COLONIAL U.S. GOVERNMENT FUND

                            Supplement to Prospectus
                             dated December 29, 1995


Effective  January 1, 1997,  the Fund no longer will be managed to qualify as an
eligible investment for Federal credit unions and national banks. The changes to
the Prospectus set forth below are effective as of such date:

The last sentence of the first  paragraph under the caption How the Fund Pursues
its Objective is revised in its entirety as follows:

The Fund may invest in U.S. government securities including zero coupon 
securities of any maturity.

The ninth  paragraph  under the caption How the Fund  Pursues its  Objective  is
deleted in its entirety.

An additional paragraph under the caption How the Fund Pursues its Objective and
prior to the sub-caption Other is added as follows:

For hedging  purposes,  the Fund may (1) buy or sell financial futures contracts
(futures)  and (2)  purchase  and write  call and put  options  on  futures  and
securities.  A future  creates an  obligation  by the seller to deliver  and the
buyer to take  delivery of the type of  instrument at the time and in the amount
specified in the contract. Although futures call for delivery (or acceptance) of
the specified  instrument,  futures are usually closed out before the settlement
date through the purchase (sale) of a comparable  contract.  If the price of the
initial sale of the future exceeds (or is less than) the price of the offsetting
purchase,  the Fund  realizes  a gain (or loss).  Options  on futures  contracts
operate in a similar  manner to options on U.S.  government  securities,  except
that the  position  assumed is in the futures  contract  rather than in the U.S.
government  security.  The Fund may not  purchase or sell  futures  contracts or
purchase  related  options if  immediately  thereafter  the sum of the amount of
deposits  for initial  margin or premiums  on the  existing  futures and related
options  positions  would  exceed 5% of the  market  value of the  Fund's  total
assets. Transactions in futures and related options involve the risk of (1) 
imperfect  correlation between the price movement of the contracts and the 
underlying  securities,  (2) the possible  absence of a liquid secondary  market
at any point in time,  and (3) if the Adviser's  prediction on interest  rates 
is  inaccurate,  the  Fund  may be worse  off than if it had not hedged.












UG-36/613C-0996                 September 23, 1996