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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / 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:
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4) Date Filed:
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CMG FUND TRUST
CMG CORE BOND FUND
CMG ENHANCED S&P 500 INDEX FUND
CMG HIGH YIELD FUND
CMG INTERNATIONAL STOCK FUND
CMG LARGE CAP GROWTH FUND
CMG LARGE CAP VALUE FUND
CMG MID CAP GROWTH FUND
CMG MID CAP VALUE FUND
CMG SHORT TERM BOND FUND
CMG SMALL CAP FUND
CMG SMALL CAP GROWTH FUND
CMG SMALL CAP VALUE FUND
CMG SMALL/MID CAP FUND
CMG STRATEGIC EQUITY FUND
CMG ULTRA SHORT TERM BOND FUND
(EACH, A "FUND"; AND COLLECTIVELY, THE "FUNDS")
ONE FINANCIAL CENTER
BOSTON, MASSACHUSETTS 02111-2621
1-866-348-1468
JULY 22, 2005
Dear Shareholder:
I am writing to you to ask for your vote on the following important matters that
affect your investment in the Funds: (1) the election of Trustees for your Fund;
(2) the approval of amendments to and the elimination of certain fundamental
investment restrictions of your Fund; and (3) the approval of a change in legal
entity for your Fund. If approved, these amendments to and eliminations of
certain fundamental investment restrictions will serve to facilitate efficient
administration of and compliance monitoring for your Fund.
Included in this booklet is information about the upcoming meeting of
shareholders of the Funds (the "Special Meeting"):
- A NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF EACH OF THE FUNDS, which
summarizes the issues on which you are being asked to vote; and
- A PROXY STATEMENT FOR THE SPECIAL MEETING, which provides more detailed
information on the specific issues being considered at the Special
Meeting.
ALSO ENCLOSED ARE YOUR BALLOT AND POSTAGE-PAID RETURN ENVELOPE.
Although we would like very much to have each shareholder attend this meeting,
we realize that it may not be possible. Whether or not you plan to be present,
we need your vote. We urge you to record your voting instructions by telephone,
via the Internet or by completing, signing and returning the enclosed proxy
card(s) promptly. A postage-paid envelope is enclosed for mailing, and Internet
voting instructions are listed at the top of your proxy card(s).
Your vote is important. A prompt response on your part will help to ensure that
your interests are represented. If you have any questions about the proposals,
please call a Columbia customer service representative at (866) 348-1468 or
contact your financial advisor.
Sincerely yours,
Christopher L. Wilson
President
CMG FUND TRUST
CMG CORE BOND FUND
CMG ENHANCED S&P 500 INDEX FUND
CMG HIGH YIELD FUND
CMG INTERNATIONAL STOCK FUND
CMG LARGE CAP GROWTH FUND
CMG LARGE CAP VALUE FUND
CMG MID CAP GROWTH FUND
CMG MID CAP VALUE FUND
CMG SHORT TERM BOND FUND
CMG SMALL CAP FUND
CMG SMALL CAP GROWTH FUND
CMG SMALL CAP VALUE FUND
CMG SMALL/MID CAP FUND
CMG STRATEGIC EQUITY FUND
CMG ULTRA SHORT TERM BOND FUND
ONE FINANCIAL CENTER,
BOSTON, MASSACHUSETTS 02111-2621
1-866-348-1468
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 16, 2005
To the Shareholders of the Funds.
NOTICE IS HEREBY GIVEN that the Special Meeting of Shareholders of the Funds
will be held at the offices of the Funds at One Financial Center, Boston,
Massachusetts, on September 16, 2005, at 10:00 a.m. Boston time. The purpose of
the Meeting is to consider and act upon the following matters:
1. To elect your Fund's nominees for Trustees. (To be voted upon by the
shareholders of each Fund. All shareholders of CMG Fund Trust will vote
together.)
2. To approve amendments to and the elimination of certain fundamental
investment restrictions of your Fund. (To be voted upon by the shareholders
of each affected Fund, voting separately by Fund and separately on each
proposed amendment or elimination.)
3. To approve the reorganization of each Fund (a "Reorganization") into a
separate, corresponding series (a "New Fund") of Columbia Funds Institutional
Trust, a Massachusetts business trust (the "Acquiring Trust"), pursuant to an
Agreement and Plan of Reorganization (a "Plan") of the Fund providing for,
and the authorization of certain related actions involving, (i) the transfer
of all of the assets of the Fund
to the corresponding New Fund, in exchange for shares of the corresponding
New Fund and the assumption by the corresponding New Fund of all of the
liabilities of the Fund, and (ii) the distribution of such shares to the
shareholders of the Fund in complete liquidation of the Fund. (To be voted
upon by the shareholders of each Fund, voting separately by Fund.)
4. To transact such other business as may properly come before the Meeting, or
any adjournment(s) thereof.
The Board of Trustees (the "Board") has fixed the close of business on July 8,
2005, as the record date for the determination of the shareholders of the Funds
entitled to notice of, and to vote at, the Meeting and any adjournments thereof.
THE BOARD RECOMMENDS THAT YOU VOTE FOR ALL OF THE PROPOSALS.
By order of the Board,
R. Scott Henderson
Secretary of the Funds
July 22, 2005
NOTICE: YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE SEE THE ENCLOSED PROXY STATEMENT AND OTHER MATERIALS FOR INSTRUCTIONS ON
HOW TO VOTE EASILY AND QUICKLY.
CMG FUND TRUST
CMG CORE BOND FUND
CMG ENHANCED S&P 500 INDEX FUND
CMG HIGH YIELD FUND
CMG INTERNATIONAL STOCK FUND
CMG LARGE CAP GROWTH FUND
CMG LARGE CAP VALUE FUND
CMG MID CAP GROWTH FUND
CMG MID CAP VALUE FUND
CMG SHORT TERM BOND FUND
CMG SMALL CAP FUND
CMG SMALL CAP GROWTH FUND
CMG SMALL CAP VALUE FUND
CMG SMALL/MID CAP FUND
CMG STRATEGIC EQUITY FUND
CMG ULTRA SHORT TERM BOND FUND
ONE FINANCIAL CENTER,
BOSTON, MASSACHUSETTS 02111-2621
1-866-348-1468
PROXY STATEMENT
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 16, 2005
This Proxy Statement is being furnished in connection with the solicitation of
proxies by the Board of Trustees (the "Board" or the "Trustees") of the Funds
for use at the special meeting of the shareholders of the Funds (the "Meeting")
to be held at the offices of the Funds, One Financial Center, Boston,
Massachusetts, on September 16, 2005, at 10:00 a.m. Boston time, and at any
adjournment(s) thereof, for the purposes set forth in the accompanying Notice of
Special Meeting of Shareholders (the "Notice"). The Notice, this Proxy Statement
and the enclosed proxy card are first being mailed, or otherwise being made
available, to shareholders on or about July 28, 2005. Please read this Proxy
Statement and keep it for future reference.
The Meeting has been called for the purpose of having the shareholders of the
Funds consider and take action upon the proposals listed in the Notice (the
"Proposals"). This Proxy Statement contains information you should know before
voting on the Proposals. As described in greater detail below, while
shareholders are being asked to amend and eliminate certain "fundamental"
investment restrictions, this is being done solely to facilitate
1
compliance testing through standardization and to enhance future flexibility.
The Funds' investment advisor, Columbia Management Advisors, Inc. ("Columbia
Management") has no present intention of changing the way that the Funds are
managed in response to these proposals. The following is a list of the Proposals
presented in this Proxy Statement and the Funds that are affected by such
Proposals:
<Table>
<Caption>
PROPOSAL AFFECTED FUNDS
- -------- --------------
Proposal 1: To approve the election of All Funds
Trustees.
Proposal 2.A.: To approve an amendment All Funds
to certain Funds' fundamental investment
restrictions with respect to borrowing
money, pledging assets and issuing
senior securities.
Proposal 2.B.: To approve an amendment All Funds
to certain Funds' fundamental investment
restrictions with respect to making
loans.
Proposal 2.C.: To approve an amendment CMG High Yield Fund
to certain Funds' fundamental investment CMG International Stock Fund
restrictions with respect to CMG Short Term Bond Fund
diversification of investments. CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG Ultra Short Term Bond Fund
Proposal 2.D.: To approve an amendment All Funds
to certain Funds' fundamental investment
restrictions with respect to investments
in commodities.
Proposal 2.E.: To approve an amendment All Funds
to certain Funds' fundamental investment
restrictions with respect to investments
in real estate.
Proposal 2.F.: To approve an amendment All Funds
to certain Funds' fundamental investment
restrictions with respect to
underwriting of securities.
Proposal 2.G.: To approve the CMG Core Bond Fund
elimination of certain Fund's CMG High Yield Fund
fundamental investment restrictions with CMG Short Term Bond Fund
respect to purchasing securities on CMG Ultra Short Term Bond Fund
margin.
Proposal 2.H.: To approve the CMG Core Bond Fund
elimination of certain Funds' CMG High Yield Fund
fundamental investment restrictions with CMG International Stock Fund
respect to investing for the purpose of CMG Short Term Bond Fund
exercising control. CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG Ultra Short Term Bond Fund
</Table>
2
<Table>
<Caption>
PROPOSAL AFFECTED FUNDS
- -------- --------------
Proposal 2.I.: To approve the CMG Core Bond Fund
elimination of certain Funds' CMG High Yield Fund
fundamental investment restrictions with CMG International Stock Fund
respect to short sales. CMG Short Term Bond Fund
CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG Ultra Short Term Bond Fund
Proposal 2.J.: To approve an amendment CMG Core Bond Fund
to certain Funds' fundamental investment CMG Enhanced S&P 500 Index
restrictions with respect to Fund
concentrating investments in an CMG High Yield Fund
industry. CMG International Stock Fund
CMG Large Cap Growth Fund
CMG Large Cap Value Fund
CMG Mid Cap Growth Fund
CMG Mid Cap Value Fund
CMG Short Term Bond Fund
CMG Small Cap Fund
CMG Small Cap Growth Fund
CMG Small Cap Value Fund
CMG Small/Mid Cap Fund
CMG Strategic Equity Fund
CMG Ultra Short Term Bond Fund
Proposal 2.K.: To approve the CMG Core Bond Fund
elimination of certain Funds' CMG High Yield Fund
fundamental investment restrictions with CMG International Stock Fund
respect to purchasing securities of CMG Short Term Bond Fund
companies less than three years old. CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG Ultra Short Term Bond Fund
Proposal 2.L.: To approve the CMG High Yield Fund
elimination of certain Funds'
fundamental investment restrictions with
respect to investing in securities of
other investment companies.
Proposal 2.M.: To approve the CMG Core Bond Fund
elimination of certain Funds' CMG High Yield Fund
fundamental investment restrictions with CMG Short Term Bond Fund
respect to purchasing or holding the CMG Ultra Short Term Bond Fund
securities of any company, if securities
of such company are owned by officers or
directors of the fund and of its
advisor.
Proposal 2.N.: To approve the CMG International Stock Fund
elimination of certain Funds' CMG Small Cap Fund
fundamental investment restrictions with CMG Small/Mid Cap Fund
respect to buying and selling puts and
calls.
Proposal 2.O.: To approve the CMG High Yield Fund
elimination of certain Fund's
fundamental investment restrictions with
respect to purchasing illiquid
securities.
Proposal 3: To approve the All Funds
Reorganization of each Fund pursuant to
the Plan.
</Table>
3
With respect to Proposal 1, all shareholders of CMG Fund Trust will vote
together on the election of Trustees. With respect to Proposal 2, the
shareholders of each Fund will vote separately by Fund and separately on each
Proposal 2.A. through 2.O. affecting the Fund. With respect to Proposal 3, the
shareholders of each Fund will vote separately by Fund on their Fund's Plan.
Timely, properly executed proxies will be voted as you instruct. If no
specification is made with respect to a Proposal, shares will be voted in
accordance with the recommendation of the Board as to that Proposal. The
solicitation is being made primarily by the mailing of this Proxy Statement and
the accompanying proxy card. Supplemental solicitations of proxies may be made
by personal interview, mail, telephone, facsimile or electronic mail ("e-mail")
by officers and Trustees of your Fund, officers and employees of Columbia
Management and other representatives of your Fund, as described below. Columbia
Management will bear the costs incurred in connection with the solicitation of
proxies, the costs of holding the Meeting, and other expenses associated with
obtaining the approval of the Funds and their shareholders.
Shareholders of record at the close of business on July 8, 2005 (the "Record
Date") are entitled to receive notice of, and to vote at, the Meeting or any
adjournment(s) thereof. Shareholders of a Fund on the Record Date shall be
entitled to one vote for each whole share held, as to any matter on which they
are entitled to vote, and each fractional share shall be entitled to a
proportionate fractional vote. Shareholders of a Fund, regardless of the class
of shares held, will vote together as a single class.
I. PROPOSAL 1: ELECTION OF TRUSTEES
Mses. Kelly and Verville and Messrs. Hacker, Lowry, Mayer, Nelson, Neuhauser,
Simpson, Stitzel, Theobald and Woolworth (who have each agreed to serve) are
proposed for election as Trustees of your Fund.
The names and ages of the Trustees of the Funds, the year each was first
elected, their principal business occupations during at least the last five
years, the number of portfolios in the other registered investment companies
advised by Columbia Management (the "Fund Complex") overseen by each Trustee and
other directorships that each Trustee holds are shown below. The address of each
Trustee is One Financial Center, Boston, MA 02111-2621, unless otherwise
indicated.
4
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
FUND
COMPLEX
POSITION YEAR FIRST PRINCIPAL OCCUPATION(S) OVERSEEN
NAME/AGE AND ADDRESS WITH FUNDS ELECTED(1) DURING PAST FIVE YEARS BY TRUSTEE
- ------------------------ ----------- ---------- ------------------------------------- -------------
DISINTERESTED TRUSTEES
Douglas A. Hacker Trustee 1996 Executive Vice President - Strategy 101
(Age 49) of United Airlines (airline) since
December, 2002 (formerly President of
UAL Loyalty Services (airline) from
September, 2001 to December, 2002;
Executive Vice President and Chief
Financial Officer of United Airlines
from July, 1999 to September, 2001;
Senior Vice President - Finance from
March, 1993 to July, 1999).
Janet Langford Kelly Trustee 1996 Partner, Zelle, Hofmann, Voelbel, 101
(Age 47) Mason & Gette LLP (Law firm) since
2005; Adjunct Professor of Law,
Northwestern University, since
September, 2004; (formerly Chief
Administration Officer and Senior
Vice President, Kmart Holding
Corporation (consumer goods), from
September, 2003 to March, 2004;
Executive Vice President - Corporate
Development and Administration,
General Counsel and Secretary,
Kellogg Company (food manufacturer),
from September, 1999 to August, 2003;
Senior Vice President, Secretary and
General Counsel, Sara Lee Corporation
(branded, packaged, consumer-products
manufacturer) from January, 1995 to
September, 1999).
<Caption>
NAME/AGE AND ADDRESS OTHER DIRECTORSHIPS HELD
- ------------------------ -------------------------------
DISINTERESTED TRUSTEES
Douglas A. Hacker None
(Age 49)
Janet Langford Kelly None
(Age 47)
</Table>
5
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
FUND
COMPLEX
POSITION YEAR FIRST PRINCIPAL OCCUPATION(S) OVERSEEN
NAME/AGE AND ADDRESS WITH FUNDS ELECTED(1) DURING PAST FIVE YEARS BY TRUSTEE
- ------------------------ ----------- ---------- ------------------------------------- -------------
Richard W. Lowry(2) Trustee 1995 Private Investor since August, 1987 103
(Age 69) (formerly Chairman and Chief
Executive Officer, U.S. Plywood
Corporation (building products
manufacturer)).
Charles R. Nelson Trustee 1981 Professor of Economics, University of 101
(Age 62) Washington, since January, 1976; Ford
and Louisa Van Voorhis Professor of
Political Economy, University of
Washington, since September, 1993;
(formerly Director, Institute for
Economic Research, University of
Washington, from September, 2001 to
June, 2003; 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. Neuhauser(2) Trustee 1985 Academic Vice President and Dean of 103
(Age 62) Faculties since August, 1999, Boston
College (formerly Dean, Boston
College School of Management from
September, 1977 to August, 1999).
Patrick J. Simpson Trustee 2000 Partner, Perkins Coie, LLP (law 101
(Age 61) firm).
Thomas E. Stitzel Trustee 1998 Business Consultant since 1999 101
(Age 69) (formerly Professor of Finance from
1975 to 1999; College of Business,
Boise State University); Chartered
Financial Analyst.
<Caption>
NAME/AGE AND ADDRESS OTHER DIRECTORSHIPS HELD
- ------------------------ -------------------------------
Richard W. Lowry(2) None
(Age 69)
Charles R. Nelson None
(Age 62)
John J. Neuhauser(2) Saucony, Inc. (athletic
(Age 62) footwear)
Patrick J. Simpson None
(Age 61)
Thomas E. Stitzel None
(Age 69)
</Table>
6
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
FUND
COMPLEX
POSITION YEAR FIRST PRINCIPAL OCCUPATION(S) OVERSEEN
NAME/AGE AND ADDRESS WITH FUNDS ELECTED(1) DURING PAST FIVE YEARS BY TRUSTEE
- ------------------------ ----------- ---------- ------------------------------------- -------------
Thomas C. Theobald(3) Trustee 1996 Partner and Senior Advisor, Chicago 101
(Age 68) Growth Partners (private equity
investing) since September, 2004;
(formerly Managing Director, William
Blair Capital Partners (private
equity investing) from September,
1994 to September, 2004).
Anne-Lee Verville Trustee 1998 Retired since 1997 (formerly General 101
(Age 59) Manager, Global Education Industry,
IBM Corporation (computers and
technology) from 1994 to 1997).
Richard L. Woolworth Trustee 1991 Retired since December, 2003 101
(Age 64) (formerly Chairman and Chief
Executive Officer, The Regence Group
(regional health insurer); Chairman
and Chief Executive Officer, Blue
Cross Blue Shield of Oregon;
Certified Public Accountant, Arthur
Young & Company).
INTERESTED TRUSTEE
William E. Mayer(2)(4) Trustee 1994 Partner, Park Avenue Equity Partners 103
(Age 65) (private equity) since February,
1999; (formerly Partner, Development
Capital LLC from November, 1996 to
February, 1999).
<Caption>
NAME/AGE AND ADDRESS OTHER DIRECTORSHIPS HELD
- ------------------------ -------------------------------
Thomas C. Theobald(3) Anixter International (network
(Age 68) support equipment distributor);
Ventas Inc. (real estate
investment trust); Jones Lang
LaSalle (real estate management
services) and Ambac Financial
Group (financial guarantee
insurance).
Anne-Lee Verville Chairman of the Board of
(Age 59) Directors, Enesco Group, Inc.
(designer, importer and
distributor of giftware and
collectibles).
Richard L. Woolworth Northwest Natural Gas Company
(Age 64) (a natural gas service
provider).
INTERESTED TRUSTEE
William E. Mayer(2)(4) Lee Enterprises (print media);
(Age 65) WR Hambrecht + Co. (financial
service provider); First Health
(healthcare); Readers Digest
(publisher); OPENFIELD
Solutions (retail industry
technology provider).
</Table>
7
(1) In October 2003, the trustees of the Liberty Funds and Stein Roe Funds were
elected to the boards of the Columbia Funds; simultaneous with that
election, Patrick J. Simpson and Richard L. Woolworth, who had been
directors/trustees of the Columbia Funds were appointed to serve as trustees
of the Liberty Funds and Stein Roe Funds. The date shown is the earliest
date on which a trustee/director was elected or appointed to the board of a
Fund in the Fund Complex.
(2) Messrs. Lowry, Neuhauser and Mayer each also serve as a director/trustee of
the All-Star Funds, currently consisting of 2 investment companies, which
are advised by an affiliate of Columbia Management.
(3) Mr. Theobald was appointed as Chairman of the Board effective December 10,
2003.
(4) Mr. Mayer is an "interested person" (as defined in the Investment Company
Act of 1940, as amended) of the Funds by reason of his affiliation with WR
Hambrecht + Co.
8
FOR INFORMATION REGARDING THE EXECUTIVE OFFICERS OF YOUR FUND, SEE APPENDIX A TO
THIS PROXY STATEMENT.
TRUSTEES' COMPENSATION
The members of the Board also serve as directors for certain other portfolios in
the Fund Complex. As of December 31, 2004, the Fund Complex consisted of 127
open-end funds and 11 closed-end management investment company portfolios.
Two-thirds of the Trustees' fees are allocated among the funds within the Fund
Complex based on the relative net assets of each fund and one-third of the fees
is divided equally among the funds within the Fund Complex.
FOR MORE INFORMATION REGARDING THE COMPENSATION OF THE TRUSTEES, SEE APPENDIX
B.1 AND APPENDIX B.2 TO THIS PROXY STATEMENT.
SHAREHOLDER COMMUNICATIONS
Shareholders may communicate with the Trustees as a group or individually. Any
such communications should be sent to the Fund's Board or an individual Trustee
in writing, c/o the Secretary of the Funds, One Financial Center, Boston, MA
02111-2621. The Secretary may determine not to forward to the Board or a Trustee
any letter that does not relate to the business of a Fund.
TRUSTEE SHARE OWNERSHIP
The table in Appendix C shows, as of December 31, 2004, the dollar range of
equity securities beneficially owned by each Trustee (i) in each of the Funds,
and (ii) in all funds overseen by the Trustee in the Fund Complex. Except as
shown in Appendix C, the Trustees did not, as of December 31, 2004 beneficially
own shares of the Funds.
TRUSTEES' MEETINGS AND COMMITTEES
The Board is responsible for the overall management and supervision of your
Fund's affairs and for protecting the interests of your Fund's shareholders. For
the fiscal year ended July 31, 2004, your Fund held 19 meetings (5 regular joint
Board meetings and 14 special joint Board meetings). The Funds are not required
under their organizational documents to hold annual meetings, but have
voluntarily undertaken to hold meetings to elect Trustees at least every five
years.
The Board has created several committees to perform specific functions on behalf
of the Funds. The members of each committee, along with a
9
description of each committee's functions, appear below, followed by a table
that sets forth the number of meetings held by each committee during the last
fiscal year.
1. AUDIT COMMITTEE
Your Fund has an Audit Committee (the "Audit Committee") comprised of Trustees
who are not "interested persons" (as defined in the Investment Company Act of
1940, as amended (the "1940 Act")) of any Fund. Each member of the Audit
Committee must be financially literate and at least one member must have prior
accounting experience or related financial management expertise.
The Audit Committee serves as an independent and objective party to monitor your
Fund's accounting policies, financial reporting and internal control systems and
the work of your Fund's independent registered public accountant. The Audit
Committee also serves to provide an open avenue of communication between the
independent registered public accountants, Columbia Management Group, Inc.'s
("Columbia") internal accounting staff and the Board. The principal functions of
the Audit Committee are to assist Board oversight of (1) the integrity of your
Fund's financial statements, (2) your Fund's compliance with legal and
regulatory requirements, (3) the independent registered public accountant's
qualifications and independence, (4) the performance of Columbia Management's
internal audit function, and (5) the independent registered public accountant.
The Audit Committee is directly responsible for the appointment, compensation,
retention and oversight of the work of the independent registered public
accountants (including the resolution of disagreements between management and
the independent registered public accountants regarding financial reporting) for
the purpose of preparing or issuing an audit report or performing other review
or attest services for your Fund.
The Funds' Audit Committee members are Ms. Verville and Messrs. Hacker, Stitzel
and Woolworth.
Based on the recommendation from the Audit Committee and on its own review, the
Board selected PricewaterhouseCoopers LLP ("PwC") as independent registered
public accountant for your Fund for its fiscal year. Representatives of PwC are
not expected to be at the 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.
10
2. GOVERNANCE COMMITTEE
Messrs. Lowry, Mayer, Simpson and Theobald are members of the Governance
Committee of each Fund. The Funds have no nominating or compensation committee.
The Governance Committee performs certain of the functions typically performed
by those committees. Among other things, the Governance Committee recommends to
the Board nominees for Trustee and nominees for appointment to various
committees; performs periodic evaluations of the effectiveness of the Board;
reviews and recommends to the Board policies and practices to be followed in
carrying out the Trustees' duties and responsibilities; and reviews and makes
recommendations to the Board regarding the compensation of the Trustees who are
not affiliated with Columbia. On February 9, 2005, the Governance Committee
adopted a written charter which sets forth the Governance Committee's structure,
duties and powers, and methods of operation. A copy of the Governance Committee
Charter is attached as Appendix D.
Three of the four Governance Committee members, Messrs. Lowry, Simpson and
Theobald, who are not "interested persons" (as defined in the 1940 Act) of any
Fund ("Governance Committee Independent Trustees"), participate in the
consideration, selection and nomination of Trustees. The Governance Committee
Independent Trustees will consider candidates for Trustee identified by any
reasonable source, including current Independent Trustees, Fund management, Fund
shareholders and other persons or entities. Shareholders of your Fund who wish
to nominate a candidate to your Fund's Board may send information regarding
prospective candidates to the Governance Committee, in care of the relevant
Fund, at One Financial Center, Boston, MA 02111-2621. The information should
include evidence of the shareholders' Fund ownership, a full listing of the
proposed candidate's education, experience, current employment, date of birth,
names and addresses of at least three professional references, information as to
whether the candidate is not an "interested person" under the 1940 Act and such
other information as may be helpful to the Governance Committee Independent
Trustees in evaluating the candidate. All satisfactorily completed information
packages regarding a candidate will be forwarded to a member of the Governance
Committee for consideration. Recommendations for candidates will be evaluated in
light of whether the number of Trustees of your Fund is expected to be increased
and anticipated vacancies. All nominations from Fund shareholders will be
considered. There may be times when the Governance Committee is not recruiting
new Board members. In that case, shareholder recommendations will be maintained
on file pending the active recruitment of Trustees.
11
When considering candidates for Trustee, the Governance Committee Independent
Trustees consider, among other things, whether prospective nominees have
distinguished records in their primary careers, personal and professional
integrity, and substantive knowledge in areas important to the Board's
operations, such as background or education in finance, auditing, securities
law, the workings of the securities markets, or investment advice. For
candidates to serve as Independent Trustees, independence from your Fund's
investment adviser, its affiliates and other principal service providers is
critical, as is an independent and questioning mind-set. In each case, the
Governance Committee Independent Trustees will evaluate whether a candidate is
an "interested person" under the 1940 Act. The Governance Committee Independent
Trustees also consider whether a prospective candidate's workload would be
consistent with regular attendance at Board meetings and would allow him or her
to be available for service on Board committees, and devote the additional time
and effort necessary to stay apprised of Board matters and the rapidly changing
regulatory environment in which the Funds operate. Different substantive areas
may assume greater or lesser significance at particular times, in light of a
Board's present composition and its perceptions about future issues and needs.
The Governance Committee Independent Trustees initially evaluate prospective
candidates on the basis of their resumes, considered in light of the criteria
discussed above. Those prospective candidates that appear likely to be able to
fill a significant need of the Board would be contacted by a Governance
Committee Independent Trustees by telephone to discuss the position; if there
appeared to be sufficient interest, an in-person meeting with one or more of the
Governance Committee Independent Trustees would be arranged. If a Governance
Committee Independent Trustee, based on the results of these contacts, believes
he or she has identified a viable candidate, he or she would air the matter with
the other Governance Committee Independent Trustees for input. Any request by
Fund management to meet with the prospective candidate would be given
appropriate consideration. The Funds have not paid a fee to third parties to
assist in finding nominees.
3. ADVISORY FEES & EXPENSES COMMITTEE
Ms. Kelly and Messrs. Mayer, Nelson and Neuhauser are members of the Advisory
Fees & Expenses Committee of each Fund. The Advisory Fees & Expenses Committee's
functions include reviewing and making recommendations to the Board as to
contracts requiring approval of a majority of the disinterested Trustees and as
to any other contracts that may be referred to the committee by the Board.
12
4. COMPLIANCE COMMITTEE
Mses. Kelly and Verville, and Messrs. Nelson, Neuhauser, Simpson and Stitzel are
members of the Compliance Committee of the Board of the Funds. The Compliance
Committee's functions include providing oversight of the monitoring processes
and controls regarding the Funds. The Committee supervises legal, regulatory and
internal rules, policies, procedures and standards other than those relating to
accounting matters and oversight of compliance by the Funds' investment adviser,
principal underwriter and transfer agent.
<Table>
<Caption>
NUMBER OF
MEETINGS
FOR FISCAL
YEAR ENDED
JULY 31, 2004
-------------
Audit Committee 9
Governance Committee 4
Advisory Fees & Expenses Committee 5
Compliance Committee 5
</Table>
5. INVESTMENT OVERSIGHT COMMITTEES
Each Investment Oversight Committee ("IOC") is responsible for monitoring, on an
ongoing basis, a select group of Columbia Funds and gives particular
consideration to such matters as the Funds' adherence to their investment
mandates, historical performance, changes in investment processes and personnel,
and proposed changes to investment objectives. Investment personnel who manage
the Funds will attend IOC meetings from time to time to assist each IOC in its
review of the Funds. Each IOC meets four times a year. Investment Oversight
Committee 1 currently consists of Messrs. Lowry, Mayer and Neuhauser. Investment
Oversight Committee 2 currently consists of Mr. Hacker and Ms. Verville.
Investment Oversight Committee 3 currently consists of Ms. Kelley and Messrs.
Stitzel and Theobald. Investment Oversight Committee 4 currently consists of
Messrs. Nelson, Simpson and Woolworth.
AUDIT COMMITTEE PRE-APPROVAL OF INDEPENDENT ACCOUNTANT SERVICES
The Audit Committee is required to pre-approve the engagement of your Fund's
independent registered public accountant to provide audit and non-audit services
to your Fund and non-audit services to Columbia Management or any entity
controlling, controlled by or under common control with Columbia Management that
provides ongoing services to the Funds ("Columbia Affiliate"), if the engagement
relates directly to the
13
operations or financial reporting of the Funds. The engagement may be entered
into pursuant to pre-approval policies and procedures established by the Audit
Committee.
The Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval
Policy ("Policy"). The Policy sets forth the procedures and conditions pursuant
to which services to be performed by the Funds' independent registered public
accountant are to be pre-approved. Unless a type of service receives general
pre-approval under the Policy, it requires specific pre-approval by the Audit
Committee if it is to be provided by the independent registered public
accountant.
The Policy provides for the general pre-approval by the Audit Committee of
certain: (i) audit services to the Funds; (ii) audit-related services to the
Funds; (iii) tax services to the Funds; (iv) other services to the Funds; and
(v) Fund-related services to Columbia Affiliates. The Policy requires the Fund
Treasurer and/or Director of Trustee Administration to submit to the Audit
Committee, at least annually, a schedule of the types of services that are
subject to general pre-approval. The schedule(s) must provide a description of
each type of service that is subject to general pre-approval and, where
possible, will provide projected fee caps for each instance of providing each
service. At least annually, the Audit Committee will review and approve the
types of services and review the projected fees for the next year, and may add
to, or subtract from, the list of pre-approved services from time to time, based
on subsequent determinations. In addition to the fees for each individual
service, the Audit Committee has the authority to implement a fee cap on the
aggregate amount of non-audit services provided to an individual New Fund. The
fee amounts listed on the schedules will be updated to the extent necessary at
each of the other regularly scheduled meetings of the Audit Committee.
FEES PAID TO THE INDEPENDENT REGISTERED PUBLIC ACCOUNTANT
The table in Appendix E1 sets forth the aggregate fees billed by PwC for each
Fund's last two fiscal years for professional services rendered for (i) audit
services, including the audit of each Fund's financial statements and services
normally provided in connection with statutory and regulatory filings or
engagements for those fiscal years; (ii) audit-related services associated with
the review of the Funds' semi-annual financial statements; (iii) tax services
and, primarily, reviews of Fund tax returns; and (iv) other services. Please
note that the table includes amounts related to non-audit services that would
have been subject to pre-approval if Securities and Exchange Commission ("SEC")
rules relating to the pre-approval of non-audit services had been in effect at
that time.
14
All of the audit fees, audit-related fees, tax fees and other fees billed by PwC
for services provided to a Fund during its most recent fiscal year were
pre-approved by the Audit Committee.
The amount billed by PwC in each of the last two recent fiscal years for
audit-related services provided to Columbia or Columbia Affiliates for
engagements that related directly to the operations or financial reporting of
each Fund was $95,000.
The table in Appendix E2 sets forth the aggregate fees billed by PwC for
non-audit services for the Funds, Columbia and Columbia Affiliates for the last
two fiscal years.
The Audit Committee has determined that the provision of the services described
above is compatible with maintaining the independence of PwC.
REQUIRED VOTE. If a quorum of shareholders is present at the Meeting, the eleven
nominees for election as Trustees who receive the greatest number of votes cast
at the Meeting will be elected Trustees. Abstentions and broker non-votes are
counted for purposes of determining whether a quorum exists at the annual
meeting, but will have no effect on the results of the vote. For each Fund, a
quorum for the conduct of business at the Meeting requires the presence, in
person or by proxy, of 30% of the outstanding shares of the CMG Fund Trust as a
whole.
II. PROPOSAL 2: ADOPTION OF STANDARDIZED FUNDAMENTAL INVESTMENT RESTRICTIONS
As described in the following proposals, the Trustees recommend that
shareholders of the affected Funds approve the elimination of and revisions to
certain fundamental investment restrictions of such Funds. Generally, the
purpose of these proposed changes is to increase each Fund's investment
flexibility and reduce administrative and compliance burdens by simplifying and
making uniform these fundamental investment restrictions across all Funds.
BACKGROUND. The 1940 Act requires registered investment companies like the Funds
to have "fundamental" investment restrictions governing certain of their
investment practices. Investment companies may also voluntarily designate
restrictions relating to other investment practices as fundamental.
"Fundamental" investment restrictions can be changed only by a shareholder vote.
The proposed elimination of and revisions to certain of the fundamental
investment restrictions of the Funds are discussed below. Columbia Management
has indicated that it has no present intention of changing the manner in which
it manages the Funds in response to these proposals. By eliminating those
fundamental investment restrictions that are not required
15
and revising those fundamental investment restrictions that are required,
however, the Trustees believe that Columbia Management will be better able to
manage the Funds in a changing regulatory or investment environment. In
addition, the process of monitoring the Funds' compliance with investment
restrictions will be simplified.
The discussion below in Proposals 2.A. through 2.O. highlights the differences
between the Funds' current fundamental investment restrictions and, where
applicable, a proposed uniform fundamental investment restriction. However,
because the current fundamental investment restrictions vary among the Funds,
shareholders of each Fund should consider comparing their Fund's current
restrictions (contained in EXHIBITS 1 through 14) with the proposed
restrictions.
2.A. AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO BORROWING
MONEY, PLEDGING ASSETS AND ISSUING SENIOR SECURITIES.
AFFECTED FUNDS: All Funds
The 1940 Act requires the Funds to state the extent to which they may borrow
money and issue senior securities. Under Section 18(f)(1) of the 1940 Act, an
open-end investment company may not issue senior securities, except that it may
borrow from banks, for any purpose, up to 33 1/3% of its total assets (including
the amount borrowed). EXHIBITS 1 and 2 list the current fundamental investment
restrictions of each of the affected Funds with respect to borrowing money,
pledging assets and issuing senior securities, respectively. Generally, the
Funds' current fundamental investment restrictions are more restrictive than
these 1940 Act requirements.
The Trustees recommend that each affected Fund amend its policy so that it will
allow each affected Fund to issue senior securities, pledging assets or borrow
money to the full extent permitted under applicable law. The proposed changes
would automatically conform each affected Fund's policy more closely to the
exact statutory and regulatory requirements, as they exist from time to time,
without incurring the time and expense of obtaining shareholder approval to
change the restriction. In addition, the proposed changes will reduce
administrative and compliance burdens by simplifying and making uniform the
Funds' fundamental investment restrictions with respect to borrowing money and
issuing senior securities. The 1940 Act does not require a fundamental
restriction with respect to the ability to pledge assets.
16
The proposed amended fundamental investment restriction is as follows:
"The fund may not . . . [b]orrow money or issue senior securities except to
the extent permitted by the 1940 Act, the rules and regulations thereunder
and any applicable exemptive relief."
2.B. AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO MAKING LOANS.
AFFECTED FUNDS: All Funds
The 1940 Act requires the Funds to state the extent to which they intend to make
loans to other persons. The Trustees recommend that each Fund's fundamental
investment restriction with respect to making loans be revised to reflect a
standard restriction for all the Funds. The amendment would permit each Fund to
enter into repurchase agreements and securities loans to the extent permitted by
the 1940 Act and applicable rules and exemptive relief. EXHIBIT 3 lists the
current fundamental investment restriction of each Fund with respect to making
loans.
The proposed amended fundamental investment restriction is as follows:
"The fund may not . . . [m]ake loans, except to the extent permitted by the
1940 Act, the rules and regulations thereunder and any applicable exemptive
relief."
Following the amendment, each Fund may, consistent with the 1940 Act and its
investment objective and policies, enter into repurchase agreements and
securities loans without limit. The staff of the SEC has taken the position that
a Fund may not loan more than 1/3 of the total value of its assets (including
any collateral for such loans). As noted above, although Columbia Management has
no present intention of changing the way in which each Fund is managed, this
increased flexibility could assist each Fund, in the future, in achieving its
investment objective and responding to changes in applicable law or regulation.
The proposed change would also automatically conform each Fund's lending policy
more closely to the exact statutory and regulatory requirements, as they exist
from time to time, without incurring the time and expense of obtaining
shareholder approval to change the policy. In addition, these proposed changes
will reduce administrative and compliance burdens by simplifying and making
uniform the fundamental investment restrictions with respect to making loans.
When a Fund enters into a repurchase agreement, it typically purchases a
security for a relatively short period of time (usually not more than seven
days), which the seller agrees to repurchase at a fixed time and price,
representing the Fund's cost plus interest. When a Fund enters into a
17
securities loan, it lends certain of its portfolio securities to broker-dealers
or other parties, typically in exchange for a portion of the interest earned on
the collateral posted by the borrower or a fee from the borrower. The borrower
may also pay the Fund an amount equal to any interest, dividends or other
distributions payable on the securities lent. These transactions must be fully
collateralized at all times, but involve risk to the Fund if the seller, in the
case of repurchase agreements, or the borrower, in the case of securities loans,
should default on its obligations. If the Fund's counterparty to these
transactions should become involved in bankruptcy or insolvency proceedings, it
is possible that the Fund may be treated as an unsecured creditor and may be
required to return the underlying securities or collateral, as applicable, to
the counterparty's estate.
2.C. AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO
DIVERSIFICATION OF INVESTMENTS.
AFFECTED FUNDS:
CMG High Yield Fund
CMG International Stock Fund
CMG Short Term Bond Fund
CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG Ultra Short Term Bond Fund
The Trustees recommend that each affected Fund's fundamental investment
restriction with respect to the diversification of its investments be revised to
reflect applicable law and a uniform policy for all of the affected Funds.
Each affected Fund is a "diversified" Fund as defined in the 1940 Act. Under the
1940 Act, a "diversified" Fund generally may not, with respect to 75% of its
total assets, invest more than 5% of its total assets in the securities of any
one issuer or own more than 10% of the outstanding voting securities of such
issuer (except U.S. Government securities, cash, cash items or the securities of
other investment companies). The remaining 25% of the Fund's total assets is not
subject to this restriction.
EXHIBIT 4 lists the current fundamental investment restrictions of each of the
affected Funds with respect to diversification of investments. The proposed
amended fundamental investment restriction is designed to track the statutory
definition of "diversified" company and read as follows:
"The fund may not . . . [p]urchase securities (except securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities) of
any one issuer if, as a result, more than 5% of its
18
total assets will be invested in the securities of such issuer or it would
own more than 10% of the voting securities of such issuer, except that: (a)
up to 25% of its total assets may be invested without regard to these
limitations and (b) a Fund's assets may be invested in the securities of
one or more management investment companies to the extent permitted by the
1940 Act, the rules and regulations thereunder, or any applicable exemptive
relief."
It is intended that the restriction will be interpreted in a manner consistent
with the statutory requirements, including rules adopted and interpretations of
the SEC under Section 5 of the 1940 Act. For example, for purposes of this
restriction, in accordance with Rule 5b-2 of the 1940 Act, the value of a
guarantee or letter of credit may be excluded from the value of a Fund's
investments in the guarantor (or issuer of the letter of credit) if the
aggregate value of securities owned by the Fund and guaranteed by such guarantor
(plus any other investments in securities issued by the guarantor) does not
exceed 10% of the Fund's total assets.
The Trustees recommend that the affected Funds' current fundamental investment
restrictions with respect to diversification of investments be amended as
proposed in order to conform the affected Funds' restrictions to the statutory
requirements discussed above. These proposed changes will reduce administrative
and compliance burdens by simplifying and making uniform the fundamental
investment restrictions with respect to diversification of investments.
2.D. AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN
COMMODITIES.
AFFECTED FUNDS: All Funds
The 1940 Act requires the Funds to state a fundamental investment restriction
regarding the purchase and sale of commodities. EXHIBIT 5 lists the current
fundamental investment restriction of each Fund with respect to investment in
commodities and commodity contracts (including, for one Fund, investments in
oil, gas or mineral development programs or leases). The Funds' current
restrictions generally prohibit them from purchasing commodities or commodity
contracts, but for certain of the Funds permit them to invest in certain futures
contracts.
The proposed amended fundamental investment restriction is as follows:
"The fund may not . . . [p]urchase or sell commodities, except that a fund
may, to the extent consistent with its investment objective, invest in
securities of companies that purchase or sell commodities or which invest
in such programs, and purchase and sell options, forward
19
contracts, futures contracts, and options on futures contracts and enter
into swap contracts and other financial transactions relating to
commodities. This limitation does not apply to foreign currency
transactions, including without limitation forward currency contracts."
The Trustees recommend that the affected Funds' current fundamental investment
restrictions with respect to investments in commodities be amended as proposed.
The proposed amendment would make it clear that the Funds may utilize not only
certain futures, but also options, options on futures and other financial
transactions that do not involve physical commodities to the extent consistent
with the Funds' investment objectives and policies. The addition of financial
transactions relating to commodities is intended to give the Funds maximum
flexibility to invest in a relating to variety of modern financial instruments
that could technically be considered commodities, but which do not involve the
direct purchase and sale of physical commodities, which are the intended focus
of the restriction. Although Columbia Management has no present intention of
changing the way in which the Funds are managed as a result of this amendment,
this investment flexibility could, in the future, assist the Funds in achieving
their investment objectives, in part because such strategies may offer
opportunities for hedging and increased investment return. These proposed
changes will also reduce administrative and compliance burdens by simplifying
and making uniform the fundamental investment restrictions with respect to
commodities.
2.E. AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN
REAL ESTATE.
AFFECTED FUNDS: All Funds
The 1940 Act requires the Funds to state a fundamental policy regarding the
purchase and sale of real estate. EXHIBIT 6 lists the current fundamental
investment restriction of each Fund with respect to investment in real estate
and securities secured by and/or of companies that deal in real estate.
Currently, the Funds' investment policies restrict their ability to sell real
estate even when the Funds acquires ownership of the real estate as a result of
its permissible investments. For instance, it is possible that a Fund could, as
a result of an investment in debt securities of a company that deals in real
estate, come to hold an interest in real estate if the issuer defaulted on its
debt obligations. Accordingly, holding and the Trustees recommend that this
policy be modified to allow the holding and sale of real estate when ownership
of real estate results from the exercise of its rights as a holder of real
estate securities and to clarify that a Fund may invest in real estate-related
securities and real estate-backed securities or instruments.
20
The proposed amended fundamental investment restriction is as follows:
"The fund may not . . . [p]urchase or sell real estate, except a fund may
purchase securities of issuers which deal or invest in real estate and may
purchase securities which are secured by real estate or interests in real
estate and it may hold and dispose of real estate or interests in real
estate acquired through the exercise of its rights as a holder of
securities which are secured by real estate or interests therein."
These proposed changes will also reduce administrative and compliance burdens by
simplifying and making uniform the fundamental investment restrictions with
respect to real estate.
2.F. AMENDING FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO UNDERWRITING
OF SECURITIES.
AFFECTED FUNDS: All Funds
The 1940 Act requires the Funds to state the extent to which they intend to
engage in the business of underwriting securities issued by other persons. Under
applicable law, a person or company generally is considered to be an underwriter
if the person or company participates in the public distribution of securities
of other issuers, which involves purchasing the securities from another issuer
with the intention of re-selling the securities to the public. From time to
time, a Fund may purchase securities in a private transaction for investment
purposes and later sell the securities to institutional investors. Under these
or other circumstances, a Fund could possibly be considered to be within the
technical definition of an underwriter under applicable law. The SEC staff has
issued interpretations that clarify that re-sales of privately placed securities
by institutional investors, such as funds, do not make the institutional
investor an underwriter in these circumstances.
EXHIBIT 7 lists the current fundamental investment restrictions with respect to
participation in the underwriting of securities of each of the affected Funds.
The proposed amended fundamental investment restriction is as follows:
"The fund may not . . . [u]nderwrite any issue of securities issued by
other persons within the meaning of the Securities Act of 1933 except when
it might be deemed to be an underwriter either: (a) in connection with the
disposition of a portfolio security; or (b) in connection with the purchase
of securities directly from the issuer thereof in accordance with its
investment objective. This restriction shall not limit the fund's ability
to invest in securities issued by other registered investment companies."
21
The Trustees recommend that this policy be amended as proposed in order to
conform the affected Funds' policies to the statutory and related requirements
discussed above and to the policies of the other Funds. In addition, these
proposed changes will reduce administrative and compliance burdens by
simplifying and making uniform the fundamental investment restrictions with
respect to underwriting of securities.
2.G. ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO
PURCHASING SECURITIES ON MARGIN
AFFECTED FUNDS:
CMG Core Bond Fund
CMG High Yield Fund
CMG Short Term Bond Fund
CMG Ultra Short Term Bond Fund
EXHIBIT 8 lists the current fundamental investment restriction of each of the
affected Funds with respect to purchasing securities on margin. Section 12
(a)(1) of the 1940 Act generally prohibits a fund from purchasing securities on
margin in contravention of any SEC rules. To date, however, the SEC has not
adopted any such rules. There are no SEC rules requiring, and the 1940 Act does
not require, that funds state a fundamental investment policy with respect to
purchasing securities on margin. As noted above, although Columbia Management
has no present intention of changing the way in which the affected Funds are
managed as a result of the elimination of these restrictions, the Trustees
believe it is not in the Funds' best interests to maintain fundamental policies
that are not required by applicable law. Accordingly, the Trustees recommend
that each affected Fund's fundamental investment restriction with respect to
purchasing securities on margin be eliminated.
2.H. ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO
INVESTING FOR THE PURPOSE OF EXERCISING CONTROL
AFFECTED FUNDS:
CMG Core Bond Fund
CMG High Yield Fund
CMG International Stock Fund
CMG Short Term Bond Fund
CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG Ultra Short Term Bond Fund
EXHIBIT 9 lists the current fundamental investment restriction of each of the
affected Funds with respect to investing for the purpose of exercising control.
Applicable regulations formerly required disclosure on this subject
22
to the extent that a fund intends to invest in companies for the purpose of
exercising control (as defined in the 1940 Act). There is no requirement,
however, that a Fund have an affirmative policy on this subject, or that any
policy that it does have be categorized as fundamental. As noted above, although
Columbia Management has no present intention of changing the way in which the
affected Funds are managed as a result of the elimination of these restrictions,
consistent with the Trustees' belief that it is not in the Funds' best interests
to maintain fundamental investment restrictions that are not required by
applicable law, the Trustees recommend that each affected Fund's fundamental
investment restriction with respect to investing for the purpose of exercising
control be eliminated.
2.I. ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO SHORT
SALES
AFFECTED FUNDS:
CMG Core Bond Fund
CMG High Yield Fund
CMG International Stock Fund
CMG Short Term Bond Fund
CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG Ultra Short Term Bond Fund
EXHIBIT 10 lists the current fundamental investment restriction of each of the
affected Funds with respect to short sales. There are no SEC rules requiring,
and the 1940 Act does not require, that funds state a fundamental investment
policy with respect to short sales. As noted above, although Columbia Management
has no present intention of changing the way in which the affected Funds are
managed as a result of the elimination of these restrictions, consistent with
the Trustees' belief that it is not in the Funds' best interests to maintain
fundamental investment restrictions that are not required by applicable law, the
Trustees recommend that each affected Fund's fundamental investment restriction
with respect to short sales be eliminated.
2.J. AMENDMENT TO FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO
CONCENTRATING INVESTMENTS IN AN INDUSTRY
AFFECTED FUNDS:
CMG Core Bond Fund
CMG Enhanced S&P 500 Index Fund
CMG High Yield Fund
CMG International Stock Fund
CMG Large Cap Growth Fund
23
CMG Large Cap Value Fund
CMG Mid Cap Growth Fund
CMG Mid Cap Value Fund
CMG Short Term Bond Fund
CMG Small Cap Fund
CMG Small Cap Growth Fund
CMG Small Cap Value Fund
CMG Small/Mid Cap Fund
CMG Strategic Equity Fund
CMG Ultra Short Term Bond Fund
Under applicable law, an investment company may not concentrate its investments
in any industry or group of industries without shareholder approval, and must
concentrate its investments consistent with any policy to do so. Although
"concentration" is not defined in the 1940 Act, the SEC has generally regarded a
fund as concentrating its investments in an industry if the fund invests more
than 25% of its net assets in securities of issuers in that industry.
EXHIBIT 11 lists the affected Funds' current fundamental investment restrictions
with respect to concentrating investments in an industry. The proposed amended
fundamental investment restriction is as follows:
"The fund may not . . . [p]urchase any securities which would cause 25% or
more of the value of its total assets at the time of purchase to be
invested in the securities of one or more issuers conducting their
principal business activities in the same industry, provided that: (a)
there is no limitation with respect to obligations issued or guaranteed by
the U.S. Government, any state or territory of the United States, or any of
their agencies, instrumentalities or political subdivisions; and (b)
notwithstanding this limitation or any other fundamental investment
limitation, assets may be invested in the securities of one or more
management investment companies to the extent permitted by the 1940 Act,
the rules and regulations thereunder and any applicable exemptive relief."
The Trustees recommend that this policy be amended as shown above to conform the
affected Funds' policies to the statutory and related requirements discussed
above and to the policies of the other Funds. In addition, these proposed
changes will reduce administrative and compliance burdens by simplifying and
making uniform the fundamental investment restrictions with respect to
concentrating investments in an industry.
24
2.K. ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO
PURCHASING SECURITIES OF COMPANIES LESS THAN THREE YEARS OLD
AFFECTED FUNDS:
CMG Core Bond Fund
CMG High Yield Fund
CMG International Stock Fund
CMG Short Term Bond Fund
CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG Ultra Short Term Bond Fund
EXHIBIT 12 lists the current fundamental investment restriction of each of the
affected Funds with respect to purchasing securities of companies that
(including predecessors and parents) are less than three years old. The 1940 Act
does not require the Funds to state a fundamental investment restriction on this
matter. As noted above, although Columbia Management has no present intention of
changing the way in which the affected Funds are managed as a result of the
elimination of these restrictions, the Trustees believe it is not in the Funds'
best interests to maintain fundamental policies that are not required by
applicable law. Accordingly, the Trustees recommend that each affected Fund's
fundamental investment restriction with respect to purchasing securities of
companies that (including predecessors and parents) are less than three years
old be eliminated.
2.L. ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
AFFECTED FUND:
CMG High Yield Fund
The affected Fund has a fundamental investment restriction stating that:
The Fund may not "[p]urchase securities of other open-end investment
companies."
Under the 1940 Act, a Fund's investment in investment companies is limited to,
subject to certain exceptions, (i) 3% of the total outstanding voting shares of
any one investment company, (ii) 5% of the Fund's total assets with respect to
shares of any one investment company, and (iii) 10% of the Fund's total assets
with respect to shares of investment companies in the aggregate. The 1940 Act,
however, does not require investment companies to maintain fundamental
investment policies with respect to investing in securities of other investment
companies. In addition, the Securities and Exchange Commission has issued
exemptive relief that permits certain investment companies additional
flexibility with respect to
25
investments in other investment companies. As noted above, although Columbia
Management has no present intention of changing the way in which the affected
Fund is managed as a result of the elimination of these restrictions, consistent
with the Trustees' belief that it is not in the Fund's best interests to
maintain fundamental investment restrictions that are not required by applicable
law, the Trustees recommend that the affected Fund's fundamental investment
restriction with respect to investing in securities of other investment
companies be eliminated.
2.M. ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO
PURCHASING OR HOLDING THE SECURITIES OF ANY COMPANY, IF SECURITIES OF SUCH
COMPANY ARE OWNED BY OFFICERS OR DIRECTORS OF THE FUND AND OF ITS ADVISOR
AFFECTED FUNDS:
CMG Core Bond Fund
CMG High Yield Fund
CMG Short Term Bond Fund
CMG Ultra Short Term Bond Fund
EXHIBIT 13 lists the current fundamental investment restriction of each of the
affected Funds with respect to purchasing or holding the securities of any
company if securities of such company are owned by the officers and directors of
the Fund and of its advisor. This restriction tracks certain restrictions
formerly required by state regulators for investment companies, which are not
applicable to the affected Funds. As noted above, although Columbia Management
has no present intention of changing the way in which the Funds are managed as a
result of the elimination of these restrictions, consistent with the Trustees'
belief that it is not in the Funds' best interests to maintain unnecessary
fundamental investment restrictions, the Trustees recommend that each affected
Fund's fundamental investment restriction with respect to purchasing or holding
the securities of any company owned by officers or directors of the Fund and of
its Advisor be eliminated.
2.N. ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO BUYING
AND SELLING PUTS AND CALLS
AFFECTED FUNDS:
CMG International Stock Fund
CMG Small Cap Fund
CMG Small/Mid Cap Fund
EXHIBIT 14 lists the current fundamental investment restriction of each of the
affected Funds with respect to buying and selling puts and calls. The
26
Trustees recommend that each affected Fund's fundamental investment restriction
with respect to buying and selling puts and calls be eliminated.
If this Proposal is approved, the affected Funds would be able to engage in a
variety of transactions involving the use of options to the extent consistent
with the Funds' investment objectives and policies. As noted above, although
Columbia Management has no present intention of changing the way in which the
Funds are managed as a result of the elimination of these restrictions, this
increased investment flexibility could, in the future, assist each affected Fund
in achieving its investment objective. Columbia Management also believes that
elimination of this investment restriction would reduce administrative and
compliance burdens by conforming each affected Fund's fundamental investment
restrictions with the other Funds which currently do not have a fundamental
investment restriction with respect to investments in options. For more
information regarding options on futures, see Proposal 2.D. above.
A Fund may purchase put options to protect its portfolio holdings in an
underlying security against a decline in market value. Such protection is
provided during the life of the put option since the Fund, as holder of the
option, is able to sell the underlying security at the put exercise price
regardless of any decline in the underlying security's market price. In order
for a put option to be profitable, the market price of the underlying security
must decline sufficiently below the exercise price to cover the premium and
transaction costs. By using put options in this manner, a fund will reduce any
profit it might otherwise have realized from appreciation of the underlying
security by the premium paid for the put option and by transaction costs.
A Fund may purchase call options to hedge against an increase in the price of
securities that the fund wants ultimately to buy. Such hedge protection is
provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs.
The successful use of a Fund's options strategies depends on the ability of
Columbia Management to forecast correctly interest rate and market movements.
When a Fund purchases an option, it runs the risk that it will lose its entire
investment in the option in a relatively short period of time, unless the Fund
exercises the option or enters into a closing sale transaction before the
option's expiration. If the price of the underlying security does not rise (in
the case of a call) or fall (in the case of a put) to an extent
27
sufficient to cover the option premium and transaction costs, the Fund will lose
part or all of its investment in the option. This contrasts with an investment
by the Fund in the underlying security, since the Fund will not realize a loss
if the security's price does not change.
The effective use of options also depends on a Fund's ability to terminate
option positions at times when Columbia Management deems it desirable to do so.
There is no assurance that a Fund will be able to effect closing transactions at
any particular time or at an acceptable price.
2.O. ELIMINATION OF FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO
PURCHASING ILLIQUID SECURITIES
AFFECTED FUND:
CMG High Yield Fund
The affected Fund has a fundamental investment restriction stating that:
The Fund may not "[p]urchase illiquid securities, if upon the purchase more
than 10% of the value of the Fund's net assets would consist of these
securities. See "DESCRIPTION OF THE FUNDS, INVESTMENT OBJECTIVES, POLICIES
AND RISKS" for a complete discussion of illiquid securities."
The 1940 Act does not require the Fund to state a fundamental investment
restriction on this matter, although the staff of the SEC has taken the position
that an open-end investment company may not invest more than 15% of its net
assets in illiquid securities (10% for money market funds). As noted above,
although Columbia Management has no present intention of changing the way in
which the affected Fund is managed as a result of the elimination of these
restrictions, the Trustees believe it is not in the Fund's best interests to
maintain fundamental policies that are not required by applicable law.
Accordingly, the Trustees recommend that the affected Fund's fundamental
investment restriction with respect to purchasing illiquid securities be
eliminated.
REQUIRED VOTE. Shareholders of each Fund are entitled to vote on each Proposal
2.A. through 2.O. if the Proposal affects their Fund, voting separately by Fund.
Approval of each of Proposals 2.A. through 2.O. requires the affirmative vote of
a "majority of the outstanding voting securities" of a Fund entitled to vote on
such Proposal. As defined by the 1940 Act, a "majority of the outstanding voting
securities" means the vote of (i) 67% or more of the Fund's shares present at
the Meeting, if the holders of more than 50% of the outstanding shares of the
Fund are represented at the Meeting in person or by proxy, or (ii) more than 50%
of the Fund's outstanding shares, whichever is less. To the extent multiple
28
Proposals apply to the same Fund, the adoption of any of these Proposals is not
contingent on the adoption of any other Proposal by shareholders of the Fund. In
addition, with respect to each Fund, the adoption of any of these Proposals 2.A.
through 2.O. is not contingent on election of any Trustees pursuant to Proposal
1.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE FOR PROPOSALS 2.A.
THROUGH 2.O., AS APPLICABLE.
III. PROPOSAL 3: REORGANIZATION OF THE FUNDS
At the Meeting, it is proposed that the shareholders of each Fund approve the
Reorganization of the Fund, which would become a separate, corresponding series
of the Acquiring Trust, a Massachusetts business trust. Each Reorganization
would be effected pursuant to a Plan which provides for the transfer of all of
the assets of the Fund to the New Fund in exchange for shares of the New Fund
and the assumption by the New Fund of all of the liabilities of the Fund,
followed by the distribution to shareholders of the Fund of the New Fund shares
in complete liquidation of the Fund and termination under Oregon law.
The Trustees believe that the consolidation of the Funds into a single legal
entity will enhance the efficiency of compliance monitoring and administration.
The Reorganizations are currently expected to be effected in the first quarter
of 2006. The New Fund will have the same fundamental investment restrictions as
the Fund immediately prior to the Reorganization (which will reflect any
approvals of Proposals 2.A. through 2.O.). All of the Trustees of the Acquiring
Trust are expected to serve as Trustees of the New Funds, even if one or more of
such Trustees are not elected pursuant to Proposal 1.
As described in more detail below in "Information About the Acquiring Trust",
the Acquiring Trust is a business trust governed by Massachusetts law and an
agreement and declaration of trust (the "Agreement and Declaration of Trust").
The Acquiring Trust has separate series representing different portfolios. Each
series of the Acquiring Trust will have shares representing beneficial interests
in the assets and liabilities belonging to that series. The New Funds will
continue the business of the Funds.
Each New Fund will have the same investment objectives, policies and
restrictions as the corresponding Fund (as amended by Proposal 2 to the extent
the amendments are approved by shareholders). In addition, each New Fund will be
managed by the same investment team as the corresponding Fund using the same
investment process, and will have the same management fees and expense structure
as, the corresponding Fund immediately prior to the Reorganization.
29
BACKGROUND AND REASONS FOR THE REORGANIZATIONS
At a meeting held on May 11, 2005, the Board, including all Trustees who are not
"interested persons" of the Funds (as defined in Section 2(a)(19) of the 1940
Act) (each, an "Independent Trustee") unanimously approved the Reorganization of
each Fund and recommended shareholder approval of each Reorganization. The Board
was assisted in its determination by independent legal counsel for the
Independent Trustees. The Board determined that each Reorganization would be in
the best interests of the relevant Fund, and that the interests of the Fund's
shareholders would not be diluted as a result of effecting the Reorganization.
The Board also took into account the fact that the expected costs of the
proposed Reorganizations, including the costs incurred in connection with the
solicitation of proxies, the costs of holding the Meeting, the fees associated
with creating the New Funds, accounting fees, and legal fees, would be borne by
Columbia Management and not the Funds.
The primary purpose of the Reorganizations is to facilitate compliance
monitoring and efficient administration.
AGREEMENT AND PLAN OF REORGANIZATION
Each Plan provides that the relevant New Fund will acquire all of the assets of
the corresponding Fund in exchange for the assumption by the New Fund of all of
the liabilities of the Fund and for the issuance of the shares of the New Fund
("Reorganization Shares"), all as of the Exchange Date (defined in each Plan to
be the date next following shareholder approval or which the Fund's prospectus
is scheduled to be reprinted or such other date as may be agreed upon by the New
Fund and the Fund). The following discussion of the Plans is qualified in its
entirety by the full text of the Plan for each Fund, the form of which is
attached as Exhibit 15 to this Proxy Statement.
Each Fund will sell all of its assets attributable to each class of its shares
to the corresponding New Fund, and, in exchange, the New Fund will assume all of
the liabilities of the Fund and deliver to the Fund a number of full and
fractional shares of beneficial interest of the same class of the New Fund
having an aggregate net asset value equal to the value of the assets of the
Fund, less the value of the liabilities of the Fund assumed by the New Fund
attributable to such class.
For federal income tax purposes, all of the Reorganizations are expected to be
tax-free reorganizations. For more information about the tax consequences of the
proposed Reorganizations, see "Federal Income Tax Consequences of the
Reorganizations" below.
30
Upon consummation of the transactions proposed to occur on the Exchange Date,
each Fund will distribute pro rata to its shareholders of record of each class
as of the Exchange Date the full and fractional Reorganization Shares of such
class received by the Fund. Each holder of shares of the Fund will receive a
number of full and/or fractional Reorganization Shares having an aggregate net
asset value on the Exchange Date equal to the value of and of the same class as
the full and/or fractional shares of the Fund held by the shareholder as of the
Exchange Date. This distribution will be accomplished by the establishment of
accounts on the share records of the corresponding New Fund in the names of the
Fund shareholders, each account representing the respective number of full and
fractional Reorganization Shares due such shareholder.
The consummation of each Reorganization is subject to the conditions set forth
in the Plan, including receipt of opinions of counsel, any of which may be
waived. Each Plan may be terminated and the Reorganization abandoned at any
time, before or after approval by the shareholders of the relevant Fund, prior
to the Exchange Date, by mutual consent of the Trustees of the relevant Fund and
trustees of the New Fund or, if any condition set forth in the Plan has not been
fulfilled and has not been waived by the party entitled to its benefits, by such
party.
All fees and expenses, including legal and accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the consummation by each New Fund and its corresponding Fund of the transactions
contemplated by the Plan will be borne by Columbia Management.
OTHER MATTERS
The investment objectives, policies and restrictions of each Fund (as amended by
Proposal 2 to the extent the amendments are approved by shareholders) will be
adopted by each New Fund and will not change as a result of the Reorganizations.
In addition, Columbia Management will serve as the investment adviser of each
New Fund. Furthermore, the management fees and expense structures of each New
Fund will be the same as for the corresponding Fund.
Immediately prior to the Reorganizations, the New Funds will have nominal assets
and no liabilities, and Columbia Management will be the sole shareholder of each
New Fund.
31
INFORMATION ABOUT THE ACQUIRING TRUST. The Acquiring Trust is governed by an
Agreement and Declaration of Trust (the "Declaration of Trust"), By-Laws (the
"By-Laws"), and its Board.
The table below summarizes the significant differences between the Declaration
of Trust and By-Laws of the Acquiring Trust and the organizational documents
(and applicable provisions of Oregon law) for the Funds. For additional
information, shareholders of a Fund should refer directly to such documents,
copies of which may be obtained by contacting the Acquiring Trust at its address
listed on the cover page of this Proxy Statement.
32
<Table>
<Caption>
THE ACQUIRING TRUST THE FUNDS
------------------------------------- -------------------------------------
SHAREHOLDER LIABILITY: A shareholder or former shareholder Shareholders who have fully paid the
held to be personally liable solely subscription price for their shares
by reason of his or her being or have no personal liability in excess
having been a shareholder is entitled of their shares.
to be held harmless from and
indemnified against all loss and A shareholder or former shareholder
expense arising from such liability. held personally liable solely by
reason of being or having been a
Every note, bond, contract, shareholder with respect to one or
instrument, certificate or more series is entitled to be held
undertaking made or issued by any harmless from and indemnified against
Trustees or Trustee or by any all loss and expense arising from
officers or officer must recite that that liability.
the same was executed or made by or
on behalf of the Trust and that Every note, bond contract,
obligations of such instrument are instrument, certificate, or
not binding on any of them or undertaking made or issued on behalf
shareholders individually. of the Trust by the Trustees, by any
officers or officer may recite that
the note, bond contract, instrument,
certificate, or undertaking was
executed or made on behalf of the
Trust or by them as Trustees or as
officers or otherwise and that the
obligations of such instrument are
not binding upon any of them or
shareholders individually. Omission
of such recital will not operate to
bind any Trustees, officers or
shareholders individually.
</Table>
33
<Table>
<Caption>
THE ACQUIRING TRUST THE FUNDS
------------------------------------- -------------------------------------
SHAREHOLDER VOTING RIGHTS: Shareholders have the power to vote Shareholders have the power to vote
only (i) for the election or, to the only (a) for the election and removal
extent required by law, removal of of Trustees, (b) with respect to
Trustees; (ii) with respect to any whether a claim, proceeding or court
termination, by the shareholders, of action should or should not be
the Trust or series or class of the brought or maintained derivatively or
Trust; (iii) with respect to as a class action on behalf of the
derivative actions, to the extent Trust or the shareholders, (c) with
certain demand requirements are met; respect to the termination of the
and (iv) with respect to any other Trust or any series of the Trust, and
matters required by law, the (d) with respect to any additional
organizational documents or deemed matters relating to the Trust as
desirable by the Board of Trustees. required by the organizational
documents, or any registration of the
No shareholder may bring a derivative Trust with the Securities and
claim without first requesting the Exchange Commission or any state, or
Trustees to bring or maintain such as the Trustees consider necessary or
action, proceeding or claim. Such desirable.
demand shall be excused only when the
plaintiff makes a specific showing On a record date, each whole share
that irreparable injury to the Trust outstanding is entitled to one vote
or series would otherwise result. as to any matter on which it is
entitled to vote, and each fractional
Each whole share (or fractional share is entitled to a proportionate
share) outstanding on the record date fractional vote.
is entitled to a number of votes on
any matter which it is entitled to
vote equal to the net asset value of
the share (or fractional share) in
U.S. dollars determined at the close
of business on the record date (for
example, a share having a net asset
value of $10.50 would be entitled to
10.5 votes).
</Table>
34
<Table>
<Caption>
THE ACQUIRING TRUST THE FUNDS
------------------------------------- -------------------------------------
Shareholders will vote together with On any matter submitted to a vote of
shareholders of the other series of the shareholders, all shareholders of
the Trust on matters affecting the all series will vote together except
Trust as a whole, such as the (i) when required by the 1940 Act,
election of Trustees. shareholders of each series will vote
separately and (ii) when the Trustees
determine that the matter affects
only the interests of one or more
series, then only the shareholders of
the series will be entitled to vote
on the matter.
SHAREHOLDER MEETINGS: Shareholders have no specific right Shareholders have no specific right
to call meetings, except as may be to call meetings. The 1940 Act
required by applicable law, including provides that the trustees of a
the Investment Company Act of 1940. common-law trust shall promptly call
a meeting of shareholders for the
purpose of voting upon the question
of removal of any such trustee or
trustees when requested in writing so
to do by the record holders of not
less than 10 per centum of the
outstanding shares.
SHAREHOLDER QUORUM: 30% of the shares entitled to vote at 30% of the shares entitled to vote at
the meeting. the meeting.
SHAREHOLDER CONSENT: Majority consent required for Majority consent is required for
shareholder action taken without a shareholder action taken without a
meeting. meeting.
</Table>
35
<Table>
<Caption>
THE ACQUIRING TRUST THE FUNDS
------------------------------------- -------------------------------------
NOTICE TO SHAREHOLDERS: Notice of shareholder meetings is to Notice of shareholder meetings must
be mailed, postage prepaid, or sent be given no earlier than 70 days nor
by facsimile or other electronic less than 10 days before the date of
submission not less than seven days the meeting.
before the date of such meeting.
For any meeting of shareholders, the
Notice is not expressly required to notice must include a description of
state the purpose for which the the purpose(s) for which the meeting
meeting is called. is called.
SHAREHOLDER PROXIES: Shareholders may put a proxy in place Shareholders may appoint a proxy, and
for a duration of up to six months. an appointment is valid for eleven
months unless a different period is
provided in the appointment form.
TRUSTEE'S POWER TO AMEND DECLARATION The Declaration of Trust may be The Declaration of Trust may be
OF TRUST: amended at any time by an instrument amended at any time by an instrument
in writing signed by a majority of in writing signed by a majority of
the then Trustees, provided that, for the Trustees; provided, however, that
non-ministerial amendments, notice is before adopting any amendment adding,
promptly mailed to shareholders as of deleting, replacing or otherwise
the day such amendment is effective. modifying any provisions relating to
the Trust's shares, the Trustees must
determine that shareholder approval
is not otherwise required by the 1940
Act or other applicable law.
</Table>
36
<Table>
<Caption>
THE ACQUIRING TRUST THE FUNDS
------------------------------------- -------------------------------------
TERMINATION OF TRUST: Shareholders have the right to Shareholders have the right to
terminate the Trust, or series or terminate the Trust by vote of at
class, upon approval of at least least two-thirds of the outstanding
66 2/3% of the outstanding shares of shares of each series entitled to
the Trust or the affected series or vote. Shareholders have the right to
class. terminate any series by vote of at
least two-thirds of the shares of
Trustees may terminate the Trust, or that series.
any series or class, without
shareholder approval by written Trustees may terminate the Trust, or
notice to shareholders. any series, without shareholder
approval by written notice to
shareholders.
MERGER OR CONSOLIDATION TRUST: The Declaration of Trust provides The Declaration of Trust provides
that a consolidation, merger or that any merger, consolidation, sale
transfer may be authorized by vote of of assets, or share exchange approved
a majority of the Trustees then in by the Trustees must be authorized by
office without shareholder approval, a vote of a majority of the
unless otherwise required by law. outstanding shares of the Trust as a
whole or any affected series, as may
be applicable.
REMOVAL OF TRUSTEES: Trustee may be removed, with or Any Trustee may be removed at any
without cause, by a majority of time by written instrument by at
Trustees then in office. least two-thirds of the number of
Trustees prior to removal, specifying
the effective date of removal.
Any Trustee may be removed at a
special meeting of shareholders by a
vote of two-thirds of the outstanding
shares.
DIRECTOR/TRUSTEE COMMITTEES: Not limited. Committees consisting of two or more
trustees may exercise the powers and
authority of the Trustees to the
extent the Trustees determine.
TRUSTEE LIABILITY: Trustees are not personally liable Trustees are not personally liable
for claims against the Trust or for for any neglect or wrongdoing of any
any neglect or wrongdoing of any officer, agent, employee, manager or
officer, agent, employee, investment principal underwriter of the Trust,
adviser, or principal underwriter of and no Trustee is responsible for the
the Trust. Each Trustee is not act or omission of any other Trustee.
responsible for the act or omission Trustees may be liable by reason of
of any other Trustee and may be willful misfeasance, bad faith, gross
liable only by reason of willful negligence, or reckless disregard of
misfeasance, bad faith, gross the duties involved in the conduct of
negligence or reckless disregard of his office.
the duties involved in the conduct of
his office.
</Table>
37
<Table>
<Caption>
THE ACQUIRING TRUST THE FUNDS
------------------------------------- -------------------------------------
TRUSTEE INDEMNIFICATION: The By-Laws state that the Trust will The Declaration of Trust and Bylaws
indemnify each of its Trustees and state that the Trust will indemnify,
officers who are not employees or to the fullest extent not prohibited
officers of any investment adviser to by law and the 1940 Act and related
the Trust or any affiliated person regulations and interpretations of
thereof and may indemnify each of its the SEC, any current or former
officers who are employees or Trustee, or officer of the Trust
officers of any investment adviser to against any liability and all
the Trust or any affiliated person expenses reasonably incurred or paid
thereof against all liabilities and or expected to be paid in connection
expenses, including amounts paid in with any claim, action, suit, or
satisfaction of judgments, in proceeding in which he or she becomes
compromise, as fines and penalties, involved by reason of the fact that
and as counsel fees, reasonably such person is or was a Trustee,
incurred by such person while in officer, employee or agent of the
office or thereafter, by reason of Trust.
the indemnified person's service as a
Trustee or officer. The Trust will
not indemnify its Trustees and
officers against any liability to the
Trust or to its shareholders to which
he or she would otherwise be subject
by reason of willful misfeasance, bad
faith, gross negligence or reckless
disregard of the duties involved in
the conduct of his office.
Under the By-Laws, in the absence of
a final decision on the merits by an
adjudicating body that such person
has not acted in good faith in the
reasonable belief that such person's
action was in the best interests of
the Trust or is liable to the Trust
or its Shareholders by reason of
willful misfeasance, bad faith, gross
</Table>
38
<Table>
<Caption>
THE ACQUIRING TRUST THE FUNDS
------------------------------------- -------------------------------------
negligence or reckless disregard of
the duties involved in the conduct of
his or her office, indemnification
will be provided if (a) approved,
after notice that it involves such
indemnification, by at least a
majority of the disinterested
Trustees acting on the matter
(provided that a majority of the
disinterested Trustees then in office
act on the matter) upon a
determination, based upon a review of
readily available facts, that such
person has acted in good faith in the
reasonable belief that such person's
action was in the best interests of
the Trust and is not liable to the
Trust or its shareholders by reason
of willful misfeasance, bad faith,
gross negligence or reckless
disregard of the duties involved in
the conduct of his or her office or
(b) there has been obtained an
opinion in writing of independent
legal counsel, based upon a review of
readily available facts to the effect
that such person appears to have
acted in good faith in the reasonable
belief that such person's action was
in the best interests of the Trust
and that such indemnification would
not protect such person against any
liability to the Trust to which such
person would otherwise be subject by
reason of willful misfeasance, bad
faith, gross negligence or reckless
disregard of the duties involved in
the conduct of his or her office.
</Table>
39
<Table>
<Caption>
THE ACQUIRING TRUST THE FUNDS
------------------------------------- -------------------------------------
LEGAL EXPENSES: The By-Laws state that legal expenses The Trust will pay for or reimburse
may be paid from time to time by the the reasonable expenses incurred by
Trust in advance of the final any current or former Trustee or
disposition of any such proceeding if officer in any proceeding in advance
the Trust receives a written of the final disposition of the
undertaking by the indemnified person proceeding to the fullest extent not
to reimburse the Trust in the event prohibited by law.
it is subsequently determined that
the indemnified person is not
entitled to such indemnification and
(a) the indemnified person provides
security for his undertaking, or (b)
the Trust is insured against losses
arising by reason of any lawful
advances, or (c) a majority of the
disinterested, non-party Trustees or
an independent legal counsel, as
expressed in a written opinion,
determines that there is reason to
believe that the indemnified person
ultimately will be found entitled to
indemnification.
DIVIDENDS: Not limited. Not limited.
</Table>
40
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATIONS
The Reorganizations are intended to be tax-free. As a condition to each Fund's
obligation to consummate the Reorganization, the Fund will receive an opinion
from Ropes & Gray LLP, counsel to each Fund, to the effect that, on the basis of
the existing provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury regulations promulgated thereunder, current administrative
rules and court decisions, generally for federal income tax purposes, except as
noted below:
(i) the Reorganization will constitute a reorganization within the meaning of
Section 368(a) of the Code, and the Fund and the New Fund will each be a
"party to a reorganization" within the meaning of Section 368(b) of the
Code;
(ii) under Section 361 of the Code, no gain or loss will be recognized by the
Fund upon the transfer of its assets to the New Fund in exchange for
Reorganization Shares and the assumption by the New Fund of the Fund's
liabilities, or upon the distribution of such Reorganization Shares by the
Fund to the shareholders of the Fund in liquidation;
(iii) under Section 354 of the Code, the Fund shareholders will recognize no
gain or loss upon exchange of their shares of the Fund for the
Reorganization Shares;
(iv) under Section 358 of the Code, the aggregate tax basis of the
Reorganization Shares to be received by each shareholder of the Fund will
be the same as the aggregate tax basis of the shares of the Fund exchanged
therefor;
(v) under Section 1223(1) of the Code, the holding period of the
Reorganization Shares received by each shareholder of the Fund will
include the holding period for the Fund shares exchanged for the
Reorganization Shares; provided such shares of the Fund were held as a
capital asset on the date of the exchange;
(vi) under Section 1032 of the Code, no gain or loss will be recognized by the
New Fund upon receipt of the assets transferred to the New Fund pursuant
to the Plan in exchange for the Reorganization Shares and assumption by
the New Fund of the liabilities of the Fund;
(vii) under Section 362(b) of the Code, the New Fund's tax basis in the assets
that the New Fund receives from the Fund will be the same as the Fund's
tax basis in such assets immediately prior to such exchange;
41
(viii) under Section 1223(2) of the Code, the New Fund's holding period in such
assets will include the Fund's holding period in such assets;
(ix) under Section 381 of the Code, the New Fund will succeed to the capital
loss carryovers of the Fund, if any, but the use by the New Fund of any
such capital loss carryovers (and of capital loss carryovers of the New
Fund) may be subject to limitation under Sections 383 and 284 of the Code.
The opinion will be qualified to reflect that the Code requires that certain
contracts or securities (including, in particular, futures contracts, certain
foreign currency contracts, "non-equity" options and investments in "passive
foreign investment companies") be marked-to-market (treated as sold for their
fair market value) at the end of a taxable year (or upon their termination or
transfer).
The opinion will be based on certain factual certifications made by officers of
the Funds and will also be based on customary assumptions. Each Fund has agreed
to make and provide additional representations to Ropes & Gray with respect to
each Fund that are reasonably requested by Ropes & Gray. The opinion is not a
guarantee that the tax consequences of the Reorganizations will be as described
above. The opinion will note and distinguish certain published precedent. There
is no assurance that the Internal Revenue Service or a court would agree with
the opinion.
VOTE REQUIRED. Approval of each Reorganization and dissolution under state law
requires the affirmative vote of holders of more than 50% of the outstanding
shares of the Fund.
IV. OTHER INFORMATION
Certain additional information regarding Columbia Management and the Meeting is
presented below.
MANAGEMENT
Columbia Management, located at One Financial Center, Boston, MA 02111, is the
Funds' investment adviser. Columbia Management, a registered investment adviser,
has been an investment adviser since 1969. Columbia Funds Distributor, Inc.
("CFD"), located at One Financial Center, Boston, MA 02111, is the Funds'
distributor. Columbia Management and CFD are wholly owned subsidiaries of
Columbia Management Group, Inc. ("CMG"), which is a wholly owned subsidiary of
Bank of America Corporation. Prior to April 1, 2004, CMG was an indirect wholly
owned subsidiary of Fleet Boston Financial Corporation. Effective April 1, 2004,
Fleet Boston Financial Corporation was acquired by Bank of America Corporation.
Bank of America is one of the world's largest
42
financial institutions, serving individual consumers, small businesses and large
corporations and institutions with a full range of banking, investing, asset
management and other financial and risk management products and services. CMG is
located at One Financial Center, Boston, MA 02111.
LEGAL PROCEEDINGS
On February 9, 2005, Columbia Management and CFD (collectively, the "Columbia
Group") entered into an Assurance of Discontinuance with the New York Attorney
General ("NYAG") (the "NYAG Settlement") and consented to the entry of a
cease-and-desist order by the Securities and Exchange Commission ("SEC") (the
"SEC Order"). The SEC Order and the NYAG Settlement are referred to collectively
as the "Settlements". The Settlements contain substantially the same terms and
conditions as outlined in the agreements in principle which Columbia Group
entered into with the SEC and NYAG in March 2004.
Under the terms of the SEC Order, the Columbia Group has agreed among other
things, to: pay $70 million in disgorgement and $70 million in civil money
penalties; cease and desist from violations of the antifraud provisions and
certain other provisions of the federal securities laws; maintain certain
compliance and ethics oversight structures; retain an independent consultant to
review the Columbia Group's applicable supervisory, compliance, control and
other policies and procedures; and retain an independent distribution consultant
(see below). The Columbia Funds have also voluntarily undertaken to implement
certain governance measures designed to maintain the independence of their
boards of trustees. The NYAG Settlement also, among other things, requires
Columbia Management and its affiliates, Banc of America Capital Management, LLC
and BACAP Distributors, LLC, to reduce certain Columbia Funds, Nations Funds and
other mutual funds management fees collectively by $32 million per year for five
years, for a projected total of $160 million in management fee reductions.
Pursuant to the procedures set forth in the SEC order, the $140 million in
settlement amounts described above will be distributed in accordance with a
distribution plan to be developed by an independent distribution consultant, who
is acceptable to the SEC staff and the Columbia Funds' independent trustees. The
distribution plan must be based on a methodology developed in consultation with
the Columbia Group and the Funds' independent trustees and not unacceptable to
the staff of the SEC. At this time, the distribution plan is still under
development. As such, any gain to the fund or its shareholders can not currently
be determined.
43
As a result of these matters or any adverse publicity or other developments
resulting from them, there may be increased redemptions or reduced sales of Fund
shares, which could increase transaction costs or operating expenses, or have
other adverse consequences for the Columbia Funds.
A copy of the SEC Order is available on the SEC website at http://www.sec.gov. A
copy of the NYAG Settlement is available as part of the Bank of America
Corporation Form 8-K filing on February 10, 2005.
In connection with events described in detail above, various parties have filed
suit against certain funds, the Trustees of the Columbia Funds, FleetBoston
Financial Corporation and its affiliated entities and/or Bank of America
Corporation and its affiliated entities. More than 300 cases including those
filed against entities unaffiliated with the funds, their Boards, FleetBoston
Financial Corporation and its affiliated entities and/or Bank of America
Corporation and its affiliated entities have been transferred to the Federal
District Court in Maryland and consolidated in a multi-district proceeding (the
"MDL").(1) The MDL is ongoing.
On January 11, 2005, a putative class action lawsuit was filed in federal
district court in Massachusetts against, among others, the Trustees of the Funds
and Columbia. The lawsuit alleges that defendants violated common law duties to
fund shareholders as well as sections of the Investment Company Act of 1940, by
failing to ensure that the Funds and other affiliated funds participated in
securities class action settlements for which the funds were eligible.
Specifically, plaintiffs allege that defendants failed to submit proof of claims
in connection with settlements of securities class action lawsuits filed against
companies in which the funds held positions.
In 2004, certain Columbia Funds, the Trustees of the Columbia Funds, advisers
and affiliated entities were named as defendants in certain purported
shareholder class and derivative actions(2) making claims, including claims
under the Investment Company and the Investment Advisers Acts of 1940 and state
law. The suits seek damages and allege, inter alia, that the fees and expenses
paid by the funds are excessive and that the advisers and
- ------------------------------
1 The derivative cases purportedly brought on behalf of the Columbia Funds in
the MDL have been consolidated under the lead case, Slaybe, et. al. v.
Columbia Management Advisers, Inc. et al., No. 04-CV-1768 (D Md. Sept. 29,
2004). The fund derivative plaintiffs allege that the funds were harmed by
market timing and late trading activity and seek, among other things, removal
of the trustees of the funds, removal of Columbia Management and CFD,
disgorgement of all management fees and monetary damages.
2 Cohen, et al. v. FleetBoston Financial Corporation, et al., (D. Mass. Aug. 2,
2004); Osburn, et al. v. FleetBoston Financial Corporation, et al., (D. Mass.
Aug. 10, 2004); Slick er, et al. v. FleetBoston Financial Corporation, et al.,
(D. Mass. Aug. 11, 2004); Simmonds, et al. v. FleetBoston Financial
Corporation, et al., (D. Mass. Sept. 8, 2004).
44
their affiliates inappropriately used fund assets to distribute the funds and
for other improper purpose. On March 2, 2005, the actions were consolidated in
the Massachusetts federal court as IN RE COLUMBIA ENTITIES LITIGATION. The
plaintiffs filed a consolidated amended complaint on June 9, 2005.
On March 21, 2005 purported class action plaintiffs filed suit in Massachusetts
state court alleging that the conduct, including market timing, entitles Class B
shareholders in certain Columbia funds to an exemption from contingent deferred
sales charges upon early redemption (the "CDSC Lawsuit"). The CDSC Lawsuit has
been removed to federal court in Massachusetts and the federal Judicial Panel
has conditionally ordered its transfer to the MDL.
OTHER BUSINESS
The Meeting has been called to transact any business that properly comes before
it. The only business that management of the Funds intends to present or knows
that others will present is the Proposals. If any other matters properly come
before the Meeting, and on all matters incidental to the conduct of the Meeting,
the persons named as proxies intend to vote the proxies in accordance with their
judgment, unless the Secretary of the Funds has previously received written
contrary instructions from the shareholder entitled to vote the shares.
OUTSTANDING SHARES AND SIGNIFICANT SHAREHOLDERS
All shareholders of record at the close of business on July 8, 2005, are
entitled to one vote for each share held on that date and to fractional votes
for any fractional shares held on that date. The table in Appendix F lists for
each Fund the total number of shares outstanding as of the close of business on
July 8, 2005, for each class of a Fund's shares entitled to vote at the Meeting.
The table in Appendix G lists each holder of record of more than five percent of
any class of shares of each Fund as of the close of business on May 31, 2005.
The Trustees and officers of each Fund, in the aggregate, owned less than 1% of
each Fund's outstanding shares as of May 31, 2005.
INFORMATION ABOUT THE MEETING AND THE VOTING AND TABULATION OF PROXIES
All proxies solicited by or on behalf of the Board that are properly executed
and returned in time to be voted at the Meeting will be voted at the Meeting as
instructed on the proxy. If no instructions are given, the proxy will be voted
in favor of the Proposals.
45
Any proxy may be revoked at any time prior to its being exercised by written
notification received by the Funds' Secretary, by the execution of a later dated
proxy, or by attending the Meeting and voting in person.
Approval of the eleven nominees for election as Trustees under Proposal 1 is by
a plurality of votes cast at the Meeting which means that if a quorum of
shareholders is present at the Meeting, the eleven nominees for election as
Trustees who receive the greatest number of votes cast at the Meeting will be
elected Trustees. Approval of each of Proposals 2.A. through 2.O. requires the
affirmative vote of a "majority of the outstanding voting securities" of a Fund
entitled to vote on such Proposal. As defined by the 1940 Act, a "majority of
the outstanding voting securities" means the vote of (i) 67% or more of the
Fund's shares present at the Meeting, if the holders of more than 50% of the
outstanding shares of the Fund are represented at the Meeting in person or by
proxy, or (ii) more than 50% of the Fund's outstanding shares, whichever is
less. Approval of Proposal 3 requires the affirmative vote of holders of more
than 50% of the outstanding shares of the Fund. Only shareholders of record on
July 8, 2005, may vote.
In determining whether a quorum is present, the Tellers will count shares
represented by proxies that reflect abstentions, and "broker non-votes," as
shares that are present and entitled to vote. With respect to Proposal 1,
withheld authority, abstentions and broker non-votes have no effect on the
outcome of voting. With respect to any other Proposals, withheld authority,
abstentions and broker non-votes have the effect of a vote "against" the
Proposal. "Broker non-votes" are shares held by brokers or nominees as to which
(i) the broker or nominee does not have discretionary voting power, and (ii) the
broker or nominee has not received instructions from the beneficial owner or
other person who is entitled to instruct how the shares will be voted.
ADJOURNMENTS
If a quorum is not present at the Meeting, the Meeting will be adjourned to
permit further solicitation of proxies. In the event that a quorum is present at
the Meeting but sufficient votes to approve any of the proposals have not been
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. A shareholder vote may be
taken on one or more of the proposals referred to above prior to such
adjournment if sufficient votes have been received and it is otherwise
appropriate. Any such adjournment will require the affirmative vote of a
majority of those shares voted at the Meeting (without regard to abstentions and
broker non-votes). If a quorum is present, the persons named as proxies will
vote those proxies that entitle them to vote for any such proposal in favor of
such adjournment and will vote those proxies that
46
require them to vote for rejection of any such proposal against any such
adjournment.
SUBMISSION OF PROPOSALS FROM SHAREHOLDERS AT FUTURE MEETINGS
Your Fund does not regularly hold annual shareholder meetings, but may from time
to time schedule special meetings. In accordance with the regulations of the
SEC, in order to be eligible for inclusion in the Fund's proxy statement for
such a meeting, a shareholder proposal must be received a reasonable time before
the Fund prints and mails its proxy statement.
You may submit shareholder proposals c/o the Secretary of the Funds, One
Financial Center, Boston, Massachusetts 02111-2621.
OTHER INFORMATION
EACH FUND HAS PREVIOUSLY SENT ITS MOST RECENT ANNUAL REPORT AND SEMI-ANNUAL
REPORT FOR ANY SUBSEQUENT SEMI-ANNUAL PERIOD TO ITS SHAREHOLDERS. YOU MAY OBTAIN
A COPY OF THE REPORT, FREE OF CHARGE, BY WRITING TO COLUMBIA AT ONE FINANCIAL
CENTER, BOSTON, MASSACHUSETTS 02111-2621, OR BY CALLING 1-866-348-1468.
47
APPENDIX A -- OFFICER INFORMATION
The names and ages of the executive officers of the Funds, the year each was
first elected or appointed to office and their principal business occupations
during at least the last five years are shown below. The address of each officer
is One Financial Center, Boston, MA 02111-2621, unless otherwise indicated.
OFFICERS
<Table>
<Caption>
YEAR FIRST ELECTED
OR APPOINTED TO
NAME/AGE AND ADDRESS POSITION WITH FUNDS OFFICE
- ------------------------ ------------------------- ------------------
Christopher L. Wilson Head of Mutual Funds 2004
(Age 47) since August 2004;
President of the Columbia
Funds since October 2004
J. Kevin Connaughton Treasurer 2000
(Age 40)
<Caption>
NAME/AGE AND ADDRESS PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
- ------------------------ ------------------------------------------------------------
Christopher L. Wilson Head of Mutual Funds since August, 2004 and Senior Vice
(Age 47) President of the Advisor since January, 2005; President of
the Columbia Funds, Liberty Funds and Stein Roe Funds since
October, 2004; President and Chief Executive Officer of the
Nations Funds since January, 2005; Senior Vice President of
BACAP Distributors LLC since January, 2005; Director of FIM
Funding, Inc. since January, 2005; Senior Vice President of
Columbia Funds Distributor, Inc. since January, 2005;
Director of Columbia Funds Services, Inc. since January,
2005 (formerly President and Chief Executive Officer, CDC
IXIS Asset Management Services, Inc. from September, 1998 to
August, 2004).
J. Kevin Connaughton Treasurer of the Columbia Funds since October, 2003 and of
(Age 40) the Liberty Funds, Stein Roe Funds and All-Star Funds since
December, 2000; Vice President of the Advisor since April,
2003 (formerly President of the Columbia Funds, Liberty
Funds and Stein Roe Funds from February, 2004 to October,
2004; Chief Accounting Officer and Controller of the Liberty
Funds and All-Star Funds from February, 1998 to October,
2000); Treasurer of the Galaxy Funds since September, 2002
(formerly Treasurer from December, 2002 to December, 2004
and President from February, 2004 to December, 2004 of the
Columbia Management Multi-Strategy Hedge Fund, LLC; Vice
President of Colonial Management Associates, Inc. from
February, 1998 to October, 2000).
</Table>
A-1
<Table>
<Caption>
YEAR FIRST ELECTED
OR APPOINTED TO
NAME/AGE AND ADDRESS POSITION WITH FUNDS OFFICE
- ------------------------ ------------------------- ------------------
Mary Joan Hoene Senior Vice President and 2004
(Age 54) Chief Compliance Officer
40 West 57th Street since 2004
New York, NY 10019
Michael G. Clarke Chief Accounting Officer 2004
(Age 35) since October 2004
Jeffrey R. Coleman Controller since October 2004
(Age 35) 2004
R. Scott Henderson Secretary since December 2004
(Age 45) 2004
<Caption>
NAME/AGE AND ADDRESS PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
- ------------------------ ------------------------------------------------------------
Mary Joan Hoene Senior Vice President and Chief Compliance Officer of the
(Age 54) Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star
40 West 57th Street Funds since August, 2004 (formerly Partner, Carter, Ledyard
New York, NY 10019 & Milburn LLP from January, 2001 to August, 2004; Counsel,
Carter, Ledyard & Milburn LLP from November, 1999 to
December, 2000; Vice President and Counsel, Equitable Life
Assurance Society of the United States from April, 1998 to
November, 1999).
Michael G. Clarke Chief Accounting Officer of the Columbia Funds, Liberty
(Age 35) Funds, Stein Roe Funds and All-Star Funds since October,
2004 (formerly Controller of the Columbia Funds, Liberty
Funds, Stein Roe Funds and the All-Star Funds from May, 2004
to October, 2004); Assistant treasurer from June, 2002 to
May, 2004; Vice President, Product Strategy & Development of
the Liberty Funds Group from February, 2001 to June, 2002;
Assistant Treasurer of the Liberty Funds Group from
February, 2001 to June, 2002; Assistant Treasurer of the
Liberty Funds, Stein Roe Funds and the All-Star Funds from
August, 1999 to February, 2001; Audit Manager, Deloitte &
Touche LLP from May, 1997 to August, 1999.
Jeffrey R. Coleman Controller of the Columbia Funds, Liberty Funds, Stein Roe
(Age 35) Funds and the All-Star Funds since October, 2004 (formerly
Vice President of CDC IXIS Asset Management Services, Inc.
and Deputy Treasurer of the CDC Nvest Funds and Loomis
Sayles Funds from February, 2003 to September, 2004;
Assistant Vice President of CDC IXIS Asset Management
Services, Inc. and Assistant Treasurer of the CDC Nvest
Funds from August, 2000 to February, 2003; Tax Manager of
PFPC, Inc. from November, 1996 to August, 2000).
R. Scott Henderson Secretary of the Columbia Funds, Liberty Funds and the Stein
(Age 45) Roe Funds since December, 2004 (formerly Of Counsel Bingham
McCutchen from April 2001 to September 2004; Executive
Director and General Counsel, Massachusetts Pension Reserves
Investment Management Board from September, 1997 to March,
2001).
</Table>
A-2
APPENDIX B.1 -- TRUSTEES' COMPENSATION
For the calendar year ended December 31, 2004, the Trustees received the
following compensation for serving as Trustees:
<Table>
<Caption>
TOTAL COMPENSATION FROM THE
FUND COMPLEX PAID TO THE
PENSION OR RETIREMENT TRUSTEES FOR THE
BENEFITS ACCRUED AS PART CALENDAR YEAR ENDED
DISINTERESTED TRUSTEES OF FUND EXPENSES(1) DECEMBER 31, 2004
- ---------------------- ------------------------ ---------------------------
Douglas A. Hacker N/A $135,000
Janet Langford Kelly N/A $148,500
Richard W. Lowry N/A $150,700
Charles R. Nelson N/A $141,500
John J. Neuhauser N/A $158,284
Patrick J. Simpson(2) N/A $129,000
Thomas E. Stitzel N/A $149,000
Thomas C. Theobald(2) N/A $172,500
Anne-Lee Verville(2) N/A $157,000
Richard L. Woolworth N/A $131,000
INTERESTED TRUSTEE
- -----------------------
William E. Mayer N/A $166,700
</Table>
(1) The Funds do not currently provide pension or retirement plan benefits to
the Trustees.
(2) During the calendar year ended December 31, 2004, Mr. Simpson deferred
$129,000 of his total compensation pursuant to the deferred compensation
plan, Mr. Theobald deferred $90,000 of his total compensation pursuant to
the deferred compensation plan and Ms. Verville deferred $55,000 of her
total compensation pursuant to the deferred compensation plan.
B-1
APPENDIX B.2 -- TRUSTEES' COMPENSATION
For purposes of Appendix B.2, the following definitions apply:
<Table>
CMG Core Bond Fund ("CBF") CMG Short Term Bond Fund ("STBF")
CMG Enhanced S&P 500 Index Fund ("ESPIF") CMG Small Cap Fund ("SCF")
CMG High Yield Fund ("HYF") CMG Small Cap Growth Fund ("SCGF")
CMG International Stock Fund ("ISF") CMG Small Cap Value Fund ("SCVF")
CMG Large Cap Growth Fund ("LCGF") CMG Small/Mid Cap Fund ("SMCF")
CMG Large Cap Value Fund ("LCVF") CMG Strategic Equity Fund ("SEF")
CMG Mid Cap Growth Fund ("MCGF") CMG Ultra Short Term Bond Fund ("USTBF")
CMG Mid Cap Value Fund ("MCVF")
</Table>
B-2
For the last fiscal year, the Trustees received from each Fund the following
compensation for serving as Trustees:
<Table>
<Caption>
AGGREGATE AGGREGATE AGGREGATE AGGREGATE AGGREGATE
COMPENSATION COMPENSATION COMPENSATION COMPENSATION COMPENSATION
FROM CBF FROM ESPIF FROM HYF FROM ISF FROM LCGF
FOR THE FISCAL FOR THE FISCAL FOR THE FISCAL FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DISINTERESTED TRUSTEE 07/31/04 07/31/04 07/31/04 07/31/04 07/31/04
- --------------------- -------------- -------------- -------------- -------------- --------------
Douglas A. Hacker(d) $329 $301 $ 751 $488 $280
Janet Langford Kelly(d) 338 282 767 506 290
Richard W. Lowry(d) 311 282 699 467 264
Charles R. Nelson 336 311 757 506 287
John J. Neuhauser(d) 323 293 725 485 274
Patrick J. Simpson(a) 353 320 814 519 299
Thomas E. Stitzel(d) 357 325 787 544 302
Thomas C. Theobald(b)(d) 433 400 1,040 612 372
Anne-Lee Verville(c)(d) 402 372 912 601 344
Richard L. Woolworth 382 345 869 566 323
INTERESTED TRUSTEE
- --------------------------------
William E. Mayer(d) 333 301 744 501 281
<Caption>
AGGREGATE AGGREGATE AGGREGATE
COMPENSATION COMPENSATION COMPENSATION
FROM LCVF FROM MCGF FROM MCVF
FOR THE FISCAL FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED YEAR ENDED
DISINTERESTED TRUSTEE 07/31/04 07/31/04 07/31/04
- --------------------- -------------- -------------- --------------
Douglas A. Hacker(d) $285 $284 $276
Janet Langford Kelly(d) 295 292 284
Richard W. Lowry(d) 268 268 260
Charles R. Nelson 292 290 282
John J. Neuhauser(d) 278 279 270
Patrick J. Simpson(a) 304 304 296
Thomas E. Stitzel(d) 308 307 297
Thomas C. Theobald(b)(d) 376 372 364
Anne-Lee Verville(c)(d) 350 347 337
Richard L. Woolworth 328 329 319
INTERESTED TRUSTEE
- --------------------------------
William E. Mayer(d) 286 286 277
</Table>
B-3
<Table>
<Caption>
AGGREGATE AGGREGATE AGGREGATE AGGREGATE AGGREGATE
COMPENSATION COMPENSATION COMPENSATION COMPENSATION COMPENSATION
FROM STBF FROM SCF FROM SCGF FROM SCVF FROM SMCF
FOR THE FISCAL FOR THE FISCAL FOR THE FISCAL FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DISINTERESTED TRUSTEE 07/31/04 07/31/04 07/31/04 07/31/04 07/31/04
- --------------------- -------------- -------------- -------------- -------------- --------------
Douglas A. Hacker(d) $553 $1,309 $307 $302 $360
Janet Langford Kelly(d) 566 1,315 315 311 369
Richard W. Lowry(d) 531 1,289 289 284 339
Charles R. Nelson 569 1,340 313 308 366
John J. Neuhauser(d) 552 1,337 301 296 352
Patrick J. Simpson(a) 594 1,408 329 324 388
Thomas E. Stitzel(d) 619 1,499 332 326 386
Thomas C. Theobald(b)(d) 676 1,569 403 399 480
Anne-Lee Verville(c)(d) 676 1,586 375 369 439
Richard L. Woolworth 649 1,544 355 349 418
INTERESTED TRUSTEE
- -----------------------------------
William E. Mayer(d) 570 1,398 309 304 362
<Caption>
AGGREGATE AGGREGATE
COMPENSATION COMPENSATION
FROM SEF FROM USTBF
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
DISINTERESTED TRUSTEE 07/31/04 07/31/04
- --------------------- -------------- --------------
Douglas A. Hacker(d) $ 778 none
Janet Langford Kelly(d) 815 none
Richard W. Lowry(d) 719 none
Charles R. Nelson 798 none
John J. Neuhauser(d) 744 none
Patrick J. Simpson(a) 829 none
Thomas E. Stitzel(d) 816 none
Thomas C. Theobald(b)(d) 1,088 none
Anne-Lee Verville(c)(d) 960 none
Richard L. Woolworth 886 none
INTERESTED TRUSTEE
- -----------------------------------
none
William E. Mayer(d) 762
none
</Table>
(a) During the fiscal year ended July 31, 2004, Mr. Simpson deferred $594, $814,
and $353 of his compensation from STBF, HYF and CBF, respectively. During
the fiscal year ended July 31, 2004, Mr. Simpson deferred $388, $519, $320,
$324, $329, $296, $304, $299, $304, $1,408, and $829 of his compensation
from the SMCF, ISF, ESPIF, SCVF, SCGF, MCVF, MCGF, LCGF, LCVF, SCF and SEF,
respectively.
(b) During the fiscal year ended July 31, 2004, Mr. Theobald deferred $46, $682,
and $243 of his compensation from STBF, HYF and CBF, respectively. During
the fiscal year ended July 31, 2004, Mr. Theobald deferred $283, $289, $234,
$230, $228, $209, $208, $216, $215, $561, and $737 of his compensation from
SMCF, ISF, ESPIF, SCVF, SCGF, MCVF, MCGF, LCGF, LCVF, SCF and SEF,
respectively.
(c) During the fiscal year ended July 31, 2004, Ms. Verville deferred $81, $417,
and $148 of her compensation from STBF, HYF and CBF, respectively. During
the fiscal year ended July 31, 2004, Ms. Verville deferred $173, $177, $143,
$140, $139, $128, $127, $132, $132, $343 and $450 of her compensation from
SMCF, ISF, ESPIF, SCVF, SCGF, MCVF, MCGF, LCGF, LCVF, SCF and SEF,
respectively.
(d) Each of Ms. Verville, Ms. Kelly and Messrs. Hacker, Lowry, Mayer, Neuhauser,
Stitzel and Theobald was elected a Trustee of the Trust on October 7, 2003.
The compensation amounts for each of them reflect their total compensation
paid for service during 2003 as a Trustee or director of funds formerly
known as the Liberty Funds and Stein Roe Funds that are now part of the
Columbia Funds Complex.
B-4
APPENDIX C -- TRUSTEE SHARE OWNERSHIP
DISINTERESTED TRUSTEES:
<Table>
<Caption>
JANET
DOUGLAS A. LANGFORD RICHARD W.
NAME OF FUND HACKER KELLY LOWRY
- ------------ ---------- -------- ----------
CMG Small/Mid Cap Fund None None None
CMG International Stock
Fund None None None
CMG Enhanced S&P 500
Index 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
CMG Large Cap Growth
Fund None None None
CMG Large Cap Value
Fund None None None
Aggregate dollar range
of equity securities
owned in all funds
overseen by trustee
in fund complex: Over $100,000 Over $100,000 Over $100,000
</Table>
C-1
<Table>
<Caption>
JOHN J.
NAME OF FUND DR. CHARLES R. NELSON NEUHAUSER
- ------------ --------------------- ---------
CMG Small/Mid Cap Fund None None
CMG International Stock Fund None None
CMG Enhanced S&P 500 Index
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
CMG Large Cap Growth Fund None None
CMG Large Cap Value Fund None None
Aggregate dollar range of
equity securities owned in
all funds overseen by
trustee in fund complex: Over $100,000 Over $100,000
</Table>
<Table>
<Caption>
PATRICK J. THOMAS E.
NAME OF FUND SIMPSON STITZEL
- ------------ ---------- ---------
CMG Small/Mid Cap Fund None None
CMG International Stock Fund None None
CMG Enhanced S&P 500 Index
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
CMG Large Cap Growth Fund None None
CMG Large Cap Value Fund None None
Aggregate dollar range of
equity securities owned in
all funds overseen by
trustee in fund complex: $50,001-$100,000 $50,001-$100,000
</Table>
C-2
<Table>
<Caption>
THOMAS C. ANNE-LEE RICHARD W.
NAME OF FUND THEOBALD VERVILLE(1) WOOLWORTH
- ------------ --------- ----------- ----------
CMG Small/Mid Cap Fund None None None
CMG International Stock Fund None None None
CMG Enhanced S&P 500 Index
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
CMG Large Cap Growth Fund None None None
CMG Large Cap Value Fund None None None
Aggregate dollar range of
equity securities owned in
all funds overseen by
trustee in fund complex: Over $100,000 $0 Over $100,000
</Table>
INTERESTED TRUSTEES:
<Table>
<Caption>
NAME OF FUND WILLIAM E. MAYER
- ------------ ----------------
CMG Small/Mid Cap Fund None
CMG International Stock Fund None
CMG Enhanced S&P 500 Index Fund None
CMG Small Cap Value Fund None
CMG Small Cap Growth Fund None
CMG Mid Cap Value Fund None
CMG Mid Cap Growth Fund None
CMG Large Cap Growth Fund None
CMG Large Cap Value Fund None
Aggregate dollar range of equity securities
owned in all funds overseen by trustee in
fund complex: $50,001-$100,000
</Table>
C-3
DISINTERESTED TRUSTEES:
<Table>
<Caption>
JANET
DOUGLAS A. LANGFORD RICHARD W.
NAME OF FUND HACKER KELLY LOWRY
- ------------ ---------- -------- ----------
CMG Short Term Bond
Fund None None None
CMG High Yield Fund None None None
CMG Core Bond Fund None None None
CMG Ultra Short Term
Fund None None None
CMG Small Cap Fund None None None
Aggregate dollar range
of equity securities
owned in all funds
overseen by trustee
in fund complex: Over $100,000 Over $100,000 Over $100,000
</Table>
<Table>
<Caption>
DR. CHARLES R. JOHN J.
NAME OF FUND NELSON NEUHAUSER
- ------------ -------------- ---------
CMG Short Term Bond Fund None None
CMG High Yield Fund None None
CMG Core Bond Fund None None
CMG Ultra Short Term Fund None None
CMG Small Cap Fund None None
Aggregate dollar range of equity
securities owned in all funds
overseen by trustee in fund
complex: Over $100,000 Over $100,000
</Table>
C-4
<Table>
<Caption>
PATRICK J. THOMAS E.
NAME OF FUND SIMPSON STITZEL
- ------------ ---------- ---------
CMG Short Term Bond Fund None None
CMG High Yield Fund None None
CMG Core Bond Fund None None
CMG Ultra Short Term Fund None None
CMG Small Cap Fund None None
Aggregate dollar range of
equity securities owned in
all funds overseen by trustee
in fund complex: $50,001-$100,000 $50,001-$100,000
</Table>
<Table>
<Caption>
THOMAS C. ANNE-LEE RICHARD W.
NAME OF FUND THEOBALD VERVILLE(1) WOOLWORTH
- ------------ --------- ----------- ----------
CMG Short Term Bond Fund None None None
CMG High Yield Fund None None None
CMG Core Bond Fund None None None
CMG Ultra Short Term Fund None None None
CMG Small Cap Fund None None None
Aggregate dollar range of
equity securities owned in
all funds overseen by
trustee in fund complex: Over $100,000 $0 Over $100,000
</Table>
INTERESTED TRUSTEES:
<Table>
<Caption>
WILLIAM E.
NAME OF FUND MAYER
- ------------ ----------
CMG Short Term Bond Fund None
CMG High Yield Fund None
CMG Core Bond Fund None
CMG Ultra Short Term Fund None
CMG Small Cap Fund None
Aggregate dollar range of equity securities owned
in all funds overseen by trustee in fund
complex: $50,001-$100,000
</Table>
C-5
APPENDIX D
GOVERNANCE COMMITTEE CHARTER
The Governance Committee (the "Committee") of the Funds shall be composed
entirely of members of the Board of the Funds who are not affiliated with the
Funds' investment adviser, sub-advisers or principal underwriter.
The functions of the Committee are:
To make nominations for independent trustee membership on the Board of Trustees
when necessary and to consider candidates proposed for the Board of Trustees by
shareholders of the Funds;
To review periodically Board governance practices and procedures and any
recommendations of the Chief Compliance Officer of the Funds relating thereto,
and to recommend to the Board any changes it may deem appropriate;
To review periodically trustee compensation and to recommend to the independent
trustees any changes it may deem appropriate;
To review committee assignments on an annual basis;
To review on an annual basis the responsibilities and charter of each committee
of the Board, whether there is continuing need for each committee, whether there
is a need for additional committees of the Board, and whether committees should
be combined or reorganized, and to make recommendations for any such action to
the Board;
To plan and administer the Board's annual self-evaluation process;
To evaluate on at least an annual basis the independence of counsel to the
independent trustees, to make recommendations to the independent trustees
regarding their determination of such counsel's status as an "independent legal
counsel" under applicable SEC rules, and to supervise such counsel.
The Committee shall meet as frequently and at such times as circumstances
dictate. Minutes shall be kept of the Committee's meetings.
The Committee shall have the resources and authority appropriate to discharge
its responsibilities, including authority to retain special counsel and other
experts or consultants at the expense of the appropriate Fund.
The Committee shall review this charter at least annually and recommend to the
Board any changes it deems appropriate.
D-1
APPENDIX E1
<Table>
<Caption>
AUDIT AUDIT-RELATED TAX ALL OTHER
FUND NAME FYE FEES FEES FEES FEES TOTAL
- --------------------------------- ------- -------- ------------- ------ --------- ------
CMG Enhanced S&P 500 7/31/04 19,430 3,500 3,812 -- 26,742
Index Fund* 7/31/03 9,250 -- -- -- 9,250
CMG Core Bond Fund 7/31/04 24,700 3,500 4,241 -- 32,441
7/31/03 22,520 3,500 1,500 27,520
CMG High Yield Fund 7/31/04 28,610 3,500 2,441 -- 34,551
7/31/03 26,250 3,500 1,400 -- 31,150
CMG International Stock Fund 7/31/04 24,700 3,500 7,019 -- 35,219
7/31/03 22,520 3,500 1,400 -- 27,420
CMG Large Cap 7/31/04 23,630 3,500 112 -- 27,242
Growth Fund** 7/31/03 -- -- -- -- --
CMG Large Cap Value Fund** 7/31/04 23,630 3,500 112 -- 27,242
7/31/03 -- -- -- -- --
CMG Mid Cap Growth Fund* 7/31/04 23,630 3,500 3,812 -- 30,942
7/31/03 11,250 -- -- -- 11,250
CMG Mid Cap Value Fund* 7/31/04 23,630 3,500 3,812 -- 30,942
7/31/03 11,250 -- -- -- 11,250
CMG Short Term Bond Fund 7/31/04 25,320 3,500 2,241 -- 31,061
7/31/03 23,110 3,500 1,500 -- 28,110
CMG Small Cap Fund 7/31/04 23,540 3,500 2,212 -- 29,252
7/31/03 21,420 3,500 1,500 -- 26,420
CMG Small Cap 7/31/04 23,630 3,500 3,812 -- 30,942
Growth Fund* 7/31/03 11,250 -- -- -- 11,250
CMG Small Cap Value Fund* 7/31/04 23,630 3,500 3,812 -- 30,942
7/31/03 11,250 -- -- -- 11,250
CMG Small/Mid Cap Fund 7/31/04 21,810 3,500 2,241 -- 27,551
7/31/03 19,770 3,500 1,500 -- 24,770
CMG Strategic Equity Fund 7/31/04 24,180 3,500 3,841 -- 31,521
7/31/03 22,030 3,500 1,500 -- 27,030
CMG Ultra Short-Term 7/31/04 23,500 -- -- -- 23,500
Bond Fund*** 7/31/03 -- -- -- -- --
- ---------------------------------------------------------------------------------------------------
</Table>
* Commenced operations on May 5, 2003.
** Commenced operations on September 10, 2003.
*** Commenced operations on March 4, 2004.
E-1
APPENDIX E2
<Table>
<Caption>
NON-AUDIT
FUND NAME FYE SERVICES
- ---------------------------------------------------------------------------------
CMG Enhanced S&P 500 Index Fund* 7/31/04 7,312
7/31/03 --
CMG Core Bond Fund 7/31/04 7,741
7/31/03 5,000
CMG High Yield Fund 7/31/04 5,941
7/31/03 4,900
CMG International Stock Fund 7/31/04 10,519
7/31/03 4,900
CMG Large Cap Growth Fund** 7/31/04 3,612
7/31/03 --
CMG Large Cap Value Fund** 7/31/04 3,612
7/31/03 --
CMG Mid Cap Growth Fund* 7/31/04 7,312
7/31/03 --
CMG Mid Cap Value Fund* 7/31/04 7,312
7/31/03 --
CMG Short Term Bond Fund 7/31/04 5,741
7/31/03 5,000
CMG Small Cap Fund 7/31/04 5,712
7/31/03 5,000
CMG Small Cap Growth Fund* 7/31/04 7,312
7/31/03 --
CMG Small Cap Value Fund* 7/31/04 7,312
7/31/03 --
CMG Small/Mid Cap Fund 7/31/04 5,741
7/31/03 5,000
CMG Strategic Equity Fund 7/31/04 7,341
7/31/03 5,000
CMG Ultra Short-Term Bond Fund*** 7/31/04 --
7/31/03 --
</Table>
The table above does not include $95,000 paid in both fiscal years to PWC by a
control affiliate related to internal controls review of the registrant's
transfer agent.
* Commenced operations on May 5, 2003.
** Commenced operations on September 10, 2003.
*** Commenced operations on March 4, 2004.
E-2
APPENDIX F -- SHARES OUTSTANDING AND ENTITLED TO VOTE
For each Fund's shares entitled to vote at the Meeting, the number of shares
outstanding as of July 8, 2005 was as follows:
<Table>
<Caption>
FUND NUMBER OF SHARES OUTSTANDING AND ENTITLED TO VOTE
- ----------------------------------------------------------------------------------------------
CMG Core Bond Fund 7,533,740.3790
CMG Enhanced S&P 500 Index Fund 6,788,084.6910
CMG High Yield Fund 33,211,967.8670
CMG International Stock Fund 10,027,722.5590
CMG Large Cap Growth Fund 3,458,930.9170
CMG Large Cap Value Fund 3,088,670.1360
CMG Mid Cap Growth Fund 1,588,970.7570
CMG Mid Cap Value Fund 1,556,214.9790
CMG Short Term Bond Fund 8,108,804.7940
CMG Small Cap Fund 6,231,295.0430
CMG Small Cap Growth Fund 2,763,552.9340
CMG Small Cap Value Fund 2,374,489.7610
CMG Small/Mid Cap Fund 3,417,966.2640
CMG Strategic Equity Fund 50,150,490.4640
CMG Ultra Short Term Bond Fund 9,014,245.7740
- ----------------------------------------------------------------------------------------------
</Table>
F-1
APPENDIX G -- OWNERSHIP OF SHARES
<Table>
<Caption>
CLASS REGISTRATION SHARE BALANCE PERCENT CLASS TOTAL
- ----- ------------------------------ --------------- ------- ---------------
CMG CORE BOND FUND
Z Bank of America NA 7,307,150.9480 98.59 7,411,552.7840
411 N. Akard St.
Dallas, TX 75201-3307
CMG ENHANCED S & P 500 INDEX FUND
Z Bank of America NA 6,823,097.9240 100.00 6,823,097.9240
411 N. Akard St.
Dallas, TX 75201-3307
CMG HIGH YIELD FUND
Z Bank of America NA 12,699,473.6910 34.80 36,487,685.2110
411 N. Akard St.
Dallas, TX 75201-3307
Z Wells Fargo Bank NA 1,835,315.5740 5.03 36,487,685.2110
Denver Area Meat Cutters &
Employers Pension Plan
P.O. Box 1533
Minneapolis, MN 55480-1533
Z Wells Fargo Bank NA 5,647,124.9030 15.48 36,487,685.2110
Rocky Mountain UFCW Unions &
Empl. Pen. Plan
P.O. Box 1533
Minneapolis, MN 55480-1533
CMG INTERNATIONAL STOCK FUND
Z Union Bank Tr. Nominee 549,193.6960 5.34 10,284,733.7470
Freightliner Corp. Pension
Plan
P.O. Box 85484
San Diego, CA 92186-5484
Z Bank of America NA 9,416,650.0890 91.56 10,284,733.7470
411 N. Akard St.
Dallas, TX 75201-3307
CMG LARGE CAP GROWTH FUND
Z Bank of America NA 3,458,930.9170 100.00 3,458,930.9170
411 N. Akard St.
Dallas, TX 75201-3307
CMG LARGE CAP VALUE FUND
Z Bank of America NA 3,100,621.7930 100.00 3,100,621.7930
411 N. Akard St.
Dallas, TX 75201-3307
CMG MID CAP GROWTH FUND
Z Bank of America NA 1,586,715.1180 100.00 1,586,715.1180
411 N. Akard St.
Dallas, TX 75201-3307
</Table>
G-1
<Table>
<Caption>
CLASS REGISTRATION SHARE BALANCE PERCENT CLASS TOTAL
- ----- ------------------------------ --------------- ------- ---------------
CMG MID CAP VALUE FUND
Z Bank of America NA 1,563,178.7670 100.00 1,563,178.7670
411 N. Akard St.
Dallas, TX 75201-3307
CMG SHORT TERM BOND FUND
Z Bank of America NA 4,868,704.8620 59.32 8,207,213.7680
411 N. Akard St.
Dallas, TX 75201-3307
Z Pacificorp Environmental 2,213,031.9940 26.96 8,207,213.7680
Remediation Company
825 NE Multnomah Ste. 1900
Portland, OR 97232-2151
CMG SMALL CAP FUND
Z U.S. Trust Company NA 653,178.3980 6.66 9,811,614.7820
Oregon Community Foundation
4380 SW Macadam Ste. 450
Portland, OR 97239-6407
Z Pechainey Plastic Pack. & 1,573,379.6080 16.04 9,811,614.7820
Contain.
50 S. LaSalle St.
Chicago, IL 60675-0001
Z Wells Fargo Bank 3,580,319.7390 36.49 9,811,614.7820
Mastercard International Pens.
Pl.
801 Nicollet Mall Ste. 700
Minneapolis, MN 55479-0001
Z Bank of America NA 745,282.6520 7.60 9,811,614.7820
411 N. Akard St.
Dallas, TX 75201-3307
Z Bank of New York 705,216.5910 7.19 9,811,614.7820
Washington Meat Industry Pen.
Tr.
Atlantic Terminal
2 Hanson Pl. Fl. 7
Brooklyn, NY 11217-1431
CMG SMALL CAP GROWTH FUND
Z Bank of America NA 2,744,784.3900 97.31 2,820,718.4180
411 N. Akard St.
Dallas, TX 75201-3307
CMG SMALL CAP VALUE FUND
Z Bank of America NA 2,366,649.5290 97.27 2,432,977.4520
411 N. Akard St.
Dallas, TX 75201-3307
</Table>
G-2
<Table>
<Caption>
CLASS REGISTRATION SHARE BALANCE PERCENT CLASS TOTAL
- ----- ------------------------------ --------------- ------- ---------------
CMG SMALL/MID CAP FUND
Z U.S. Trust Company NA 216,370.3590 6.33 3,417,966.2640
Oregon Community Foundation
4380 SW Macadam Ste. 450
Portland, OR 97239-6407
Z Mac & Co. 699,152.5420 20.46 3,417,966.2640
Micron Foundation
P.O. Box 3198
Pittsburgh, PA 15230-3198
Z Union Bank Tr. Nominee FBO 322,033.7600 9.42 3,417,966.2640
Oregon Washington Carpenters
Employers Pension Trust Fund
P.O. Box 85484
San Diego, CA 92186-5484
Z Freightliner Corp. Pension 362,616.4950 10.61 3,417,966.2640
Plan
P.O. Box 85484
San Diego, CA 92186-5484 ]
CMG STRATEGIC EQUITY FUND
Z U.S. Bank National Association 5,272,581.3720 10.43 50,564,503.9020
Oregon Retail Employees Pen.
Trust
P.O. Box 3168 Pl-6
Portland, OR 97208-3168
Z USB FBO 2,881,299.8480 5.70 50,564,503.9020
Willamette University
P.O. Box 1787
Milwaukee, WI 53201-1787
Z USB FBO Atu/Trimet 6,526,336.0960 12.91 50,564,503.9020
Joint Pension Trust
P.O. Box 1787
Milwaukee, WI 53201-1787
Z George K. & Joan D. Austin 2,651,961.1940 5.24 50,564,503.9020
P.O. Box 209
Newberg, OR 97132-0209
Z Meyer Memorial Trust 3,725,451.4440 7.37 50,564,503.9020
25 N.W. 10th Ave. Ste. 400
Portland, OR 97209-3128
CMG ULTRA SHORT TERM BOND FUND
Bank of America NA 8,819,305.9740 100.00 8,819,305.9740
411 N. Akard St.
Dallas, TX 75201-3307
</Table>
G-3
EXHIBIT 1
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO BORROWING
CMG Strategic Equity Fund
CMG Short Term Bond Fund
CMG Small Cap Growth Fund
CMG Enhanced S&P 500 Index Fund
CMG Large Cap Value Fund
CMG Large Cap Growth Fund
CMG Mid Cap Value Fund
CMG Mid Cap Growth Fund
CMG Small Cap Value Fund
CMG Ultra Short Term Bond Fund
The Fund may not "[b]orrow money, except that (a) the Fund may borrow from banks
for temporary or emergency (not leveraging) purposes, including the meeting of
redemption requests that might otherwise require the untimely disposition of
securities and (b) the Fund may, to the extent consistent with its investment
policies, enter into reverse repurchase agreements, [forward][dollar] roll
transactions and similar investment strategies and techniques. To the extent
that it engages in transactions described in (a) and (b), the Fund will be
limited so that no more than 33 1/3% of the value of its total assets (including
the amount borrowed) valued at the lesser of cost or market, less liabilities
(not including the amount borrowed) valued at the time the borrowing is made, is
derived from such transactions."
CMG Core Bond Fund
The Fund may not "[b]orrow money, issue senior securities, or pledge, mortgage
or hypothecate its assets, except that the Fund may (i) borrow from banks, but
only if immediately after each borrowing there is asset coverage of 300%, (ii)
enter into transactions in options, futures, options on futures, and other
derivative instruments as described in the Prospectus and this Statement of
Additional Information (the deposit of assets in escrow in connection with the
writing of covered put and call options and the purchase of securities on a
when-issued or delayed delivery basis, collateral arrangements with respect to
initial or variation margin deposit for futures contracts and commitments
entered into under swap agreements or other derivative instruments, will not be
deemed to be pledges of the Fund's
1
assets), (iii) enter into reverse repurchase agreements, dollar roll
transactions or economically similar transactions to the extent its commitment
under such transaction is covered by the segregation of assets, and (iv) borrow
money as a temporary measure for extraordinary or emergency purposes provided
that such borrowings do not exceed 5% of the gross assets of the Fund valued at
the lesser of cost or market value, and the Fund does not pledge, mortgage, or
hypothecate assets valued at market to an extent greater than 10% of the gross
assets valued at cost of the Fund."
CMG Small Cap Fund
CMG Small/Mid Cap Fund
The Fund may not "[b]orrow money in excess of 5% of its net asset value. Any
borrowing must only be temporary, from banks, and for extraordinary or emergency
purposes."
CMG International Stock Fund
The Fund may not "[b]orrow money, except temporarily for extraordinary or
emergency purposes. For all amounts borrowed, the Fund will maintain an asset
coverage of 300%. The Fund will not make any additional investments while
borrowings exceed 5% of the Fund's total assets."
CMG High Yield Fund
The Fund may not "[b]orrow money except as a temporary measure for extraordinary
or emergency purposes. Its borrowings may not exceed 5% of the gross assets of
the Fund valued at the lesser of cost or market value, nor may it pledge,
mortgage or hypothecate assets valued at market to an extent greater than 10% of
the gross assets valued at cost of the Fund."
2
EXHIBIT 2
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO ISSUING SENIOR
SECURITIES
CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG International Stock Fund
CMG High Yield Fund
CMG Short Term Bond Fund
CMG Ultra Short Term Bond Fund
The Fund may not "[i]ssue senior securities, bonds, or debentures."
CMG Strategic Equity Fund
CMG Small Cap Growth Fund
CMG Enhanced S&P 500 Index Fund
CMG Large Cap Value Fund
CMG Large Cap Growth Fund
CMG Mid Cap Value Fund
CMG Mid Cap Growth Fund
CMG Small Cap Value Fund
The Fund may not "[i]ssue any senior security (as defined in the 1940 Act)
except that a Fund may (a) engage in transactions that may result in the
issuance of senior securities to the extent permitted under regulations and
interpretations of 1940 Act or an exemptive order or interpretation of the staff
of the [Securities and Exchange Commission (the "SEC")][SEC]; (b) acquire other
securities, the acquisition of which may result in the issuance of a senior
security, to the extent permitted under regulations or interpretations of the
1940 Act; (c) subject to the restrictions described in the Statement of
Additional Information, borrow money as authorized by the 1940 Act; and (d)
issue multiple classes of shares in accordance with regulations of the SEC."
CMG Core Bond Fund
The Fund may not "[b]orrow money, issue senior securities, or pledge, mortgage
or hypothecate its assets, except that the Fund may (i) borrow from banks, but
only if immediately after each borrowing there is asset coverage of 300%, (ii)
enter into transactions in options, futures, options on futures, and other
derivative instruments as described in the Prospectus and this Statement of
Additional Information (the deposit of assets in escrow in
1
connection with the writing of covered put and call options and the purchase of
securities on a when-issued or delayed delivery basis, collateral arrangements
with respect to initial or variation margin deposit for futures contracts and
commitments entered into under swap agreements or other derivative instruments,
will not be deemed to be pledges of the Fund's assets), (iii) enter into reverse
repurchase agreements, dollar roll transactions or economically similar
transactions to the extent its commitment under such transaction is covered by
the segregation of assets, and (iv) borrow money as a temporary measure for
extraordinary or emergency purposes provided that such borrowings do not exceed
5% of the gross assets of the Fund valued at the lesser of cost or market value,
and the Fund does not pledge, mortgage, or hypothecate assets valued at market
to an extent greater than 10% of the gross assets valued at cost of the Fund."
2
EXHIBIT 3
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO MAKING LOANS
CMG Strategic Equity Fund
CMG Small Cap Fund
CMG International Stock Fund
CMG Core Bond Fund
CMG Short Term Bond Fund
CMG Small Cap Growth Fund
CMG Small Cap Value Fund
CMG Enhanced S&P 500 Index Fund
CMG Large Cap Value Fund
CMG Large Cap Growth Fund
CMG Mid Cap Value Fund
CMG Mid Cap Growth Fund
CMG Ultra Short Term Bond Fund
The Fund may not "[m]ake loans, except that the Fund may (a) purchase debt
obligations which are consistent with its investment objectives and policies;
(b) enter into repurchase agreements; and (c) loan its portfolio securities, to
the fullest extent permitted under [Investment Company Act of 1940 (the "1940
Act")][the 1940 Act].
CMG Small/Mid Cap Fund
The Fund may not "[m]ake loans to other persons (except by purchase of
short-term commercial paper, repurchase agreements, bonds, debentures, or other
debt securities constituting part of an issue). For purposes of this
restriction, the making of a loan by the Fund will not include the purchase of a
portion of an issue of publicly distributed bonds, debentures, or other
securities, whether or not the purchase is made upon the original issuance of
the securities."
CMG High Yield Fund
The Fund may not "[m]ake loans to other persons (except by purchase of
short-term commercial paper, bonds, debentures, repurchase agreements or other
debt securities constituting part of an issue). The Fund my lend portfolio
securities to broker-dealers or other institutional investors if, as a result
thereof, the aggregate value of all securities loaned does not exceed 33 1/3% of
its total assets."
1
EXHIBIT 4
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO DIVERSIFICATION OF
INVESTMENTS
CMG International Stock Fund
The Fund may not "[p]urchase the security of any issuer (including any foreign
government issuer) if the purchase, at the time thereof, would cause more than
5% of the value of the total assets of the Fund at market value to be invested
in the securities of that issuer (other than obligations of the U.S. Government
and its agencies and instrumentalities), with reference to 75% of the assets of
the Fund."
CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG High Yield Fund
CMG Short Term Bond Fund
CMG Ultra Short Term Bond Fund
The Fund may not "[p]urchase the security of any issuer if the purchase, at the
time thereof, would cause more than 5% of the value of [its total assets][the
total assets of the Fund] at market value to be invested in the securities of
that issuer (other than obligations of the U.S. Government and its [agencies
and] instrumentalities), with reference to 75% of the assets of the Fund."
1
EXHIBIT 5
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN
COMMODITIES
CMG Core Bond Fund
The Fund may not "[b]uy or sell commodities or commodities contracts or oil, gas
or mineral programs, except that the Fund may purchase, sell or enter into
financial futures contracts and options on future contracts, foreign currency
forward contracts, foreign currency options, or any interest rate,
securities-related or foreign currency related hedging instrument, including
swap agreements and other derivative instruments, subject to compliance with any
applicable provisions of the federal securities or commodities laws."
CMG International Stock Fund
The Fund may not "[b]uy or sell commodities. However, the Fund may invest in
futures contracts or options on such contracts relating to broadly based stock
indices, subject to the restrictions set forth below in restriction 13, and my
enter into foreign currency transactions."
CMG High Yield Fund
The Fund may not "[i]nvest directly in oil, gas, or other mineral development or
exploration programs or leases; although, the Fund may own securities of
companies engaged in those businesses."
CMG High Yield Fund
CMG Ultra Short Term Bond Fund
The Fund may not "[b]uy or sell commodities or commodity futures contracts."
CMG Strategic Equity Fund
CMG Small Cap Growth Fund
CMG Enhanced S&P 500 Index Fund
CMG Large Cap Value Fund
CMG Large Cap Growth Fund
CMG Mid Cap Value Fund
CMG Mid Cap Growth Fund
CMG Small Cap Value Fund
1
The Fund may not "[b]uy or sell physical commodities or commodities contracts or
oil, gas or mineral programs, but the Fund may purchase, sell or enter into
financial futures contracts and options on financial futures contracts, foreign
currency forward contracts, foreign currency options, or any interest rate,
securities-related or foreign currency related hedging instrument, including
swap agreements and other derivative instruments, subject to compliance with the
federal securities and commodities laws."
CMG Small Cap Fund
CMG Small/Mid Cap Fund
The Fund may not "[b]uy or sell commodities. The Fund may, however, invest in
futures contracts relating to broadly based stock indices, subject to the
restrictions set forth below in restriction [15][13]."
2
EXHIBIT 6
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN REAL
ESTATE
CMG Strategic Equity Fund
CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG Small Cap Growth Fund
CMG Enhanced S&P 500 Index Fund
CMG Large Cap Value Fund
CMG Large Cap Growth Fund
CMG Mid Cap Value Fund
CMG Mid Cap Growth Fund
CMG Small Cap Value Fund
The Fund may not "[p]urchase or sell real estate unless acquired as the result
of direct ownership of securities or other instruments. This restriction shall
not prevent the Fund from investing in securities or other instruments backed by
real estate or securities of companies engaged in the real estate business,
including real estate investment trusts. This restriction shall not preclude the
Fund from buying securities backed by mortgages on real estate or securities of
companies engaged in these activities. This restriction shall not prevent the
Fund from investing in real estate operating companies and companies engaged in
other real estate related businesses."
CMG International Stock Fund
The Fund may not "buy or sell real estate. However, the Fund may purchase or
hold readily marketable securities issued by companies, such as real estate
investment trusts, which operate in real estate or interests therein."
CMG Core Bond Fund
CMG High Yield Fund
CMG Short Term Bond Fund
CMG Ultra Short Term Bond Fund
The Fund may not "buy or sell real estate. However, the Fund may purchase or
hold securities issued by companies, such as real estate investment trusts, that
deal in real estate or interests therein, and participation interests in pools
of real estate mortgage loans."
1
EXHIBIT 7
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO UNDERWRITING OF
SECURITIES
CMG Small/Mid Cap Fund
CMG International Stock Fund
CMG Short Term Bond Fund
The Fund may not "[u]nderwrite securities of other issuers, except that the Fund
may acquire portfolio securities in circumstances where, if the securities are
later publicly offered or sold by the Fund, it might be deemed to be an
underwriter for purposes of the the 1933 Act."
CMG Strategic Equity Fund
CMG Small Cap Growth Fund
CMG Enhanced S&P 500 Index Fund
CMG Large Cap Value Fund
CMG Large Cap Growth Fund
CMG Mid Cap Value Fund
CMG Mid Cap Growth Fund
CMG Small Cap Value Fund
The Fund may not "[u]nderwrite securities issued by others, except to the extent
that a Fund may be considered an underwriter within the meaning of the
Securities Act of 1933, as amended[(the "Securities Act")], when reselling
securities held in its own portfolio."
CMG Small Cap Fund
CMG Core Bond Fund
CMG High Yield Fund
CMG Ultra Short Term Bond Fund
The Fund may not "[u]nderwrite securities of other issuers, except the Fund may
acquire portfolio securities in circumstances where, if the securities are later
publicly offered or sold by the Fund, it might be deemed to be an underwriter
for purposes of the Securities Act of 1933, as amended [("1933 Act")]."
1
EXHIBIT 8
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO PURCHASING
SECURITIES ON MARGIN
CMG High Yield Fund
The Fund may not "[b]uy any securities or other property on margin, except for
short-term credits necessary for clearing transactions and except that margin
payments and other deposits in connection with transactions in options, futures,
and forward contracts shall not be deemed to constitute purchasing securities on
margin."
CMG Core Bond Fund
The Fund may not "[b]uy any securities or other property on margin except for
use of short-term credit necessary for clearance of purchases and sales of
portfolio securities, but the Fund may make margin deposits in connection with
transactions in options, futures, and options on futures or purchase or sell
puts or calls, or confirmations thereof."
CMG Short Term Bond Fund
CMG Ultra Short Term Bond Fund
The Fund may not "[b]uy any securities or other property on margin, or purchase
or sell puts or calls, or combinations thereof."
1
EXHIBIT 9
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTING FOR THE
PURPOSE OF EXERCISING CONTROL
CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG International Stock Fund
CMG High Yield Fund
The Fund may not "[p]urchase the securities of any issuer if the purchase, at
the time thereof, would cause more than 10% of the outstanding voting securities
of that issuer to be held in the Fund."
CMG Core Bond Fund
CMG High Yield Fund
CMG Short Term Bond Fund
CMG Ultra Short Term Bond Fund
The Fund may not "[i]nvest in companies to exercise control or management."
CMG Small Cap Fund
CMG Small/Mid Cap Fund
CMG International Stock Fund
The Fund may not "[i]nvest in companies for the purpose of exercising control or
management."
1
EXHIBIT 10
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO SHORT SALES
CMG High Yield Fund
CMG Short Term Bond Fund
CMG Ultra Short Term Bond Fund
The Fund may not "[e]ngage in short sales of securities except to the extent
that it owns other securities convertible into an equivalent amount of such
securities. These short sales may only be made to protect a profit in or to
attempt to minimize a loss with respect to convertible securities. In any event
no more than 10% of the Fund's net assets valued at market may, at any time, be
held as collateral for such sales."
CMG Core Bond Fund
The Fund may not "[e]ngage in short sales, except as permitted in this Statement
of Additional Information."
CMG Small Cap Fund
CMG Small/Mid Cap Fund
The Fund may not "[e]ngage in short sales of securities except to the extent
that such sales are "against the box"; that is, only to the extent the Fund owns
the securities sold short or owns other securities convertible into an
equivalent amount of securities sold short. Such transactions may only be made
to protect a profit in or to attempt to minimize a loss with respect to
convertible securities. In any event, no more than 10% of the value of the
Fund's net assets may, at the time, be held as collateral for such sales."
CMG International Stock Fund
The Fund may not "[e]ngage in short sales of securities except to the extent
that the Fund owns other securities convertible into an equivalent amount of
such securities. Such transactions may only be made to protect a profit in or to
attempt to minimize a loss with respect to convertible securities. In any event,
no more than 5% of the value of the Fund's net assets taken at market may, at
any time, be held as collateral for such sales."
1
EXHIBIT 11
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO CONCENTRATING
INVESTMENTS IN AN INDUSTRY
CMG International Stock Fund
The Fund may not "[c]oncentrate investments in any industry. However, the Fund
may (a) invest up to 25% of the value of its [total] assets in any one industry
and (b) invest for temporary defensive purposes up to 100% of the value of its
assets in securities issued or guaranteed by the United States or its agencies
or instrumentalities."
CMG Strategic Equity Fund
CMG Short Term Bond Fund
CMG Corporate Bond Fund
CMG Small Cap Growth Fund
CMG Enhanced S&P 500 Index Fund
CMG Large Cap Value Fund
CMG Large Cap Growth Fund
CMG Mid Cap Value Fund
CMG Mid Cap Growth Fund
CMG Ultra Short Term Bond Fund
The Fund may not "[c]oncentrate investments in any industry. [It may, however,]
[However, it may] (a) invest up to 25% of the value of its total assets in any
one industry, (b) invest up to 100% of the value of its total assets in
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, and (c) invest for temporary defensive purposes up to 80% of
the value of its total assets in certificates of deposit ("CDs") and bankers'
acceptances with maturities not greater than one year. CDs and bankers'
acceptances will be limited to domestic banks that have total assets in excess
of $1 billion and are subject to regulatory supervision by the U.S. Government
or state governments. Commitments to purchase securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities on a "when-issued"
basis may not exceed 20% of the total assets of the Fund. [Emphasis on
investments in securities of a particular industry will be shifted whenever the
advisor determines that such action is desirable for investment reasons. The
Trustees will periodically review these decisions of the advisor.]"
1
CMG Core Bond Fund
The Fund may not "[c]oncentrate more than 25% of the value of its total assets
in any one industry (the SEC takes the position that investments in government
securities of a single foreign country represent investments in a separate
industry for these purposes)."
CMG High Yield Fund
The Fund may not "[c]oncentrate its investments in any industry. However, it may
invest up to 25% of the value of its total assets in any one industry and more
than 25% of the value of its total assets in cash, cash equivalents, or
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.
CMG Small Cap Fund
CMG Small/Mid Cap Fund
The Fund may not "[c]oncentrate investments in any industry. The Fund, however,
may (a) invest up to 25% of the value of the total assets in any one industry
and (b) invest for temporary defensive purposes up to 100% of the value of the
total assets in securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities."
2
EXHIBIT 12
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO PURCHASING
SECURITIES OF COMPANIES LESS THAN THREE YEARS OLD
CMG Core Bond Fund
CMG Short Term Bond Fund
CMG Ultra Short Term Bond Fund
CMG High Yield Fund
The Fund may not "[i]nvest in the securities of any company if the purchase, at
the time thereof, would cause more than 5% of the value of the Fund's total
assets to be invested in companies which, including predecessors and parents,
have a record of less than three years continuous operation."
CMG Small Cap Fund
CMG Small/Mid Cap Fund
The Fund may not "[i]nvest its assets in the securities of any company if the
purchase, at the time thereof, would cause more than 10% of the value of the
Fund's total assets to be invested in companies which have a record of less than
three years of continuous operation including the operation of predecessors and
parents."
CMG International Stock Fund
The Fund may not "[i]nvest its funds in the securities of any company if the
purchase would cause more than 5% of the value of the Fund's total assets to be
invested in companies which have a record of less than three years of continuous
operation, including operation of predecessors and parents."
1
EXHIBIT 13
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO PURCHASING OR
HOLDING THE SECURITIES OF ANY COMPANY, IF SECURITIES OF SUCH COMPANY ARE OWNED
BY OFFICERS OR DIRECTORS OF THE FUND AND OF ITS ADVISOR
CMG High Yield Fund
The Fund may not "[p]urchase or retain securities of an issuer if those officers
or directors of the Fund or the Advisor who individually own 1/2 of 1 percent of
the outstanding securities of that issuer together own more than 5 percent of
such securities."
CMG Core Bond Fund
CMG Short Term Bond Fund
CMG Ultra Short Term Bond Fund
The Fund may not "[p]urchase or retain securities of an issuer, any of whose
officers or directors or security holders is an officer or director of the Fund
or of its advisor if, or so long as, the officers and directors of the Fund and
of its advisor together own beneficially more than 5 percent of any class of
securities of the issuer."
1
EXHIBIT 14
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO BUYING AND SELLING
PUTS AND CALLS
CMG Small Cap Fund
CMG Small/Mid Cap Fund
The Fund may not "[b]uy and sell puts and calls on stock index futures, or
financial futures or options on financial futures, unless such options are
written by other persons and the options or futures are offered through the
facilities of a national securities association or are listed on a national
securities or commodities exchange."
CMG International Stock Fund
The Fund may not "[b]uy and sell puts and calls on securities, stock index
futures, or options on stock index futures, or financial futures or options on
financial futures, unless such options are written by other persons and the
options or futures are offered through the facilities of a recognized securities
association or are listed on a recognized securities or commodities exchange or
similar entity."
1
EXHIBIT 15
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of , 2005, is by
and among (the "Acquired Trust"), an Oregon business trust, on behalf
of (the "Acquired Fund"); (the "Acquiring Trust"), a
Massachusetts business trust on behalf of (the "Acquiring Fund"); and
Columbia Management Advisors, Inc. ("Columbia").
This Agreement is intended to be and is adopted as a plan of reorganization and
liquidation within the meaning of Sections 361(a) and Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code"), and any
successor provision. The reorganization will consist of the transfer of all of
the assets of the Acquired Fund attributable to each class of its shares in
exchange for shares of the same class of shares of the Acquiring Fund (the
"Acquisition Shares"), and the assumption by the Acquiring Fund of the
liabilities of the Acquired Fund and the distribution of the Acquisition Shares
to the relevant shareholders of the Acquired Fund in liquidation of the Acquired
Fund, all upon the terms and conditions set forth in this Agreement.
In consideration of the premises and of the covenants and agreements hereinafter
set forth, the parties hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ACQUISITION SHARES AND LIQUIDATION OF ACQUIRED FUND.
1.1 Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein,
(a) The Acquired Fund will transfer and deliver to the Acquiring Fund,
and the Acquiring Fund will acquire, all the assets of the Acquired
Fund as set forth in paragraph 1.2;
(b) The Acquiring Fund will assume all of the Acquired Fund's
liabilities and obligations of any kind whatsoever, whether
absolute, accrued, contingent or otherwise, in existence on the
Closing Date (as defined in paragraph 1.2 hereof) (the
"Obligations"); and
(c) The Acquiring Fund will issue and deliver to the Acquired Fund in
exchange for the net assets attributable to each class of its shares
the number of Acquisition Shares of the
1
corresponding class (including fractional shares, if any) determined
by dividing the value of such net assets, computed in the manner and
as of the time and date set forth in paragraph 2.1, by the net asset
value of one Acquisition Share of the applicable class computed in
the manner and as of the time and date set forth in paragraph 2.2.
Such transactions shall take place at the closing provided for in
paragraph 3.1 (the "Closing").
1.2 The assets of the Acquired Fund to be acquired by the Acquiring Fund
shall consist of all cash, securities, dividends and interest
receivable, receivables for shares sold and all other assets which are
owned by the Acquired Fund on the closing date provided in paragraph
3.1 (the "Closing Date") and any deferred expenses, other than
unamortized organizational expenses, shown as an asset on the books of
the Acquired Fund on the Closing Date. The Acquiring Fund agrees that
all rights to indemnification and all limitations of liability
existing in favor of the Acquired Fund's current and former Trustees
and officers, acting in their capacities as such, under the Acquired
Fund's organizational documents as in effect as of the date of this
Agreement shall survive the reorganization as obligations of the
Acquiring Fund and shall continue in full force and effect, without
any amendment thereto, and shall constitute rights which may be
asserted against the Acquiring Fund, its successors or assigns.
1.3 As provided in paragraph 3.4, as soon after the Closing Date as is
conveniently practicable (the "Liquidation Date"), the Acquired Fund
will liquidate and distribute pro rata to shareholders of record of
each class of shares, determined as of the close of business on the
Valuation Date (as defined in paragraph 2.1), the Acquisition Shares
of the relevant class received by the Acquired Fund pursuant to
paragraph 1.1. Such liquidation and distribution will be accomplished
by the transfer of the Acquisition Shares then credited to the account
of the Acquired Fund on the books of the Acquiring Fund to open
accounts on the share records of the Acquiring Fund in the names of
the Acquired Fund shareholders and representing the respective pro
rata number of Acquisition Shares due such shareholders. The Acquiring
Fund shall not be obligated to issue certificates representing
Acquisition Shares in connection with such exchange.
1.4 With respect to Acquisition Shares distributable pursuant to paragraph
1.3 to an Acquired Fund shareholder holding a
2
certificate or certificates for shares of the Acquired Fund, if any,
on the Valuation Date, the Acquired Fund will not permit such
shareholder to receive Acquisition Share certificates therefor,
exchange such Acquisition Shares for shares of other investment
companies, effect an account transfer of such Acquisition Shares, or
pledge or redeem such Acquisition Shares until such Acquired Fund
shareholder has surrendered all his or her outstanding certificates
for Acquired Fund shares or, in the event of lost certificates, posted
adequate bond.
1.5 If applicable, as soon as practicable after the Closing Date, the
Acquired Trust shall file an application pursuant to Section 8(f) of
the Investment Company Act of 1940, as amended (the "1940 Act"), for
an order declaring that it has ceased to be an investment company and,
upon receipt of such order, shall make all filings and take all other
steps as shall be necessary and proper to effect its complete
termination under Oregon law. After the Closing Date, the Acquired
Fund shall not conduct any business except in connection with its
liquidation, deregistration (if applicable), and termination.
2. VALUATION.
2.1 For the purpose of paragraph 1, the value of the Acquired Fund's
assets to be acquired by the Acquiring Fund hereunder shall be the
value of such assets computed as of the close of regular trading on
the New York Stock Exchange on the business day next preceding the
Closing (such time and date being herein called the "Valuation Date")
using the valuation procedures set forth in the organizational
documents of the Acquiring Fund and the then current prospectus or
prospectuses or statement or statements of additional information of
the Acquiring Fund (collectively, as amended or supplemented from time
to time, the "Acquiring Fund Prospectus") for determining net asset
value, [after deduction for the expenses of the reorganization
contemplated hereby to be paid by the Acquired Fund pursuant to
paragraph 9.2, and shall be certified by the Acquired Fund.]
2.2 For the purpose of paragraph 2.1, the net asset value of an
Acquisition Share of each class shall be the net asset value per share
computed as of the close of regular trading on the New York Stock
Exchange on the Valuation Date, using the valuation procedures set
forth in the organizational documents of the Acquiring Fund and the
Acquiring Fund Prospectus.
3
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be on , 2005, or on such other date
as the parties may agree. The Closing shall be held at p.m. at
Columbia's offices, One Financial Center, Boston, Massachusetts 02111,
or at such other time and/or place as the parties may agree.
3.2 The portfolio securities of the Acquired Fund shall be made available
by the Acquired Fund to the custodian for the Acquiring Fund (the
"Custodian"), for examination no later than five business days
preceding the Valuation Date. On the Closing Date, such portfolio
securities and all the Acquired Fund's cash shall be delivered by the
Acquired Fund to the Custodian for the account of the Acquiring Fund,
such portfolio securities to be duly endorsed in proper form for
transfer in such manner and condition as to constitute good delivery
thereof in accordance with the custom of brokers or, in the case of
portfolio securities held in the U.S. Treasury Department's book-entry
system or by the Depository Trust Company, Participants Trust Company
or other third party depositories, by transfer to the account of the
Custodian in accordance with Rule 17f-4, Rule 17f-5 or Rule 17f-7, as
the case may be, under the 1940 Act and accompanied by all necessary
federal and state stock transfer stamps or a check for the appropriate
purchase price thereof. The cash delivered shall be in the form of
currency or certified or official bank checks, payable to the order of
"[Name of Custodian], custodian for [Name of Acquiring Fund]."
3.3 In the event that on the Valuation Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be
restricted, or (b) trading or the reporting of trading on said
Exchange or elsewhere shall be disrupted so that accurate appraisal of
the value of the net assets of the Acquired Fund or the Acquiring Fund
is impracticable, the Closing Date shall be postponed until the first
business day after the day when trading shall have been fully resumed
and reporting shall have been restored; provided that if trading shall
not be fully resumed and reporting restored within three business days
of the Valuation Date, this Agreement may be terminated by either the
Acquired Fund or the Acquiring Fund upon the giving of written notice
to the other party.
3.4 At the Closing, the Acquired Fund or its transfer agent shall deliver
to the Acquiring Fund or its designated agent a list of the
4
names and addresses of the Acquired Fund shareholders and the number
of outstanding shares of each class of the Acquired Fund owned by each
Acquired Fund shareholder, all as of the close of business on the
Valuation Date, certified by any Vice President, Secretary or
Assistant Secretary of the Acquired Fund. The Trust will provide to
the Acquired Fund evidence satisfactory to the Acquired Fund that the
Acquisition Shares issuable pursuant to paragraph 1.1 have been
credited to the Acquired Fund's account on the books of the Acquiring
Fund. On the Liquidation Date, the Acquiring Fund will provide to the
Acquired Fund evidence satisfactory to the Acquired Fund that such
Acquisition Shares have been credited pro rata to open accounts in the
names of the Acquired Fund shareholders as provided in paragraph 1.3.
3.5 At the Closing, each party shall deliver to the other such bills of
sale, instruments of assumption of liabilities, checks, assignments,
stock certificates, receipts or other documents as such other party or
its counsel may reasonably request in connection with the transfer of
assets, assumption of liabilities and liquidation contemplated by
paragraph 1.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Acquired Fund represents and warrants the following to the
Acquiring Fund as of the date hereof and agrees to confirm the
continuing accuracy and completeness in all material respects of the
following on the Closing Date:
(a) The Acquired Fund is a series of the Acquired Trust that is duly
organized and validly existing under the laws of the State of
Oregon;
(b) The Acquired Trust is a duly registered investment company
classified as a management company of the open-end type and its
registration with the Securities and Exchange Commission as an
investment company under the 1940 Act is in full force and effect,
and the Acquired Fund is a separate series thereof duly designated
in accordance with the applicable provisions of the Declaration of
Trust of the Acquired Trust and the 1940 Act;
(c) The Acquired Fund is not in violation in any material respect of any
provision of its organizational documents or of any agreement,
indenture, instrument, contract, lease or other undertaking to which
the Acquired Fund is a party or by which the Acquired Fund is bound,
and the execution,
5
delivery and performance of this Agreement will not result in any
such violation;
(d) The Acquired Fund has no material contracts or other commitments
(other than this Agreement and such other contracts as may be
entered into in the ordinary course of its business) which if
terminated may result in material liability to the Acquired Fund or
under which (whether or not terminated) any material payments for
periods subsequent to the Closing Date will be due from the Acquired
Fund;
(e) To the knowledge of the Acquired Fund, except as has been disclosed
in writing to the Acquiring Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental
body is presently pending or threatened as to the Acquired Fund, any
of its properties or assets, or any person whom the Acquired Fund
may be obligated to indemnify in connection with such litigation,
proceeding or investigation, and is not a party to or subject to the
provisions of any order, decree or judgment of any court or
governmental body, which materially and adversely affects its
business or its ability to consummate the transactions contemplated
hereby;
(f) The statement of assets and liabilities, the statement of
operations, the statement of changes in net assets, and the schedule
of investments of the Acquired Fund, as of and for its most recently
completed fiscal year, audited by PricewaterhouseCoopers LLP (and,
if applicable, an unaudited statement of assets and liabilities,
statement of operations, statement of changes in net assets and
schedule of investments for any subsequent semiannual period
following the most recently completed fiscal year), copies of which
have been furnished to the Acquiring Fund, fairly reflect the
financial condition and results of operations of the Acquired Fund
as of such dates and for the periods then ended in accordance with
generally accepted accounting principles consistently applied, and
the Acquired Fund has no known liabilities of a material amount,
contingent or otherwise, other than those shown on the statements of
assets referred to above or those incurred in the ordinary course of
its business since the date of the Acquired Fund's most recently
completed fiscal year;
6
(g) Since the date of the Acquired Fund's most recently completed fiscal
year, there has not been any material adverse change in the Acquired
Fund's financial condition, assets, liabilities or business (other
than changes occurring in the ordinary course of business), or any
incurrence by the Acquired Fund of indebtedness, except as disclosed
in writing to the Acquiring Fund. For the purposes of this
subparagraph (g), distributions of net investment income and net
realized capital gains, changes in portfolio securities, changes in
the market value of portfolio securities or net redemptions shall be
deemed to be in the ordinary course of business;
(h) As of the Closing Date, all federal and other tax returns and
reports of the Acquired Fund required by law to have been filed by
such date (giving effect to extensions) shall have been filed, and
all federal and other taxes shown to be due on such returns and
reports or on any assessment received shall have been paid, or
provisions shall have been made for the payment thereof. All of the
Acquired Fund's tax liabilities will have been adequately provided
for on its books. To the best of the Acquired Fund's knowledge, it
will not have had any tax deficiency or liability asserted against
it or question with respect thereto raised, and it will not be under
audit by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid;
(i) The Acquired Fund meets the requirements of subchapter M of the Code
for treatment as a "regulated investment company" within the meaning
of Section 851 of the Code, and will continue meeting such
requirements at all times through the Closing Date. The Acquired
Fund has not at any time since its inception been liable for nor is
now liable for any material income or excise tax pursuant to Section
852 or 4982 of the Code. The Acquired Fund has duly filed all
federal, state, local and foreign tax returns which are required to
have been filed, and all taxes of the Acquired Fund which are due
and payable have been paid except for amounts that alone or in the
aggregate would not reasonably be expected to have a material
adverse effect. The Acquired Fund is in compliance in all material
respects with applicable regulations of the Internal Revenue Service
pertaining to the reporting of dividends and other distributions on
and redemptions of its capital stock and to withholding in respect
7
of dividends and other distributions to shareholders, and is not
liable for any material penalties which could be imposed thereunder;
(j) Exhibit A attached hereto sets forth the authorized capital of the
Acquired Fund. All issued and outstanding shares of the Acquired
Fund are, and at the Closing Date will be, duly and validly issued
and outstanding, fully paid and non-assessable (except as set forth
in the Acquired Fund's then current prospectus or prospectuses or
statement or statements of additional information (collectively, as
amended or supplemented from time to time, the "Acquired Fund
Prospectus")) by the Acquired Fund and will have been issued in
compliance with all applicable registration or qualification
requirements of federal and state securities laws. Except as set
forth on Exhibit A attached hereto, no options, warrants or other
rights to subscribe for or purchase, or securities convertible into,
any shares of common stock of the Acquired Fund are outstanding and
none will be outstanding on the Closing Date;
(k) The Acquired Fund's investment operations from inception to the date
hereof have been in compliance in all material respects with the
investment policies and investment restrictions set forth in the
Acquired Fund Prospectus, except as previously disclosed in writing
to the Acquiring Fund;
(l) The execution, delivery and performance of this Agreement has been
duly authorized by the Trustees of the Acquired Fund, and, upon
approval thereof by the required majority of the shareholders of the
Acquired Fund, this Agreement will constitute the valid and binding
obligation of the Acquired Fund enforceable in accordance with its
terms except as the same may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and other equitable principles;
(m) The Acquisition Shares to be issued to the Acquired Fund pursuant to
paragraph 1 will not be acquired for the purpose of making any
distribution thereof other than to the Acquired Fund shareholders as
provided in paragraph 1.3;
(n) The information provided by the Acquired Fund for use in the Proxy
Statement referred to in paragraph 5.3 shall be
8
accurate and complete in all material respects and shall comply with
federal securities and other laws and regulations as applicable
thereto;
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquired Fund of the transactions contemplated by this Agreement,
except such as may be required under the Securities Act of 1933, as
amended (the "1933 Act"), the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act and state securities or "Blue
Sky" laws (which terms used herein shall include the laws of the
District of Columbia and of Puerto Rico);
(p) At the Closing Date, the Acquired Fund will have good and marketable
title to its assets to be transferred to the Acquiring Fund pursuant
to paragraph 1.1 and will have full right, power and authority to
sell, assign, transfer and deliver the Investments (as defined
below) and any other assets and liabilities of the Acquired Fund to
be transferred to the Acquiring Fund pursuant to this Agreement. At
the Closing Date, subject only to the delivery of the Investments
and any such other assets and liabilities and payment therefor as
contemplated by this Agreement, the Acquiring Fund will acquire good
and marketable title thereto and will acquire the Investments and
any such other assets and liabilities subject to no encumbrances,
liens or security interests whatsoever and without any restrictions
upon the transfer thereof, except as previously disclosed to the
Acquiring Fund. As used in this Agreement, the term "Investments"
shall mean the Acquired Fund's investments shown on the schedule of
its investments as of the date of its most recently completed fiscal
year, referred to in subparagraph 4.1(f) hereof, as supplemented
with such changes in the portfolio as the Acquired Fund shall make,
and changes resulting from stock dividends, stock split-ups, mergers
and similar corporate actions through the Closing Date;
(q) Reserved;
(r) No registration of any of the Investments would be required if they
were, as of the time of such transfer, the subject of a public
distribution by either of the Acquiring Fund or the Acquired Fund,
except as previously disclosed by the Acquired Fund to the Acquiring
Fund.
9
4.2 The Acquiring Fund represents and warrants the following to the
Acquired Fund as of the date hereof and agrees to confirm the
continuing accuracy and completeness in all material respects of the
following on the Closing Date:
(a) The Acquiring Fund is a series of the Acquiring Trust that is duly
organized, validly existing and in good standing under the laws of
The Commonwealth of Massachusetts;
(b) The Acquiring Trust is a duly registered investment company
classified as a management company of the open-end type and its
registration with the Securities and Exchange Commission as an
investment company under the 1940 Act is in full force and effect,
and the Acquiring Fund is a separate series thereof duly designated
in accordance with the applicable provisions of the Declaration of
Trust of the Acquiring Trust and the 1940 Act;
(c) At the Closing Date, the Acquiring Fund Prospectus will conform in
all material respects to the applicable requirements of the 1933 Act
and the rules and regulations of the Securities and Exchange
Commission thereunder and will not include any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and
there will be no material contracts to which the Acquiring Fund is a
party that are not referred to in such Prospectus or in the
registration statement of which it is a part;
(d) At the Closing Date, the Acquiring Fund will have good and
marketable title to its assets;
(e) The Acquiring Fund is not in violation in any material respect of
any provisions of its organizational documents or of any agreement,
indenture, instrument, contract, lease or other undertaking to which
the Acquiring Fund is a party or by which the Acquiring Fund is
bound, and the execution, delivery and performance of this Agreement
will not result in any such violation;
(f) To the knowledge of such counsel, except as has been disclosed in
writing to the Acquired Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental
body is presently pending or
10
threatened as to the Acquiring Fund, any of its properties or
assets, or any person whom the Acquiring Fund may be obligated to
indemnify in connection with such litigation, proceeding or
investigation, and the Acquiring Fund is not a party to or subject
to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its
business or its ability to consummate the transactions contemplated
hereby;
(g) Reserved;
(h) Reserved;
(i) As of the Closing Date, the Acquiring Fund shall have not been
required by law to have filed any federal or other tax returns or
reports. All of the Acquiring Fund's tax liabilities, if any, will
have been adequately provided for on its books. To the best of the
Acquiring Fund's knowledge, it will not have not have had any tax
deficiency or liability asserted against it or question with respect
thereto raised, and it will not be under audit by the Internal
Revenue Service or by any state or local tax authority for taxes in
excess of those already paid;
(j) The Acquiring Fund was established by the Trustees of the Acquiring
Trust in order to effect the transactions described in this
Agreement. It has not yet filed its first federal income tax return
and, thus, has not yet elected to be treated as a "regulated
investment company" for federal income tax purposes. However, upon
filing its first income tax return at the completion of its first
taxable year, the Acquiring Fund will elect to be a "regulated
investment company" and until such time will take all steps
necessary to ensure that it qualifies for taxation as a "regulated
investment company" under Sections 851 and 852 of the Code.
(k) The Acquiring Fund has no shares of beneficial interest issued and
outstanding;
(l) Reserved;
(m) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Acquiring
Fund, and this Agreement constitutes the valid and binding
obligation of the Acquiring Fund enforceable in accordance with its
terms, except as the same
11
may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally and other equitable principles;
(n) The Acquisition Shares to be issued and delivered to the Acquired
Fund pursuant to the terms of this Agreement will at the Closing
Date have been duly authorized and, when so issued and delivered,
will be duly and validly issued shares in the Acquiring Fund, and
will be fully paid and non-assessable (except as set forth in the
Acquiring Fund Prospectus) by the Acquiring Fund, and no shareholder
of the Acquiring Fund will have any preemptive right of subscription
or purchase in respect thereof;
(o) The information to be furnished by the Acquiring Fund for use in the
Proxy Statement referred to in paragraph 5.3 shall be accurate and
complete in all material respects and shall comply with federal
securities and other laws and regulations applicable thereto; and
(p) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the
Acquiring Fund of the transactions contemplated by this Agreement,
except such as may be required under the 1933 Act, the 1934 Act, the
1940 Act and state securities or "Blue Sky" laws (which term as used
herein shall include the laws of the District of Columbia and of
Puerto Rico).
5. COVENANTS OF THE ACQUIRED FUND AND THE ACQUIRING FUND.
The Acquired Fund and the Acquiring Fund each hereby covenants and agrees with
the other as follows:
5.1 Each of the Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the
Closing Date, it being understood that such ordinary course of
business will include regular and customary periodic dividends and
distributions.
5.2 The Acquired Fund will call a meeting of its shareholders to be held
prior to the Closing Date to consider and act upon this Agreement and
take all other reasonable action necessary to obtain the required
shareholder approval of the transactions contemplated hereby.
5.3 In connection with the Acquired Fund shareholders' meeting referred to
in paragraph 5.2, the Acquired Fund will prepare a
12
Proxy Statement for such meeting, to be distributed to the Acquired
Fund shareholders pursuant hereto, all in compliance with the
applicable requirements of the 1934 Act and the 1940 Act.
5.4 The information to be furnished by the Acquired Fund and the Acquiring
Fund for use in the Proxy Statement, as referred to in paragraph 5.3,
shall be accurate and complete in all material respects and shall
comply with federal securities and other laws and regulations
thereunder applicable thereto.
5.5 The Acquiring Fund will advise the Acquired Fund promptly if at any
time prior to the Closing Date the assets of the Acquired Fund include
any securities which the Acquiring Fund is not permitted to acquire.
5.6 Subject to the provisions of this Agreement, the Acquired Fund and the
Acquiring Fund will each take, or cause to be taken, all action, and
do or cause to be done, all things reasonably necessary, proper or
advisable to cause the conditions to the other party's obligations to
consummate the transactions contemplated hereby to be met or fulfilled
and otherwise to consummate and make effective such transactions.
5.7 The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act
and such of the state securities or "Blue Sky" laws as it may deem
appropriate in order to continue its operations after the Closing
Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the transactions provided for
herein shall be subject, at its election, to the performance by the Acquiring
Fund of all the obligations to be performed by them hereunder on or before the
Closing Date and, in addition thereto, to the following further conditions:
6.1 The Acquiring Fund shall have delivered to the Acquired Fund, a
certificate executed in its name by its President or a Vice President
and its Treasurer or an Assistant Treasurer, in form and substance
satisfactory to the Acquired Fund and dated as of the Closing Date, to
the effect that the representations and warranties of the Acquiring
Fund made in this Agreement are true and correct at and as of the
Closing Date, except as they may be
13
affected by the transactions contemplated by this Agreement, and that
the Acquiring Fund has complied with all the covenants and agreements
and satisfied all of the conditions on their parts to be performed or
satisfied under this Agreement at or prior to the Closing Date.
6.2 The Acquired Fund shall have received a favorable opinion of Ropes &
Gray LLP dated the Closing Date and, in a form satisfactory to the
Acquiring Fund, to the following effect:
(a) The Acquiring Trust is duly organized and validly existing under the
laws of The Commonwealth of Massachusetts and has power to own all
of its properties and assets and to carry on its business as
presently conducted;
(b) This Agreement has been duly authorized, executed and delivered on
behalf of the Acquiring Fund and, assuming the Proxy Statement
referred to in paragraph 5.3 complies with applicable federal
securities laws and assuming the due authorization, execution and
delivery of this Agreement by the Acquired Fund is the valid and
binding obligation of the Acquiring Fund enforceable against the
Acquiring Fund in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally and other equitable principles;
(c) The Acquiring Fund has the power to assume the liabilities to be
assumed by it hereunder and upon consummation of the transactions
contemplated hereby the Acquiring Fund will have duly assumed such
liabilities;
(d) The Acquisition Shares to be issued for transfer to the Acquired
Fund shareholders as provided by this Agreement are duly authorized
and upon such transfer and delivery will be validly issued and
outstanding and fully paid and nonassessable shares in the Acquiring
Fund, and no shareholder of the Acquiring Fund has any preemptive
right of subscription or purchase in respect thereof;
(e) The execution and delivery of this Agreement did not, and the
performance by the Acquiring Fund of its obligations hereunder will
not, violate the Acquiring Fund's organizational documents, or any
provision of any agreement known to such counsel to which the
Acquiring Fund is a party or by which it is bound or, to the
knowledge of such
14
counsel, result in the acceleration of any obligation or the
imposition of any penalty under any agreement, judgment, or decree
to which the Acquiring Fund is a party or by which it is bound;
(f) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by the Acquiring Fund of the
transactions contemplated by this Agreement except such as may be
required under state securities or "Blue Sky" laws or such as have
been obtained;
(g) Such counsel does not know of any legal or governmental proceedings
relating to the Acquiring Fund existing on or before the date of
mailing of the Proxy Statement referred to in paragraph 5.3 or the
Closing Date required to be described in the Proxy Statement which
are not described as required;
(h) The Acquiring Trust is registered with the Securities and Exchange
Commission as an investment company under the 1940 Act; and
(i) To the knowledge of such counsel, except as has been disclosed in
writing to the Acquired Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental
body is presently pending or threatened as to the Acquiring Fund or
any of its properties or assets or any person whom the Acquired Fund
may be obligated to indemnify in connection with such litigation,
proceeding or investigation, and the Acquiring Fund is not a party
to or subject to the provisions of any order, decree or judgment of
any court or governmental body, which materially and adversely
affects its business or its ability to consummate the transaction
contemplated hereby.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the transactions provided for
herein shall be subject, at its election, to the performance by the Acquired
Fund of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, to the following further conditions:
7.1 The Acquired Fund shall have delivered to the Acquiring Fund a
certificate executed in its name by its President or a Vice
15
President and its Treasurer or an Assistant Treasurer, in form and
substance satisfactory to the Acquiring Fund and dated as of the
Closing Date, to the effect that the representations and warranties of
the Acquired Fund made in this Agreement are true and correct at and
as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and that the Acquired
Fund have complied with all the covenants and agreements and satisfied
all of the conditions on their parts to be performed or satisfied
under this Agreement at or prior to the Closing Date;
7.2 The Acquiring Fund shall have received a favorable opinion of Stoel
Rives LLP, special Oregon counsel, dated the Closing Date and in a
form satisfactory to the Acquiring Fund, to the following effect:
(a) The Acquired Trust is duly organized and validly existing under the
laws of the State of Oregon and has power to own all of its
properties and assets and to carry on its business as presently
conducted;
(b) This Agreement has been duly authorized, executed and delivered on
behalf of the Acquired Fund and, assuming the Proxy Statement
referred to in paragraph 5.3 comply with applicable federal
securities laws and, assuming the due authorization, execution and
delivery of this Agreement by the Acquiring Fund, is the valid and
binding obligation of the Acquired Fund enforceable against the
Acquired Fund in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally and other equitable principles;
(c) The Acquired Fund has the power to sell, assign, transfer and
deliver the assets to be transferred by it hereunder, and, upon
consummation of the transactions contemplated hereby, the Acquired
Fund will have duly transferred such assets to the Acquiring Fund;
(d) The execution and delivery of this Agreement did not, and the
performance by the Acquired Fund of its respective obligations
hereunder will not, violate the Acquired Fund's organizational
documents or any provision of any agreement known to such counsel to
which the Acquired Fund is a party or by which it is bound or, to
the knowledge of such counsel,
16
result in the acceleration of any obligation or the imposition of
any penalty under any agreement, judgment, or decree to which the
Acquired Fund is a party or by which it is bound;
(e) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by the Acquired Fund of the
transactions contemplated by this Agreement, except such as have
been obtained;
(f) Such counsel does not know of any legal or governmental proceedings
relating to the Acquired Fund existing on or before the date of
mailing of the Proxy Statement referred to in paragraph 5.3 or the
Closing Date required to be described in the Proxy Statement which
are not described as required;
(g) The Acquired Trust is registered with the Securities and Exchange
Commission as an investment company under the 1940 Act; and
(h) To the knowledge of such counsel, except as has been disclosed in
writing to the Acquiring Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental
body is presently pending or threatened as to the Acquired Fund or
any of its properties or assets or any person whom the Acquiring
Fund may be obligated to indemnify in connection with such
litigation, proceeding or investigation, and the Acquired Fund is
not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body, which materially and
adversely affects its business or its ability to consummate the
transaction contemplated thereby.
7.3 Reserved.
7.4 The Acquired Fund shall have furnished to the Acquiring Fund a
certificate, signed by the President (or any Vice President) and the
Treasurer of the Acquired Fund, as to the adjusted tax basis in the
hands of the Acquired Fund of the securities delivered to the
Acquiring Fund pursuant to this Agreement.
7.5 The custodian of the Acquired Fund shall have delivered to the
Acquiring Fund a certificate identifying all of the assets of the
Acquired Fund held by such custodian as of the Valuation Date.
17
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH OF THE ACQUIRING FUND
AND THE ACQUIRED FUND.
The respective obligations of the Acquired Fund and the Acquiring Fund hereunder
are each subject to the further conditions that on or before the Closing Date:
8.1 This Agreement and the transactions contemplated herein shall have
received all necessary shareholder approvals at the meeting of
shareholders of the Acquired Fund referred to in paragraph 5.2.
8.2 On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought
to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions contemplated
hereby.
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including
those of the Securities and Exchange Commission and of state "Blue
Sky" and securities authorities) deemed necessary by the Acquired Fund
or the Acquiring Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order or
permit would not involve a risk of a material adverse effect on the
assets or properties of the Acquired Fund or the Acquiring Fund.
8.4 Reserved.
8.5 The Acquired Fund shall have received a favorable opinion of Ropes &
Gray LLP satisfactory to the Acquired Fund, and the Acquiring Fund
shall have received a favorable opinion of Ropes & Gray LLP
satisfactory to the Acquiring Fund, each substantially to the effect
that, for federal income tax purposes:
(a) The transactions contemplated by this Agreement will constitute a
reorganization within the meaning of Section 368(a) of the Code, and
the Acquired Fund and the Acquiring Fund will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code;
(b) No gain or loss will be recognized by the Acquired Fund (i) upon the
transfer of its assets to the Acquiring Fund in exchange for the
Acquisition Shares and the assumption by the Acquiring Fund of the
liabilities of the Acquired Fund or (ii) upon the distribution of
the Acquisition Shares by the
18
Acquired Fund to its shareholders in liquidation, as contemplated in
paragraph 1 hereof;
(c) No gain or loss will be recognized by the Acquiring Fund upon
receipt of the assets of the Acquired Fund in exchange for the
assumption of liabilities and obligations and issuance of the
Acquisition Shares as contemplated in paragraph 1 hereof;
(d) The tax basis of the assets of the Acquired Fund acquired by the
Acquiring Fund will be the same as the tax basis of such assets in
the hands of the Acquired Fund immediately prior to the transfer,
and the holding period of the assets of the Acquired Fund in the
hands of the Acquiring Fund will include the period during which
those assets were held by the Acquired Fund;
(e) The holding periods of the assets of the Acquired Fund in the hands
of the Acquiring Fund will include the periods during which such
assets were held by the Acquired Fund;
(f) No gain or loss will be recognized by the Acquired Fund shareholders
upon the exchange of all of their Acquired Fund shares for the
Acquisition Shares;
(g) The aggregate tax basis of the Acquisition Shares to be received by
each shareholder of the Acquired Fund will be the same as the
aggregate tax basis of the Acquired Fund shares exchanged therefor;
(h) An Acquired Fund shareholder's holding period for the Acquisition
Shares to be received will include the period during which the
Acquired Fund shares exchanged therefor were held, provided that the
shareholder held the Acquired Fund shares as a capital asset on the
date of the exchange; and
(i) The Acquiring Fund will succeed to and take into account the items
of the Acquired Fund described in Section 381(c) of the Code,
subject to the conditions and limitations specified in Sections 381,
382, 383 and 384 of the Code and the regulations thereunder.
The opinion will be based on certain factual certifications made by
officers of the Acquired Fund and the Acquiring Fund and will also be
based on customary assumptions. The opinion is not a
19
guarantee that the tax consequences of the relevant Acquisition
will be as described above.
Ropes & Gray LLP will express no view with respect to the effect of
the Acquisition on any transferred asset as to which any unrealized
gain or loss is required to be recognized at the end of a taxable year
(or on the termination or transfer thereof) under federal income tax
principles.
8.6 At any time prior to the Closing, any of the foregoing conditions of
this Agreement may be waived jointly by the Board of each of the
Acquired Fund and the Acquiring Fund, if, in their judgment, such
waiver will not have a material adverse effect on the interests of the
shareholders of the Acquired Fund or the Acquiring Fund.
9. BROKERAGE FEES AND EXPENSES.
9.1 The Acquired Fund and the Acquiring Fund each represents and warrants
to the other that there are no brokers or finders entitled to receive
any payments in connection with the transactions provided for herein.
9.2 All fees and expenses incurred in connection with the transactions
contemplated herein shall be borne by Columbia.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES.
10.1 The Acquired Fund and the Acquiring Fund agree that neither party has
made any representation, warranty or covenant not set forth herein and
that this Agreement constitutes the entire agreement between the
parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in
connection herewith shall not survive the consummation of the
transactions contemplated hereunder except paragraphs 1.1, 1.3, 1.5,
5.4, 9, 10, 13 and 14.
11. TERMINATION.
11.1 This Agreement may be terminated by the mutual agreement of the
Acquired Fund and the Acquiring Fund. In addition, either the Acquired
Fund or the Acquiring Fund may at its option terminate this Agreement
at or prior to the Closing Date because:
(a) Of a material breach by the other of any representation, warranty,
covenant or agreement contained herein to be performed by the other
party at or prior to the Closing Date;
20
(b) A condition herein expressed to be precedent to the obligations of
the terminating party has not been met and it reasonably appears
that it will not or cannot be met; or
(c) Any governmental authority of competent jurisdiction shall have
issued any judgment, injunction, order, ruling or decree or taken
any other action restraining, enjoining or otherwise prohibiting
this Agreement or the consummation of any of the transactions
contemplated herein and such judgment, injunction, order, ruling,
decree or other action becomes final and non-appealable; provided
that the party seeking to terminate this Agreement pursuant to this
Section 11.1(c) shall have used its reasonable best efforts to have
such judgment, injunction, order, ruling, decree or other action
lifted, vacated or denied.
If the transactions contemplated by this Agreement have not been
substantially completed by December 31, 2007, this Agreement shall
automatically terminate on that date unless a later date is agreed to by
both the Acquired Fund and the Acquiring Fund.
11.2 If for any reason the transactions contemplated by this Agreement are
not consummated, no party shall be liable to any other party for any
damages resulting therefrom, including without limitation
consequential damages.
12. AMENDMENTS.
This Agreement may be amended, modified or supplemented in such manner as may be
mutually agreed upon in writing by the authorized officers of the Acquired Fund
and the Acquiring Fund; provided, however, that following the shareholders'
meeting called by the Acquired Fund pursuant to paragraph 5.2 no such amendment
may have the effect of changing the provisions for determining the number of the
Acquisition Shares to be issued to shareholders of the Acquired Fund under this
Agreement to the detriment of such shareholders without their further approval.
13. NOTICES.
Any notice, report, statement or demand required or permitted by any provisions
of this Agreement shall be in writing and shall be given by prepaid telegraph,
telecopy or certified mail addressed to the Acquired Fund or the Acquiring Fund,
One Financial Center, Boston, Massachusetts 02111, Attention: Secretary.
21
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; NON-RECOURSE.
14.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the domestic substantive laws of The Commonwealth of Massachusetts,
without giving effect to any choice or conflicts of law rule or
provision that would result in the application of the domestic
substantive laws of any other jurisdiction.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment
or transfer hereof or of any rights or obligations hereunder shall be
made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed
to confer upon or give any person, firm or corporation, other than the
parties hereto and their respective successors and assigns, any rights
or remedies under or by reason of this Agreement.
14.5 A copy of the Declaration of Trust of the Acquiring Trust is on file
with the Secretary of The Commonwealth of Massachusetts, and a copy of
the Restated Declaration of Trust of the Acquired Trust is on file
with the Secretary of State of the State of Oregon, and notice is
hereby given that no trustee, officer, agent or employee of such fund
shall have any personal liability under this Agreement, and that this
Agreement is binding only upon the assets and properties of the
Acquired Fund and the Acquiring Fund.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK.]
22
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as a sealed instrument by its President, a Vice President or Treasurer
and its corporate seal to be affixed thereto and attested by its Secretary or
Assistant Secretary.
[NAME OF ACQUIRED FUND]
By:
-------------------------------------
Name:
Title:
[NAME OF ACQUIRING FUND]
By:
-------------------------------------
Name:
Title:
Solely for purposes of Paragraph 9.2 of
the Agreement
COLUMBIA MANAGEMENT ADVISORS, INC.
By:
-------------------------------------
Name:
Title:
23
EXHIBIT A
<Table>
<Caption>
ACQUIRED FUND AUTHORIZED CAPITAL
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
</Table>
* Converts to Class A shares after the expiration of a period of time.
A-1
[COLUMBIA MANAGEMENT LOGO] CMG FUND TRUST PROXY
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 16, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
hereby appoints Christopher L. Wilson, J. Kevin Connaughton, Michael G. Clarke
and Vincent P. Pietropaolo, and each of them, with full power of substitution to
each, to vote all shares at the Special Meeting of Shareholders to be held at
One Financial Center, Boston, Massachusetts, on September 16, 2005 at 10:00 a.m.
Eastern time and at any and all adjournments, as specified herein and in
accordance with their best judgment, on any other business that may properly
come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BELOW
AND, ABSENT DIRECTION, WILL BE VOTED FOR THE PROPOSAL LISTED BELOW. THIS PROXY
WILL BE VOTED IN ACCORDANCE WITH THE HOLDER'S BEST JUDGMENT AS TO ANY OTHER
MATTER.
VOTE VIA THE INTERNET: HTTPS://VOTE.PROXY-DIRECT.COM
VOTE VIA THE TELEPHONE: 1-866-837-1888
----------------------------------------------------
----------------------------------------------------
NOTE: Please sign exactly as name or names appear
hereon. Joint owners should each sign personally.
When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in corporate name by
President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
----------------------------------------------------
Shareholder sign here
----------------------------------------------------
Co-owner sign here
----------------------------------------------------
Date CMG_15452
FUNDS FUNDS FUNDS
- ----- ----- -----
Fundname Drop In 1 Fundname Drop In 2 Fundname Drop In 3
Fundname Drop In 4 Fundname Drop In 5 Fundname Drop In 6
PLEASE MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. EXAMPLE: [X]
- --------------------------------------------------------------------------------
[ ] To vote FOR ALL Proposals for all Funds mark this box. No other vote is
necessary.
- --------------------------------------------------------------------------------
1. TO ELECT TRUSTEES:
01. Douglas A. Hacker 02. Janet Langford Kelly 03. Richard W. Lowry 04. Charles R. Nelson
05. John J. Neuhauser 06. Patrick J. Simpson 07. Thomas E. Stitzel 08. Thomas C. Theobald
09. Anne-Lee Verville 10. Richard L. Woolworth 11. William E. Mayer
To withhold authority to vote for one or more of the nominees, write the corresponding number(s) of the nominee(s) on the
line provided next to your fund(s).
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
Fundname Drop In 1 [ ] [ ] [ ] ________________________________
Fundname Drop In 2 [ ] [ ] [ ] ________________________________
Fundname Drop In 3 [ ] [ ] [ ] ________________________________
Fundname Drop In 4 [ ] [ ] [ ] ________________________________
Fundname Drop In 5 [ ] [ ] [ ] ________________________________
Fundname Drop In 6 [ ] [ ] [ ] ________________________________
2.a. TO APPROVE AN AMENDMENT TO CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO BORROWING MONEY, PLEDGING
ASSETS AND ISSUING SENIOR SECURITIES.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Fundname Drop In 1 [ ] [ ] [ ] Fundname Drop In 2 [ ] [ ] [ ] Fundname Drop In 3 [ ] [ ] [ ]
Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.b. TO APPROVE AN AMENDMENT TO CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO MAKING LOANS.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Fundname Drop In 1 [ ] [ ] [ ] Fundname Drop In 2 [ ] [ ] [ ] Fundname Drop In 3 [ ] [ ] [ ]
Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.c. TO APPROVE AN AMENDMENT TO CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO DIVERSIFICATION OF
INVESTMENTS.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Fundname Drop In 1 [ ] [ ] [ ] Fundname Drop In 2 [ ] [ ] [ ] Fundname Drop In 3 [ ] [ ] [ ]
Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.d. TO APPROVE AN AMENDMENT TO CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN COMMODITIES.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Fundname Drop In 1 [ ] [ ] [ ] Fundname Drop In 2 [ ] [ ] [ ] Fundname Drop In 3 [ ] [ ] [ ]
Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.e. TO APPROVE AN AMENDMENT TO CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTMENTS IN REAL ESTATE.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Fundname Drop In 1 [ ] [ ] [ ] Fundname Drop In 2 [ ] [ ] [ ] Fundname Drop In 3 [ ] [ ] [ ]
Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.f. TO APPROVE AN AMENDMENT TO CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO UNDERWRITING OF SECURITIES.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Fundname Drop In 1 [ ] [ ] [ ] Fundname Drop In 2 [ ] [ ] [ ] Fundname Drop In 3 [ ] [ ] [ ]
Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.g. TO APPROVE THE ELIMINATION OF CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO PURCHASING SECURITIES ON
MARGIN.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Fundname Drop In 1 [ ] [ ] [ ] Fundname Drop In 2 [ ] [ ] [ ] Fundname Drop In 3 [ ] [ ] [ ]
Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.h. TO APPROVE THE ELIMINATION OF CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTING FOR THE PURPOSE
OF EXERCISING CONTROL.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Fundname Drop In 1 [ ] [ ] [ ] Fundname Drop In 2 [ ] [ ] [ ] Fundname Drop In 3 [ ] [ ] [ ]
Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.i. TO APPROVE THE ELIMINATION OF CERTAIN FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO SHORT SALES.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Fundname Drop In 1 [ ] [ ] [ ] Fundname Drop In 2 [ ] [ ] [ ] Fundname Drop In 3 [ ] [ ] [ ]
Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.j. TO APPROVE AN AMENDMENT TO CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO CONCENTRATING INVESTMENTS IN
AN INDUSTRY.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Fundname Drop In 1 [ ] [ ] [ ] Fundname Drop In 2 [ ] [ ] [ ] Fundname Drop In 3 [ ] [ ] [ ]
Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.k. TO APPROVE THE ELIMINATION OF CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO PURCHASING SECURITIES OF
COMPANIES LESS THAN THREE YEARS OLD.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Fundname Drop In 1 [ ] [ ] [ ] Fundname Drop In 2 [ ] [ ] [ ] Fundname Drop In 3 [ ] [ ] [ ]
Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.l. TO APPROVE THE ELIMINATION OF CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO INVESTING IN SECURITIES OF
OTHER INVESTMENT COMPANIES.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
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2.m. TO APPROVE THE ELIMINATION OF CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO PURCHASING OR HOLDING THE
SECURITIES OF ANY COMPANY, IF SECURITIES OF SUCH COMPANY ARE OWNED BY OFFICERS OR DIRECTORS OF THE FUND AND OF ITS ADVISOR.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
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Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.n. TO APPROVE THE ELIMINATION OF CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO BUYING AND SELLING PUTS AND
CALLS.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
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Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
2.o. TO APPROVE THE ELIMINATION OF CERTAIN FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO PURCHASING ILLIQUID
SECURITIES.
FOR AGAINST ABSTAIN
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3. TO APPROVE THE REORGANIZATION OF EACH FUND INTO A SEPARATE, CORRESPONDING SERIES OF COLUMBIA FUNDS INSTITUTIONAL TRUST,
PURSUANT TO AN AGREEMENT AND PLAN OF REORGANIZATION.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
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Fundname Drop In 4 [ ] [ ] [ ] Fundname Drop In 5 [ ] [ ] [ ] Fundname Drop In 6 [ ] [ ] [ ]
CMG_15452