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COLUMBIA MANAGEMENT.
February 15, 2005
CHANGES TO PRODUCT OFFERING
As part of an ongoing effort to keep our investment professional partners
informed, we would like to review planned changes to our mutual fund product
line. Columbia Management, including Banc of America Capital Management, LLC
(BACAP(1)) has undertaken an effort to streamline the array of products offered
in the Columbia and Nations funds families to address the needs of investors as
effectively and efficiently as possible. This initiative is an ordinary
progression following the consolidation of the former FleetBoston Financial and
Bank of America organizations.
The Board of Trustees of Columbia Funds recently approved several changes to the
Columbia Funds product line. Below is an outline of mergers among Columbia
Funds, additional mergers involving Columbia and Nations Funds and, lastly, the
liquidation of one fund. Each of the proposed mergers is subject to approval by
shareholders at meetings scheduled for September 2005. The proposed mergers of
Columbia Funds with Nations Funds also are subject to approval by the Nations
Funds Board of Trustees.
FUNDS STREAMLINING - MERGERS
The Columbia Funds and Nations Funds product offering currently includes funds
that have similar mandates and investment styles. In an effort to achieve
economies of scale and other benefits for our shareholders, Columbia Funds is
proposing the merger of several of those funds. Through these mergers, we hope
to position the combined funds in such a way that they can invest more
efficiently and spread their fixed costs over a larger asset base, potentially
resulting in lower expense ratios. These changes figure prominently in our
effort to rationalize our product line and to provide our shareholders with the
best products and services possible. In recommending which fund should survive
in a merger, a number of factors are considered, including historical
performance, expenses, tax consequences, investment objective and ability to
attract future assets.
The following are the mergers approved by the Columbia Board of Trustees. Please
note that mergers of Columbia Funds into Nations Funds are subject to the
approval of the Nations Funds Board of Trustees. Further, certain of the mergers
described below also may involve more or more Nations Funds that are proposed to
be acquired. We expect to announce information on these transactions, and
additional mergers involving Nations Funds in the near future. (Figures in
parentheses are the funds' total assets as of January 31, 2005).
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1 Columbia Management is the primary investment management division of Bank of
America Corporation. Columbia Management entities furnish investment
management services and advise institutional and mutual fund portfolios.
BACAP, an SEC registered investment adviser, is part of Columbia Management
and is a wholly-owned subsidiary of Bank of America, N.A. Nations Funds are
distributed by BACAP DISTRIBUTORS, LLC. CMG Funds are distributed by Columbia
Financial Center Incorporated. Columbia Funds are distributed by Columbia
Funds Distributors, Inc., which also provides certain intermediary
relationship management services to BACAP Distributors, LLC with respect to
the Nations Funds. BACAP Distributors, LLC, Columbia Funds Distributor, Inc.
and Columbia Financial Center Incorporated are part of Columbia Management,
members NASD, SIPC, and are affiliates of Bank of America Corporation.
- FOR INVESTMENT PROFESSIONAL USE ONLY -
- DO NOT DISTRIBUTE -
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EQUITY MUTUAL FUNDS:
- Columbia Newport Tiger Fund ($340.6 million ) would be merged into
Columbia International Stock Fund ($663.3 million, prior to pending
merger with Columbia International Equity Fund). The management team of
Penny Burgess and Deborah Snee, who currently manage the Columbia
International Stock Fund, is expected to run the combined fund after
the merger.
- Columbia Tax-Managed Growth Fund II ($38.5 million) would be merged
into Columbia Tax-Managed Growth Fund ($269.9 million). Both funds are
managed by a team of investment professionals assigned to it by Stein
Roe Investment Counsel, LLC, a registered investment advisor which acts
as the sub-advisor to both funds, and is expected to run the combined
fund following the merger.
- Columbia Mid Cap Value Fund ($1,816.9 million) would be merged into
Nations Mid Cap Value Fund ($571.2 million). Both funds are managed by
David Hoffman and Diane Sobin, who are expected to run the combined
fund following the merger.
- Columbia Large Company Index Fund ($872.9 million) would be merged into
Nations Large Cap Index Fund ($1,349.6 million). The management team of
the Nations Large Cap Index Fund, led by Vikram Kuriyan, is expected to
run the fund following the merger.
- Columbia Tax-Managed Value Fund ($74.2 million) would be merged into
Columbia Growth & Income Fund ($1,907 million).
- Columbia Small Company Index Fund ($342.4 million) would be merged into
Nations Small Cap Index Fund ($1,073.2 million). The management team of
the Nations Small Cap Index Fund, led by Vikram Kuriyan, is expected to
run the fund following the merger.
FIXED-INCOME MUTUAL FUNDS:
- Columbia Short Term Bond Fund ($507.1 million) would be merged into
Nations Short Term Income Fund ($1,100.5 million). Both funds are
managed by Leonard Aplet and Richard Cutts, who are expected to run the
combined fund following the merger.
- Columbia Intermediate Government Income Fund ($356.7 million) would be
merged into Nations Intermediate Bond Fund ($655.6 million). Brian
Drainville, who currently manages the Nations Intermediate Bond Fund,
is expected to run the combined fund after the merger.
- Columbia Income Fund ($632.1 million) would be merged into Columbia
Intermediate Bond Fund ($1,140.4 million). Both funds are managed by
teams led by Mark Newlin. A management team of Mark Newlin, Stephen
Luetger, Thomas LaPointe, and Kevin Cronk is expected to run the
combined fund after the merger.
- Columbia Pennsylvania Intermediate Municipal Bond Fund ($25.1 million)
would be merged into Columbia Intermediate Tax Exempt Fund ($516.2
million).
- FOR INVESTMENT PROFESSIONAL USE ONLY -
- DO NOT DISTRIBUTE -
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- Columbia Managed Municipals Fund ($421.4 million) would be merged into
Columbia Tax-Exempt Fund ($1,705.2 million).
- Columbia Florida Intermediate Municipal Bond Fund ($68.6 million) would
be merged into Nations Florida Intermediate Municipal Fund ($199.8
million).
FIXED-INCOME VARIABLE SERIES FUNDS:
- Columbia High Yield Fund, Variable Series ($86.1 million) would be
merged into Nations High Yield Bond Portfolio ($98.6 million).
All mergers are subject to shareholder approval at special meetings expected to
be held in September, 2005 and are tentatively set to occur during September and
October (the one variable series merger is tentatively set to occur in late 2005
or early 2006). With the exception of Columbia High Yield Fund, Variable Series,
the funds that are slated to be acquired will be closed to new and subsequent
investments at the close of business on April 29, 2005. However, purchases that
are part of an Automatic Investment Plan, Automated Dollar Cost Averaging
program or Automatic Dividend Diversification program, as well as dividend
reinvestments and contributions to certain existing retirement plan accounts,
will continue.
FUNDS STREAMLINING - LIQUIDATION
The Trustees of Columbia National Municipal Bond Fund, Inc. have decided to
liquidate the fund (total assets of $13.1 million as of January 31, 2005). The
small size of this fund reduces the likelihood that shareholders would be able
to benefit from the lower expense ratios that larger funds may generate. We
considered merging the fund with another Columbia Fund but determined that doing
so was not in the best interest of the fund's shareholders.
Liquidation of the fund is subject to shareholder approval at a special meeting
expected to be held in September, 2005, the liquidation would then take place
within a reasonable time thereafter. The fund will be closed to new and
subsequent investments at the close of business on April 29, 2005. However,
purchases that are part of an Automatic Investment Plan, Automated Dollar Cost
Averaging program or Automatic Dividend Diversification program, as well as
dividend reinvestments and contributions to certain existing retirement plan
accounts, will continue.
Shareholders in the fund may close out their investments through any of the
following:
- Do nothing, and, pending approval of shareholders to liquidate, we will
automatically redeem your account on the liquidation date and forward a
check for the balance to the address of record. Contingent deferred
sales charges and redemption fees will be waived on the liquidation
date.
- Exchange shares of Columbia National Municipal Bond Fund for comparable
shares in any other Columbia Fund. Shareholders will not pay additional
sales charges on this exchange. While there are no other Columbia Funds
that follow the exact investing style pursued by the Columbia National
Municipal Bond Fund, investors may want to consider the Columbia Tax
Exempt Fund. Shareholders should see that fund's prospectus for
additional information.
- FOR INVESTMENT PROFESSIONAL USE ONLY -
- DO NOT DISTRIBUTE -
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- Redeem fund shares at any time prior to the liquidation date. Voluntary
liquidations will be subject to any restrictions including contingent
deferred sales charges and redemption fees currently described in the
fund's prospectus.
With all of these options, shareholders may realize a gain or loss when they
exchange or redeem shares in Columbia National Municipal Bond Fund, Inc.
Shareholders should consult a tax advisor about the tax implications that may
result from the exchange or liquidation of fund shares.
ADDITIONAL INFORMATION ON THE FUND MERGERS AND THE LIQUIDATION WILL BE
COMMUNICATED TO SHAREHOLDERS THROUGH LETTERS AND PROSPECTUS SUPPLEMENTS TO BE
MAILED BEGINNING THIS WEEK.
FEBRUARY 2005 SHAREHOLDER MEETINGS & FUND MERGERS
Columbia Funds shareholder meetings originally scheduled for February 16, are
expected adjourned to March 11, 2005 as receipt of a quorum of outstanding votes
prior to the meetings does not appear likely. The shareholder meeting for
Columbia Contrarian Income Fund is still scheduled for March 1, 2005. The
primary purpose of these proxy solicitations was to approve the mergers below.
Subject to shareholder approval, Columbia intends to complete these mergers on
or about Friday, March 18, 2005.
- Columbia Common Stock Fund would be merged into Columbia Large Cap Core
Fund.
- Columbia International Equity Fund would be merged into Columbia
International Stock Fund.
- Columbia Contrarian Income Fund would be merged into Columbia Quality
Plus Bond Fund.
- Columbia Growth Fund would be merged into Columbia Large Cap Growth
Fund.
Lastly, Columbia Corporate Bond Fund originally was proposed to be merged, along
with Columbia Contrarian Income Fund, into Columbia Quality Plus Bond Fund. The
fund was closed to new and subsequent investments effective November 10, 2004.
Columbia has since reevaluated its position and no longer recommends a merger,
but rather intends to liquidate the fund at a future date in 2005.
If you have any questions about the transactions described above, please call
your dedicated service team.
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THE PRIVATE BANK
FINANCIAL INDEPENDENT RETIREMENT OF BANK OF
INSTITUTIONS BROKER/DEALERS ADVISORS INVESTMENTS AMERICA
800-718-9009 800-215-5005 800-446-4008 877-894-3582 800-521-1297
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We appreciate your confidence in Columbia Funds and look forward to serving you
in the future.
- FOR INVESTMENT PROFESSIONAL USE ONLY -
- DO NOT DISTRIBUTE -
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PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF THE
FUNDS CAREFULLY BEFORE INVESTING. CONTACT COLUMBIA MANAGEMENT FOR A PROSPECTUS,
WHICH CONTAINS THIS AND OTHER IMPORTANT INFORMATION ABOUT OUR FUNDS. READ IT
CAREFULLY BEFORE YOU INVEST.
The foregoing is not an offer to sell, nor a solicitation of an offer to buy,
shares of any investment company, nor is it a solicitation of any proxy. For
more information regarding the surviving fund of each merger, or to receive a
free copy of a prospectus/proxy statement relating to a proposed merger
(containing important information about fees, expenses and risk considerations)
once a registration statement relating to the proposed merger has been filed
with the Securities and Exchange Commission and become effective, please call
800-345-6611 or visit www.columbiafunds.com. The prospectus/proxy statement will
also be available for free on the Securities and Exchange Commission's website
(http://www.sec.gov). Please read the prospectus/information statement carefully
before making any investment decisions.
Columbia Management is the primary investment management division of Bank of
America Corporation. Columbia Management entities furnish investment management
services and advise institutional and mutual fund portfolios. Nations Funds are
distributed by BACAP DISTRIBUTORS, LLC. Columbia Funds are distributed by
COLUMBIA FUNDS DISTRIBUTORS, INC., which also provides certain intermediary
relationship management services to BACAP Distributors, LLC with respect to the
Nations Funds. BACAP Distributors, LLC, Columbia Funds Distributor, Inc. and
Columbia Financial Center Incorporated are part of Columbia Management and are
affiliates of Bank of America Corporation.
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Not FDIC Insured May Lose Value No Bank Guarantee
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- FOR INVESTMENT PROFESSIONAL USE ONLY -
- DO NOT DISTRIBUTE -
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COL-95/522O 0205 4386
- FOR INVESTMENT PROFESSIONAL USE ONLY -
- DO NOT DISTRIBUTE -