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
Columbia Common Stock Fund, Inc. Columbia Growth Fund, Inc. Columbia International Stock Fund, Inc.
Columbia Special Fund, Inc. Columbia Small Cap Fund, Inc. Columbia Real Estate Equity Fund, Inc.
Columbia Balanced Fund, Inc. Columbia Daily Income Company Columbia U.S. Government Securities Fund, Inc.
Columbia Fixed Income Securities Fund, Inc. Columbia Municipal Bond Fund, Inc. Columbia High Yield Fund, Inc.
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(Names of Registrants as Specified in their Charters)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / 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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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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IMPORTANT NEWS
FOR COLUMBIA
FUND SHAREHOLDERS
Dear Columbia Fund Shareholder:
As you may know, on August 14, 1997, Columbia Funds Management Company ("CFMC"),
the investment advisor to the Columbia Funds, entered into an acquisition
agreement under which it will become a subsidiary of Fleet Financial Group, Inc.
("Fleet"), a diversified financial services company based in Boston,
Massachusetts. As a result of this transaction, it is necessary for the
shareholders of each of the Columbia Funds to approve a new investment advisory
contract with CFMC.
The new investment advisory contracts will not alter your Columbia Funds
investments in any way. With respect to each of the Columbia Funds, the name,
fee structure and underlying expenses for the shares you own will not change
because of the acquisition. In addition, the investment managers of the Funds
have all signed employment contracts to remain with CFMC, and the individuals
responsible for providing your account services will remain the same. You will
continue to receive the high quality investment management and shareholder
services that you have come to expect over the years.
The Board of Directors of each Columbia Fund, including the independent
directors that are not affiliated with CFMC or Fleet, met on September 26 to
consider the approval of the new investment advisory contracts. After careful
consideration of the shareholders' interests, each Fund's Board of Directors
unanimously approved a new investment advisory contract and recommended that it
be submitted to the shareholders for approval. They encourage you to vote FOR
the proposal on your enclosed ballot(s). Before voting, however, please be sure
to read the attached Joint Proxy Statement, which provides complete details of
the transaction and additional information about Fleet.
Please cast your vote, and return your ballot(s) in the postage-paid envelope
as soon as possible. Shareholders with multiple Columbia Fund accounts may find
more than one ballot enclosed. Please be sure to vote on every ballot you
receive. Remember, your vote really does make a difference.
If you have any questions about this proxy solicitation, the transaction with
Fleet, or voting your shares, please do not hesitate to contact us toll-free at
1-800-547-1707 or at 222-3606 in Portland. As always, we appreciate your
continuing investment in Columbia Funds, and we look forward to serving your
needs in the months and years to come.
Sincerely,
[SIGNATURE]
John A. Kemp
PRESIDENT
COLUMBIA FINANCIAL CENTER
P.O. BOX 1350-PORTLAND, OR 97207-1350
1-800-547-1707-www.columbiafunds.com
CAST YOUR VOTE & RETURN YOUR BALLOT
Q&A
THE COLUMBIA FAMILY OF FUNDS
WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ATTACHED JOINT PROXY STATEMENT.
THE FOLLOWING QUESTIONS AND ANSWERS ARE DESIGNED TO PROVIDE A BRIEF OVERVIEW OF
THE PROPOSAL TO BE VOTED UPON AT THE SPECIAL MEETING OF SHAREHOLDERS.
WHAT IS HAPPENING?
Columbia Funds Management Company ("CFMC") -- not the Columbia Funds -- has
entered into an acquisition agreement to become a subsidiary of Fleet
Financial Group, Inc. ("Fleet"). The acquisition will result in a change in
control of CFMC. For CFMC to continue to serve as the investment advisor to
each of the Columbia Funds, it is necessary for each Fund's shareholders to
approve a new investment advisory contract with CFMC. The accompanying
materials are designed to provide you with the necessary information to make
an informed decision on that approval. The Directors of each of the Funds,
including those Directors not affiliated with any of the Funds or CFMC, have
unanimously recommended that you vote for approval of each of the new
contracts.
WHY AM I BEING ASKED TO VOTE?
The Investment Company Act of 1940, which regulates investment companies
such as the Columbia Funds, as well as each Fund's current investment
advisory contract, requires shareholders to approve a new investment
advisory contract whenever there is a change in control of a Fund's
investment advisor.
HOW WILL THE CFMC-FLEET TRANSACTION AFFECT ME AS A SHAREHOLDER?
Each of the Columbia Funds and their investment objectives will remain the
same. The Columbia Funds will still be located in Portland, Oregon, and the
Columbia name, fee structure, and underlying expenses will not change
because of this transaction. The primary consequence is that CFMC will
change from a privately owned company to a subsidiary of Fleet. The
agreement with Fleet calls for CFMC to operate as an autonomous business
unit. Moreover, all key employees responsible for managing and servicing the
Columbia Funds, including portfolio managers, have signed employment
contracts to remain with CFMC following the acquisition. Shareholders will
continue to receive the same level of services that they have come to expect
over the years.
WHY DID CFMC ENTER INTO THIS AGREEMENT?
Over the years, CFMC and its affiliates have been approached by numerous
companies about a strategic relationship. Recently, it became apparent that
such a relationship could help the Columbia organization better serve its
clients and investors. Many of the Funds' shareholders have been with the
firm since it was founded over 30 years ago, and serving their best
interests was an important priority in this decision. As discussed in more
detail in the enclosed materials, the agreement with Fleet enables Columbia
to preserve its culture and autonomy and, at the same time, potentially take
advantage of the greater resources of Fleet to develop additional services
and products for shareholders.
WILL THE INVESTMENT ADVISORY FEES BE THE SAME?
Yes, the investment advisory fees paid by the Funds to CFMC will remain the
same.
WILL I CONTINUE TO BE ABLE TO INVEST IN THE COLUMBIA FUNDS WITHOUT SALES CHARGES
OR 12b-1 FEES?
Yes, you will continue to be able to purchase Fund shares without sales
charges or 12b-1 fees.
IS MY VOTE IMPORTANT?
Yes, it is important that as many shareholders as possible be represented in
the voting process. CFMC has retained the services of a professional proxy
solicitor, Shareholder Communications Corporation, to help us contact the
Columbia Funds' shareholders. If we do not receive your ballot, you may
receive a call from Shareholder Communications Corporation requesting you to
vote.
You may cast your vote by completing and returning your proxy card(s) in the
enclosed postage-paid envelope or by faxing your ballot toll-free to
1-888-776-9932. If you have a single account holding shares of multiple
Columbia Funds, you will receive a single proxy card for your account and
only one Joint Proxy Statement. If you have accounts under more than one
name but with the same address and social security number, you will receive
a separate proxy card for each of your accounts, but only one Joint Proxy
Statement. PLEASE SIGN AND RETURN ALL THE PROXY CARDS YOU RECEIVE AS
PROMPTLY AS POSSIBLE.
WHO IS PAYING FOR THIS PROXY SOLICITATION AND THE TRANSACTION WITH FLEET?
All costs of the proxy solicitation and the Special Shareholder Meeting will
be paid by CFMC and Fleet. None of the legal costs associated with the
transaction will be borne by any of the Columbia Funds.
WHOM DO I CALL FOR MORE INFORMATION?
As always, when you have questions about the Columbia Funds, or if you have
questions about this proxy solicitation, you may call us toll-free at
1-800-547-1707 and one of our Investor Services Representatives will be
happy to assist you.
---------------------------------------------
COLUMBIA COMMON STOCK FUND, INC.
COLUMBIA GROWTH FUND, INC.
COLUMBIA INTERNATIONAL STOCK FUND, INC.
COLUMBIA SPECIAL FUND, INC.
COLUMBIA SMALL CAP FUND, INC.
COLUMBIA REAL ESTATE EQUITY FUND, INC.
COLUMBIA BALANCED FUND, INC.
COLUMBIA DAILY INCOME COMPANY
COLUMBIA U.S. GOVERNMENT SECURITIES FUND, INC.
COLUMBIA FIXED INCOME SECURITIES FUND, INC.
COLUMBIA MUNICIPAL BOND FUND, INC.
COLUMBIA HIGH YIELD FUND, INC.
-- NOTICE OF SPECIAL MEETING OF SHAREHOLDERS --
TO BE HELD DECEMBER 4, 1997
Notice is hereby given that a Special Meeting of Shareholders (the "Meeting") of
each Columbia Fund listed above (each a "Fund" and collectively the "Funds")
will be held jointly at the Doubletree Hotel, Portland Downtown, 310 S.W.
Lincoln, Portland, OR 97201, on December 4, 1997, at 2:30 p.m., Pacific Time,
for the following purposes:
- - For the shareholders of each Fund to approve or disapprove a new Investment
Advisory Contract between the Fund and Columbia Funds Management Company (the
"Advisor"); and
- - To transact any other business that properly comes before the Meeting and any
adjournment thereof.
Shareholders of record of each Fund at the close of business on October 6,
1997 (the "Record Date") are entitled to notice of and to vote at the Meeting
and any adjournment thereof. Shareholders of each Fund will vote separately on
the Proposal. If you have a single account holding shares of multiple Columbia
Funds, you will receive a single proxy card for your account and only one Joint
Proxy Statement. If you have accounts under more than one name but with the same
address and social security number, you will receive a separate proxy card for
each of your accounts, but only one Joint Proxy Statement. PLEASE DATE AND SIGN
ALL OF THE PROXY CARDS YOU RECEIVE AND RETURN THEM IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. You may also choose to return your proxy card(s) by toll-free fax at
1-888-776-9932. You
1
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may attend the Meeting in person even if you return your proxy cards; retention
of the proxy cards is not necessary for admission to or identification at the
Meeting.
By order the Board of Directors,
Jeff B. Curtis
SECRETARY
October 20, 1997
Portland, Oregon
-- IMPORTANT --
You can help avoid the necessity of sending follow-up letters to ensure a quorum
by promptly signing and returning the enclosed proxy card(s). If you are unable
to be present in person, please vote, sign and return the enclosed proxy card(s)
to ensure that the necessary quorum may be represented at the meeting. The
enclosed envelope requires no postage if mailed in the United States.
The Board of Directors of each Fund recommends that you cast your vote:
FOR approval of each new Investment Advisory Contract.
YOUR VOTE IS IMPORTANT
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JOINT PROXY STATEMENT
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COLUMBIA COMMON STOCK FUND, INC.
COLUMBIA GROWTH FUND, INC.
COLUMBIA INTERNATIONAL STOCK FUND, INC.
COLUMBIA SPECIAL FUND, INC.
COLUMBIA SMALL CAP FUND, INC.
COLUMBIA REAL ESTATE EQUITY FUND, INC.
COLUMBIA BALANCED FUND, INC.
COLUMBIA DAILY INCOME COMPANY
COLUMBIA U.S. GOVERNMENT SECURITIES FUND, INC.
COLUMBIA FIXED INCOME SECURITIES FUND, INC.
COLUMBIA MUNICIPAL BOND FUND, INC.
COLUMBIA HIGH YIELD FUND, INC.
-- JOINT PROXY STATEMENT --
- -------- --------
-- SPECIAL MEETING OF SHAREHOLDERS --
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DECEMBER 4, 1997
This Joint Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (each a "Board" and together the "Boards") of
each Columbia Fund listed above (each a "Fund" and collectively the "Funds") for
use at the Special Meeting of Shareholders of each Fund to be held jointly on
December 4, 1997 (the "Meeting") and at any adjournments thereof. The first
mailing of this Joint Proxy Statement and the related Notice of Special Meeting
is expected to be made on or about October 20, 1997.
If the enclosed proxy cards are properly executed and returned in time to be
voted at the Meeting, the proxies named in the proxy cards will vote the shares
represented by the proxy in accordance with the instructions given on the proxy
cards. Unmarked proxy cards with respect to any Fund will be voted for approval
of a new investment advisory contract between that Fund and Columbia Funds
Management Company (the "Advisor").
Any person giving a proxy in the form accompanying this Joint Proxy Statement
has the power to revoke it at any time before its exercise. The proxy may be
revoked by filing with the Fund, attention Jeff B. Curtis, Secretary, an
instrument of revocation or a duly executed proxy card bearing a later date. The
proxy may also be revoked by voting in person at the Meeting. A shareholder who
attends the Meeting, however, is not required to revoke the proxy and vote in
person. Each valid, unrevoked proxy will be voted at the Meeting in accordance
with the instructions given in the proxy.
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JOINT PROXY STATEMENT
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-- SHARES ENTITLED TO VOTE AND QUORUM --
The holders of shares of record ("Shareholders") of each Fund as of the close of
business on October 6, 1997, the record date for the determination of
Shareholders entitled to notice of and to vote at the Meeting (the "Record
Date"), are entitled to one vote for each share held and a fractional vote for a
fractional share. The table below identifies the number of shares outstanding
for each Fund as of the Record Date.
NUMBER OF
SHARES
NAME OF FUND OUTSTANDING
- ----------------------------------------------------------------------- ------------
Columbia Common Stock Fund, Inc........................................ 33,424,104
Columbia Growth Fund, Inc.............................................. 34,932,310
Columbia International Stock Fund, Inc................................. 10,136,429
Columbia Special Fund, Inc............................................. 66,728,987
Columbia Small Cap Fund, Inc........................................... 4,439,465
Columbia Real Estate Equity Fund, Inc.................................. 7,395,725
Columbia Balanced Fund, Inc............................................ 36,136,805
Columbia Daily Income Company.......................................... 875,748,841
Columbia U.S. Government Securities Fund, Inc.......................... 4,525,865
Columbia Fixed Income Securities Fund, Inc............................. 27,941,833
Columbia Municipal Bond Fund, Inc...................................... 32,247,512
Columbia High Yield Fund, Inc.......................................... 3,715,453
A quorum for the conduct of business at the Meeting requires the presence, in
person or by proxy, of holders of a majority of the outstanding shares of each
Fund. If the necessary quorum to transact business or the vote required to
approve the Proposal is not obtained at the Meeting with respect to one or more
Funds, the persons named as proxies may propose one or more adjournments of the
Meeting for a total of not more than 120 days in the aggregate to obtain a
quorum or to permit further solicitation of proxies. Any such adjournment may be
approved by the affirmative vote of the holders of a majority of the relevant
Fund's shares present in person or by proxy at the Meeting, even though less
than a quorum. The persons named as proxies will vote in favor of such
adjournment those proxies they are entitled to vote in favor of the Proposal and
will vote against any such adjournment those proxies to be voted against the
Proposal.
Attached as Exhibit A is a list of all persons known by the Funds to be the
record or beneficial owners of 5% or more of the outstanding shares of
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JOINT PROXY STATEMENT
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any Fund as of the Record Date. Exhibit A also shows the number of shares of
each Fund owned by each director and by all directors and officers of the Funds
as a group as of the Record Date.
-- SOLICITATION OF PROXIES --
All costs of soliciting proxies for the Meeting, including printing and mailing
expenses, will be borne 50% by the Advisor and 50% by Fleet Financial Group,
Inc. or its affiliate, Fleet National Bank. Proxies will be solicited by use of
the mails, and officers and employees of the Advisor and its affiliates may also
solicit proxies by telephone or personal contact. The Advisor has also hired
Shareholder Communications Corporation to assist in soliciting proxies. Copies
of solicitation materials will be furnished to fiduciaries, custodians, and
brokerage houses for forwarding to beneficial owners of the stock held in their
names.
PROPOSAL
- ---------- ----------
-- TO APPROVE OR DISAPPROVE NEW --
INVESTMENT ADVISORY CONTRACT
----------------------------------------
-- BACKGROUND --
The Advisor serves as the investment advisor to each Fund pursuant to an
investment advisory contract between the Fund and the Advisor (each a "Current
Contract" and collectively the "Current Contracts"). The approval of a new
investment advisory contract between each Fund and the Advisor (each a "New
Contract" and collectively the "New Contracts") is being sought in connection
with the proposed acquisition (the "Acquisition") of the Advisor by Fleet
Financial Group, Inc. ("Fleet") through its wholly-owned subsidiary, Fleet
National Bank ("FNB"). Under the Investment Company Act of 1940 (the "Investment
Company Act"), the change in ownership of the Advisor resulting from the
Acquisition will result in the automatic termination of all of the Current
Contracts. The New Contracts, which are substantially identical to the Current
Contracts, are proposed to become effective upon the termination of the Current
Contracts at the completion of the Acquisition. Attached, as Exhibit B, is the
form of the
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New Contracts, which are described under "The New Investment Advisory Contracts"
below. The Advisor's address is 1300 S.W. Sixth Avenue, Portland, Oregon 97201.
-- THE ACQUISITION --
On August 14, 1997, the Advisor and three affiliated companies entered into an
agreement (the "Acquisition Agreement") to be acquired by FNB, a wholly-owned
subsidiary of Fleet. The affiliated companies (together with the Advisor, the
"Columbia Companies") are Columbia Management Co. ("CMC"), Columbia Trust
Company (the "Trust Company"), and Columbia Financial Center Incorporated
("CFCI"). J. Jerry Inskeep, Jr. and James F. Rippey and their families together
own over 50% of the outstanding capital stock of each of CMC, the Advisor, and
CFCI, and the Advisor owns 79% of the outstanding capital stock of the Trust
Company. Certain employees of the Columbia Companies, including the other
officers of the Funds, and their families, own the remaining stock of the
Columbia Companies.
The Columbia Companies operate together to provide a range of investment
advisory and related services. The Advisor serves as the investment advisor to
the Funds. CMC acts as investment manager for various institutional clients,
including CMC Fund Trust, which offers three mutual fund portfolios to
institutional investors. The Trust Company acts as transfer agent and dividend
crediting agent for the Funds and CMC Fund Trust and provides a variety of
investment advisory and trust services to tax-qualified retirement plans through
its common trust and collective trust pools and to individuals, institutions,
trusts and estates through private management accounts using the Funds as
investment vehicles.
CFCI, a registered securities broker and a member of the National Association
of Securities Dealers, Inc. ("NASD"), acts as the principal underwriter for
distribution of the Funds' shares, but it does not charge any fees or
commissions for these services. Following the Acquisition, CFCI will not serve
as the principal underwriter of the Funds because of restrictions under federal
banking laws. Instead, the principal underwriter will be an independent
distributor. This independent distributor will, for a fee (which will be paid by
the Advisor), be named as the principal underwriter in the Funds' Prospectus and
sales literature, will file all sales materials with the NASD, and will contract
with other broker-dealers and financial
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intermediaries, including CFCI, for distribution of the shares. In all other
respects, and to the extent permitted by applicable law, CFCI will continue to
handle all the marketing and distribution activities of the Funds, including
preparing advertising and sales material, communicating with shareholders, and
marketing the Funds' shares. CFCI's address is 1301 S.W. Fifth Avenue, Portland,
Oregon 97201.
Under the terms of the Acquisition Agreement, each of the Columbia Companies,
other than the Trust Company, will become a wholly-owned subsidiary of FNB
through a merger with a newly created subsidiary of FNB in which each of those
Columbia Companies will be the surviving corporation. It is anticipated that FNB
will acquire the Trust Company by purchasing the stock of the Trust Company held
by shareholders other than CFMC (whose shares of the Trust Company FNB will
acquire through the merger). Following the Acquisition, the name of the Advisor
will continue to be Columbia Funds Management Company. The purchase price to be
paid to the shareholders of the Columbia Companies has two components, (i) a
fixed cash price payable at closing of the Acquisition, after adjustment to
reflect the net book value of the Columbia Companies as of the closing, and (ii)
contingent cash payments based on the profitability of the Columbia Companies in
the years 2001 and 2002, subject to acceleration in certain circumstances. The
Acquisition is expected to close soon after the Meeting, subject to the
satisfaction of closing conditions, which include among others (i) approval of
the New Contract by the Shareholders of each Fund, (ii) continued effectiveness
of employment or consulting agreements executed by certain employees of the
Columbia Companies, and (iii) certain regulatory approvals.
Current management of the Advisor and Fleet have indicated their intent that
the Advisor continue to operate with the same investment personnel and that the
same persons who are now responsible for the administration and operations of
the Advisor and for the investment policies of the Funds continue to manage the
Advisor following the Acquisition. No substantive changes in the Advisor's
method of operation, or the location where it conducts its business, are
contemplated as a result of the Acquisition. The Acquisition Agreement provides
that the Columbia Companies will remain autonomous business units of Fleet to be
managed by John A. Kemp (currently Managing Director-Administration and Senior
Vice President of
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JOINT PROXY STATEMENT
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the Advisor) as Chief Executive Officer and Thomas L. Thomsen (currently
Managing Director-Investments and Senior Vice President of the Advisor) as Chief
Investment Officer. Mr. Kemp and Mr. Thomsen have each signed a five-year
employment agreement with FNB effective upon the closing of the Acquisition,
which include substantial retention and incentive bonuses payable through 2003.
Mr. Inskeep and Mr. Rippey have signed two-year employment agreements.
Substantially all other investment managers and analysts of the Advisor,
including the portfolio managers of each of the Funds, have signed employment
agreements, effective upon the closing of the Acquisition, generally for three
years, which also include substantial retention and incentive bonuses payable
through 2003.
-- INFORMATION CONCERNING FLEET --
FNB is a wholly-owned subsidiary of Fleet, a publicly owned multibank holding
company registered under the Bank Holding Company Act of 1956. Fleet, FNB, and
various of their directly and indirectly owned subsidiaries provide a wide range
of banking, financial, and investment products and services to individuals and
businesses. Their principal activities include consumer and commercial banking,
mortgage lending and servicing, trust administration, investment management,
retirement plan services, brokerage and clearing services, securities
underwriting, private and corporate financing and advisory activities, and
insurance services. Among Fleet's principal non-banking subsidiaries are Fleet
Investment Advisors Inc. ("FIA"), a registered investment adviser; FIS
Securities, Inc. and Fleet Enterprises, Inc., retail broker-dealers; Fleet
Brokerage Securities, Inc., a discount broker; and Fleet Securities, Inc., a
securities underwriting firm. FIA and its affiliates manage, advise, or oversee
the investment of over $50 billion in assets belonging to a wide range of
individual, trust, and institutional clients, including registered investment
companies with total assets of approximately $10 billion.
-- SECTION 15(f) OF THE INVESTMENT COMPANY ACT --
The Acquisition is subject to Section 15(f) of the Investment Company Act.
Section 15(f) provides in substance that, when a sale of a controlling interest
in an investment advisor occurs, the investment advisor or any of its affiliated
persons, as defined in the Investment Company Act, may receive any amount or
benefit in connection with the sale as long as two conditions
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JOINT PROXY STATEMENT
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are satisfied. First, an "unfair burden" must not be imposed on the investment
company as a result of the transaction relating to the sale of such interest, or
any express or implied terms, conditions or understandings applicable to the
sale. The term "unfair burden" (as defined in the Investment Company Act)
includes any arrangement during the two-year period after the transaction
whereby the investment advisor (or predecessor or successor advisor), or any
"interested person" (as defined in the Investment Company Act) of any such
advisor, receives or is entitled to receive any compensation, directly or
indirectly, from the investment company or its security holders (other than fees
for bona fide investment advisory or other services) or from any person in
connection with the purchase or sale of securities or other property to, from or
on behalf of the investment company. Each Fund's Board is aware of no
circumstances arising from the Acquisition that might result in an unfair burden
being imposed on any Fund. Moreover, FNB and the Advisor have agreed with each
other that they will each use their reasonable best efforts to ensure that no
unfair burden will be imposed on any Fund as a result of the Acquisition during
the two-year period following the Acquisition.
The second condition of Section 15(f) is that, during the three-year period
following the completion of a transaction, at least 75% of an investment
company's directors must not be "interested persons" (as defined in the
Investment Company Act) of the investment adviser or predecessor adviser
("Independent Directors"). FNB has agreed with the Advisor that for at least the
first three years following completion of the Acquisition, FNB will ensure that
not more than 25% of any Fund's Board are "interested persons." There are now
six directors of each Fund, three of whom (James C. George, Thomas R. Mackenzie,
and Richard L. Woolworth) are Independent Directors and three of whom (J. Jerry
Inskeep, Jr., James F. Rippey and John A. Kemp) are "interested persons." To
satisfy the second condition of Section 15(f), each of the Independent Directors
will remain Directors of the Funds and Mr. Rippey and Mr. Kemp will resign as
directors of the Funds effective as of the closing of the Acquisition. Following
the Acquisition, each Fund will then have three Independent Directors and one
director who is an "interested person."
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JOINT PROXY STATEMENT
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-- THE NEW INVESTMENT ADVISORY CONTRACTS --
The form of each of the proposed New Contracts is attached to this Joint Proxy
Statement as Exhibit B. The terms of each New Contract, including the fees
payable by each Fund, are identical in all material respects to those of the
corresponding Current Contract, except for the dates of effectiveness and
termination. The terms of the Current Contracts are described under "The Current
Investment Advisory Contracts" below. If approved by Shareholders, each New
Contract will become effective on the closing date of the Acquisition and will
continue in effect for an initial term of two years. Each New Contract will then
continue in effect from year to year thereafter if that continuance is approved
by the Fund's Board or by a "majority of the outstanding voting securities" (as
defined below) of the Fund and, in either event, by the vote cast in person of a
majority of the Fund's Independent Directors. If the Acquisition is not
completed, the Current Contacts will remain in effect.
-- THE BOARDS' CONSIDERATION --
The Boards of the Funds, including all of the Independent Directors, met in
person on September 26, 1997 for the purpose of considering whether it would be
in the best interests of each Fund and its Shareholders for the Fund to enter
into a New Contract with the Advisor that would become effective upon the
completion of the Acquisition. At an earlier meeting on August 21, 1997, the
Independent Directors were briefed generally by representatives of the Advisor
on the terms of the Acquisition and the expected impact of the Acquisition on
the Funds. The Independent Directors requested, and prior to their meeting on
September 26, 1997 they received, materials regarding Fleet and its business,
personnel and financial condition, the terms of the proposed Acquisition, and
Fleet's plans for the Advisor following the Acquisition. Representatives of
Fleet were present to answer questions from the Independent Directors, who were
assisted in their review and deliberations by independent legal counsel.
In determining whether to approve a New Contract, the Board of each Fund
assessed how the Acquisition would affect the Advisor and its ability to
continue to provide to the Fund services of the same scope and quality as the
Advisor now provides. In particular, the Board inquired about the impact of the
Acquisition on the Advisor's personnel, management, facilities, and
8
JOINT PROXY STATEMENT
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financial capabilities. They noted favorably the commitments made by Fleet in
the Acquisition Agreement to maintain the Advisor and the other Columbia
Companies as autonomous business units of Fleet and the incentives established
by Fleet for the management and investment professionals of the Columbia
Companies to continue in their current roles. They also considered the possible
benefits to the Funds of the Advisor's affiliation with Fleet, including access
to the greater resources of Fleet to expand distribution of the Funds and to
develop additional services for Shareholders.
The Board of each of the Funds also considered that each New Contract is
identical, in all material respects, to the corresponding Current Contract
(other than the dates of effectiveness and termination), which was last approved
by the Boards in April 1997. In particular, they noted that there would be no
change in the advisory fees paid by the Funds under the New Contracts.
Based upon each Board's review and the evaluations of the materials it
received, and after consideration of all factors the directors deemed relevant,
the Board of each Fund, including all of the Independent Directors, unanimously
determined that the corresponding New Contract is in the best interests of the
Fund and its Shareholders.
--------------------------
ACCORDINGLY, THE BOARD OF EACH FUND, INCLUDING ALL OF THE INDEPENDENT
DIRECTORS, APPROVED THE APPLICABLE NEW CONTRACT AND VOTED TO RECOMMEND
SHAREHOLDER APPROVAL OF THE NEW CONTRACT.
-------------------------------------------------------------------
-- THE CURRENT INVESTMENT ADVISORY CONTRACTS --
Under the Current Contracts, the Advisor regularly provides each Fund with
research, advice, and supervision with respect to investment matters and
determines what securities to purchase or sell and what portion of the Fund's
assets to invest. The Advisor provides office space and pays all executive
salaries and expenses and ordinary office expenses of each Fund (other than the
expenses of clerical services relating to the administration of the Fund).
Certain employees of the Advisor are also officers of the Funds and, subject to
the authority of each Fund's Board of Directors, are responsible for the overall
management of the Funds' business affairs.
9
JOINT PROXY STATEMENT
---------------------------------------------
In return for the Advisor's services and the expenses the Advisor assumes under
each Current Contract, each Fund pays the Advisor an advisory fee, which is
accrued daily and payable monthly. The table below shows the fee schedule for
each Fund and the amount of advisory fees paid to the Advisor by each Fund for
1996.
- --------------- ---------------
-- ADVISOR FEE SCHEDULE --
------------------------------
ANNUAL ADVISORY FEE RATE ADVISORY FEE
NAME OF FUND (AS A PERCENTAGE OF DAILY NET ASSETS) PAID FOR 1996
- -------------------------------------------- ------------------------------------- --------------
Columbia Common Stock Fund, Inc............. .60% on all assets $ 2,686,585
Columbia Growth Fund, Inc................... .75% on first $200 million
.625% on next $300 million
.50% on assets over $500 million $ 5,711,080
- ---------------------------------------------------------------------------
Columbia International Stock Fund, Inc...... 1.00% on all assets $ 1,157,227
Columbia Special Fund, Inc.................. 1.00% on first $500 million
.75% on assets over $500 million $12,880,541
- ---------------------------------------------------------------------------
Columbia Small Cap Fund, Inc................ 1.00% on all assets $ 40,273(1)
Columbia Real Estate Equity Fund, Inc....... .75% on all assets $ 232,413
- ---------------------------------------------------------------------------
Columbia Balanced Fund, Inc................. .50% on all assets $ 2,935,512
Columbia Daily Income Company............... .50% on first $500 million
.45% on next $500 million
.40% on assets over $1 billion $ 4,009,904
- ---------------------------------------------------------------------------
Columbia U.S. Government Securities Fund,
Inc........................................ .50% on all assets $ 206,591
Columbia Fixed Income Securities Fund,
Inc........................................ .50% on all assets $ 1,668,004
- ---------------------------------------------------------------------------
Columbia Municipal Bond Fund, Inc........... .50% on all assets $ 1,881,542
Columbia High Yield Fund, Inc............... .60% on all assets $ 150,432
- ---------------------------------------------------------------------------
- ------------------------
(1) Fund began offering shares to the public on October 1, 1996.
Each Fund assumes the following costs and expenses: costs relating to
corporate matters; cost of services to Shareholders; transfer and dividend
paying agent fees; custodian fees; legal, auditing, and accounting expenses;
disinterested directors' fees; taxes and governmental fees; interest; brokers'
10
JOINT PROXY STATEMENT
---------------------------------------------
commissions; transaction expenses; cost of stock certificates and any other
expenses (including clerical expenses) of issue, sale, repurchase, or redemption
of its shares; expenses of registering or qualifying its shares for sale;
transfer taxes; all expenses of preparing its registration statements,
prospectuses, and reports; and the cost of printing and delivering to
Shareholders its prospectuses and reports. Additionally, third party
administrators of tax qualified retirement plans and other financial
institutions may establish omnibus accounts with the Funds and provide
sub-transfer agency and recordkeeping or other services to participants and
beneficial owners in the omnibus accounts. In recognition that these
arrangements reduce or eliminate the need for a Fund's transfer agent to provide
such services, the Fund may pay the administrator a sub-transfer agent or
recordkeeping fee.
The following table lists the date of each Current Contract and the date each
Current Contract was last approved by the applicable Fund's Shareholders.
DATE CURRENT
CONTRACT WAS LAST
APPROVED BY THE
DATE OF CURRENT FUND'S
NAME OF FUND CONTACT SHAREHOLDERS
- -------------------------------------------------- ----------------- ------------------
Columbia Common Stock Fund, Inc................... August 8, 1991 April 23, 1992
Columbia Growth Fund, Inc......................... April 20, 1993(1) March 16, 1983
Columbia International Stock Fund, Inc............ August 12, 1992 April 15, 1993
Columbia Special Fund, Inc........................ May 1, 1993(1) March 20, 1986
Columbia Small Cap Fund, Inc...................... August 20, 1996 Sept. 16, 1996
Columbia Real Estate Equity Fund, Inc............. February 24, 1994 June 23, 1994
Columbia Balanced Fund, Inc....................... August 8, 1991 April 23, 1992
Columbia Daily Income Company..................... April 20, 1993(1) March 11, 1981
Columbia U.S. Government Securities Fund, Inc..... April 29, 1988 March 17, 1988
Columbia Fixed Income Securities Fund, Inc........ April 29, 1988 March 17, 1988
Columbia Municipal Bond Fund, Inc................. April 29, 1988 March 17, 1988
Columbia High Yield Fund, Inc..................... August 16, 1993 June 23, 1994
- ------------------------
(1) The Current Contract was restated on the date indicated to make
typographical corrections and, in the case of Columbia Special Fund, Inc.,
to reduce the investment advisory fee. These changes did not require
resubmission of the restated contracts to the Shareholders for approval.
After an initial two-year term, each Current Contract provides that it may be
continued in effect from year to year thereafter, provided that each continuance
is approved by the vote of a "majority of the outstanding voting
11
JOINT PROXY STATEMENT
---------------------------------------------
securities" (as defined below) of each Fund or by the Fund's Board and, in
either event, by the vote cast in person by a majority of the Independent
Directors at a meeting called for the purpose of voting on such approval. Each
Current Contract has been continued in effect from year to year by action of the
Board, including the Independent Directors. The most recent annual approval of
the Current Contracts occurred at a meeting of the Boards held on April 24,
1997. At that meeting each Board approved a minor amendment to the applicable
Fund's Current Contract to clarify that the Current Contract does not include
any waiver by the Fund of any rights under federal securities laws.
Each Current Contract also provides that it may be terminated at any time by
vote of the Fund's Board of Directors, by vote of the Fund's Shareholders, or by
the Advisor, in each instance without the payment of any penalty, on 60 days
notice. Each Current Contract also provides that it will automatically terminate
if it is assigned, as defined in the Investment Company Act.
The Advisor has entered into an agreement with CMC pursuant to which CMC
provides the Advisor with statistical and other factual information, advice
regarding economic factors and trends, and advice as to occasional transactions
in specific securities. CMC, upon receipt of specific instructions from the
Advisor, also contacts brokerage firms to trade securities for each Fund. The
Advisor pays CMC a fee for these services. No Fund's expenses are increased by
this arrangement, and no amounts are paid by any Fund to CMC pursuant to this
agreement.
-- OTHER FEES PAID TO THE COLUMBIA COMPANIES --
The Trust Company acts as transfer agent and dividend crediting agent for each
of the Funds pursuant to Transfer Agent Agreements. The Trust Company is paid a
fee of $1.50 per month by each Fund for each shareholder account existing at any
time during the month. In addition, each Fund pays the Trust Company for extra
administrative services performed in accordance with a schedule set forth in the
applicable Transfer Agent Agreement and reimburses the Trust Company for certain
out-of-pocket expenses incurred in carrying out its duties under the applicable
12
JOINT PROXY STATEMENT
---------------------------------------------
Transfer Agent Agreement. The following table shows the amount paid to the Trust
Company by each Fund for services performed under the applicable Transfer Agent
Agreement for 1996.
TRANSFER AGENT
NAME OF FUND FEES IN 1996
- --------------------------------------------------------------------- --------------
Columbia Common Stock Fund, Inc...................................... $ 218,624
Columbia Growth Fund, Inc............................................ $ 510,664
Columbia International Stock Fund, Inc............................... $ 181,749
Columbia Special Fund, Inc........................................... $ 663,083
Columbia Small Cap Fund, Inc......................................... $ 3,700(1)
Columbia Real Estate Equity Fund, Inc................................ $ 24,214
Columbia Balanced Fund, Inc.......................................... $ 301,673
Columbia Daily Income Company........................................ $ 578,095
Columbia U.S. Government Securities Fund, Inc........................ $ 33,282
Columbia Fixed Income Securities Fund, Inc........................... $ 172,277
Columbia Municipal Bond Fund, Inc.................................... $ 79,716
Columbia High Yield Fund, Inc........................................ $ 19,989
- ------------------------
(1) Fund began offering shares to the public on October 1, 1996.
-- DIRECTORS OF THE ADVISOR AND EXECUTIVE --
OFFICERS OF THE FUNDS
The following is a list of all directors of the Advisor, four of whom also serve
as executive officers of each Fund, and the two other executive officers of each
Fund, both of whom are officers of the Advisor. Each executive officer of the
Funds is an "interested person" as defined in the Investment Company Act. The
business address of each person named below is 1300 SW Sixth Avenue, Portland,
OR 97201.
NAME AGE PRINCIPAL POSITIONS FOR PAST FIVE YEARS
- ------------------------- --- ---------------------------------------------------------------------------
J. Jerry Inskeep, Jr. 66 Chairman and Director of the Advisor, CMC, each of the Funds, and the Trust
Company; Director of CFCI; Chairman and Trustee of CMC Fund Trust.
James F. Rippey 66 President and Director of the Advisor, CMC, and the Trust Company; Director
of each of the Funds; President and Trustee of CMC Fund Trust.
13
JOINT PROXY STATEMENT
---------------------------------------------
NAME AGE PRINCIPAL POSITIONS FOR PAST FIVE YEARS
- ------------------------- --- ---------------------------------------------------------------------------
John A. Kemp 55 Managing Director-Administration (since July 1997), Senior Vice President,
and Director of the Advisor, CMC, and the Trust Company; Senior Vice
President and Director of CFCI; Director (since June 1994) and President of
each of the Funds; Vice President and Trustee of CMC Fund Trust.
George L. Hanseth 53 Vice President, Assistant Secretary, Treasurer, and Director of the
Advisor, CMC, and the Trust Company; Senior Vice President and Treasurer of
each of the Funds; President and Director of CFCI; Vice President,
Assistant Secretary, Treasurer, and Trustee of CMC Fund Trust.
Lawrence S. Viehl 58 Vice President and Director (since April 1997) of the Advisor, CMC, and the
Trust Company; Vice President of CMC Fund Trust and each of the Funds.
Terry L. Chambers 52 Vice President and Director of the Advisor, CMC, and the Trust Company.
Alan J. Folkman 55 Senior Vice President and Director of the Advisor, CMC, and the Trust
Company.
Thomas L. Thomsen 53 Managing Director-Investments (since May 1997), Senior Vice President and
Director of the Advisor, CMC, and the Trust Company.
Robert A. Unger 50 Vice President and Director (since January 1994) of the Advisor and CMC;
Director of the Trust Company.
Albert D. Corrado 63 Vice President of the Advisor and the Trust Company; Vice President of each
Fund.
Jeff B. Curtis 44 Vice President, General Counsel, and Secretary of the Advisor, CMC, the
Trust Company, and CFCI (since April 1993); Secretary of each of the Funds
and CMC Fund Trust (since April 1994); Attorney with Stoel Rives LLP
(1986-1993), a law firm in Portland, Oregon.
Pursuant to federal banking regulations, each of Messrs. Kemp, Hanseth, Viehl,
Corrado, and Curtis will be ineligible to serve as officers of the Funds
following the Acquisition. Therefore, the Board of Directors of each Fund will,
in accordance with the Fund's Bylaws, appoint a successor to each ineligible
officer.
14
JOINT PROXY STATEMENT
---------------------------------------------
-- REQUIRED VOTE --
No New Contract can be implemented unless it is approved at the Meeting, or any
adjournment thereof, by a majority of the outstanding voting securities of the
applicable Fund. Under the Investment Company Act, approval of a "majority of
the outstanding voting securities" means receiving the affirmative vote of the
holders of (a) 67% or more of the Fund's shares present in person or by proxy at
the Meeting, provided that the holders of more than 50% of the outstanding
shares are present in person or by proxy at the Meeting, or (b) more than 50% of
the Fund's outstanding shares, whichever is less. Abstentions and broker
non-votes are counted as shares present at the Meeting for purposes of
determining if a quorum is present and have the effect of votes against approval
of the New Contracts.
If the Shareholders of a Fund do not approve a New Contract, Fleet could
refuse to complete the Acquisition. If Fleet, at its option, completes the
Acquisition, the Current Contract with that Fund will terminate effective as of
the closing of the Acquisition, and the Fund's Board will make such arrangements
for the management of the Fund's investments as it deems to be in the best
interests of the Fund and its Shareholders.
--------------------------
THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT EACH FUND'S SHAREHOLDERS
VOTE FOR APPROVAL OF THE NEW INVESTMENT ADVISORY CONTRACT.
-------------------------------------------------------------------
- -------------- --------------
-- SHAREHOLDER PROPOSALS --
--------------------------------
Each Fund's Bylaws provide that the Fund is not required to hold annual
shareholders meetings, except as required by the Investment Company Act or
Oregon law. Therefore, a Fund may not hold an annual meeting in any year unless
required by law. For those years in which a Fund holds an annual shareholders'
meeting, a shareholder proposal must be received by the Fund within a reasonable
period of time before the proxy solicitation is made in order to be considered
for inclusion in the proxy materials relating to that annual meeting.
15
JOINT PROXY STATEMENT
---------------------------------------------
- ------------- -------------
-- REPORTS TO SHAREHOLDERS --
----------------------------------
Each Fund's most recent Annual Report to Shareholders and Semi-Annual Report to
Shareholders have been sent previously to Shareholders and can be obtained
without charge upon request by contacting the Columbia Funds, P.O. Box 1350,
Portland, Oregon, 97207-1350 (telephone 1-800-547-1707 (toll-free nationwide) or
222-3606 in Portland).
- -------------- --------------
-- DISCRETIONARY AUTHORITY --
---------------------------------
While the Notice of Special Meeting of Shareholders provides for transaction of
any other business that properly comes before the Meeting, the Boards of each of
the Funds have no knowledge of any matters to be presented at the Meeting other
than the matters described in this Joint Proxy Statement. The enclosed proxy,
however, gives discretionary authority to the proxy holders to vote in
accordance with their judgment if any other matters are properly presented.
By Order of the Boards of Directors
Jeff B. Curtis
SECRETARY
October 20, 1997
Portland, Oregon
16
PRINCIPAL SHAREHOLDERS
OF THE FUNDS
---------------------------------------------
EXHIBIT A
The following table shows, as of October 6, 1997, the names and addresses of all
persons known by the Funds to be the record or beneficial owners of 5% or more
of the outstanding shares of any Fund. Those Shareholders marked with an
asterisk are nominees holding shares for beneficial owners and the Funds have no
record concerning the actual beneficial owners. The table also shows the number
of shares of each Fund beneficially owned by each director and all directors and
officers of the Funds as a group as of October 6, 1997. Except as otherwise
indicated, each director and all directors and officers of the Funds as a group
beneficially owned less than 1% of the outstanding shares of any Fund.
- --------------------------------------------------------------------------------
-- Columbia Common Stock Fund, Inc. --
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES HELD OUTSTANDING SHARES
- ------------------------------------------------------------ ----------- ------------------
Bankers Trust Co. of CA NA* 6,779,097 20.282%
300 S. Grand Avenue, 40th Floor
Los Angeles, CA 90071
Wells Fargo Bank* 1,765,297 5.282%
P.O. Box 9800
Calabasas, CA 91372
James C. George 5,515
J. Jerry Inskeep, Jr. 214,586
John A. Kemp 1,645
Thomas R. Mackenzie 10.076
James F. Rippey 31,671
Richard L. Woolworth 83
Directors and Officers as a Group 296,132
A-1
---------------------------------------------
- --------------------------------------------------------------------------------
-- Columbia Special Fund, Inc. --
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES HELD OUTSTANDING SHARES
- ------------------------------------------------------------ ----------- ------------------
Charles Schwab & Co Inc.* 5,757,992 8.629%
101 Montgomery Street
San Francisco, CA 94104
Standard Insurance Co.* 3,600,016 5.395%
P.O. Box 711
Portland, OR 97207
James C. George 5,960
J. Jerry Inskeep, Jr. 97,556
John A. Kemp 4,619
Thomas R. Mackenzie 5,242
James F. Rippey 32,112
Richard L. Woolworth 6,996
Directors and Officers as a Group 240,250
- --------------------------------------------------------------------------------
-- Columbia Balanced Fund, Inc. --
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES HELD OUTSTANDING SHARES
- ------------------------------------------------------------ ----------- ------------------
Fidelity Investments* 2,257,319 6.247%
Institutional Operations Co.
100 Magellan Way - KW1C
Covington, KY 41015
Wells Fargo Bank* 2,083,781 5.766%
P.O. Box 9800
Calabasas, CA 91372
J. Jerry Inskeep, Jr. 261,215
John A. Kemp 6,023
James F. Rippey 9,467
Richard L. Woolworth 6,732
Directors and Officers as a Group 293,951
- --------------------------------------------------------------------------------
-- Columbia Fixed Income Securities Fund, Inc. --
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES HELD OUTSTANDING SHARES
- ------------------------------------------------------------ ----------- ------------------
Charles Schwab & Co Inc.* 2,177,250 7.792%
101 Montgomery St.
San Francisco, CA 94104
J. Jerry Inskeep, Jr. 10,594
John A. Kemp 1,941
James F. Rippey 80,357
Richard L. Woolworth 98
Directors and Officers as a Group 147,677
A-2
---------------------------------------------
- --------------------------------------------------------------------------------
-- Columbia Growth Fund, Inc. --
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES HELD OUTSTANDING SHARES
- ------------------------------------------------------------ ----------- ------------------
Charles Schwab & Co Inc.* 1,792,424 5.131%
101 Montgomery Street
San Francisco, CA 94104
James C. George 4,254
J. Jerry Inskeep, Jr. 95,517
John A. Kemp 2,304
Thomas R. Mackenzie 25,984
James F. Rippey 87,125
Richard L. Woolworth 4,716
Directors and Officers as a Group 271,561
- --------------------------------------------------------------------------------
-- Columbia Small Cap Fund, Inc. --
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES HELD OUTSTANDING SHARES
- ------------------------------------------------------------ ----------- ------------------
James C. George 3,779
J. Jerry Inskeep, Jr. 61,257 1.38%
John A. Kemp 3,484
Thomas R. Mackenzie 81
James F. Rippey 20,833
Directors and Officers as a Group 110,505 2.48%
- --------------------------------------------------------------------------------
-- Columbia Daily Income Company --
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES HELD OUTSTANDING SHARES
- ------------------------------------------------------------ ----------- ------------------
James C. George 1,775,765
J. Jerry Inskeep, Jr. 4,742,388
John A. Kemp 683,457
Thomas R. Mackenzie 136,935
James F. Rippey 10,485,850 1.19%
Richard L. Woolworth 73,804
Directors and Officers as a Group 21,355,848 2.43%
- --------------------------------------------------------------------------------
-- Columbia Municipal Bond Fund, Inc. --
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES HELD OUTSTANDING SHARES
- ------------------------------------------------------------ ----------- ------------------
J. Jerry Inskeep, Jr. 702,205 2.17%
John A. Kemp 3,476
Thomas R. Mackenzie 61,232
James F. Rippey 77,947
Richard L. Woolworth 101
Directors and Officers as a Group 1,114,282 3.45%
A-3
---------------------------------------------
- --------------------------------------------------------------------------------
-- Columbia International Stock Fund, Inc. --
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES HELD OUTSTANDING SHARES
- ------------------------------------------------------------ ----------- ------------------
James C. George 7,463
J. Jerry Inskeep, Jr. 65,299
John A. Kemp 4,071
Thomas R. Mackenzie 3,481
James F. Rippey 34,020
Richard L. Woolworth 96
Directors and Officers as a Group 162,481 1.59%
- --------------------------------------------------------------------------------
-- Columbia Real Estate Equity Fund, Inc. --
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES HELD OUTSTANDING SHARES
- ------------------------------------------------------------ ----------- ------------------
James C. George 6,704
J. Jerry Inskeep, Jr. 84,380 1.14%
John A. Kemp 3,531
Thomas R. Mackenzie 3,722
James F. Rippey 98,565 1.33%
Richard L. Woolworth 105
Directors and Officers as a Group 230,672 3.11%
- --------------------------------------------------------------------------------
-- Columbia U.S. Government Securities Fund, Inc. --
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES HELD OUTSTANDING SHARES
- ------------------------------------------------------------ ----------- ------------------
Standard Insurance Co.* 512,568 11.325%
P.O. Box 711
Portland, OR 97207
John A. Kemp 1,452
James F. Rippey 3,043
Richard L. Woolworth 144
Directors and Officers as a Group 18,047
- --------------------------------------------------------------------------------
-- Columbia High Yield Fund, Inc. --
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES HELD OUTSTANDING SHARES
- ------------------------------------------------------------ ----------- ------------------
J. Jerry Inskeep, Jr. 34,874
John A. Kemp 1,403
Thomas R. Mackenzie 3,910
James F. Rippey 37,712 1.01%
Richard L. Woolworth 139
Directors and Officers as a Group 91,237 2.45%
A-4
FORM OF INVESTMENT
ADVISORY CONTRACT
---------------------------------------------
EXHIBIT B
- ------------ ------------
-- COLUMBIA [FUND NAME], INC. --
INVESTMENT ADVISORY CONTRACT
------------------------------------
This Agreement is made the day of , 1997 between COLUMBIA [Fund
Name], INC., an Oregon corporation, (the "Fund") and COLUMBIA FUNDS MANAGEMENT
COMPANY, an Oregon corporation having its principal place of business in
Portland, Oregon (the "Adviser"). The Fund is registered as an open-end
investment company pursuant to the Investment Company Act of 1940 (the "Act").
The Adviser is registered as an investment adviser pursuant to the Investment
Advisers Act of 1940. This Agreement relates to services to be performed by the
Adviser with respect to the Fund.
The parties agree as follows:
1. DUTIES OF ADVISER. The Adviser shall regularly provide the Fund with
research, advice, and supervision with respect to investment matters and shall
furnish continuously an investment program, recommend what securities shall be
purchased or sold and what portion of the Fund's assets shall be held invested
or uninvested, subject always to the provisions of the Act and the Fund's
Articles of Incorporation and Bylaws, and amendments thereto, which amendments
shall be furnished to the Adviser by the Fund. The Adviser shall take any steps
necessary or appropriate to carry out its decisions in regard to the foregoing
matters and the general conduct of the business of the Fund. The Adviser may
take into consideration receipt of research and statistical information and
other services rendered to the Fund in the allocation of commissions from
portfolio brokerage business.
2. ALLOCATION OF CHARGES AND EXPENSES.
(a) The Adviser shall pay or reimburse the Fund for payments made by the Fund
for all executive salaries and executive expenses, office rent of the Fund,
ordinary office expenses (other than the expense of clerical services relating
to the administration of the Fund), and for any other expenses that, if
otherwise borne by the Fund, would cause the Fund to "be deemed to be acting as
a distributor of securities of which it is the issuer, other than through an
underwriter," pursuant to Rule 12b-1 under the Act. The
B-1
---------------------------------------------
Adviser shall provide investment advisory, statistical, and research facilities
and all clerical services relating to research, statistical, and investment work
with respect to the Fund.
(b) The Adviser shall not be required to pay any expenses of the Fund other than
those enumerated in this Agreement. The Fund will assume all other costs,
including the cost of its custodian, legal, auditing, and accounting expenses,
disinterested directors' fees, taxes, and governmental fees, interest, brokers'
commissions, transaction expenses, cost of stock certificates, and any other
expenses (including clerical expenses) of issue, sale, repurchase, or redemption
of shares, expenses of registering or qualifying shares for sale, transfer
taxes, and all expenses of preparing the Fund's registration statement and
prospectus, and the cost of printing and delivering to shareholders prospectuses
and reports.
3. COMPENSATION OF THE ADVISER. For the services to be rendered, the facilities
to be furnished, and the payments to be made by the Adviser, as provided in
Sections 1 and 2 hereof, for each calendar month the Fund shall pay to the
Adviser a fee computed at the annual rate of 1 percent of daily net assets. If
the asset value is not required to be determined on any particular business day,
then for the purposes of this Section 3, the asset value of a share as last
determined shall be deemed to be the asset value of a share as of the close of
business on that day. If there is no business day in any calendar month, the fee
shall be computed on the basis of the asset value of a share as last determined,
multiplied by the average number of shares outstanding on the last day of the
month.
4. COVENANTS OF THE ADVISER. In connection with purchases or sales of portfolio
securities for the account of the Fund, neither the Adviser nor any officer,
director, or employee of the Adviser shall act as a principal. The Adviser
covenants that it and its employees will comply with investment restrictions of
the Fund's Bylaws applicable to them. If the Adviser or any of its affiliates
give any advice to clients concerning the shares of the Fund, it will act solely
as investment counsel for the clients and not on behalf of the Fund.
5. LIMITATION ON LIABILITY OF ADVISER. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this agreement relates, except a loss
resulting from willful malfeasance, bad faith, or gross negligence on the part
of the Adviser in the performance of its duties or from reckless disregard by
the Adviser of its obligations and duties under this Agreement. The federal
securities laws impose liabilities under certain circumstances on
B-2
---------------------------------------------
persons who act in good faith, and therefore nothing herein shall in any way
constitute a waiver or limitation of any rights which the Fund may have under
any federal securities laws.
6. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) This Agreement shall remain in force for two years from the date hereof, and
it may be continued from year to year thereafter if approved annually by a vote
of a majority of the Fund's shareholders or by its Board of Directors and in
either case a vote of a majority of the Board of Directors who are not parties
to this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
(b) This Agreement may be terminated at any time without the payment of any
penalty by vote of the Board of Directors of the Fund, by vote of a majority of
the outstanding shares of the Fund, or by the Adviser, on 60 days written notice
to the other party.
(c) This Agreement shall automatically terminate if it is assigned. The Adviser
shall notify the Fund of any change in the officers or directors of the Adviser
within a reasonable time after the change. The terms "assignment," "vote of a
majority of the outstanding voting securities," and "interested persons" shall
have the meanings specified in the Act.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of
the day and year first written above.
COLUMBIA
[FUND NAME], INC.
By ____________________________________________
Title:
COLUMBIA FUNDS
MANAGEMENT COMPANY
By ____________________________________________
Title:
B-3
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 4, 1997
The undersigned hereby appoints J. Jerry Inskeep, Jr., James F. Rippey,
John A. Kemp and George L. Hanseth, and each of them separately, proxies,
with power of substitution to each, and hereby authorizes them to represent
and to vote, as designated below, at the Special Meeting of Shareholders of
the above Funds, on December 4, 1997, at 2:30 p.m., Pacific Time, and at any
adjournments thereof, all the shares of the Funds identified on the reverse
side in the Proposal which the undersigned would be entitled to vote if
personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PROPOSAL.
Be sure to vote your shares in each of the Funds shown on the reverse. If
you have any questions, please call Columbia Funds at 1-800-547-1707.
Please sign your name exactly as it appears on this card. If you are a
joint owner, each owner should sign. When signing as executor, administrator,
attorney, trustee, or guardian, or as custodian for a minor, please give your
full title as such. If you are signing for a corporation, please sign the full
corporate name and indicate the signer's office. If the shareholder is a
partner, sign in the partnership name.
- ---------------------------------- -----------------
Signature [PLEASE SIGN WITHIN BOX] Date
- ---------------------------------- -----------------
Signature (Joint Owners) Date
This proxy is solicited on behalf of the Boards of Directors of the
Columbia Funds listed below. Each Fund's Board of Directors recommends a vote
FOR the Proposal.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK. Example: / /
This proxy card is valid only when signed and dated.
PROPOSAL:
Approval of Investment Advisory Contract with Columbia Funds Management
Company
NAME OF FUND FOR AGAINST ABSTAIN
- ------------ --- ------- -------
Columbia Balanced Fund, Inc. / / / / / /
Columbia Common Stock Fund, Inc. / / / / / /
Columbia Daily Income Company / / / / / /
Columbia Fixed Income Securities Fund, Inc. / / / / / /
Columbia Growth Fund, Inc. / / / / / /
Columbia High Yield Fund, Inc. / / / / / /
Columbia International Stock Fund, Inc. / / / / / /
Columbia Municipal Bond Fund, Inc. / / / / / /
Columbia Real Estate Equity Fund, Inc. / / / / / /
Columbia Small Cap Fund, Inc. / / / / / /
Columbia Special Fund, Inc. / / / / / /
Columbia U.S. Government Securities
Fund, Inc. / / / / / /
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