SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e) (2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CMG FUND TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or Item 22(a)(2)
of Schedule 14A
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------
5) Total fee paid:
--------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------
3) Filing Party:
--------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------
IMPORTANT NEWS FOR CMG FUND TRUST SHAREHOLDERS
Dear CMG Fund Trust Shareholder,
The CMG Fund Trust (the "Trust") will hold a special meeting of shareholders on
October 7, 2003 at 10:30 a.m. (Pacific Coast Time). At this meeting, you will be
asked to vote on a proposal regarding the Trust. The proposal is to elect nine
new trustees and three of the incumbent trustees of the boards of the Trust.
Because of the retirement of two members of the Board of Trustees of the Trust
(the "Board"), the increase in size and complexity of the Trust and the increase
in responsibility of fund directors generally imposed by recent legislative and
regulatory actions, the Board believes it is appropriate to increase the size of
the Board. To facilitate the expansion, the trustees are proposing that the
Board be combined with the Liberty Funds boards. The Liberty Funds are a fund
complex advised by the same investment adviser that advises the portfolios of
the Trust, Columbia Management Advisors, Inc. Two of the Trust's trustees, Mr.
Simpson and Mr. Woolworth, will be joining the Liberty Funds' board of trustees;
one current Trust trustee, Dr. Nelson, is already a Liberty Funds board member.
The combination would add to the Board the expertise and experience of nine new
directors, would allow the Board to appoint specialized committees and may
reduce certain costs associated with maintaining the Board.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL.
This special meeting will be held at the Portland Art Museum's Whitsell
Auditorium (located at SW Park and SW Madison, Portland, Oregon). It is very
important that you vote your shares at your earliest convenience. The Trust has
retained the services of Georgeson Shareholder Communications, Inc. to assist
shareholders with the voting process. As we get closer to October 7th,
shareholders who have not yet voted may receive a call from Georgeson
Shareholder Communications reminding them to vote.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. YOU CAN VOTE
EASILY AND QUICKLY BY MAIL, OR IN PERSON. A SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE HAS BEEN ENCLOSED FOR YOUR CONVENIENCE. PLEASE HELP THE TRUST AVOID THE
EXPENSE OF A FOLLOW-UP MAILING BY VOTING TODAY!
If you have any questions regarding the Proxy Statement, please call Georgeson
Shareholder Communications at (866) 238-4083.
We appreciate your participation and prompt response in these matters and thank
you for your continued support.
Sincerely,
- -s- Jeff B. Curtis
JEFF B. CURTIS
President
SHC-60/004P-0803
Q & A
VOTING THE PROPOSAL UNDER THE CMG FUND TRUST PROXY SOLICITATION
The following questions and answers provide an overview of the key features of
the proposals and of the information contained in this Proxy Statement. Please
review the full Proxy Statement prior to casting your vote.
1. WHAT IS BEING PROPOSED?
PROPOSAL NO. 1: The Board of Trustees (the "Board") of the CMG Fund Trust (the
"Trust") is proposing the election of nine new trustees as well as three of the
incumbent trustees of the Trust's Board.
2. WHY IS THE ELECTION OF TRUSTEES BEING PROPOSED?
The Board currently has four trustees (Messrs. James C. George, Patrick J.
Simpson and Richard L. Woolworth and Dr. Charles R. Nelson). Pursuant to the
Board's retirement policy, Mr. George is required to retire from the Board after
the regular meeting scheduled to be held in July 2004. Mr. George has agreed,
however, to resign as a trustee of the Trust upon election of the new nominees
for trustee.
Due to the size and complexity of the Trust, and an increase in the
responsibilities of fund trustees generally, the Board believes it is
appropriate to increase the size of the Board. The expansion would be
accomplished by electing to the Board the current trustees of the Liberty Funds,
a fund group also advised by Columbia Management Advisors, the Trust's adviser.
The new trustees would, among other things, add to the Board's experience in
evaluating distribution and consolidation issues that are of importance to the
Trust. Two of the Trust's trustees, Mr. Simpson and Mr. Woolworth, will be
joining the Liberty Funds' board of trustees; one, Dr. Nelson, is already a
Liberty Funds trustee. In addition, by expanding the Board, the trustees will
have the flexibility to appoint special committees to focus on specific matters.
The combined Board may also reduce the trustees' and legal fees paid by the
Trust.
Please review the Proposal No. 1 section of this Proxy Statement for more
information.
3. HOW MANY VOTES ARE REQUIRED TO ELECT THE NEW TRUSTEES?
If a quorum of shareholders is present at the Special Meeting, the 12 nominees
who receive the greatest number of votes cast at the meeting will be elected
trustees. Please note that if you send in a signed proxy
card but you give no voting instructions, your shares will be voted "FOR" the
nominees proposed by the Board.
The Trust's Board recommends that you vote "FOR" the election of each of the
nominees under proposal 1.
4. WHY SHOULD I VOTE ON THESE PROPOSALS?
As part owner of the Trust, it is important that you are represented in the
voting. For this reason, the services of a professional proxy solicitor have
been retained to contact all Trust shareholders. If we do not receive a proxy
from you, it is possible that you will receive a call or letter from our
solicitor requesting you to vote.
5. HAS THE BOARD OF TRUSTEES APPROVED THIS PROPOSAL?
Yes, the Board has reviewed the proposal and unanimously recommends that you
vote "FOR" for the proposal before you.
CMG STRATEGIC EQUITY FUND
CMG SMALL/MID CAP FUND
CMG INTERNATIONAL STOCK FUND
CMG SMALL CAP FUND
CMG SHORT TERM BOND FUND
CMG FIXED INCOME SECURITIES FUND
CMG HIGH YIELD FUND
CMG ENHANCED S&P 500 FUND
CMG SMALL CAP VALUE FUND
CMG SMALL CAP GROWTH FUND
CMG MID CAP VALUE FUND
CMG MID CAP GROWTH FUND
------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
------------------------------
To the Shareholders:
Notice is given that CMG Fund Trust (the "Trust") will hold a special meeting of
shareholders (the "Special Meeting") of CMG Strategic Equity Fund, CMG Small Cap
Fund, CMG Small/Mid Cap Fund, CMG International Stock Fund, CMG Short Term Bond
Fund, CMG High Yield Fund, CMG Fixed Income Securities Fund, CMG Enhanced S&P
500 Fund, CMG Small Cap Value Fund, CMG Small Cap Growth Fund, CMG Mid Cap Value
Fund and CMG Mid Cap Growth Fund (each a "Fund" and together the "Funds") at the
Portland Art Museum's Whitsell Auditorium (located at SW Park and SW Madison,
Portland, Oregon) on October 7, 2003 at 10:30 a.m., Pacific Time, for the
following purposes:
1. Election of Trustees. To elect a Board of Trustees of the Trust.
2. Other Business. To transact any other business that properly comes before
the Special Meeting or any adjournment or adjournments thereof.
Shareholders of record at the close of business on August 21, 2003 are entitled
to receive notice of and to vote at the Trust's Special Meeting and any
adjournment thereof.
By Order of the Board of Trustees
-s- MARK A. WENTZIEN
Mark A. Wentzien
Secretary
August 27, 2003
Portland, Oregon
YOUR VOTE IS IMPORTANT
YOU WILL RECEIVE A PROXY CARD. THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE
"FOR" THE NOMINEES AND "FOR" THE PROPOSAL.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for signing proxy cards may be of assistance to you
and may help to avoid the time and expense involved in validating your vote if
you fail to sign your proxy cards properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party signing
should conform exactly to a name shown on the proxy card.
3. ALL OTHER ACCOUNTS: The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the name on the proxy card. For
example:
<Table>
<Caption>
REGISTRATION VALID SIGNATURE
- ------------ ------------------------
CORPORATE ACCOUNTS
(1) ABC Corp. ...................... John Doe, Treasurer
(2) ABC Corp.
c/o John Doe, Treasurer.......... John Doe,Treasurer
(3) ABC Corp. Profit Sharing Plan... John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust....................... Jane Doe, Trustee
(2) Jane Doe, Trustee
u/t/d 12/28/78................... Jane Doe
CUSTODIAL OR ESTATE ACCOUNTS
(1) John Smith, Cust
f/b/o John Smith, Jr. UGMA....... John Smith
(2) John Smith Jr. ................. John Smith Jr., Executor
</Table>
CMG STRATEGIC EQUITY FUND
CMG SMALL/MID CAP FUND
CMG INTERNATIONAL STOCK FUND
CMG SMALL CAP FUND
CMG SHORT TERM BOND FUND
CMG FIXED INCOME SECURITIES FUND
CMG HIGH YIELD FUND
CMG ENHANCED S&P 500 FUND
CMG SMALL CAP VALUE FUND
CMG SMALL CAP GROWTH FUND
CMG MID CAP VALUE FUND
CMG MID CAP GROWTH FUND
------------------------------
PROXY STATEMENT
------------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 7, 2003
This Proxy Statement and form of proxy enclosed are furnished in connection with
a solicitation of proxies by the Board of Trustees of CMG Fund Trust (the
"Trust") to be voted at the special meeting of shareholders (the "Special
Meeting") of CMG Strategic Equity Fund, CMG Small Cap Fund, CMG Small/Mid Cap
Fund, CMG International Stock Fund, CMG Short Term Bond Fund, CMG High Yield
Fund, CMG Fixed Income Securities Fund, CMG Enhanced S&P 500 Fund, CMG Small Cap
Value Fund, CMG Small Cap Growth Fund, CMG Mid Cap Value Fund and CMG Mid Cap
Growth Fund (each a "Fund" and collectively the "Funds"), to be held on October
7, 2003 at 10:30 a.m., at the Portland Art Museum's Whitsell Auditorium (located
at SW Park and SW Madison, Portland, Oregon), for the purposes set forth in the
accompanying Notice of Special Meetings of Shareholders.
The Trust is a registered open-end, management investment company under the
Investment Company Act of 1940 (the "40 Act") and is organized as an Oregon
business trust. The Trust is comprised of the Funds, all of which are the
subject of this Proxy Statement. Each Fund is a separate series of the Trust.
Within the Trust, there are 20 separate series of which only the Funds are
operational as of the date of this Proxy Statement.
1
If the enclosed proxy card[s] is[are] properly executed and returned in time to
be voted at the Special Meeting, the proxies named in the proxy card[s] will
vote the shares represented by the proxy in accordance with the instructions
marked on the proxy cards. Executed proxies that are unmarked will be voted for
approval of the proposals described in this Proxy Statement.
This Proxy Statement and the related Notice of Special Meeting are expected to
be first mailed to shareholders of record on or about August 29, 2003. The
principal executive offices of the Trust are located at 1300 SW Sixth Avenue,
Portland, Oregon 97201-5601. Copies of the Funds' most recent Annual and
Semi-Annual Reports are available upon request, without charge, by (i) writing
to the Trust at Columbia Financial Center, P.O. Box 1350, Portland, Oregon
97207-1350, (ii) calling toll free 1-800-547-1037, or (iii) visiting the
Securities and Exchange Commission's Web site at www.sec.gov.
PROPOSALS APPLICABLE TO EACH FUND
The following table summarizes the proposals applicable to each Fund:
<Table>
<Caption>
PROPOSAL # PROPOSAL DESCRIPTION APPLICABLE FUND(S) PAGE
- ---------- ---------------------- ---------------------- ----
1. To elect as trustees All 5
the nominees presented
in Proposal 1
</Table>
SHARES ENTITLED TO VOTE AND QUORUM
The holders of record of shares (the "Shareholders") of each Fund as of the
close of business on August 21, 2003, the record date for the determination of
Shareholders entitled to notice of and to vote at the Special Meeting (the
"Record Date"), are entitled to one vote for each share held and a fractional
vote for each fractional share. The table below sets forth the number of shares
outstanding for each Fund as of the Record Date.
<Table>
<Caption>
NUMBER OF SHARES
NAME OF FUND OUTSTANDING
- ------------ ----------------
CMG Strategic Equity Fund 33,408,156.752
CMG Small/Mid Cap Fund 8,695,570.561
CMG Small Cap Fund 63,689,825.813
</Table>
2
<Table>
<Caption>
NUMBER OF SHARES
NAME OF FUND OUTSTANDING
- ------------ ----------------
CMG International Stock Fund 6,133,284.811
CMG Short Term Bond Fund 9,926,647.739
CMG Fixed Income Securities Fund 3,096,717.747
CMG High Yield Fund 53,556,305.316
CMG Enhanced S&P 500 Fund 1,037,405.608
CMG Small Cap Value Fund 2,259,496.814
CMG Small Cap Growth Fund 1,854,227.585
CMG Mid Cap Value Fund 417,411.688
CMG Mid Cap Growth Fund 350,712.674
</Table>
A quorum for the conduct of business at the Special Meeting requires the
presence, in person or by proxy, of holders of 30 percent of the outstanding
shares of the Trust. If a quorum to transact business or the vote required to
approve any proposal described in this Proxy Statement is not present at the
Special Meeting, the persons named as proxies may propose one or more
adjournments of the Special Meeting for a total of not more than 120 days in the
aggregate to obtain a quorum or to permit further solicitation of proxies. Any
such adjournment may be approved by the affirmative vote of the holders of a
majority of shares of all Funds (voting together as a single group) present in
person or by proxy at the Special Meeting, even though less than a quorum. The
persons named as proxies will vote the shares represented by the proxy upon such
proposal as determined in their discretion.
If a proxy is properly executed and returned and includes instructions to
withhold authority to vote, represents a broker "non-vote" (that is, a proxy
from a broker or nominee indicating that such person has not received
instructions from the beneficial owner or other person entitled to vote Fund
shares on a particular matter with respect to which the broker or nominee does
not have a discretionary power) or is marked with an abstention (collectively,
"abstentions"), the Fund shares represented thereby will be considered to be
present at the Special Meeting for purposes of determining the existence of a
quorum for the transaction of business. Abstentions will not constitute a vote
"for" or "against" any proposal or adjournment to permit further solicitation of
proxies.
Shareholders can vote by marking the enclosed proxy card(s) and returning the
card(s) in the postage-paid envelope or by following the instructions on the
enclosed voter instruction insert. Any Shareholder
3
who has given a proxy has the right to revoke the proxy any time prior to its
exercise:
- By written notice of the proxy's revocation to Mark A. Wentzien, Secretary
of the Trust, at the above address prior to the Special Meeting;
- By the subsequent execution and return of another proxy prior to the
Special Meeting; or
- By voting in person at the Special Meeting and giving oral notice of
revocation to the Chairman of the Special Meeting.
A Shareholder who attends the Special Meeting, however, is not required to
revoke the proxy and vote in person. Each valid, unrevoked proxy will be voted
at the Special Meeting in accordance with the instructions given in the proxy.
If no instructions are given, shares represented by the proxy will be voted for
the nominees for trustee named in this Proxy Statement.
PRINCIPAL SHAREHOLDERS AND SHARES
HELD BY MANAGEMENT
Attached as Exhibit A is a list of all persons known by the Trust to be the
record or beneficial owners of 5% or more of the outstanding shares of any Fund
in the Trust as of the Record Date. Exhibit A also shows the number of shares of
each Fund in the Trust owned by each trustee and nominee and by all trustees,
nominees and officers of the Trust as a group as of the Record Date.
SOLICITATION OF PROXIES
Columbia Management Advisors, Inc. (the "Adviser"), located at 1301 SW Fifth
Avenue, Portland, Oregon 97201, serves as the investment adviser for each of the
Funds.
In addition to solicitations of proxies by mail, proxies may be solicited by
officers and employees of the Adviser, personally or by telephone or
electronically, without additional compensation. Copies of solicitation
materials will be furnished to fiduciaries, custodians, and brokerage houses for
forwarding to beneficial owners of the shares held in their names. In addition,
the Trust has hired an unaffiliated proxy solicitor, Georgeson Shareholder
Communications, Inc. ("Georgeson"), to assist
4
in the solicitation of proxies. The estimated cost of Georgeson's services to
the Trust will be $3,750. All costs of printing and mailing proxy materials and
the costs and expenses of holding the Special Meeting, including all amounts
paid to Georgeson, will be paid one-half by the Trust and one-half by the
Adviser.
PROPOSAL NO. 1: TO ELECT TRUSTEES OF THE TRUST
The first proposal to be considered at the Special Meeting is the election of
trustees of each Fund. The purpose of the proposal is to elect nine new
trustees, as well as three of the incumbent trustees, to the Trust's Board of
Trustees (the "Board"). None of the nominees listed below, except for Messrs.
Patrick J. Simpson and Richard L. Woolworth and Dr. Charles R. Nelson, now
serves as a trustee of any Fund. Each of the incumbent trustees was previously
elected to the Boards by the shareholders and currently oversees the 12
portfolios of the Trust and the 15 Columbia funds (the "Columbia Funds"). The
Adviser also serves as the investment adviser for each of the Columbia Funds.
Each of Dr. Nelson and the proposed nine new trustees now serve on the boards of
trustees of the approximately 85 funds and portfolios of the Liberty Funds
managed by the Adviser, or affiliates of the Adviser (the "Liberty Funds").
The Board currently has four trustees. Under the Board retirement policy, each
trustee of the Trust must agree to resign as of the end of the first regular
Board meeting following the trustee's 72nd birthday. Pursuant to this policy,
Mr. J. Jerry Inskeep, Jr. resigned from the Board on April 30, 2003, and Mr.
James C. George is required to resign from the Board after the regular Board
meeting currently scheduled to be held in July 2004. As a result, absent further
action, the number of trustees on the Board will be reduced to three by July
2004.
The Board believes that it would be appropriate to replace the two retiring
trustees. In addition, because of the increase in size and complexity of the
Trust over the past year and because of the increase in the responsibilities of
fund trustees generally imposed by recent legislative and regulatory actions,
the Board believes that it would be appropriate to augment the size of the
Board. The Board recognizes that the identification, recruitment and
assimilation of additional qualified trustees would likely take significant time
and require an increase in the trustees' current compensation levels.
5
To facilitate the expansion of the Board, the Adviser has suggested that the
members of the Board be combined with those of the Liberty Funds boards. The
combination would be accomplished by electing the nine members of the Liberty
Funds boards to the Trust's board of trustees (and the boards of directors of
each of the Columbia Funds) and appointing Messrs. Simpson and Woolworth to the
Liberty Funds boards. The end result would be to have the same members serve on
each of the several boards of the Trust, the Columbia Funds and the Liberty
Funds. Mr. George would resign from the Board upon the election of the nominees
at the Special Meeting.
The proposed combination would permit the boards of the Trust and the Liberty
Funds to meet concurrently and to develop uniform policies and procedures. The
nine new trustees would add to the Board their expertise and the experience they
have gained from serving on the boards of the Liberty Funds. Although the
combined board would have more funds to oversee, the larger boards would have
the flexibility to appoint special committees to focus on specific matters. For
example, it is anticipated that the combined boards would delegate certain
responsibilities to separate audit, governance, contracts and investments
committees. Additionally, combining the boards may result in economies of scale,
reducing certain fixed costs associated with the Boards. Accordingly, it is
expected that the combined boards would require only one independent counsel and
that based on current asset levels and compensation schedules, each Fund's share
of the compensation paid to the directors and trustees of the combined boards
would be lower than the compensation that would be payable to the trustees of
the Trust if there were no combination and only three new trustees were added to
replace the retiring trustees.
Following the board combination, the nine new trustees would represent 75% of
the Board. Since Board action normally requires a majority vote, the new
nominees would effectively control the Board. Matters on which fund boards
typically vote include changes to the adviser and the advisory contract,
agreements with the transfer agent, custodian, administrator and other service
providers, appointment of independent auditors and counsel, adoption of
investment and other policies, and approval of fund mergers. Although Messrs.
Simpson and Woolworth and Dr. Nelson would continue as members of the combined
boards, they would no longer be able to carry the vote on any of these or other
matters. The new trustees would have the same fiduciary duty to the
6
Trust's shareholders as the continuing members, and approval of certain of the
matters described above would require separate shareholder approval. In
addition, all but two of the nine new trustee nominees are considered
independent or "disinterested" under the 1940 Act, as are the Trust's three
incumbent trustees. It is expected that the officers of the Liberty Funds will
be appointed as officers of the Trust following the board combination. See
"Executive Officers of the Funds."
To provide certain assurances to the shareholders of the Trust, Columbia
Management Group ("CMG"), the parent of the Adviser, has represented to the
Trust, among other things, that:
- - there will be no material change in the investment management, distribution,
administrative or shareholder services provided to the Trust as a direct
result of the proposed combination, without prior discussion with the Board;
- - CMG will not propose any increase in fee schedules for contracts between the
Funds and CMG or any of its affiliates for a period of two years from the date
of completion of the proposed combination;
- - there are no pending or threatened claims against the Liberty Funds or their
trustees or officers with respect to the activities or operations of the
Liberty Funds;
- - CMG has provided the Board with all information reasonably necessary for the
Board to evaluate the combination;
- - this Proxy Statement complies with all requirements of the proxy rules, does
not contain any statement that is false or misleading with respect to any
material fact and does not omit to state any material fact necessary to make
the statements herein not false or misleading; and
- - CMG will indemnify and hold harmless the Trust and the members of the Board
and their agents against any liability or expense incurred by them arising out
of any misstatement or omission in any information provided by CMG, or breach
of any of CMG's representations or warranties, in connection with the
consideration of the combination by the Board and the shareholders of the
Trust.
In addition, the Adviser has committed to pay one-half of the costs related to
the solicitation of proxies and the Special Meeting.
7
When the combination is completed, Mr. George has agreed to resign. The Adviser
has committed to make an early retirement payment to Mr. George that is
equivalent to the fees he would have received as a member of the combined boards
prior to his scheduled retirement in July 2004. After the combination, the
trustees of the Trust will receive compensation for their services as directors
and trustees of the Trust, the Columbia Funds and the Liberty Funds. The
compensation of Messrs. Woolworth and Simpson will increase as a result of the
combination. The compensation for Dr. Nelson will decrease. See "Compensation of
Directors."
The Board met in person or by telephone on nine occasions from January 30, 2003
to August 19, 2003 to discuss the proposed consolidation. A special committee of
the Board comprised of Messrs. Simpson and Woolworth also met in person with
members of the Liberty Funds boards on May 6 and 7, 2003 and August 12 and 13,
2003. On the basis of these and other meetings and the information and
representations provided by the Adviser and CMG, the Board unanimously approved
the combination and determined to recommend the combination to the shareholders
of the Trust.
The 1940 Act generally provides that at all times a majority of trustees of the
Trust must be elected by shareholders and that new trustees cannot be elected by
a board of trustees to fill vacancies unless, after the election, two-thirds of
the trustees have been elected by shareholders. To assure compliance with the
two-thirds requirement of the 1940 Act, shareholders are being asked to elect
the three incumbent trustees and the nine new nominees.
Each of the nominees has agreed to serve if elected. If a nominee declines to
serve before the meeting or otherwise becomes unavailable for election, the
proxy confers discretionary power on the persons named therein to vote in favor
of a substitute nominee. If elected, the nominees will hold office until the
next meeting of shareholders at which trustees are elected and until their
successors are elected and qualified.
As permitted under Oregon law, the Trust is not required to hold, and does not
anticipate holding, annual meetings. Thus, the trustees will be elected for
indefinite terms. Any trustee may resign, however, and any trustee may be
removed at any meeting of shareholders called for that purpose by at least a
majority of the votes entitled to be cast for the election of trustees. If a
vacancy exists for any reason, the remaining
8
trustees may fill the vacancy by electing another trustee so long as two-thirds
of the trustees have been elected by shareholders. If at any time less than a
majority of the trustees holding office have been elected by shareholders, the
trustees then in office will call a shareholders' meeting within 60 days for the
purpose of electing trustees. As a condition to election as a trustee, in
accordance with the Board's retirement policy, each nominee will be required to
submit in writing a resignation as a trustee that becomes effective as of the
adjournment of the first regularly scheduled meeting of the trustees following
the trustee's 72nd birthday.
The Board met five times during 2002. Each incumbent trustee attended all of
these meetings other than Dr. Nelson, who was not elected to the Board until
January 2003. The Board has three standing committees composed exclusively of
all the Trust's disinterested trustees, the Audit Committee, the Compensation
Committee and the Nominating Committee.
The Audit Committee considers and engages, on an annual basis, the independent
auditors for each of the Funds, reviews with management and the independent
auditors the financial statements included in the Fund's Annual Report to
Shareholders, and generally oversees the audit process. The Audit Committee held
one meeting in 2002. The Compensation Committee is responsible for determining
trustee compensation. The Compensation Committee held one meeting in 2002. The
Nominating Committee is responsible for selecting and nominating candidates for
election to serve as trustees. The Nominating Committee held one meeting in 2002
and will not consider nominees recommended by shareholders of Funds in the
Trust.
Set forth below are the 12 nominees for election as trustees of the Trust (the
"Nominees"), together with information about them. Other trusteeships include
positions of trustee or director of companies that are required to file reports
with the Securities and Exchange Commission (the "SEC"), other than registered
investment companies in the fund complex, which consists of the Columbia Funds,
the Liberty Funds and all other registered funds managed by the Adviser and its
affiliates (the "Fund Complex").
9
DISINTERESTED TRUSTEES OR NOMINEES
<Table>
<Caption>
NUMBER OF
PORTFOLIOS
IN FUND
TERM OF COMPLEX OTHER
POSITION(S) OFFICE AND PRINCIPAL OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS HELD WITH LENGTH OF OCCUPATION(S) TRUSTEE OR HELD BY
AND AGE FUNDS TIME SERVED* DURING PAST 5 YEARS NOMINEE TRUSTEE***
- ------------- ----------- ------------ ------------------- ----------- -------------
Douglas A. Hacker(1) New N/A Executive Vice 112 None
P.O. Box 66100 Nominee President --
Chicago, IL 60666 Strategy of United
(47 years old) Airlines (airline)
since December 2002
(formerly President
of UAL Loyalty
Services from
September 2001 to
December 2002;
Executive Vice
President and Chief
Financial Officer
from July 1999 to
September 2001, and
Senior Vice
President and Chief
Financial Officer
from July 1994 to
July 1999 of United
Airlines).
Janet Langford New N/A Executive Vice 112 None
Kelly(1) Nominee President --
One Kellogg Square Corporate
Battle Creek, MI Development and
49016 Administration,
(45 years old) General Counsel and
Secretary, Kellogg
Company (food
manufacturer) since
September 1999;
(formerly Senior
Vice President,
Secretary and
General Counsel,
Sara Lee
Corporation
(branded, packaged,
consumer-products
manufacturer) from
January 1995 to
September 1999).
</Table>
10
<Table>
<Caption>
NUMBER OF
PORTFOLIOS
IN FUND
TERM OF COMPLEX OTHER
POSITION(S) OFFICE AND PRINCIPAL OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS HELD WITH LENGTH OF OCCUPATION(S) TRUSTEE OR HELD BY
AND AGE FUNDS TIME SERVED* DURING PAST 5 YEARS NOMINEE TRUSTEE***
- ------------- ----------- ------------ ------------------- ----------- -------------
Richard L. New N/A Private investor 114 None
Lowry(1)(2) Nominee since August 1987
10701 Charleston Dr. (formerly Chairman
Vero Beach, FL 32963 and Chief Executive
(67 years old) Officer, U.S.
Plywood Corporation
(building products
manufacturer)).
Charles R. Nelson(1) Director Served for 1 Professor of 112 None
Department of year Economics,
Economics University of
University of Washington, since
Washington January 1976; Ford
Seattle, WA 98195 and Louisa Van
(61 years old) Voorhis Professor
of Political
Economy, University
of Washington,
since September
1993; Director,
Institute for
Economic Research,
University of
Washington, since
September 2001;
Adjunct Professor
of Statistics,
University of
Washington since
September 1980;
Associate Editor,
Journal of Money
Credit and Banking,
since September
1993; consultant on
econometric and
statistical
matters.
John J. New N/A Academic Vice 115 Saucony, Inc.
Neuhauser(1)(2)(3) Nominee President and Dean (athletic
84 College Road of Faculties since footwear).
Chestnut Hill, MA August 1999, Boston
02467-3838 College (formerly
(60 years old) Dean, Boston
College School of
Management from
September 1977 to
September 1999).
</Table>
11
<Table>
<Caption>
NUMBER OF
PORTFOLIOS
IN FUND
TERM OF COMPLEX OTHER
POSITION(S) OFFICE AND PRINCIPAL OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS HELD WITH LENGTH OF OCCUPATION(S) TRUSTEE OR HELD BY
AND AGE FUNDS TIME SERVED* DURING PAST 5 YEARS NOMINEE TRUSTEE***
- ------------- ----------- ------------ ------------------- ----------- -------------
Patrick J. Simpson(1) Director Served for 3 Lawyer, Perkins 112 None
1211 S.W. Years Coie LLP.
5th Avenue
Suite 1500
Portland, OR 97204
(58 years old)
Thomas E. Stitzel(1) New N/A Business consultant 112 None
2208 Tawny Woods Pl. Nominee since 1999
Boise, ID 83706 (formerly Professor
(67 years old) of Finance from
1975 to 1999 and
Dean from 1977 to
1991, College of
Business, Boise
State University);
Chartered Financial
Analyst.
Thomas C. Theobald(1) New N/A Managing Director, 112 Anixter
27 West Monroe Nominee William Blair International
Street, Capital Partners (network
Suite 3500 (private equity support
Chicago, IL 60606 investing) since equipment
(66 years old) September 1994. distributor),
Jones Lang
LaSalle
(real estate
management
services),
MONY
Group (life
insurance)
and Ventas,
Inc.
(healthcare
REIT).
</Table>
12
<Table>
<Caption>
NUMBER OF
PORTFOLIOS
IN FUND
TERM OF COMPLEX OTHER
POSITION(S) OFFICE AND PRINCIPAL OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS HELD WITH LENGTH OF OCCUPATION(S) TRUSTEE OR HELD BY
AND AGE FUNDS TIME SERVED* DURING PAST 5 YEARS NOMINEE TRUSTEE***
- ------------- ----------- ------------ ------------------- ----------- -------------
Anne-Lee New N/A Author and speaker 113 Chairman of
Verville(1)(3) Nominee on educational the Board,
359 Stickney Hill systems needs Enesco Group,
Road (formerly General Inc.
Hopkinton, NH 03229 Manager, Global (designed,
(58 years old) Education Industry imported, and
from 1994 to 1997, distributed
and President, giftware and
Applications collectibles).
Solutions Division
from 1991 to 1994,
IBM Corporation
(global education
and global
applications)).
Richard L. Director Served for Chairman/CEO, The 112 The Regence
Woolworth(1) 12 Years Regence Group (a Group,
100 S.W. Market St. healthcare Regence
#1500 maintenance BlueCross
Portland, OR organization). BlueShield of
97207 Oregon; NW
(62 years old) Natural, a
natural gas
service
provider
</Table>
INTERESTED NOMINEES
<Table>
<Caption>
NUMBER OF
PORTFOLIOS
TERM OF IN FUND OTHER
POSITION(S) OFFICE AND PRINCIPAL COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH LENGTH OF OCCUPATION(S) OVERSEEN BY HELD BY
AND AGE FUNDS TIME SERVED DURING PAST 5 YEARS TRUSTEE TRUSTEE***
- ------------- ----------- ----------- ------------------- ----------- -------------
William E. New N/A Managing Partner, 114 Lee
Mayer(1)(2)(4) Nominee Park Avenue Equity Enterprises
399 Park Avenue Partners (private (print
Suite 3204 equity) since media), WR
New York, NY 10022 February 1999 Hambrecht +
(63 years old) (formerly Founding Co.
partner, (financial
Development Capital service
LLC from November provider),
1996 to February First Health
1999). (healthcare)
and the
Reader's
Digest
Association,
Inc.
(publishing).
</Table>
13
<Table>
<Caption>
NUMBER OF
PORTFOLIOS
TERM OF IN FUND OTHER
POSITION(S) OFFICE AND PRINCIPAL COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH LENGTH OF OCCUPATION(S) OVERSEEN BY HELD BY
AND AGE FUNDS TIME SERVED DURING PAST 5 YEARS TRUSTEE TRUSTEE***
- ------------- ----------- ----------- ------------------- ----------- -------------
Joseph R. New Vice Executive Vice 113 None
Palombo(2)(4) Nominee; President President and Chief
245 Summer Street Vice since Operating Officer
Boston, MA 02210 President January of CMG since
(50 years old) 2003 December 2001;
Director, Executive
Vice President and
Chief Operating
Officer of the
Adviser since April
2003 (formerly
Chief Operations
Officer of Mutual
Funds, Liberty
Financial
Companies, Inc.
from August 2000 to
November, 2001;
Executive Vice
President of Stein
Roe & Farnham
Incorporated (Stein
Roe) from April
1999 to April 2003;
Director of
Colonial Management
Associates, Inc.
from April 1999 to
April 2003;
Director of Stein
Roe from September
2000 to April
2003); President of
Liberty Funds and
Galaxy Funds since
February 2003
(formerly Vice
President from
September 2002 to
February 2003);
Manager of Stein
Roe Floating Rate
Limited Liability
Company since
October 2000
(formerly Vice
President of
Liberty Funds from
April, 1999 to
August 2000; Chief
Operating Officer
and Chief
</Table>
14
<Table>
<Caption>
NUMBER OF
PORTFOLIOS
TERM OF IN FUND OTHER
POSITION(S) OFFICE AND PRINCIPAL COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH LENGTH OF OCCUPATION(S) OVERSEEN BY HELD BY
AND AGE FUNDS TIME SERVED DURING PAST 5 YEARS TRUSTEE TRUSTEE***
- ------------- ----------- ----------- ------------------- ----------- -------------
Compliance Officer,
Putnam Mutual Funds
from December 1993
to March 1999).
</Table>
There is no family relationship between any of the trustees or nominees listed
above.
- ---------------
* Each trustee serves for an indefinite term until the date the trustee
resigns, retires or is removed in accordance with the Bylaws of each Fund.
(1) Includes service as a director or trustee of the Columbia Funds (15 funds)
and the Liberty Funds (85 funds).
(2) Mr. Lowry, Mr. Neuhauser and Mr. Mayer each serve as director of the Liberty
All-Star Funds, currently consisting of two funds, which are advised by an
affiliate of the Adviser.
(3) Mr. Neuhauser and Mrs. Verville serve as disinterested directors of Columbia
Management Multi-Strategy Hedge Fund, LLC, which is managed by the Adviser.
Mr. Palombo is an interested director of the Columbia Management Hedge Fund,
LLC.
(4) "Interested person" as defined by the 1940 Act. Mr. Mayer is an interested
person because of his affiliation with WR Hambrecht + Co. WR Hambrecht + Co.
is a registered broker-dealer and over the past six months the Trust has,
from time to time, used WR Hambrecht + Co. to execute portfolio
transactions. Mr. Palombo is an interested person as a director and officer
of the Adviser and shareholder of the ultimate parent of the Adviser.
15
Share Ownership. The following table sets forth the dollar range of shares
owned by each trustee and nominee for trustee of the Trust as of July 31, 2003
of (i) each individual Fund and (ii) all of the funds in the Fund Complex:
DISINTERESTED TRUSTEES OR NOMINEES:
<Table>
<Caption>
DOUGLAS A. JANET LANGFORD RICHARD W.
NAME OF FUND HACKER KELLY LOWRY
- ------------ ---------- -------------- ----------
CMG Strategic Equity Fund None None None
CMG Small Cap Fund None None None
CMG Small/Mid Cap Fund None None None
CMG International Stock Fund None None None
CMG Short Term Bond Fund None None None
CMG High Yield Fund None None None
CMG Fixed Income Securities
Fund None None None
CMG Enhanced S&P 500 Fund None None None
CMG Small Cap Value Fund None None None
CMG Small Cap Growth Fund None None None
CMG Mid Cap Value Fund None None None
CMG Mid Cap Growth Fund None None None
AGGREGATE DOLLAR RANGE OF
FUND SHARES IN FUNDS
OVERSEEN BY DIRECTOR OR
NOMINEE IN FAMILY OF
INVESTMENT COMPANIES: OVER $100,000 OVER $100,000 $1-$50,000
</Table>
<Table>
<Caption>
DR. CHARLES R. JOHN J.
NAME OF FUND NELSON NEUHAUSER
- ------------ -------------- ---------
CMG Strategic Equity Fund None None
CMG Small Cap Fund None None
CMG Small/Mid Cap Fund None None
CMG International Stock Fund None None
CMG Short Term Bond Fund None None
CMG High Yield Fund None None
CMG Fixed Income Securities Fund None None
CMG Enhanced S&P 500 Fund None None
</Table>
16
<Table>
<Caption>
DR. CHARLES R. JOHN J.
NAME OF FUND NELSON NEUHAUSER
- ------------ -------------- ---------
CMG Small Cap Value Fund None None
CMG Small Cap Growth Fund None None
CMG Mid Cap Value Fund None None
CMG Mid Cap Growth Fund None None
AGGREGATE DOLLAR RANGE OF FUND SHARES
IN FUNDS OVERSEEN BY DIRECTOR OR
NOMINEE IN FAMILY OF INVESTMENT
COMPANIES: OVER $100,000 OVER $100,000
</Table>
<Table>
<Caption>
PATRICK J. THOMAS E.
NAME OF FUND SIMPSON STITZEL
- ------------ ---------- ---------
CMG Strategic Equity Fund None None
CMG Small Cap Fund None None
CMG Small/Mid Cap Fund None None
CMG International Stock Fund None None
CMG Short Term Bond Fund None None
CMG High Yield Fund None None
CMG Fixed Income Securities Fund None None
CMG Enhanced S&P 500 Fund None None
CMG Small Cap Value Fund None None
CMG Small Cap Growth Fund None None
CMG Mid Cap Value Fund None None
CMG Mid Cap Growth Fund None None
AGGREGATE DOLLAR RANGE OF FUND
SHARES IN FUNDS OVERSEEN BY
DIRECTOR OR NOMINEE IN FAMILY
OF INVESTMENT COMPANIES: $50,001-$100,000 $50,001-$100,000
</Table>
<Table>
<Caption>
THOMAS C. ANNE-LEE RICHARD W.
NAME OF FUND THEOBALD VERVILLE WOOLWORTH
- ------------ --------- -------- ----------
CMG Strategic Equity Fund None None None
CMG Small Cap Fund None None None
CMG Small/Mid Cap Fund None None None
CMG International Stock Fund None None None
CMG Short Term Bond Fund None None None
CMG High Yield Fund None None None
CMG Fixed Income Securities Fund None None None
</Table>
17
<Table>
<Caption>
THOMAS C. ANNE-LEE RICHARD W.
NAME OF FUND THEOBALD VERVILLE WOOLWORTH
- ------------ --------- -------- ----------
CMG Enhanced S&P 500 Fund None None None
CMG Small Cap Value Fund None None None
CMG Small Cap Growth Fund None None None
CMG Mid Cap Value Fund None None None
CMG Mid Cap Growth Fund None None None
AGGREGATE DOLLAR RANGE OF FUND
SHARES IN FUNDS OVERSEEN BY
DIRECTOR OR NOMINEE IN FAMILY
OF INVESTMENT COMPANIES: OVER $100,000 NONE* OVER $100,000
</Table>
INTERESTED NOMINEES:
<Table>
<Caption>
WILLIAM E. JOSEPH A.
NAME OF FUND MAYER PALOMBO
- ------------ ---------- ---------
CMG Strategic Equity Fund None None
CMG Small Cap Fund None None
CMG Small/Mid Cap Fund None None
CMG International Stock Fund None None
CMG Short Term Bond Fund None None
CMG High Yield Fund None None
CMG Fixed Income Securities Fund None None
CMG Enhanced S&P 500 Fund None None
CMG Small Cap Value Fund None None
CMG Small Cap Growth Fund None None
CMG Mid Cap Value Fund None None
CMG Mid Cap Growth Fund None None
AGGREGATE DOLLAR RANGE OF FUND SHARES IN
FUNDS OVERSEEN BY DIRECTOR OR NOMINEE IN
FAMILY OF INVESTMENT COMPANIES: NONE NONE
</Table>
- ---------------
* Because Ms. Verville's share ownership in the Liberty Funds is held through
her deferred compensation plan, her ownership is not required to be disclosed.
As of July 31, 2003, none of the disinterested trustees or nominees or members
of their immediate families owned any securities of the Adviser or any other
entity directly or indirectly controlling, controlled by, or under common
control with the Adviser.
18
COMPENSATION OF TRUSTEES
Each disinterested trustee currently receives an annual aggregate fee of $30,000
for his services as a director of the Columbia Funds and trustee of the Trust,
plus an additional $4,000 for each regular board meeting attended and $1,000 for
each special board meeting attended, and is reimbursed for expenses incurred in
attending all meetings. Each disinterested trustee also receives $500 for each
board committee meeting in which the trustee participates. Each disinterested
trustee serving on the Audit Committee (other than any chairman of the Audit
Committee) is entitled to an additional annual aggregate fee in the amount of
$1,000 for his services in this capacity, and any chairman of the Audit
Committee is entitled to an additional aggregate fee in the amount of $2,000.
None of the trustees receives any form of pension or retirement benefit
compensation from the Funds. One-third of the foregoing trustees' fees and
expenses are allocated equally among the Columbia Funds and the portfolios of
the Trust, and the remaining trustees' fees and expenses are allocated in
proportion to each fund's average daily net assets for the preceding fiscal
quarter. The following table sets forth compensation received by each trustee
for 2002 who are standing for reelection. No officer of the Funds received any
compensation from the Funds in 2002.
<Table>
<Caption>
PATRICK J. RICHARD L. DR. CHARLES R.
AGGREGATE COMPENSATION FROM FUND SIMPSON WOOLWORTH NELSON
- -------------------------------- ---------- ---------- --------------
CMG Strategic Equity Fund $ 782 $ 782 $ 0
CMG Small Cap Fund $ 1,942 $ 1,942 $ 0
CMG Small/Mid Cap Fund $ 435 $ 435 $ 0
CMG International Stock Fund $ 155 $ 155 $ 0
CMG Short Term Bond Fund $ 973 $ 973 $ 0
CMG High Yield Fund $ 2,362 $ 2,362 $ 0
CMG Fixed Income Securities Fund $ 187 $ 187 $ 0
CMG Enhanced S&P 500 Fund $ 0 $ 0 $ 0
CMG Small Cap Value Fund $ 0 $ 0 $ 0
CMG Small Cap Growth Fund $ 0 $ 0 $ 0
CMG Mid Cap Value Fund $ 0 $ 0 $ 0
CMG Mid Cap Growth Fund $ 0 $ 0 $ 0
TOTAL COMPENSATION FROM FUND
COMPLEX(1)(2) $57,000 $57,000 $120,182
</Table>
19
- ---------------
(1) These amounts reflect the total compensation paid to each trustee for his
service (i) as a trustee of the Trust for the fiscal year ended October 31,
2002 and (ii) as a director of the 15 Columbia Funds for the calendar year
ended December 31, 2002, which is the most recently completed fiscal year
for each of the Columbia Funds. The CMG Enhanced S&P 500, Small Cap Value,
Small Cap Growth, Mid Cap Value, and Mid Cap Growth Funds were not in
existence as of October 31, 2002. Dr. Nelson was elected as a trustee of
each of the Columbia Funds in July 2002. Dr. Nelson was elected as a trustee
of the CMG Fund Trust on January 27, 2003 and received no compensation from
the CMG Fund Trust in 2002. Messrs. Woolworth and Simpson did not receive
compensation from any of the Liberty Funds in 2002.
(2) Dr. Nelson's total compensation includes compensation for his service in
2002 as an independent trustee of Liberty Funds.
Upon approval of proposal 1, each disinterested trustee of the Trust will be
compensated for his or her services as a trustee and director of the Trust, the
Columbia Funds and the Liberty Funds. For such services, each disinterested
director and trustee will receive an annual retainer of $45,000 and attendance
fees of $8,000 for each regular joint board meeting in 2003 (increasing to
$9,600 in 2004) and $1,000 for each special telephonic joint board meeting. Each
director and trustee will be reimbursed for expenses incurred in attending all
meetings. The chair of the Audit Committee will receive an annual retainer of
$10,000 and the chairs of each of the Contracts Committee and the Governance
Committee will receive an annual retainer of $5,000. Committee members will
receive compensation of $2,000 for each meeting of the Audit Committee and
$1,500 for each meeting of the other committees. This compensation schedule is
now in effect for the trustees of the Liberty Funds, and it is not expected to
change as a result of the combination of the Liberty Funds' boards with the
Board of the Trust. The aggregate amount of compensation to be paid to each of
the Trust's trustees will be more than the amount of compensation paid now.
However, it is expected that each Fund will pay less to each trustee on a pro
rata basis than if there were no combination.
REQUIRED VOTE
If a quorum of shareholders is present for the Trust at the Special Meeting, the
twelve nominees for election as trustees who receive the greatest number of
votes cast at the Special Meeting will be elected trustees of the Trust. If your
shares are represented at the meeting but you give no voting instructions, your
shares will be voted FOR all nominees named herein. The shareholders of all the
Funds will vote
20
together as a single group for electing the trustees. If the nominees are not
approved by shareholders, the Board will consider what further action should be
taken.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES UNDER PROPOSAL 1.
INFORMATION ON THE TRUST'S
INDEPENDENT ACCOUNTANTS
The 1940 Act provides that every registered investment company shall be audited
at least once each year by independent public accountants selected by a majority
of the trustees of the investment company who are not interested persons of the
investment company or its investment adviser.
The Board of Trustees, including a majority of the independent trustees, has
selected PricewaterhouseCoopers LLP to be the Trust's independent public
accountants to audit and certify each Fund's financial statements for the fiscal
year ended July 31, 2003.
The independent accountants examine annual financial statements for the Funds
and provide other non-audit and tax-related services to the Funds.
Representatives of PricewaterhouseCoopers LLP are not expected to be present at
the Special Meeting, but have been given the opportunity to make a statement if
they so desire and will be available should any matter arise requiring their
presence.
PricewaterhouseCoopers LLP has no direct or material indirect financial interest
in any Fund or in the Adviser, other than receipt of fees for services to the
Funds and the Adviser. PricewaterhouseCoopers LLP or one of its predecessors has
been the independent public accountants for the Trust since 1993.
FEES PAID TO PRICEWATERHOUSECOOPERS LLP
Audit Fees. For the fiscal years ended October 31, 2001 and October 31, 2002,
respectively, the approximate fee for professional services
21
rendered for the audit of the annual financial statements of each of the Funds
were as follows:
<Table>
<Caption>
FUND NAME 2002 2001
- --------- -------- --------
CMG Strategic Equity Fund.................. $ 23,700 $ 5,000
CMG Small/Mid Cap Fund..................... $ 23,300 $ 19,000
CMG Small Cap Fund......................... $ 24,800 $ 20,500
CMG International Stock Fund............... $ 28,100 $ 22,500
CMG Short Term Bond Fund................... $ 23,400 $ 17,500
CMG Fixed Income Securities Fund........... $ 27,600 $ 21,500
CMG High Yield Fund........................ $ 20,700 $ 15,000
CMG Enhanced S&P 500 Fund.................. $ 0 $ 0
CMG Small Cap Value Fund................... $ 0 $ 0
CMG Small Cap Growth Fund.................. $ 0 $ 0
CMG Mid Cap Value Fund..................... $ 0 $ 0
CMG Mid Cap Growth Fund.................... $ 0 $ 0
TOTAL AUDIT FEES........................... $171,600 $121,000
</Table>
Audit-Related Fees. For the fiscal years ended October 31, 2001 and October 31,
2002, PricewaterhouseCoopers was not paid any audit-related fees.
Tax Fees. For the fiscal years ended October 31, 2001 and October 31, 2002,
PricewaterhouseCoopers LLP was paid approximately $32,400 and $21,700,
respectively, for tax-related services rendered to the Funds. These amounts
include services for tax reporting and documentation, tax compliance and tax
advice.
All Other Fees. For the fiscal years ended October 31, 2001 and October 31,
2002, PricewaterhouseCoopers LLP was paid approximately $-0- and $48,000,
respectively, for all other services rendered to the Funds. These services
included non-audit procedures performed upon the conversion of the Funds'
accounting system. In addition, for the fiscal years ended October 31, 2001 and
October 31, 2002, PricewaterhouseCoopers LLP was paid approximately $84,000 and
$239,000, respectively, for all other services rendered to the Adviser and any
entity controlling, controlled by, or under common control with the Adviser that
provides ongoing services to the Funds. These fees primarily relate to the
audits of the Funds' Adviser and distributor and required internal control
reports for the Funds' transfer agent. During 2002 the Funds changed their
transfer agent and distributor and the fees paid by those additional entities
are included above.
22
Audit Committee's Pre-Approval Policies and Procedures. The Trust's Audit
Committee adopted a Policy for Engagement of Independent Auditors For Audit and
Non-Audit Services on July 30, 2003 (the "Policy") which establishes the
policies and procedures for pre-approval of audit and non-audit services
provided to any Fund, its Adviser and certain of its Adviser's affiliates by the
Trust's independent auditors. The Policy uses a combination of specific and
general pre-approval procedures.
On a yearly basis, at a regularly scheduled meeting of the Audit Committee, each
Fund's Chief Financial Officer or Treasurer submits to the committee schedules
of the types of services to be provided for the next fiscal year that are
subject to general pre-approval. The schedules provide a description of each
type of service that is subject to general pre-approval and, where possible, fee
caps for each service. The Audit Committee then reviews and approves the types
of services to be provided for the next fiscal year and may add to, or subtract
from, the list of general pre-approved services from time to time.
If, subsequent to the approval of the schedules of pre-approved services, the
Trust, the Adviser or an Adviser affiliate determines that it would like to
engage the independent auditors to perform a service not included on the
pre-approved schedule, the Trust will need specific approval. The Trust's
management is required to provide the Audit Committee a written explanation
detailing the proposed engagement and why the work is being proposed to be
performed by the independent auditor. The Fund's Chief Financial Officer or
Treasurer is required to arrange for a discussion of the proposed service at the
next scheduled Audit Committee meeting. In the event timing for the project is
critical and needs to be considered before the next meeting of the Audit
Committee, a pre-designated committee member may approve or deny the request on
behalf of the Audit Committee. In the pre-designated member's discretion, a
special meeting of the Audit Committee may be called to consider the proposal.
In any case, the independent auditor may not commence any such project unless
and until specific approval has been given.
Because the Audit Committee's pre-approval policies and procedures were
implemented after the completion of the audit for the last fiscal year, none of
the non-audit fees described above was pre-approved by the Audit Committee. The
Adviser and Trust's Audit Committee considered whether these non-audit services
were compatible with maintaining the
23
independence of PricewaterhouseCoopers LLP in its audit of the Funds.
PricewaterhouseCoopers LLP, in accordance with Independence Standards Board
Standard No. 1, has confirmed to the Trust's Audit Committee in a letter dated
April 22, 2003 that they are independent accountants (within the meaning of
federal securities laws) with respect to the Fund.
24
EXECUTIVE OFFICERS OF THE TRUST
The officers of the Trust are listed below, together with their addresses, ages
and principal business occupations. The officers hold office indefinitely,
except that any officer may resign or may be removed by a vote of a majority of
the directors at any regular meeting or special meeting of the directors. All
officers are "interested persons" as defined by the 1940 Act and receive no fees
or salaries from any of the Funds in the Trust. Unless stated otherwise, the
business address of each officer is 1300 SW Sixth Avenue, Portland, Oregon
97201.
<Table>
<Caption>
POSITION(S)
HELD WITH LENGTH OF TIME PRINCIPAL OCCUPATION(S)
NAME AND AGE FUNDS SERVED DURING PAST 5 YEARS
- ------------ ----------- ------------------- --------------------------
Vicki L. Benjamin (42) Vice Since July 2003 Controller of the Liberty
One Financial Center President Funds and of the Liberty
Boston, MA 02111 and All- Star Funds since May
Principal 2002; Chief Accounting
Accounting Officer of the Liberty
Officer Funds and Liberty All-Star
Funds since June 2001;
Controller and Chief
Accounting Officer of the
Galaxy Funds since
September 2002 (formerly
Vice President, Corporate
Audit, State Street Bank
and Trust Company from May
1998 to April 2001; Audit
Manager from July 1994 to
June 1997; Senior Audit
Manager from July 1997 to
May 1998, Coopers &
Lybrand, LLP).
J. Kevin Connaughton (39) Chief Since December 2002 Treasurer of Liberty
245 Summer Street Financial Funds, Liberty All-Star
Boston, MA 02110 Officer Funds, Stein Roe Funds and
Galaxy Funds; Senior Vice
President of Liberty Funds
Group LLC. Prior to his
current positions, Mr.
Connaughton was Controller
of Liberty Funds, Liberty
All-Star Funds and Stein
Roe Funds; Vice President
of Liberty Funds Group LLC
and Colonial Management
Associates, Inc.; Senior
Tax Manager, Coopers &
Lybrand LLP.
</Table>
25
<Table>
<Caption>
POSITION(S)
HELD WITH LENGTH OF TIME PRINCIPAL OCCUPATION(S)
NAME AND AGE FUNDS SERVED DURING PAST 5 YEARS
- ------------ ----------- ------------------- --------------------------
Jeff B. Curtis (49) President 3 Years Managing Director,
and Executive Vice President
Assistant and Chief Operating
Secretary Officer-West Coast of the
Adviser. Prior to his
current positions with the
Adviser, Mr. Curtis was
President, Senior Vice
President and General
Counsel of the Adviser.
Mr. Curtis is also
currently the President of
Columbia Trust Company and
Columbia Financial Center
Incorporated, affiliates
of the Adviser.
Richard J. Johnson (45) Chief Since January 2003 Head of Equities/Portland
Investment and Senior Vice President
Officer and of the Adviser; Chief
Senior Vice Investment Officer and
President Senior Vice President of
Columbia Trust Company.
Prior to his current
positions with the
Adviser, Mr. Johnson was
Chief Investment Officer
and Vice President of the
Adviser.
</Table>
26
<Table>
<Caption>
POSITION(S)
HELD WITH LENGTH OF TIME PRINCIPAL OCCUPATION(S)
NAME AND AGE FUNDS SERVED DURING PAST 5 YEARS
- ------------ ----------- ------------------- --------------------------
Joseph R. Palombo (50) Vice Since January 2003 Executive Vice President
One Financial Center President and Chief Operating
Boston, MA 02111 Officer of Columbia
Management Group, Inc.
(the parent of the
Adviser) since December
2001; Director, Executive
Vice President and Chief
Operating Officer of the
Adviser since April 2003;
(formerly Chief Operations
Officer of Mutual Funds,
Liberty Financial
Companies, Inc. from
August 2000 to November,
2001; Executive Vice
President of Stein Roe &
Farnham Incorporated
(Stein Roe) from April
1999 to April 2003;
Director of Colonial
Management Associates,
Inc. from April 1999 to
April 2003; Director of
Stein Roe from September
2000 to April 2003);
President of Liberty Funds
since February 2003;
Manager of Stein Roe
Floating Rate Limited
Liability Company since
October 2000 (formerly
Vice President of Liberty
Funds from April, 1999 to
August 2000; Chief
Operating Officer and
Chief Compliance Officer,
Putnam Mutual Funds from
December 1993 to March
1999).
Mark A. Wentzien (43) Secretary 3 Years Vice President of the
Adviser. Prior to his
current positions, Mr.
Wentzien was Associate
Counsel of the Adviser.
</Table>
If proposal 1 is approved, the Adviser will recommend the combined board
appoints the following individuals as officers of the Funds to conform to the
officers of the Liberty Funds: Joseph Palombo as President, Kevin Connaughton as
Treasurer, Vicki Benjamin as Chief Accounting Officer and Michael Clarke as
Controller. Mark Wentzien will remain as Secretary until a successor is
appointed.
27
ADDITIONAL INFORMATION
The transfer and dividend crediting agent for the Funds is Liberty Funds
Services, Inc., One Financial Center, Boston, Massachusetts 02111.
State Street Bank & Trust Co., Lafayette Corporate Center, 2 Avenue de
Lafayette, Boston, Massachusetts 02111-1724, acts as general custodian for
assets of the Trust, including custody of foreign securities acquired by those
Funds that invest in foreign securities.
The Adviser is the Funds' administrator and provides certain administrative
services to the Funds pursuant to a Pricing, Bookkeeping and Fund Administration
Agreement.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
AND SHAREHOLDER PROPOSALS
Although the Notice of Special Meeting of Shareholders provides for the
transaction of any other business that properly comes before the meeting, the
Board of Trustees has no knowledge of any matters to be presented at the meeting
other than the matters described in this Proxy Statement. The enclosed proxy,
however, gives discretionary authority to the proxy holders to vote in
accordance with their judgment if any other matters are presented.
The Trust's Bylaws do not require it or any Fund to hold an annual meeting of
shareholders. A Fund will be required, however, to call special meetings of
shareholders in accordance with the requirements of the 1940 Act to seek
approval of, among other matters, new investment advisory contracts or changes
in the Fund's fundamental policies, such as its investment objective or
investment restrictions.
Because the Trust does not hold regular meetings of the Funds' shareholders, the
anticipated date of the next shareholders meeting cannot be provided.
Shareholders who wish to submit a proposal for consideration at a meeting of
shareholders must deliver notice of the proposal within a reasonable time before
the Trust mails its proxy materials. As of August 1, 2003, the Trust had not
received any shareholder proposals and thus none is included in these proxy
materials.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON ARE URGED TO COMPLETE, SIGN, DATE
AND RETURN THEIR PROXY CARDS IN THE ENCLOSED
28
POSTAGE-PAID ENVELOPE, OR TO VOTE BY TELEPHONE BY FOLLOWING THE ENCLOSED
INSTRUCTIONS.
By Order of the Board of Trustees,
-s- MARK A. WENTZIEN
Mark A. Wentzien
Secretary
Portland, Oregon
August 27, 2003
29
(This page intentionally left blank)
EXHIBIT A
PRINCIPAL SHAREHOLDERS OF THE FUNDS
As of August 21, 2003, each trustee and all officers and trustees as a group,
owned of record or beneficially less than 1% of the outstanding shares of each
Fund.
As of August 21, 2003, to the knowledge of the Funds, no person owned of record
or beneficially more than 5% of the outstanding shares of any Fund except the
following record owners:
CMG SMALL CAP FUND
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Wells Fargo Minnesota NA PF#640 16.30%
Farm Credit Consol Master Trust
12072461
Mutual Fund Dept
733 Marquette Ave Mac N9306 036
Minneapolis MN 55479-0001
Northern Trust Company PF#425 8.24%
IHC Pension Plan
22-07739
50 S LaSalle Street
Chicago IL 60675-0001
State Street Bank PF#426 6.91%
FBO Children's Medical Center
Dallas
12578571
7th Floor
200 Newport Ave
North Quincy MA 02171-2145
Wells Fargo Bank PF#302 6.20%
Mastercard International Pens Pl
#215113
Mutual Funds Dept
PO Box 63050
San Francisco CA 94163-0001
</Table>
A-1
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
MAC & CO PF#424 5.90%
Iowa Health Board Designated Fd
IWFF1110022
Mutual Fund Operations
PO Box 3198
Pittsburgh PA 15230-3198
</Table>
CMG SMALL/MID CAP FUND
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Wells Fargo Bank MN NA PF #255 11.29%
Longview Fibre Co Pension Tr Fd
#4500016001
Mutual Funds Dept
733 Marquette Ave MAC N9306-036
Minneapolis MN 55479-0001
Union Bank Tr Nominee PF #85 10.59%
Western Council WCIW TOC PEN FD
#311-66087
PO Box 85484
San Diego CA 92186-5484
Union Bank Tr Nominee PF #124 10.47%
Lumber Industry Pension Fund
#311-23347
PO Box 85484
San Diego CA 92186-5484
US Trust Company NA PF#256 8.40%
Oregon Community Foundation
#75272503
4380 SW Macadam Ste 450
Portland OR 97239-6407
Union Bank Tr Nominee PF #20 8.26%
Freightliner Corp Pension Plan
#6749712001
PO Box 85484
San Diego CA 92186-5484
</Table>
A-2
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
MAC & CO 8.04%
A/C MNFF1230012
Micron Foundation - SMID
PO Box 3198
Pittsburgh PA 15230-3198
Key Trust Company PF #54 7.31%
Oregon Washington Carpenters
Employers Pension Trust Fund
#40204400180382
PO Box 94871
Cleveland OH 44101-4871
USB FBO PF#384 6.21%
Trimet Pension Trust - CNC Smid
97310319
PO Box 1787
Milwaukee WI 53201-1787
Bank of New York PF#53 5.87%
Oregon Sheet Metal Worker Pen Tr
#276698
Master Trust/Master Custody Div
One All Street 25th Fl
New York NY 10286-0001
Wells Fargo Bank MN NA PF #42 5.24%
Lumber Emp & West Coun -
LPIW PEN
Mutual Funds Dept
733 Marquette Ave
MAC N9306-036
Minneapolis MN 55479-0001
</Table>
A-3
CMG INTERNATIONAL STOCK FUND
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Fleet National Bank 48.63%
FBO Liberty Omnibus R/R
Attn: Various Accts
PO Box 92800
Rochester NY 14692-8900
Fleet National Bank 11.06%
FBO Liberty Omnibus C/R
Attn: Various Accts
PO Box 92800
Rochester NY 14692-8900
Fleet National Bank 10.24%
FBO Liberty Omnibus C/C
Attn: Various Accts
PO Box 92800
Rochester NY 14692-8900
Union Bank Tr Nominee PF #124 9.81%
Lumber Industry Pension Fund
#311-23347
PO Box 85484
San Diego CA 92186-5484
Union Bank Tr Nominee PF #20 8.66%
Freightliner Corp Pension Plan
#6749712001
PO Box 85484
San Diego CA 92186-5484
</Table>
CMG STRATEGIC EQUITY FUND
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Meyer Memorial Trust 11.19%
c/o Wayne Pierson
1515 SW 5th Ave Ste 500
Portland OR 97201-5450
</Table>
A-4
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
USB FBO PF #89 9.17%
Willamette University
97303871
PO Box 1787
Milwaukee WI 53201-1787
USB FBO PF #335 8.46%
Tri-Met Pension Trust
97310313
Milwaukee WI 53201-1787
Board of Trustees of the 8.00%
Intermountain Retail Store
FBO Intermountain Retail
Store Emp PF#0186
Pension Plan Attn: Richard Hepner
201 Queen Anne Ave N Ste 100
Seattle WA 98109-4824
</Table>
CMG SHORT TERM BOND FUND
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Pacificorp Environmental 25.50%
Remediation Company PF #549
825 NE Multnomah Ste 1900
Portland OR 97232-2151
Marshall & Ilsley Trust Company 17.75%
FBO LSI Logic Inc
Attn: Ms Becky McKendry TR-11
1000 N Water St 14th Floor
Milwaukee WI 53202-6648
Fleet National Bank 8.82%
FBO Liberty Omnibus C/C
Attn: Various Acts
PO Box 92800
Rochester NY 14692-8900
</Table>
A-5
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Andrew Honzel PF#520 6.19%
Beverly Honzel
12929 SW Forest Meadows
Lake Oswego OR 97034-1593
Honzel Ltd Partnership PF #521 5.70%
12929 SW Forest Meadows
Lake Oswego OR 97034-1593
</Table>
CMG FIXED INCOME SECURITIES FUND
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Bank of New York PF#379 32.15%
FBO Local Union 191 IBEW
Joint Trust Funds #771305
Master Trust/Master Custody Div
One Wall St 25th Flr
New York NY 10286-0001
Fleet National Bank 18.50%
FBO Liberty Omnibus C/C
Attn: Various Accts
PO Box 92800
Rochester NY 14692-8900
US Bancorp NA FBO 11.92%
J Jerry Inskeep Jr Rollover IRA
A/C 19-0000530
PO Box 1787
Milwaukee WI 53201-1787
The Sherwood Trust -- Fxd PF#338 9.90%
61007859335
PO Box 1855
Walla Walla WA 99362-0035
</Table>
A-6
CMG HIGH YIELD FUND
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Comerica Bank PF #326 9.90%
Carpenters Pens Tr Fund for S Ca
0201100-0714425
M/C 3464
PO Box 75000
Detroit MI 48275-0001
Wells Fargo Bank PF#695 9.30%
Rocky Mountain UFCW
Unions & Empl
Pen Plan 1142163509
1740 Broadway
MAC# C7301-022
Denver CO 80274-0001
Covenant Benevolent Institution 7.87%
5145 N California Ave
Chicago IL 60625-3661
Fleet National Bank 6.74%
FBO Liberty Omnibus C/C
Attn: Various Accts
PO Box 92800
Rochester NY 14692-8900
Fleet National Bank 5.26%
FBO Liberty Omnibus R/R
Attn: Various Accts
PO Box 92800
Rochester NY 14692-8900
</Table>
CMG ENHANCED S&P 500 FUND
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Fleet National Bank 59.30%
FBO CMC Omnibus C/R
Attn Various Accts
PO Box 92800
Rochester NY 14692-8900
</Table>
A-7
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Fleet National Bank 40.70%
FBO CMC Omnibus C/C
Attn Various Accts
PO Box 92800
Rochester NY 14692-8900
</Table>
CMG SMALL CAP VALUE FUND
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Fleet National Bank 65.08%
FBO CMC Omnibus R/R
Attn Various Accts
PO Box 92800
Rochester NY 14692-8900
Fleet National Bank 18.73%
FBO CMC Omnibus C/R
Attn Various Accts
PO Box 92800
Rochester NY 14692-8900
Fleet National Bank 16.18%
FBO CMC Omnibus C/C
Attn Various Accts
PO Box 92800
Rochester NY 14692-8900
</Table>
CMG SMALL CAP GROWTH FUND
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Fleet National Bank 78.47%
FBO CMC Omnibus R/R
Attn Various Accts
PO Box 92800
Rochester NY 14692-8900
</Table>
A-8
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Fleet National Bank 16.36%
FBO Liberty Omnibus C/C
Attn Various Accounts
PO Box 92800
Rochester NY 14692-8900
Fleet National Bank 5.16%
FBO CMC Omnibus C/R
Attn Various Accts
PO Box 92800
Rochester NY 14692-8900
</Table>
CMG MID CAP VALUE FUND
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Fleet National Bank 56.86%
FBO CMC Omnibus C/R
Attn Various Accounts
PO Box 92800
Rochester NY 14692-8900
Fleet National Bank 25.74%
FBO CMC Omnibus C/C
Attn Various Accts
PO Box 92800
Rochester NY 14692-8900
Fleet National Bank 17.38%
FBO CMC Omnibus R/R
Attn Various Accts
PO Box 92800
Rochester NY 14692-8900
</Table>
A-9
CMG MID CAP GROWTH FUND
<Table>
<Caption>
PERCENT OF SHARES HELD
NAME AND ADDRESS AT AUGUST 21, 2003
- ---------------- ----------------------
Fleet National Bank 59.26%
FBO CMC Omnibus C/R
Attn Various Accts
PO Box 92800
Rochester NY 14692-8900
Fleet National Bank 20.51%
FBO CMC Omnibus R/R
Attn: Various Accts
PO Box 92800
Rochester NY 14692-8900
Fleet National Bank 20.21%
FBO CMC Omnibus C/C
Attn Various Accts
PO Box 92800
Rochester NY 14692-8900
</Table>
A-10
(This page intentionally left blank)
This proxy is solicited on behalf of the Board of Trustees of the Trust. The
Trust's Board of Trustees recommends that you vote IN FAVOR of the Proposal.
This proxy, when properly executed, will be voted in the manner directed herein
and absent direction will be voted "FOR" each item below. This proxy will be
voted in accordance with the holder's best judgment as to any other matter.
PLEASE MARK VOTES AS IN THIS EXAMPLE:
1. Election of Trustees: To elect 12 trustees to the Trust:
<Table>
01. Douglas A. Hacker 02. Janet Langford Kelly 03. Richard L. Lowry FOR WITHHOLD
04. William E. Mayer 05. Dr. Charles R. Nelson 06. John J. Neuhauser ALL ALL
07. Joseph A. Palombo 08. Patrick J. Simpson 09. Thomas E. Stitzel [ ] [ ]
10. Thomas C. Theobald 11. Anne-Lee Verville 12. Richard L. Woolworth
</Table>
[ ]
-----------------------------------------------------------
For all nominees except as noted
above
To withhold authority to vote for any nominee(s) mark "For All Except" and write
the nominee number(s) on the line provided.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<Table>
Mark box at right for address change and
note new address at left. [ ]
Please mark, sign, date and return this
proxy promptly using the enclosed
envelope.
Note: Please sign exactly as your name
appears on this proxy card. When signing
as executor, administrator, attorney,
trustee, guardian, or as custodian for a
minor, please give your full title as
such. If you are signing for a
corporation, please sign the full
corporate name and indicate the signer's
office. If the shareholder is a partner,
please sign in the partnership's name.
For a joint account, either party may
sign, but the name of the party signing
should conform exactly to a name on the
proxy card.
- ----------------------------------
Signature
- ----------------------------------
Signature (if held jointly)
- ----------------------------------
Date
</Table>
PLEASE VOTE PROMPTLY
Your vote is important, no matter how many shares you own. Please vote on the
reverse side of this proxy card and sign in the space(s) provided. Return your
completed proxy card in the enclosed envelope today.
You may receive additional proxies for other accounts. These are not duplicates:
you should sign and return each proxy card in order for your votes to be
counted.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. The signers of this
proxy hereby appoint each of Joseph R. Palombo, Jeff B. Curtis, and Mark A.
Wentzien proxies of the signers, with power of substitution, to vote at the
Special Meeting of Shareholders to be held in Portland, Oregon, on Tuesday,
October 7, 2003, and at any adjournments, as specified herein and in accordance
with their best judgment, on any other business that may properly come before
this meeting.
THE BOARD OF TRUSTEES UNANIMOUSLY HAS RECOMMENDED A VOTE "FOR" ALL MATTERS.
VOTE YOUR PROXY BY TELEPHONE!
The enclosed proxy statement provides details on important issues affecting your
funds. THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR ALL PROPOSALS.
You can vote your proxies by telephone. It is easy and confidential.
A REMINDER -- if you vote by telephone, you should NOT mail your proxy card.
TELEPHONE VOTING:
- - Read the proxy statement.
- - With your proxy card available, call toll-free (877) 779-8683.
- - When prompted, enter the voter control number located in the upper left corner
of your proxy card.
- - Follow the instructions provided.
Telephone voting is available 24 hours a day, seven days a week.
If you have questions regarding the meeting agenda or the execution of proxies,
call a representative toll-free at (866) 238-4083.
SHC-43/173P-0803 (8/03)