held by an investor. If a
purchase results in an account having a value from $1 million to $5 million,
then the shares purchased will be subject to a 1.00% contingent deferred sales
charge payable to the Distributor, if redeemed within 18 months from the first
day of the month following the purchase. If the purchase results in an account
having a value in excess of $5 million, the contingent deferred sales charge
will not apply to the portion of the purchased shares comprising such excess
amount.
Class B Shares. Class B shares are offered at net asset value, without an
initial sales charge, and are subject to a 0.75% annual distribution fee for
approximately eight years (at which time they automatically convert to Class A
shares not bearing a distribution fee) and a declining
8
<PAGE>
contingent deferred sales charge if redeemed within six years after purchase. As
shown below, the amount of the contingent deferred sales charge depends on the
number of years after purchase that the redemption occurs:
Years Contingent Deferred
After Purchase Sales Charge
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
More than 6 0.00%
Year one ends one year after the end of the month in which the purchase was
accepted and so on. The Distributor pays financial service firms a commission of
4.00% on Class B share purchases.
Class C Shares. Class C shares are offered at net asset value and are subject to
a 0.75% annual distribution fee and a 1.00% contingent deferred sales charge on
redemptions made within one year after the end of the month in which the
purchase was accepted.
The Distributor pays financial service firms an initial commission of 1.00% on
Class C share purchases and an ongoing commission of 0.75% annually commencing
after the shares purchased have been outstanding for one year. Payment of the
ongoing commission is conditioned on receipt by the Distributor of the 0.75%
annual distribution fee referred to above. The commission may be reduced or
eliminated 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). When a redemption subject to a contingent
deferred sales charge is made, generally, older shares will be redeemed first
unless the shareholder instructs otherwise. See the Statement of Additional
Information for more information.
Which Class is more beneficial to an investor depends on the amount and intended
length of the investment. Large investments, qualifying for a reduced Class A
sales charge, avoid the distribution fee. Investments in Class B shares have
100% of the purchase invested immediately. Investors investing for a relatively
short period of time might consider Class C shares. Purchases of $250,000 or
more must be for Class A or Class C shares. Purchases of $1,000,000 or more must
be for Class A shares. Consult your financial service firm.
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.
Special Purchase Programs. The Fund allows certain investors or groups of
investors to purchase shares with reduced or without initial or contingent
deferred sales charges. The programs are described in the Statement of
Additional Information under "Programs for Reducing or Eliminating Sales
Charges."
Shareholder Services and Account Fees. A variety of shareholder services are
available. For more information about these services or your account, call
1-800-345-6611. Some services are described in the attached account application.
A shareholder's manual explaining all available services will be provided upon
request.
In June of any year, 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. The Fund may also 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.
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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.
HOW TO EXCHANGE SHARES
Except as described below with respect to money market funds, the Fund's shares
may be exchanged at net asset value among shares of the same class of most
Colonial funds 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 1-800-426-3750 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. The
Fund will terminate the exchange privilege as to a particular shareholder if the
Adviser determines, in its sole and absolute discretion, that the shareholder's
exchange activity is likely to adversely impact the Adviser's ability to manage
the Fund's investments in accordance with its investment objective or otherwise
harm the Fund or its remaining shareholders.
Class A Shares. An exchange from a money market fund into a non-money market
fund will be at the applicable offering price next determined (including sales
charge), except for amounts on which an initial sales charge was paid. Non-money
market fund shares must be held for five months before qualifying for exchange
to a fund with a higher sales charge, after which exchanges are made at the net
asset value next determined.
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 C Shares. Exchanges of Class C shares are not subject to the contingent
deferred sales charge. However, if shares are redeemed within one year after the
original purchase, a 1.00% contingent deferred sales charge will be assessed.
Only one "round-trip" exchange of the Fund's Class C shares may be made per
three-month
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period, measured from the date of the initial purchase. For example, an exchange
from Fund A to Fund B and back to Fund A would be permitted only once during
each three-month period.
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. The Transfer Agent will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine and may be liable for losses related to unauthorized or
fraudulent transactions in the event reasonable procedures are not employed.
Such procedures include restrictions on where proceeds of telephone redemptions
may be sent, limitations on the ability to redeem by telephone shortly after an
address change, recording of telephone lines and requirements that the redeeming
shareholder and/or financial adviser provide certain identifying information.
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 PLAN
Under a 12b-1 Plan, the Fund pays the Distributor monthly a service fee at an
annual rate of 0.25% of the Fund's net assets attributed to each Class of
shares. The 12b-1 Plan also requires the Fund to pay the Distributor monthly a
distribution fee at an annual rate of 0.75% of the average daily net assets
attributed to its Class B and Class C shares. Because the Class B and Class C
shares bear 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
C shares do not convert. The multiple class structure could be terminated should
certain Internal Revenue Service rulings be rescinded. See the Statement of
Additional Information for more information. The Distributor uses the fees to
defray the cost of commissions and service fees paid to financial service firms
which have sold Fund shares, and to defray other expenses such as sales
literature, prospectus printing and distribution, shareholder servicing costs
and compensation to wholesalers. Should the fees exceed the Distributor's
expenses in any year, the Distributor would realize a profit. The Plan also
authorizes 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.
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Investment Adviser
Colonial Management Associates, Inc.
One Financial Center
Boston, MA 02111-2621
Distributor
Colonial Investment Services, Inc.
One Financial Center
Boston, MA 02111-2621
Custodian
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108-2624
Shareholder Services and Transfer Agent
Colonial Investors Service Center, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-345-6611
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110-2624
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110-2624
Your financial service firm is:
October 28, 1996, Revised August 21, 1997
COLONIAL U.S. STOCK FUND
PROSPECTUS
Colonial U.S. Stock Fund seeks long-term growth by investing primarily in large
capitalization equities.
For more detailed information about the Fund, call the Adviser at 1-800-426-3750
for the October 28, 1996, revised May 30, 1997, Statement of Additional
Information.
- ----------------------------- --------------------------
NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE
- ----------------------------- --------------------------
Printed in U.S.A.
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