0000950135-01-502825.txt : 20011008
0000950135-01-502825.hdr.sgml : 20011008
ACCESSION NUMBER: 0000950135-01-502825
CONFORMED SUBMISSION TYPE: DEFS14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20011024
FILED AS OF DATE: 20010917
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: LIBERTY ACORN TRUST
CENTRAL INDEX KEY: 0000002110
STANDARD INDUSTRIAL CLASSIFICATION: []
IRS NUMBER: 362692100
STATE OF INCORPORATION: MA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: DEFS14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 811-01829
FILM NUMBER: 1738315
BUSINESS ADDRESS:
STREET 1: 227 W MONROE STE 3000
CITY: CHICAGO
STATE: IL
ZIP: 60606
BUSINESS PHONE: 3126349200
MAIL ADDRESS:
STREET 1: 227 W MONROE STE 3000
CITY: CHICAGO
STATE: IL
ZIP: 60606
FORMER COMPANY:
FORMER CONFORMED NAME: ACORN FUND INC
DATE OF NAME CHANGE: 19920703
FORMER COMPANY:
FORMER CONFORMED NAME: ACORN INVESTMENT TRUST
DATE OF NAME CHANGE: 19940204
DEFS14A
1
b39928dsdefs14a.txt
LIBERTY ACORN TRUST
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
Liberty Acorn Trust
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(Name of Registrant as Specified in Its Charter)
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(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
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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TWO CONVENIENT WAYS TO VOTE YOUR PROXY
The enclosed proxy statement provides details on important issues affecting your
Liberty Funds. The Board of Trustees recommends that you vote for all proposals.
You can vote your proxies over the Internet or by telephone -- it's easy and
confidential!
If you are voting by Internet or telephone, you should NOT mail your proxy card.
Vote by Internet:
-- Read the proxy statement and have your proxy card available.
-- Go to www.libertyfunds.com.
-- Click on the proxy link and follow the instructions provided.
Vote by telephone:
-- Read the proxy statement and have your proxy card available.
-- When you are ready to vote, call toll free 877-779-8683.
-- Enter the voter control number located on the upper left corner of your
proxy card.
-- Follow the instructions provided to cast your vote. A representative will
be available to answer questions.
INTERNET AND TELEPHONE VOTING ARE AVAILABLE 24 HOURS A DAY, SEVEN DAYS A WEEK.
If you have any questions, please call 888-832-5694 from 9:00 a.m. to 11:00 p.m.
EDT Monday through Friday, and Saturdays from 12:00 to 6:00 p.m.
4
TWO CONVENIENT WAYS TO VOTE YOUR PROXY
The enclosed proxy statement provides details on important issues affecting your
funds. The Board of Trustees recommends that you vote FOR the proposal.
You can vote your proxies over the Internet or by telephone -- it's easy and
confidential!
If you are voting by Internet or telephone, you should NOT mail your proxy card.
Vote by Internet:
-- Read the proxy statement and have your proxy card available.
-- Go to www.acornfunds.com.
-- Click on the proxy link and follow the instructions provided.
Vote by Telephone:
-- Read the proxy statement and have your proxy card available.
-- When you are ready to vote, call toll free 877-779-8683.
-- Enter the voter control number located in the upper left corner of your
proxy card.
-- Follow the instructions provided to cast your vote. A representative will
be available to answer questions regarding the meeting agenda and
execution of proxies.
INTERNET AND TELEPHONE VOTING ARE AVAILABLE 24 HOURS A DAY, SEVEN DAYS A WEEK.
If you have any questions, please call (800) 290-6426 from 8:00 a.m. to 11:00
p.m. EDT Monday through Friday, and Saturdays from 9:00 a.m. to 10:00 p.m.
5
LIBERTY ACORN TRUST
Dear Shareholder:
On October 24, 2001, we will be holding a special meeting of shareholders of the
Liberty Acorn Family of Funds. The meeting will take place at 9:00 a.m., Central
time, in the Bank One Auditorium, Plaza Level, 38 South Dearborn Street in
Chicago, Illinois.
As a Liberty Acorn shareholder, you are being asked to vote on a proposed new
investment advisory agreement. In a nutshell, Liberty Financial Companies, Inc.
has entered into an agreement to sell its asset management business to Fleet
National Bank, part of FleetBoston Financial Corporation, a diversified
financial services company. The sale will terminate the Funds' current advisory
agreement but the proposed new advisory agreement is substantially the same as
that currently in place. NO CHANGES IN ADVISORY FEE RATES OR SERVICES ARE BEING
PROPOSED.
Your vote is very important. The Board of Trustees has approved the new
agreement and recommends that you vote "For" the proposal. Please complete, sign
and date the enclosed proxy card and return it in the enclosed postage-paid
return envelope. This will ensure that your vote is counted, even if you cannot
attend the meeting in person. It is important that you vote promptly.
As always, we thank you for investing with us. If you have questions, please
feel free to call 888-832-5694.
Sincerely,
/s/ RALPH WANGER
Ralph Wanger
President
September 18, 2001
G-60/612G-0701
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LIBERTY ACORN TRUST
Dear Shareholder:
On October 24, 2001, we will be holding a special meeting of shareholders of the
Liberty Acorn Family of Funds. The meeting will take place at 9:00 a.m., Central
time, in the Bank One Auditorium, Plaza Level, 38 South Dearborn Street in
Chicago, Illinois.
As a Liberty Acorn shareholder, you are being asked to vote on a proposed new
investment advisory agreement. In a nutshell, Liberty Wanger Asset Management's
parent company, Liberty Financial Companies, Inc., has entered into an agreement
to sell its asset management business to Fleet National Bank, part of
FleetBoston Financial Corporation, a diversified financial services company. The
firm will become part of Fleet's asset management division.
The sale will terminate the Funds' current advisory agreement but the proposed
new advisory agreement is substantially the same as that currently in place. NO
CHANGES IN ADVISORY FEE RATES OR SERVICES ARE BEING PROPOSED. YOUR STATUS AS A
NO-LOAD INVESTOR WILL NOT CHANGE.
Your vote is very important. The Acorn Board of Trustees has approved the new
agreement and recommends that you vote "For" the proposal. Please complete, sign
and date the enclosed proxy card and return it in the enclosed postage-paid
return envelope. This will ensure that your vote is counted, even if you cannot
attend the meeting in person. It is important that your vote be received by
October 24, 2001 in order to be counted.
As always, we thank you for investing with us. While the changes in ownership we
have experienced over the past two years may raise concerns, Fleet's management
has assured us that the Liberty Acorn Family of Funds will maintain its
independence and investment style. The proven process we have used in managing
money for more than 30 years will not change. If you have questions, please feel
free to call us at 800-922-6769.
Sincerely,
/s/ RALPH WANGER
Ralph Wanger
President
September 18, 2001
G-60/588G-0601
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IMPORTANT NEWS
FOR FUND SHAREHOLDERS
WHILE WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT,
HERE'S A BRIEF OVERVIEW OF MATTERS TO BE VOTED UPON.
QUESTIONS AND ANSWERS
Q. What am I being asked to vote "For" in this proxy?
A. You are being asked to vote for a proposal to approve a new investment
advisory agreement for your Fund with your Fund's current investment advisor,
on substantially identical terms as the current investment advisory
agreement. NO CHANGE IN ADVISORY FEE RATES OR SERVICES IS BEING PROPOSED.
Q. Why am I being asked to vote on a new agreement?
A. Liberty Financial Companies, Inc. (Liberty Financial), the parent company of
the investment advisor to the Funds listed in the Notice of Special Meeting
of Shareholders, has entered into an agreement to sell its asset management
business, including the Funds' investment advisor, to Fleet National Bank
(Fleet), an indirect wholly owned subsidiary of FleetBoston Financial
Corporation, a U.S. financial holding company. The sale will result in the
termination of the current investment advisory agreement for the Funds. The
sale will not be completed unless a number of conditions are met. One of the
conditions of the sale is that shareholders of a percentage of the Funds and
other accounts managed by Liberty Financial affiliates must approve new
advisory agreements. Your Board of Trustees has approved, and recommends that
you approve, the new investment advisory agreement for your Fund.
Q. What prompted the sale of Liberty Financial's asset management business to
Fleet?
A. On November 1, 2000, Liberty Financial announced that it had retained Credit
Suisse First Boston to help explore strategic alternatives, including the
possible sale of Liberty Financial. Liberty Financial ultimately determined
to sell its asset management business to Fleet.
Q. How will the sale of Liberty Financial's asset management business
potentially benefit me?
A. Your Board of Trustees believes that there may be benefits of scale from
combining the asset management businesses of Fleet and Liberty Financial,
including the ability to attract and retain key personnel, greater access to
resources for investment professionals of
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the advisor, enhanced technology and customer service, and the expected
availability of additional investment options for shareholders of the Funds.
Q. How does the proposed new agreement differ from the current agreement?
A. The proposed agreement is substantially identical to the current agreement.
It differs only in its beginning date and term and certain other minor
provisions. A comparison of the proposed new agreement is included in the
proxy statement under the heading "New Advisory Agreement."
Q. Will this change the advisory fees on my fund?
A. No. Advisory fees will remain the same.
Q. Will there be any advisor or Fund strategy changes?
A. No. Liberty Wanger Asset Management is expected to continue to manage the
Funds after the sale of Liberty Financial's asset management business, using
the same investment strategies and objectives currently in place.
Q. How does the Board of Trustees recommend that I vote on the proposal?
A. The Board of Trustees recommends that you vote "FOR" the proposal. The Board
believes that the proposal is in the best interests of your Fund and its
shareholders.
Q. How can I vote my proxy?
A. For your convenience, there are several ways you can vote:
- By Mail: vote, sign and return the enclosed proxy card
- In person: October 24, 2001, at 9:00 a.m., Central time, in the Bank One
Auditorium, Plaza Level, 38 South Dearborn Street, Chicago, Illinois.
- By telephone or Internet
IT IS IMPORTANT THAT YOU VOTE PROMPTLY.
11
IMPORTANT NEWS
FOR FUND SHAREHOLDERS
WHILE WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT,
HERE'S A BRIEF OVERVIEW OF MATTERS TO BE VOTED UPON.
QUESTIONS AND ANSWERS
Q. What am I being asked to vote "For" in this proxy?
A. You are being asked to vote for a proposal to approve a new investment
advisory agreement for your Fund with your Fund's current investment advisor,
on substantially identical terms as the current investment advisory
agreement. NO CHANGE IN ADVISORY FEE RATES OR SERVICES IS BEING PROPOSED.
Q. Why am I being asked to vote on a new agreement?
A. Liberty Wanger Asset Management's parent company, Liberty Financial
Companies, Inc. (Liberty Financial), has entered into an agreement to sell
its asset management business to Fleet National Bank (Fleet), part of
FleetBoston Financial Corporation. While the Fleet name is often associated
with banking, FleetBoston Financial is a large financial services company
with many different business units. Liberty Wanger Asset Management will
become part of Fleet's separate asset management division.
The sale will result in the termination of the current investment advisory
agreement for the Liberty Acorn Family of Funds. The sale will not be
completed unless a number of conditions are met. One of the conditions of
the sale is that shareholders of a percentage of the Funds and other
accounts managed by Liberty Financial affiliates must approve new advisory
agreements. Your Board of Trustees has approved, and recommends that you
approve, the new investment advisory agreement for your Fund.
Q. What prompted the sale of Liberty Financial's asset management business to
Fleet?
A. On November 1, 2000, Liberty Financial announced that it had retained Credit
Suisse First Boston to help explore strategic alternatives, including the
possible sale of Liberty Financial, to ensure the continued success of the
organization. Liberty Financial ultimately determined to sell its asset
management business to Fleet.
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Q. How will the sale of Liberty Financial's asset management business
potentially benefit me?
A. Your Board of Trustees believes that there may be benefits of scale from
combining the asset management businesses of Fleet and Liberty Financial,
including the ability to attract and retain key personnel, greater access to
resources for investment professionals of the advisor, enhanced technology
and customer service, and the expected availability of additional investment
options for shareholders of the Funds.
Q. If I hold no-load shares of a Fund, will I still be able to make additional
purchases of those shares without a sales load?
A. Yes. The sale will not affect your ability to purchase additional no-load
shares.
Q. How does the proposed new agreement differ from the current agreement?
A. The proposed agreement is substantially identical to the current agreement.
It differs only in its beginning date and term and certain other minor
provisions. A comparison of the proposed new agreement is included in the
proxy statement under the heading "New Advisory Agreement."
Q. Will this change the advisory fees on my fund?
A. No. Advisory fees will remain the same.
Q. Will there be any advisor or Fund strategy changes?
A. No. Liberty Wanger Asset Management is expected to continue to manage the
Funds after the sale of Liberty Financial's asset management business, using
the same investment strategies and objectives currently in place.
Q. How does the Board of Trustees recommend that I vote on the proposal?
A. The Board of Trustees recommends that you vote "FOR" the proposal. The Board
believes that the proposal is in the best interests of your Fund and its
shareholders.
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Q. How can I vote my proxy?
A. For your convenience, there are several ways you can vote:
- By Mail: vote, sign and return the enclosed proxy card
- In person: October 24, 2001, at 9:00 a.m., Central time, in the Bank One
Auditorium, Plaza Level, 38 South Dearborn Street, Chicago, Illinois.
- By telephone or Internet
IT IS IMPORTANT THAT YOU VOTE PROMPTLY.
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LIBERTY ACORN TRUST
227 WEST MONROE STREET
SUITE 3000
CHICAGO, ILLINOIS 60606
Liberty Acorn Fund
Liberty Acorn International
Liberty Acorn USA
Liberty Acorn Twenty
Liberty Acorn Foreign Forty
(the "Funds")
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 24, 2001
A Special Meeting of the shareholders of each Fund will be held on Wednesday,
October 24, 2001 at 9:00 a.m., Central time, at Bank One Auditorium, Plaza
Level, 38 South Dearborn Street, Chicago, Illinois 60602 for these purposes:
1. To approve a new Investment Advisory Agreement for each of Liberty Acorn
Fund, Liberty Acorn International, Liberty Acorn USA, Liberty Acorn Twenty,
and Liberty Acorn Foreign Forty; and
2. To consider and act upon any other matters that properly come before the
meeting and any adjourned session of the meeting.
Shareholders of record at the close of business on August 23, 2001 are entitled
to notice of and to vote at the meeting and any adjourned session.
By order of the Board of Trustees,
Bruce H. Lauer
Secretary
September 18, 2001
PLEASE RESPOND. YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU
OWN. YOU CAN VOTE EASILY AND QUICKLY BY PHONE, BY MAIL, BY INTERNET OR IN
PERSON.
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PROXY STATEMENT
LIBERTY ACORN TRUST
227 WEST MONROE STREET
SUITE 3000
CHICAGO, ILLINOIS 60606
LIBERTY ACORN FUND
LIBERTY ACORN INTERNATIONAL
LIBERTY ACORN USA
LIBERTY ACORN TWENTY
LIBERTY ACORN FOREIGN FORTY
(THE "FUNDS")
The Trustees of Liberty Acorn Trust (the "Trustees") are soliciting proxies from
the shareholders of each of the Funds in connection with a Special Meeting of
Shareholders of each Fund (the "Meeting"). The Meeting has been called to be
held on Wednesday, October 24, 2001 at 9:00 a.m., Central time, at Bank One
Auditorium, Plaza Level, 38 South Dearborn Street, Chicago, Illinois 60602. The
meeting notice, this Proxy Statement and proxy cards are being sent to
shareholders beginning on or about September 18, 2001.
The only item of business that the Trustees expect will come before the Meeting
is approval of a new Investment Advisory Agreement for each Fund (the "New
Advisory Agreement") with Liberty Wanger Asset Management, L.P. (the "Advisor").
PROPOSAL 1
NEW ADVISORY AGREEMENT
As explained below, the proposed New Advisory Agreement for each Fund is
substantially identical (except for its term and date and certain other
non-material changes) to the Investment Advisory Agreement currently in effect
for that Fund (the "Current Advisory Agreement").
The reason the Trustees are proposing a New Advisory Agreement for each Fund is
that the Current Advisory Agreement will terminate when the Advisor's parent
company, Liberty Financial Companies, Inc. ("LFC"), sells each of the advisors
and its other subsidiaries that
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operate its asset management business (the "Asset Management Segment") to Fleet
National Bank, a national banking association, or a wholly owned subsidiary
thereof ("Fleet"). As a result of this acquisition, the advisors will become
direct or indirect, wholly owned subsidiaries of Fleet. The Investment Company
Act of 1940, as amended (the "Investment Company Act"), provides generally that
the advisory agreement of an investment company must provide for automatic
termination if assigned, such as when the investment advisor or its parent
company undergoes a significant change of ownership.
In addition, LFC has agreed to sell, in a separate transaction, all of the
issued and outstanding capital stock of the subsidiaries constituting the
annuity segment of LFC's business to Sun Life Assurance Company of Canada, a
Canadian corporation (the "Annuity Sale"). The sale of the Asset Management
Segment to Fleet and the Annuity Sale are not conditioned on each other. LFC has
entered into a Merger Agreement with Liberty Mutual Insurance Company (the
majority stockholder of LFC), which provides that, following the acquisition of
the Asset Management Segment by Fleet and the Annuity Sale, LFC will merge with
and into LFC Acquisition Corporation, a wholly owned subsidiary of Liberty
Mutual Insurance Company, with LFC being the surviving corporation (the
"Merger"). In connection with the Merger, holders of LFC common stock, other
than LFC, Liberty Mutual and their respective direct and indirect subsidiaries
and other than those holders of LFC common stock who validly perfect and
exercise their appraisal rights under Massachusetts law, will be entitled to
receive an amount of cash equal to $33.44, subject to adjustment, per share of
common stock. Once such merger consideration is paid, such shares will be
cancelled.
The Trustees have carefully considered the matter and have concluded that it is
appropriate to enter into the New Advisory Agreement for each Fund, so that the
Advisor can continue, following the acquisition of the Asset Management Segment
by Fleet, to manage each Fund on the same terms as are now in effect. The
Trustees also have approved an interim advisory agreement for each Fund pursuant
to Rule 15a-4 under the Investment Company Act, which will be entered into
immediately following the closing of the acquisition of the Asset Management
Segment by Fleet if (i) the Meeting is not held until after the closing of the
acquisition of the Asset Management Segment by Fleet or (ii) the Fund does not
receive the requisite shareholder vote for the New Advisory Agreement at the
Meeting. See "Basis for the Trustees'
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Recommendations" below for further information on the interim agreement.
The acquisition of the Asset Management Segment by Fleet will occur only if
various conditions are satisfied (or waived by the parties, if permitted by
law). Those conditions include, among others, the receipt of certain government
approvals, approval or consent from investment advisory clients of the Advisor
and other LFC affiliates (including mutual fund clients) which represent a
specified percentage of LFC's total assets under management as of March 31,
2001, the avoidance of a certain level of net redemptions from portfolios
managed by the Advisor and certain of its affiliates that make up the Asset
Management Segment and approval of the acquisition by the requisite vote of the
shareholders of LFC. LFC currently expects that the acquisition will occur
during the latter part of 2001, but the acquisition could be delayed. If the
acquisition does not occur, the New Advisory Agreement would not be needed
because the automatic termination of the Current Advisory Agreement would not
occur.
Under the Investment Company Act, a Fund cannot enter into a New Advisory
Agreement unless the shareholders of that Fund vote to approve the New Advisory
Agreement. The Meeting is being held to seek shareholder approval of the New
Advisory Agreement for each Fund. NO CHANGE IN ADVISORY FEE RATES OR SERVICES IS
BEING PROPOSED.
Shareholders of each Fund, regardless of class, will vote separately on the New
Advisory Agreement for that Fund. Each share is entitled to cast one vote, and
fractional shares are entitled to a proportionate fractional vote.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND VOTE TO APPROVE THE
NEW ADVISORY AGREEMENT FOR THEIR FUND.
DESCRIPTION OF THE NEW ADVISORY AGREEMENT
The New Advisory Agreement for each Fund is substantially identical (but for a
few non-material changes) to the Current Advisory Agreement for that Fund. The
date of the New Advisory Agreement for any Fund will be the date that Fleet
acquires the Asset Management Segment, or such later date on which shareholders
of the Fund approve the New Advisory Agreement, and the initial term of the New
Advisory
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Agreement expires on July 31, 2003. Appendix A to this Proxy Statement sets
forth information about the Current Advisory Agreement, including the date of
the Current Advisory Agreement and the advisory fee rates under both the New
Advisory Agreement and the Current Advisory Agreement. Appendix B to this Proxy
Statement contains the form of the New Advisory Agreement applicable to each
Fund. The next several paragraphs briefly summarize some important provisions of
the New Advisory Agreement, but for a complete understanding of the Agreement,
you should read Appendices A and B.
The New Advisory Agreement for each Fund essentially provides that the Advisor,
under the Trustees' supervision, will (1) decide what securities to buy and sell
for the Fund's portfolio; (2) select brokers and dealers to carry out portfolio
transactions for the Fund and (3) provide officers, office space and certain
administrative services to the Fund.
The New Advisory Agreement for each Fund provides that it will continue in
effect for an initial period beginning on the date Fleet acquires the Asset
Management Segment, or such later date on which the shareholders of a Fund
approve the New Advisory Agreement, and ending on July 31, 2003. After that, it
will continue in effect from year to year as long as the continuation is
approved at least annually (i) by the Trustees or by vote of a majority of the
outstanding voting securities of the Fund and (ii) by vote of a majority of the
Trustees who are not "interested persons," as that term is defined in the
Investment Company Act, of the Trust or the Advisor (those Trustees who are not
"interested persons" of the Trust or the Advisor are referred to below as the
"Independent Trustees").
The New Advisory Agreement for each Fund may be terminated without penalty by
vote of the Trustees or by vote of a majority of the outstanding voting
securities of the Fund, on sixty days' written notice to the Advisor, or by the
Advisor upon sixty days' written notice to the Trust, and each terminates
automatically in the event of its "assignment" as defined in the Investment
Company Act. The Investment Company Act defines "assignment" to include, in
general, transactions in which a significant change in the ownership of an
investment advisor or its parent company occurs (such as the acquisition of the
Asset Management Segment by Fleet).
The New Advisory Agreement for each Fund provides that the Advisor will not be
liable to the Fund or its shareholders, except for liability
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arising from the Advisor's willful misfeasance, bad faith, gross negligence or
reckless disregard of duty.
The Advisor currently provides administrative services to each Fund under a
separate administration agreement. That agreement and the agreement discussed in
the following paragraph are not subject to the "assignment" provisions of the
Investment Company Act and are not impacted by LFC's sale of the Asset
Management Segment to Fleet. The aggregate administrative services fees paid by
each Fund to the Advisor for the most recently completed fiscal year are set
forth in Appendix E. Upon shareholder approval of the New Advisory Agreement,
each Fund, under the administration agreement, will continue to pay to the
Advisor the same fee rate under that agreement that it currently pays. Some or
all of the administrative services required pursuant to the administration
agreement are provided, at the Advisor's expense, by affiliates of the Advisor.
The Advisor will continue to be responsible for the performance of services it
delegates to others.
Liberty Funds Services, Inc. ("LFSI"), One Financial Center, Boston,
Massachusetts 02111, is the transfer and shareholder servicing agent for the
Funds. The aggregate transfer agency fees paid by each Fund to LFSI for the most
recently completed fiscal year are set forth in Appendix E. The transfer agency
arrangements for each Fund will remain in effect if the proposed New Advisory
Agreement is approved.
BASIS FOR THE TRUSTEES' RECOMMENDATIONS
The Trustees initially met on June 25, 2001 to discuss the proposed acquisition
of the Asset Management Segment by Fleet. At that meeting, the Trustees
discussed the terms of the proposed acquisition, the general corporate structure
of Fleet and the background of certain key employees of Fleet, and the views of
the Advisor on the proposed acquisition. The Trustees discussed items that they
wanted to raise with Fleet and authorized their counsel to create a list of
discussion items. At a meeting of the Independent Trustees held on July 2, 2001,
the Independent Trustees reviewed and revised the list of discussion items to be
presented to representatives of Fleet, and were updated on the status of
discussions between the Advisor and Fleet.
At a meeting of the Board held on July 10, 2001, representatives of LFC made a
presentation regarding the terms of the proposed acquisition and representatives
of Fleet made a presentation regarding Fleet's structure
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and asset management business and their plans as they existed at that time for
the Asset Management Segment. In addition, the representatives of Fleet
responded to the list of discussion items furnished to them in advance of the
meeting. The Trustees asked numerous questions relating to the autonomy of
Liberty Acorn Trust and the Advisor, Fleet's process to transition the Asset
Management Segment, including the Advisor, into its business operations and
Fleet's commitment to the asset management business. At that meeting, the
Trustees met in executive session and determined to request that Fleet enter
into a side agreement with Liberty Acorn Trust setting forth certain of the
items discussed at the meeting. The Trustees authorized their counsel to prepare
a memorandum to Fleet setting forth the principal terms of the proposed
agreement. The Trustees also discussed the various alternatives available if
they should determine not to approve the New Advisory Agreement. At a meeting of
the Independent Trustees held on July 16, 2001, the Independent Trustees
reviewed the draft memorandum and requested that their counsel incorporate into
the memorandum suggestions made at the meeting, and forward the memorandum to
representatives of Fleet.
At a meeting held on July 31, 2001, the Independent Trustees met in executive
session to discuss Fleet's proposed agreement responding to the Trustees'
memorandum. Thereafter, the Trustees met with representatives of Fleet and a
representative of LFC, all of whom answered various questions posed by the
Trustees, particularly relating to the status of negotiations concerning the
retention of key employees of the Advisor. The Trustees and Fleet finalized the
terms of the agreement (the "Fleet Agreement") by which Fleet agreed that during
the initial term of the New Advisory Agreement, except as otherwise authorized
by the Trustees, it will:
- preserve the autonomy of Liberty Acorn Trust;
- preserve the independence of the Advisor, including its investment philosophy
and approach to investment operations, research and talent;
- allow the Advisor considerable latitude to recruit and compensate (on
competitive terms) investment management personnel;
- not interfere with the Advisor's relationships with regional brokers unless
regulatory or compliance concerns dictate and will permit the Advisor to
continue to allocate the commissions and soft dollar payments as it has in the
past;
6
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- maintain the trading desk at the Advisor for domestic and international
trading activities; and
- not add to the current management responsibilities of any portfolio manager of
a Fund the responsibility to manage additional funds from the Fleet
organization without the consent of the Trustees.
The Trustees requested that Fleet and the Advisor continue to negotiate the
terms of the retention arrangements with key employees of the Advisor, and
agreed to meet on August 15, 2001 to consider approval of the New Advisory
Agreement.
At a meeting of the Board held on August 15, 2001, the representatives of Fleet
and the Advisor updated the Board on the status of the negotiations between
Fleet and key employees of the Advisor. After further discussion and
consideration, the Trustees approved the New Advisory Agreement and determined
to recommend that each Fund's shareholders vote to approve the New Advisory
Agreement for their Fund. The Trustees subsequently gave further consideration
to the proposed acquisition and reaffirmed their recommendation that
shareholders vote to approve the New Advisory Agreement.
In coming to that determination, the Trustees gave particular consideration to
matters relating to the possible effects on the Advisor and the Funds of the
acquisition of the Asset Management Segment by Fleet. Among other things, the
Trustees considered:
- the terms of the Fleet Agreement as described above;
- certain actions taken by LFC and the Advisor to help retain and incent their
key personnel;
- the general reputation, financial resources and business activities of Fleet
and its parent organization;
- the potential benefits of scale from combining the asset management businesses
of Fleet and LFC, including the ability to attract and retain key personnel
and enhance technology and customer service;
- the stated intention of Fleet to consult with the Board of the Funds prior to
removing or reducing any voluntary fee waivers or expense limitations; and
- the stated intention of Fleet to provide investment professionals of the
Advisor with access to greater resources as a result of the acquisition.
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In addition, the Trustees considered a wide range of information of the type
they regularly consider when determining whether to continue a Fund's advisory
agreement as in effect from year to year. The Trustees considered information
about, among other things:
- the Advisor and its respective personnel (including particularly those
personnel with responsibilities for providing services to the Funds),
resources and investment process;
- the terms of the New Advisory Agreement;
- the scope and quality of the services that the Advisor has been providing to
the Funds;
- the investment performance of each Fund and of similar funds managed by other
advisors;
- the advisory fee rates payable to the Advisor by the Funds and by other funds
and client accounts managed by the Advisor, and payable by similar funds
managed by other advisors (Appendix C to this Proxy Statement contains
information comparing each Fund's advisory fee schedule to the fee schedule
for other funds managed by the Advisor that have investment objectives similar
to the particular Fund);
- the total expense ratios of the Funds and of similar funds managed by other
advisors; and
- compensation payable by the Funds to affiliates of the Advisor for other
services (see Appendix E to this Proxy Statement for more information about
that compensation).
In addition, the Trustees considered that the agreement relating to the
acquisition by Fleet provides that Fleet will (subject to certain
qualifications) use all reasonable efforts to assure compliance with Section
15(f) of the Investment Company Act. Section 15(f) provides that a mutual fund
investment advisor or its affiliates may receive benefits or compensation in
connection with a change of control of the investment advisor (such as Fleet's
acquisition of the Asset Management Segment) if two conditions are satisfied.
First, for three years after the change of control, at least 75% of the members
of the board of any registered investment company advised by the advisor must
consist of persons who are not "interested persons," as defined in the
Investment Company Act, of the advisor. (No changes in the current composition
of the Trustees are required to satisfy that condition.) Second, no "unfair
8
25
burden" may be imposed on any such registered investment company as a result of
the change of control transaction or any express or implied terms, conditions or
understandings applicable to the transaction. "Unfair burden" means any
arrangement, during the two years after the transaction, by which the investment
advisor or any "interested person" of the advisor receives or is entitled to
receive any compensation, directly or indirectly, from such investment company
or its security holders (other than fees for bona fide investment advisory or
other services) or from any other person in connection with the purchase or sale
of securities or other property to, from or on behalf of such investment
company.
The Trustees also considered the fact that Credit Suisse First Boston acted as
financial advisor to LFC in connection with both the Annuity Sale and the sale
of the Asset Management Segment to Fleet and that Steven R. Nason, a Director in
Credit Suisse First Boston's Financial Institutions Group, who participated in
that engagement, is the son of Robert E. Nason, an Independent Trustee of
Liberty Acorn Trust, and concluded that the independence of Robert Nason as a
Trustee was not impaired by his son's involvement in those transactions.
After carefully considering the information described above, the Trustees,
including the Independent Trustees, unanimously voted to approve the New
Advisory Agreement for each Fund and to recommend that each Fund's shareholders
vote to approve the New Advisory Agreement for their Fund.
In the event that the shareholders have not approved the New Advisory Agreement
at the time of the acquisition of the Asset Management Segment by Fleet, the
Advisor will enter into an interim advisory agreement pursuant to Rule 15a-4
under the Investment Company Act, which will take effect immediately following
the acquisition of the Asset Management Segment by Fleet (at which time the
Current Advisory Agreement will terminate due to an assignment). This interim
advisory agreement will be in substantially the form set forth in Appendix B but
also will include certain provisions required by Rule 15a-4 (such as a maximum
term of 150 days, a provision that the Board of Trustees of Liberty Acorn Trust
or a majority of the Fund's shareholders may terminate the agreement at any time
without penalty on not more than 10 days' written notice, and a provision that
the compensation earned by the Advisor thereunder will be held in an
interest-bearing escrow account until shareholder approval of the New Advisory
Agreement is obtained,
9
26
after which the amount in the escrow account (together with any interest) will
be paid to the Advisor). If a Fund has not received the requisite shareholder
approval for the New Advisory Agreement within 150 days after the closing of the
acquisition, the Trustees will consider other appropriate arrangements subject
to approval in accordance with the Investment Company Act.
INFORMATION ABOUT THE ADVISOR AND THE FLEET/LFC TRANSACTION
LIBERTY WANGER ASSET MANAGEMENT, L.P.
Liberty Wanger Asset Management, L.P. (formerly named Wanger Asset Management,
L.P. ("WAM")), located at 227 West Monroe Street, Suite 3000, Chicago, Illinois
60606, is the Funds' advisor. WAM was renamed Liberty Wanger Asset Management,
L.P. on September 29, 2000, when it became a wholly owned subsidiary of LFC (the
"WAM Merger"). The Advisor and its predecessor have managed mutual funds since
1992. On September 29, 2000, the former investment advisory agreement for each
Fund with WAM terminated and the Current Advisory Agreement became effective. As
of July 31, 2001, the Advisor managed over $8.9 billion in assets.
LFC is a direct majority-owned subsidiary of LFC Management Corporation, which
in turn is a direct wholly owned subsidiary of Liberty Corporate Holdings, Inc.,
which in turn is a direct wholly owned subsidiary of LFC Holdings, Inc., which
in turn is a direct wholly owned subsidiary of Liberty Mutual Equity
Corporation, which in turn is a direct wholly owned subsidiary of Liberty Mutual
Insurance Company ("Liberty Mutual"). As of June 30, 2001, LFC Management
Corporation owned approximately 70.46% of the common stock of LFC and the
balance is held by the public and listed on the New York Stock Exchange. LFC is
a diversified and integrated asset management organization which provides
insurance and investment products to individuals and institutions. The principal
executive office of LFC is located at 600 Atlantic Avenue, 24th Floor, Boston,
Massachusetts 02210. Liberty Mutual is an underwriter of workers' compensation
insurance and a property and casualty insurer in the United States, organized
under the laws of Massachusetts in 1912. The principal business activities of
Liberty Mutual's subsidiaries other than LFC are property-casualty insurance,
insurance services and life insurance (including group life and health insurance
products) marketed through its own sales force. The principal executive offices
of LFC Management
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Corporation, Liberty Corporate Holdings, Inc., LFC Holdings, Inc., Liberty
Mutual and Liberty Mutual Equity Corporation are located at 175 Berkeley Street,
Boston, Massachusetts 02117.
The Advisor is a limited partnership managed by its general partner, WAM
Acquisition GP, Inc. ("WAM GP"). WAM GP is a wholly owned subsidiary of LFC. The
directors of WAM GP are Ralph Wanger, Lindsay Cook and J. Andrew Hilbert. Mr.
Wanger is the president of WAM GP. Mr. Cook is an Executive Vice President of
LFC. Mr. Hilbert is a Senior Vice President and Chief Financial Officer of LFC.
The business address of WAM GP and of Mr. Wanger is 227 West Monroe Street,
Suite 3000, Chicago, Illinois 60606. The business address of Messrs. Cook and
Hilbert is 600 Atlantic Avenue, Federal Reserve Plaza, Boston, Massachusetts
02210.
In addition, the following individuals who are officers or Trustees of the Funds
are also officers or directors of the Advisor: Bruce H. Lauer, Kenneth A. Kalina
and Ralph Wanger.
DESCRIPTION OF THE TRANSACTION
On June 4, 2001, LFC announced that it had entered into a Stock Purchase
Agreement with Fleet (the "Purchase Agreement"). Under the Purchase Agreement,
Fleet would acquire the Asset Management Segment for a purchase price of $900
million, plus the assumption of approximately $110 million in debt. This price
may be adjusted:
- upward or downward based on increases or decreases in the amount of portfolios
managed by the subsidiaries that make up the Asset Management Segment
(excluding the effects of market action) from December 31, 2000 until a date
prior to the closing as the result of purchases of and exchanges into and
withdrawals from and exchanges out of those portfolios. The maximum purchase
price adjustment under this provision would be $180 million;
- upward or downward based on increases or decreases in the tangible net worth
of the Asset Management Segment from April 1, 2001 through a date prior to the
closing;
- downward based on decreases of more than 20% (excluding the effects of sales
and redemptions) in the market values of the assets under management of the
Asset Management Segment between March 31, 2001 and a date prior to the
closing; and
- upward or downward based on the estimated value of amounts owing to or by LFC
at the time of closing in respect of taxes with respect to
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28
the income of the Asset Management Segment and the settlement of certain
inter-company accounts, agreements and arrangements between LFC and the
subsidiaries that make up the Asset Management Segment.
The transaction will not occur unless various conditions are satisfied (or
waived by the parties, if permitted by law). One of these conditions is
obtaining approval or consent from investment advisory clients of the Advisor
and other LFC affiliates that constitute the Asset Management Segment (including
fund clients) whose accounts represented 80% of the Asset Management Segment's
assets under management as of March 31, 2001. Because of these conditions,
approval or disapproval by a Fund's shareholders of the New Advisory Agreement
for their Fund, taken together with other clients' consents or approvals, could
affect whether or not the transaction occurs. As described below, certain
Trustees and officers of Liberty Acorn Trust will receive certain material
payments or benefits if the transaction occurs. The transaction will result in
the automatic termination of the Current Advisory Agreement. If for some reason
the transaction does not occur, the automatic termination of the Current
Advisory Agreement will not occur, and the New Advisory Agreement will not be
entered into, even if it has been approved by the Funds' shareholders. If
shareholder approval is not obtained at the time the transaction occurs, a Fund
will enter into an interim advisory agreement with the Advisor. See "Basis for
the Trustees' Recommendations" above for further information on the interim
agreement.
Simultaneously with the signing of the Purchase Agreement, at Fleet's request,
Liberty Mutual and LFC entered into a license agreement with Fleet which
provides that upon the closing of the acquisition of the Asset Management
Segment, Fleet will have a perpetual, royalty free, non-transferable,
non-sublicensable, non-exclusive license to use the Liberty mark and trade name,
the Statue of Liberty design and other associated marks and trade names used in
connection with the Asset Management Segment's business. The license agreement
also contains other covenants and provisions more fully set forth in the Fleet
license agreement. Neither Liberty Mutual nor LFC will receive compensation or
other consideration under the Fleet license agreement.
As a result of the acquisition, the Advisor and certain of its affiliates that
constitute the Asset Management Segment would become wholly owned, direct or
indirect subsidiaries of Fleet. Fleet is a wholly owned subsidiary of
FleetBoston Financial Corporation, a Boston, Massachusetts-based financial
holding company. Fleet and its affiliates offer a comprehensive
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29
array of financial solutions to approximately 20 million customers in more than
20 countries. Their key lines of business include:
- CONSUMER AND INVESTMENT SERVICES -- includes domestic retail banking to
consumer and small business customers, community banking, student loan
processing, credit card services, and investment services, including mutual
funds and investments, retirement planning, large institutional asset
management and brokerage;
- CORPORATE AND GLOBAL BANKING -- includes commercial finance, including
asset-based lending and leasing; international banking in key Latin American
markets; corporate banking, including specialized industry and institutional
lending; and middle market lending, including commercial lending, government
banking services, trade services and cash management; and
- CAPITAL MARKETS -- includes investment banking services, brokerage,
market-making and principal investing.
CERTAIN INTERESTS OF FUND TRUSTEES AND OFFICERS. Substantially all full-time
employees of LFC and its subsidiaries (including certain officers of Liberty
Acorn Trust) participate in the Liberty Financial Companies, Inc. and
Subsidiaries Non-Commissioned Employee Severance and Retention Plan or the
Liberty Financial Companies, Inc. and Subsidiaries Commissioned Employees
Severance and Retention Plan (the "Retention Plans"). The Retention Plans
provide for cash retention bonuses and the full vesting upon a change of control
of all outstanding options to purchase shares of stock of LFC ("LFC Options")
and shares of restricted stock of LFC ("Restricted Stock") for which the target
price in the applicable restricted stock agreement is less than the value of LFC
common stock on the date of the change of control, even though some of these LFC
Options and Restricted Stock would not otherwise have vested or become fully
exercisable prior to the change of control. The Retention Plans also provide for
enhanced severance benefits to substantially all employees upon a change of
control and additional payments to cover excise tax obligations. With respect to
employees of the subsidiaries that constitute the Asset Management Segment, a
change of control will be deemed to occur under the Retention Plans upon the
completion of the Fleet transaction.
Pursuant to the WAM Merger, in addition to the fixed amount of the purchase
price paid by LFC to the principals of WAM (including Ralph Wanger and Charles
McQuaid, members of the Board of Trustees of Liberty Acorn Trust), additional
purchase price amounts would have
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30
been payable by LFC if the Advisor's earnings met certain targets for the 36 and
60 month periods beginning with the month following the closing of the WAM
Merger. If Fleet acquires the Asset Management Segment, those targets and the
related payments will be reduced. In addition, Fleet has offered to amend the
existing bonus compensation plan for certain employees of the Advisor, including
Messrs. Wanger and McQuaid and the other portfolio managers of the Funds. The
amended plan would provide for discretionary bonus compensation based on market
comparable compensation and investment performance, and would no longer tie
bonus compensation to the annual earnings of the Advisor.
CERTAIN BROKERAGE MATTERS
In their consideration of the New Advisory Agreement, the Trustees took account
of the Advisor's practices regarding the selection and compensation of brokers
and dealers that execute portfolio transactions for the Funds, and the brokers'
and dealers' provision of brokerage and research services to the Advisor. The
Advisor has informed the Trustees that it does not expect to change these
practices as a result of Fleet's acquisition of the Asset Management Segment. A
summary of these brokerage and soft-dollar practices is set forth in Appendix D.
OTHER INFORMATION
PRINCIPAL UNDERWRITER'S AND ADMINISTRATOR'S ADDRESS. The address of the Funds'
principal underwriter, Liberty Funds Distributor, Inc., is One Financial Center,
Boston, Massachusetts 02111. The address of the Funds' administrator, Liberty
Wanger Asset Management, L.P., is 227 West Monroe Street, Suite 3000, Chicago,
Illinois 60606.
FUND ANNUAL AND SEMIANNUAL REPORTS. THE FUNDS HAVE PREVIOUSLY SENT THEIR ANNUAL
REPORT AND ANY SUBSEQUENT SEMIANNUAL REPORTS TO THEIR SHAREHOLDERS. YOU CAN
OBTAIN A COPY OF THESE REPORTS WITHOUT CHARGE BY WRITING TO LIBERTY FUNDS
DISTRIBUTOR, INC., ONE FINANCIAL CENTER, BOSTON, MASSACHUSETTS 02111-2621 OR BY
CALLING 800-426-3750.
OUTSTANDING SHARES AND SIGNIFICANT SHAREHOLDERS. Shareholders of record at the
close of business on August 23, 2001 are entitled to notice of and to vote at
the Meeting and any adjourned session. Appendix F to this Proxy Statement lists
for each Fund the total number of shares outstanding as of August 23, 2001 for
each class of the Fund's shares entitled to vote at the Meeting. It also
identifies holders of more than 5%
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of any class of shares of each Fund and contains information about the
shareholdings in the Funds by the Trustees and the executive officers of the
Funds.
INFORMATION ABOUT PROXIES AND THE CONDUCT OF THE MEETING
SOLICITATION OF PROXIES. Proxies will be solicited primarily by mailing this
Proxy Statement and its enclosures, but proxies may also be solicited through
further mailings, telephone calls, personal interviews or e-mail by officers of
the Funds or by employees or agents of the Advisor or of LFC and its affiliated
companies. In addition, D.F. King, with respect to Class Z shares of the Funds,
and Georgeson Shareholder Communications Inc., with respect to Class A, B and C
shares of the Funds, have been engaged to assist in the solicitation of proxies
at an estimated cost of $17,500 and $39,082, respectively.
COSTS OF SOLICITATION. All of the costs of the Meeting, including the costs of
soliciting proxies, will be paid by LFC or Fleet. None of these costs will be
borne by the Funds or their shareholders.
VOTING AND TABULATION OF PROXIES. Shares represented by duly executed proxies
will be voted as instructed on the proxy. If no instructions are given, the
proxy will be voted in favor of the New Advisory Agreement. You may vote by any
one of the three following methods: (1) by mailing the enclosed proxy card; (2)
through use of the Internet or (3) by telephone. If you mail the enclosed proxy
and no choice is indicated for a proposal listed in the attached Notice of
Meeting, your proxy will be voted in favor of that proposal. Votes made through
use of the Internet or by telephone must have an indicated choice in order to be
accepted. Please see the enclosed proxy insert for information on how to vote by
Internet or telephone. At any time before it has been voted, your proxy may be
revoked in one of the following ways: (i) by sending a signed, written letter of
revocation to the Secretary of the Trust; (ii) by properly executing a
later-dated proxy (by any of the methods of voting described above) or (iii) by
attending the Meeting, requesting return of any previously delivered proxy and
voting in person.
Votes cast in person or by proxy at the Meeting will be counted by persons
appointed by the Funds as tellers for the Meeting (the "Tellers"). Thirty
percent of the shares of any Fund outstanding on the record date, present in
person or represented by proxy, constitutes a quorum for the transaction of
business by the shareholders of that Fund at the Meeting. In determining whether
a quorum is present, the Tellers
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will count shares represented by proxies that reflect abstentions and "broker
non-votes" as shares that are present and entitled to vote. Since these shares
will be counted as present, but not as voting in-favor of any proposal, these
shares will have the same effect as if they cast votes 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.
REQUIRED VOTE. For each Fund, the vote required to approve the New Advisory
Agreement is the lesser of (1) 67% of the shares of that Fund that are present
at the Meeting, if the holders of more than 50% of the shares of the Fund
outstanding as of the record date are present or represented by proxy at the
Meeting, or (2) more than 50% of the shares of the Fund outstanding on the
record date. If the required vote is not obtained for any Fund, the Trustees
will consider what other actions to take in the best interests of the Fund.
ADJOURNMENTS; OTHER BUSINESS. If any Fund has not received enough votes by the
time of the Meeting to approve that Fund's New Advisory Agreement, the persons
named as proxies may propose that the Meeting be adjourned one or more times as
to that Fund to permit further solicitation of proxies. Any adjournment requires
the affirmative vote of a majority of the total number of shares of that Fund
that are present in person or by proxy when the adjournment is being voted on.
The persons named as proxies will vote in favor of any such adjournment all
proxies that they are entitled to vote in favor of the relevant Fund's New
Advisory Agreement. They will vote against any such adjournment any proxy that
directs them to vote against the New Advisory Agreement. They will not vote any
proxy that directs them to abstain from voting on the New Advisory Agreement.
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 approval of the New Advisory Agreement. 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.
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SHAREHOLDER PROPOSALS AT FUTURE MEETINGS. The Funds do not hold annual or other
regular meetings of shareholders. Shareholder proposals to be presented at any
future meeting of shareholders of the Funds must be received by the applicable
Fund in writing a reasonable time before the Trust begins to print and mail
proxies for that meeting, in order to be considered for inclusion in the proxy
materials for that meeting. You may submit shareholder proposals to the
Secretary of the Funds, 227 West Monroe Street, Suite 3000, Chicago, Illinois
60606.
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35
APPENDIX A
ADVISORY AGREEMENT
-------------------------------------------------------------------------------------------
DESCRIPTION OF DATE OF LAST
TRUSTEE ACTION SUBMISSION OF CURRENT
ADVISORY FEE REGARDING CURRENT INVESTMENT ADVISORY
RATE SCHEDULE DATE OF CURRENT INVESTMENT ADVISORY AGREEMENT FOR
(AS A % OF INVESTMENT AGREEMENT SINCE SHAREHOLDER APPROVAL
AVERAGE DAILY ADVISORY BEGINNING OF FUND'S AND REASON FOR
NAME OF FUND NET ASSETS) AGREEMENT LAST FISCAL YEAR SUBMISSION
-------------------------------------------------------------------------------------------
Liberty 0.75% on September 29, On July 6, 2000, On September 26, 2000,
Acorn Fund first $700 2000 the Trustees shareholders approved
million; approved the the current investment
0.70% over current investment advisory agreement in
$700 million advisory agreement connection with LFC's
to $2 in connection with acquisition of the
billion; LFC's acquisition Advisor
0.65% over $2 of the Advisor.
billion
-------------------------------------------------------------------------------------------
Liberty 1.20% on September 29, On July 6, 2000, On September 26, 2000,
Acorn first $100 2000 the Trustees shareholders approved
International million; approved the the current investment
0.95% on next current investment advisory agreement in
$400 million; advisory agreement connection with LFC's
0.75% over in connection with acquisition of the
$500 million LFC's acquisition Advisor
of the Advisor.
-------------------------------------------------------------------------------------------
Liberty 0.95% on September 29, On July 6, 2000, On September 26, 2000,
Acorn USA first $200 2000 the Trustees shareholders approved
million; approved the the current investment
0.90% over current investment advisory agreement in
$200 million advisory agreement connection with LFC's
in connection with acquisition of the
LFC's acquisition Advisor
of the Advisor.
-------------------------------------------------------------------------------------------
Liberty 0.90%(1) September 29, On July 6, 2000, On September 26, 2000,
Acorn Twenty 2000 the Trustees shareholders approved
approved the the current investment
current investment advisory agreement in
advisory agreement connection with LFC's
in connection with acquisition of the
LFC's acquisition Advisor
of the Advisor.
-------------------------------------------------------------------------------------------
A-1
36
-------------------------------------------------------------------------------------------
DESCRIPTION OF DATE OF LAST
TRUSTEE ACTION SUBMISSION OF CURRENT
ADVISORY FEE REGARDING CURRENT INVESTMENT ADVISORY
RATE SCHEDULE DATE OF CURRENT INVESTMENT ADVISORY AGREEMENT FOR
(AS A % OF INVESTMENT AGREEMENT SINCE SHAREHOLDER APPROVAL
AVERAGE DAILY ADVISORY BEGINNING OF FUND'S AND REASON FOR
NAME OF FUND NET ASSETS) AGREEMENT LAST FISCAL YEAR SUBMISSION
-------------------------------------------------------------------------------------------
Liberty 0.95%(2) September 29, On July 6, 2000, On September 26, 2000,
Acorn 2000 the Trustees shareholders approved
Foreign approved the the current investment
Forty current investment advisory agreement in
advisory agreement connection with LFC's
in connection with acquisition of the
LFC's acquisition Advisor
of the Advisor.
-------------------------------------------------------------------------------------------
(1) The Advisor has voluntarily agreed to reimburse Liberty Acorn Twenty to the
extent the ordinary operating expenses exceed 1.35% of the average daily net
assets for Class Z, Class A, Class B and Class C shares. This arrangement
may be modified or terminated by either Liberty WAM or the Fund on 30 days'
notice to the other.
(2) The Advisor has voluntarily agreed to reimburse Liberty Acorn Foreign Forty
to the extent the ordinary operating expenses exceed 1.45% of the average
daily net assets for Class Z, Class A, Class B and Class C shares. This
arrangement may be modified or terminated by either Liberty WAM or the Fund
on 30 days' notice to the other.
A-2
37
APPENDIX B
FORM OF INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT
LIBERTY ACORN TRUST, a Massachusetts business trust registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end diversified
management investment company ("Liberty Acorn"), and LIBERTY WANGER ASSET
MANAGEMENT, L.P., a Delaware limited partnership registered under the Investment
Advisers Act of 1940 as an investment adviser ("Liberty WAM"), agree that:
1. ENGAGEMENT OF LIBERTY WAM. Liberty Acorn appoints Liberty WAM to furnish
investment advisory and other services to Liberty Acorn for its series
designated Liberty Acorn Fund, Liberty Acorn International, Liberty Acorn USA,
Liberty Acorn Twenty and Liberty Acorn Foreign Forty (each, a "Fund," and
collectively, the "Funds")), and Liberty WAM accepts that appointment, for the
period and on the terms set forth in this agreement.
If Liberty Acorn establishes one or more series in addition to the Funds named
above with respect to which it desires to retain Liberty WAM as investment
adviser hereunder, and if Liberty WAM is willing to provide such services under
this agreement, Liberty Acorn and Liberty WAM may add such new series to this
agreement, by written supplement to this agreement. Such supplement shall
include a schedule of compensation to be paid to Liberty WAM by Liberty Acorn
with respect to such series and such other modifications of the terms of this
agreement with respect to such series as Liberty Acorn and Liberty WAM may
agree. Upon execution of such a supplement by Liberty Acorn and Liberty WAM,
that series will become a Fund hereunder and shall be subject to the provisions
of this agreement to the same extent as the Funds named above, except as
modified by the supplement.
2. SERVICES OF LIBERTY WAM.
(a) INVESTMENT MANAGEMENT. Subject to the overall supervision and control of
Liberty Acorn's board of trustees (the "Board"), Liberty WAM shall have
supervisory responsibility for the general management and investment of the
Funds' assets. Liberty WAM shall comply with the 1940 Act and with all
applicable rules and regulations of the Securities and Exchange Commission, the
provisions of the Internal
B-1
38
Revenue Code applicable to the Funds as regulated investment companies, the
investment policies and restrictions, portfolio transaction policies and the
other statements concerning the Funds in Liberty Acorn's agreement and
declaration of trust, bylaws, and registration statements under the 1940 Act and
the Securities Act of 1933 (the "1933 Act"), and policy decisions and procedures
adopted by the Board from time to time.
Liberty WAM is authorized to make the decisions to buy and sell securities and
other assets for the Funds, to place the Funds' portfolio transactions with
broker-dealers, and to negotiate the terms of such transactions including
brokerage commissions on brokerage transactions, on behalf of the Funds. Liberty
WAM is authorized to exercise discretion within the Funds' policy concerning
allocation of its portfolio brokerage, as permitted by law, including but not
limited to section 28(e) of the Securities Exchange Act of 1934, and in so doing
shall not be required to make any reduction in its investment advisory fees.
Liberty Acorn hereby authorizes any entity or person associated with Liberty WAM
that is a member of a national securities exchange to effect any transaction on
the exchange for the account of a Fund to the extent permitted by and in
accordance with Section 11(a) of the Securities Exchange Act of 1934 and Rule
11a2-2(T) thereunder. Liberty Acorn hereby consents to the retention by such
entity or person of compensation for such transactions in accordance with Rule
11a-2(T)(a)(iv).
Liberty WAM may, where it deems it to be advisable, aggregate orders with other
securities of the same type to be sold or purchased by one or more Funds with
like orders on behalf of other clients of Liberty WAM (as well as clients of
other investment advisers affiliated with Liberty WAM, in the event that Liberty
WAM and such affiliated investment advisers share common trading facilities). In
such event, Liberty WAM (or Liberty WAM and its affiliated advisers, as the case
may be) will allocate the shares so sold or purchased, as well as the expenses
incurred in the transaction, in a manner it (or it and they) consider to be
equitable and fair and consistent with its (or its or their) fiduciary
obligations to clients.
(b) REPORTS AND INFORMATION. Liberty WAM shall furnish to the Board periodic
reports on the investment strategy and performance of the Funds and such
additional reports and information as the Board or the officers of Liberty Acorn
may reasonably request. Liberty Acorn shall
B-2
39
furnish or otherwise make available to Liberty WAM such copies of financial
statements, proxy statements, reports, and other information relating to the
business and affairs of each Fund as Liberty WAM may, at any time or from time
to time, reasonably require in order to discharge its obligations under this
agreement.
(c) CUSTOMERS OF FINANCIAL INSTITUTIONS. It is understood that Liberty WAM
may, but shall not be obligated to, make payments from its own resources to
financial institutions (which may include banks, broker-dealers, recordkeepers,
administrators and others) that provide, either directly or through agents,
administrative and other services with respect to shareholders who are customers
of such institutions, including establishing shareholder accounts, assisting
Liberty Acorn's transfer agent with respect to recording purchase and redemption
transactions, advising shareholders about the status of their accounts, current
yield and dividends declared and such related services as the shareholders or
the Funds may request.
(d) BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, Liberty WAM agrees to maintain records relating to its services
under this agreement, and further agrees that all records that it maintains for
Liberty Acorn are the property of Liberty Acorn and to surrender promptly to
Liberty Acorn any of such records upon Liberty Acorn's request; provided that
Liberty WAM may at its own expense make and retain copies of any such records.
Liberty WAM further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
(e) STATUS OF LIBERTY WAM. Liberty WAM shall for all purposes herein be deemed
to be an independent contractor and not an agent of Liberty Acorn and shall,
unless otherwise expressly provided or authorized, have no authority to act for
or represent Liberty Acorn in any way. Liberty WAM agrees to notify the Trust
promptly of any change in the identity of Liberty WAM's general partner.
3. ADMINISTRATIVE SERVICES. Liberty WAM shall supervise the business and
affairs of Liberty Acorn and each Fund and shall provide such services and
facilities as may be required for effective administration of Liberty Acorn and
the Funds as are not provided by employees or other agents engaged by Liberty
Acorn; provided that Liberty WAM shall not have any obligation to provide under
this agreement any such services
B-3
40
which are the subject of a separate agreement or arrangement between Liberty
Acorn and Liberty WAM, any affiliate of Liberty WAM, or any third party
administrator.
4. USE OF AFFILIATED COMPANIES AND SUBCONTRACTORS. In connection with the
services to be provided by Liberty WAM under this agreement, Liberty WAM may, to
the extent it deems appropriate, and subject to compliance with the requirements
of applicable laws and regulations and upon receipt of approval of the Trustees,
make use of (i) its affiliated companies and their directors, trustees,
officers, and employees and (ii) subcontractors selected by Liberty WAM,
provided that Liberty WAM shall supervise and remain fully responsible for the
services of all such third parties in accordance with and to the extent provided
by this agreement. All costs and expenses associated with services provided by
any such third parties shall be borne by Liberty WAM or such parties.
5. EXPENSES TO BE PAID BY LIBERTY ACORN. Except as otherwise provided in this
agreement or any other contract to which Liberty Acorn is a party, Liberty Acorn
shall pay all expenses incidental to its organization, operations and business,
including, without limitation:
(a) all charges of depositories, custodians, sub-custodians and other agencies
for the safekeeping and servicing of its cash, securities and other property and
of its transfer agents and registrars and its dividend disbursing and redemption
agents, if any;
(b) all charges of its administrator, if any;
(c) all charges of legal counsel and of independent auditors;
(d) all compensation of trustees other than those affiliated with Liberty WAM
or Liberty Acorn's administrator, if any, and all expenses incurred in
connection with their services to Liberty Acorn;
(e) all expenses of preparing, printing and distributing notices, proxy
solicitation materials and reports to shareholders of the Funds;
(f) all expenses of meetings of shareholders of the Funds;
(g) all expenses of registering and maintaining the registration of Liberty
Acorn under the 1940 Act and of shares of the Funds under the 1933 Act,
including all expenses of preparation, filing and printing of annual or more
frequent revisions of the Funds' registration statements under the 1940 Act and
1933 Act, and of supplying each then existing shareholder or beneficial owner of
shares of the Funds of a copy of each
B-4
41
revised prospectus or supplement thereto, and of supplying a copy of the
statement of additional information upon request to any then existing
shareholder;
(h) all costs of borrowing money;
(i) all expenses of publication of notices and reports to shareholders and to
governmental bodies or regulatory agencies;
(j) all taxes and fees payable to federal, state or other governmental
agencies, domestic or foreign, and all stamp or other taxes;
(k) all expenses of printing and mailing certificates for shares of a Fund;
(l) all expenses of bond and insurance coverage required by law or deemed
advisable by the Board;
(m) all expenses of qualifying and maintaining qualification of, or providing
appropriate notification of intention to sell relating to, shares of the Funds
under the securities laws of the various states and other jurisdictions, and of
registration and qualification of Liberty Acorn under any other laws applicable
to Liberty Acorn or its business activities;
(n) all fees, dues and other expenses related to membership of Liberty Acorn in
any trade association or other investment company organization; and
(o) any extraordinary expenses.
In addition to the payment of expenses, Liberty Acorn shall also pay all
brokers' commissions and other charges relating to the purchase and sale of
portfolio securities for each Fund.
6. ALLOCATION OF EXPENSES PAID BY LIBERTY ACORN. Any expenses paid by Liberty
Acorn that are attributable solely to the organization, operation or business of
a Fund or Funds shall be paid solely out of the assets of that Fund or Funds.
Any expense paid by Liberty Acorn that is not solely attributable to a Fund or
Funds, nor solely to any other series of Liberty Acorn, shall be apportioned in
such manner as Liberty Acorn or Liberty Acorn's administrator determines is fair
and appropriate, or as otherwise specified by the Board.
7. EXPENSES TO BE PAID BY LIBERTY WAM. Liberty WAM shall furnish to Liberty
Acorn, at Liberty WAM's own expense, office space and all necessary office
facilities, equipment and personnel required to provide its
B-5
42
services pursuant to this agreement. Liberty WAM shall also assume and pay all
expenses of placement of securities orders and related bookkeeping.
8. COMPENSATION OF LIBERTY WAM. For the services to be rendered and the
expenses to be assumed and to be paid by Liberty WAM under this agreement,
Liberty Acorn on behalf of the respective Funds shall pay to Liberty WAM fees
accrued daily and paid monthly at the annual rates (as a percentage of the
Fund's net assets) shown below:
LIBERTY ACORN FUND
ASSETS RATE OF FEE
------ -----------
First $700 million 0.75%
$700 million to $2 billion 0.70%
In excess of $2 billion 0.65%
LIBERTY ACORN INTERNATIONAL
ASSETS RATE OF FEE
------ -----------
First $100 million 1.20%
$100 million to $500 million 0.95%
In excess of $500 million 0.75%
LIBERTY ACORN USA
ASSETS RATE OF FEE
------ -----------
First $200 million 0.95%
In excess of $200 million 0.90%
LIBERTY ACORN TWENTY
LIBERTY ACORN FOREIGN FORTY
B-6
43
The fees attributable to each Fund shall be a separate charge to such Fund and
shall be the several (and not joint or joint and several) obligation of each
such Fund.
9. SERVICES OF LIBERTY WAM NOT EXCLUSIVE. The services of Liberty WAM to
Liberty Acorn under this agreement are not exclusive, and Liberty WAM shall be
free to render similar services to others so long as its services under this
agreement are not impaired by such other activities.
10. SERVICES OTHER THAN AS ADVISER. Within the limits permitted by law,
Liberty WAM or an affiliate of Liberty WAM may receive compensation from Liberty
Acorn for other services performed by it for Liberty Acorn which are not within
the scope of the duties of Liberty WAM under this agreement, including the
provision of brokerage services.
11. STANDARD OF CARE. To the extent permitted by applicable law, neither
Liberty WAM nor any of its partners, officers, agents, employees or affiliates
shall be liable to Liberty Acorn or its shareholders for any loss suffered by
Liberty Acorn or its shareholders as a result of any error of judgment, or any
loss arising out of any investment, or as a consequence of any other act or
omission of Liberty WAM or any of its affiliates in the performance of Liberty
WAM's duties under this agreement, except for liability resulting from willful
misfeasance, bad faith or gross negligence on the part of Liberty WAM or such
affiliate, or by reason of reckless disregard by Liberty WAM or such affiliate
of the obligations and duties of Liberty WAM under this agreement.
12. EFFECTIVE DATE, DURATION AND RENEWAL. This agreement shall become
effective on . Unless terminated as provided in Section 13, this
agreement shall continue in effect as to a Fund until July 31, 2003 and
thereafter from year to year only so long as such continuance is specifically
approved at least annually (a) by a majority of those trustees who are not
interested persons of Liberty Acorn or of Liberty WAM, voting in person at a
meeting called for the purpose of voting on such approval, and (b) by either the
Board or vote of the holders of a "majority of the outstanding shares" of that
Fund (which term as used throughout this agreement shall be construed in
accordance with the definition of "vote of a majority of the outstanding voting
securities of a company" in section 2(a)(42) of the 1940 Act).
B-7
44
13. TERMINATION. This agreement may be terminated as to a Fund at any time,
without payment of any penalty, by the Board, or by a vote of the holders of a
majority of the outstanding shares of that Fund, upon 60 days' written notice to
Liberty WAM. This agreement may be terminated by Liberty WAM at any time upon 60
days' written notice to Liberty Acorn. This agreement shall terminate
automatically in the event of its assignment (as defined in Section 2(a)(4) of
the 1940 Act).
14. AMENDMENT. This agreement may be amended in accordance with the 1940 Act.
15. NON-LIABILITY OF TRUSTEES AND SHAREHOLDERS. A copy of the declaration of
trust of Liberty Acorn is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of Liberty Acorn by its officers as officers and not individually. All
obligations of Liberty Acorn hereunder shall be binding only upon the assets of
Liberty Acorn (or the appropriate Fund) and shall not be binding upon any
trustee, officer, employee, agent or shareholder of Liberty Acorn. Neither the
authorization of any action by the trustees or shareholders of Liberty Acorn nor
the execution of this agreement on behalf of Liberty Acorn shall impose any
liability upon any trustee, officer or shareholder of Liberty Acorn.
16. USE OF MANAGER'S NAME. Liberty Acorn may use the name "Liberty" or any
other name derived from the name "Liberty" only for so long as this agreement or
any extension, renewal or amendment hereof remains in effect, including any
similar agreement with any organization that shall remain affiliated with
Liberty Financial Companies, Inc. and shall have succeeded to the business of
Liberty WAM as investment adviser. At such time as this agreement or any
extension, renewal or amendment hereof, or such other similar agreement shall no
longer be in effect, Liberty Acorn will (by amendment of its agreement and
declaration of trust if necessary) cease to use any name derived from the name
"Liberty" or otherwise connected with Liberty WAM, or with any organization that
shall have succeeded to Liberty WAM's business as investment adviser.
17. NOTICES. Any notice, demand, change of address or other communication to
be given in connection with this agreement shall be given in writing and shall
be given by personal delivery, by registered or certified mail or by transmittal
by facsimile or other electronic medium addressed
B-8
45
to the recipient as follows (or at such other address or addresses as a party
may provide to the other from time to time, by notice):
If to Liberty WAM: Liberty Wanger Asset
Management, L.P.
Attention: Bruce H. Lauer
227 West Monroe Street,
Suite 3000
Chicago, Illinois 60606
Telephone: 312 634-9200
Facsimile: 312 634-0016
with a copy to:
If to Liberty Acorn: Liberty Acorn Trust
227 West Monroe Street,
Suite 3000
Chicago, Illinois 60606
Telephone: 312 634-9200
Facsimile: 312 634-1919
with a copy to:
Bell, Boyd & Lloyd LLC
Attention: Cameron S. Avery
Three First National Plaza,
Suite 3300
Chicago, Illinois 60602
Telephone: 312/372-1121
Facsimile: 312/372-2098
All notices shall be conclusively deemed to have been given on the day of actual
delivery thereof and, if given by registered or certified mail, on the fifth
business day following the deposit thereof in the mail and, if given by
facsimile or other electronic medium, on the day of transmittal thereof (upon
electronic confirmation of receipt thereof).
18. GOVERNING LAW. This agreement shall be construed and interpreted in
accordance with the laws of the State of Illinois and the laws of the
B-9
46
United States of America applicable to contracts executed and to be performed
therein.
Dated as of , 2001
LIBERTY ACORN TRUST
By
----------------------------------------
LIBERTY WANGER ASSET MANAGEMENT, L.P.
By WAM Acquisition GP, Inc.
Its General Partner
By
----------------------------------------
B-10
47
APPENDIX C
CERTAIN OTHER MUTUAL FUNDS ADVISED/SUB-ADVISED BY THE ADVISOR
The Advisor acts as investment advisor or sub-advisor to the following other
mutual funds that have investment objectives similar to those of the Funds for
compensation at the annual percentage rates of the corresponding average net
asset levels of those funds set forth below.
LIBERTY ACORN INTERNATIONAL
---------------------------------------------------------------------------
ADVISOR'S
NET ASSETS OF RELATIONSHIP TO
OTHER FUNDS AT OTHER FUNDS
OTHER FUNDS WITH JULY 31, 2001 (ADVISOR OR
SIMILAR OBJECTIVES (IN THOUSANDS) FEE RATE SUB-ADVISOR)
---------------------------------------------------------------------------
Liberty Global Young $1,955 0.85% of the Sub-Advisor
Investor Fund average daily
net assets of
the portion
managed by the
Advisor
---------------------------------------------------------------------------
Wanger International $242,640 1.30% on first Advisor
Small Cap $100 million;
1.20% on next
$400 million;
1.10% over $250
million
---------------------------------------------------------------------------
LIBERTY ACORN FOREIGN FORTY
----------------------------------------------------------------------------
ADVISOR'S
NET ASSETS OF RELATIONSHIP TO
OTHER FUNDS AT OTHER FUNDS
OTHER FUNDS WITH JULY 31, 2001 (ADVISOR OR
SIMILAR OBJECTIVES (IN THOUSANDS) FEE RATE SUB-ADVISOR)
----------------------------------------------------------------------------
Liberty Global Young $1,955 0.85% of the Sub-Advisor
Investor Fund average daily
net assets of
the portion
managed by the
Advisor
----------------------------------------------------------------------------
Wanger Foreign Forty $16,366 1.00%(1) Advisor
----------------------------------------------------------------------------
(1) The Advisor has undertaken to limit Wanger Foreign Forty's annual expenses
(excluding taxes, interest, extraordinary litigation expenses and
incremental foreign custody costs) to 1.45% of its average net assets. This
expense limitation is contractual and will terminate on September 30, 2002.
C-1
48
LIBERTY ACORN USA
----------------------------------------------------------------------------
ADVISOR'S
NET ASSETS OF RELATIONSHIP TO
OTHER FUND AT OTHER FUND
OTHER FUND WITH JULY 31, 2001 (ADVISOR OR
SIMILAR OBJECTIVES (IN THOUSANDS) FEE RATE SUB-ADVISOR)
----------------------------------------------------------------------------
Wanger U.S. Small Cap $487,160 1.00% on first Advisor
$100 million;
0.95% on next
$150 million;
0.90% over $250
million
----------------------------------------------------------------------------
LIBERTY ACORN TWENTY
----------------------------------------------------------------------------
ADVISOR'S
NET ASSETS OF RELATIONSHIP TO
OTHER FUND AT OTHER FUND
OTHER FUND WITH JULY 31, 2001 (ADVISOR OR
SIMILAR OBJECTIVES (IN THOUSANDS) FEE RATE SUB-ADVISOR)
----------------------------------------------------------------------------
Wanger Twenty $17,160 0.95%(2) Advisor
----------------------------------------------------------------------------
LIBERTY ACORN FUND
----------------------------------------------------------------------------
ADVISOR'S
NET ASSETS OF RELATIONSHIP TO
OTHER FUND AT OTHER FUND
OTHER FUND WITH JULY 31, 2001 (ADVISOR OR
SIMILAR OBJECTIVES (IN THOUSANDS) FEE RATE SUB-ADVISOR)
----------------------------------------------------------------------------
Wanger U.S. Small Cap $487,160 1.00% on first Advisor
$100 million;
0.95% on next
$150 million;
0.90% over $250
million
----------------------------------------------------------------------------
(2) The Advisor has undertaken to limit Wanger Twenty's annual expenses
(excluding taxes, interest, extraordinary litigation expenses and
incremental foreign custody costs) to 1.35% of its average net assets. This
expense limitation is contractual and will terminate on September 30, 2002.
C-2
49
APPENDIX D
BROKERAGE PRACTICES
The following is a summary of the brokerage practices of Liberty Wanger Asset
Management, L.P.:
PORTFOLIO TRANSACTIONS
Liberty Wanger Asset Management, L.P. (Liberty WAM) places the orders for the
purchase and sale of portfolio securities and options and futures contracts for
the Funds. Liberty WAM's overriding objective in selecting brokers and dealers
to effect portfolio transactions is to seek the best combination of net price
and execution. The best net price, giving effect to brokerage commissions, if
any, is an important factor in this decision; however, a number of other
subjective factors may also enter into the decision. These factors include
Liberty WAM's knowledge of negotiated commission rates currently available and
other current transaction costs; the nature of the security being purchased or
sold; the size of the transaction; the desired timing of the transaction; the
activity existing and expected in the market for the particular security;
confidentiality; the execution, clearance and settlement capabilities of the
broker or dealer selected and others considered; Liberty WAM's knowledge of the
financial condition of the broker or dealer selected and such other brokers and
dealers; and Liberty WAM's knowledge of actual or apparent operation problems of
any broker or dealer.
Recognizing the value of these factors, Liberty WAM may cause a Fund to pay a
brokerage commission in excess of that which another broker may have charged for
effecting the same transaction. Liberty WAM has established internal policies
for the guidance of its trading personnel, specifying minimum and maximum
commissions to be paid for various types and sizes of transactions effected for
the Funds. Liberty WAM has discretion for all trades of the Funds. Transactions
which vary from the guidelines are subject to periodic supervisory review. These
guidelines are reviewed and periodically adjusted, and the general level of
brokerage commissions paid is periodically reviewed by Liberty WAM. Evaluations
of the reasonableness of brokerage commissions, based on the factors described
in the preceding paragraph, are made by Liberty WAM's trading personnel while
effecting portfolio transactions. The general level
D-1
50
of brokerage commissions paid is reviewed by Liberty WAM, and reports are made
annually to the Board of Trustees.
Liberty WAM maintains and periodically updates a list of approved brokers and
dealers which, in Liberty WAM's judgment, are generally capable of providing
best price and execution and are financially stable. Liberty WAM's traders are
directed to use only brokers and dealers on the approved list.
Beginning October 2002, Liberty WAM may place certain trades for the Funds
through its affiliate AlphaTrade Inc. (ATI), pursuant to procedures adopted by
the Board of Trustees. ATI is a wholly owned subsidiary of Colonial Management
Associates, Inc. ATI is a fully disclosed introducing broker that limits its
activities to electronic execution of transactions in listed equity securities.
The Funds will pay ATI a commission for these transactions. The Funds have
adopted procedures consistent with Investment Company Act Rule 17e-1 governing
such transactions.
CONSISTENT WITH THE CONDUCT RULES OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC. AND SUBJECT TO SEEKING BEST COMBINATION OF NET PRICE AND EXECUTION
AND SUCH OTHER POLICIES AS THE TRUSTEES OF THE FUNDS MAY DETERMINE, LIBERTY WAM
MAY CONSIDER SALES OF SHARES OF EACH OF THE FUNDS AS A FACTOR IN THE SELECTION
OF BROKER-DEALERS TO EXECUTE SUCH MUTUAL FUND SECURITIES TRANSACTIONS.
INVESTMENT RESEARCH PRODUCTS AND SERVICES FURNISHED
BY BROKERS AND DEALERS
Liberty WAM engages in the long-standing practice in the money management
industry of acquiring research and brokerage products and services ("research
products") from broker-dealer firms in return for directing trades for the Funds
to those firms. In effect, Liberty WAM is using the commission dollars generated
from the Funds to pay for these research products. The money management industry
uses the term "soft dollars" to refer to this industry practice.
Liberty WAM has a duty to seek the best combination of net price and execution.
Liberty WAM faces a potential conflict of interest with this duty when it uses
Fund trades to obtain soft dollar products. This conflict exists because Liberty
WAM is able to use the soft dollar products in managing its Funds without paying
cash ("hard dollars") for the product. This reduces Liberty WAM's expenses.
D-2
51
Moreover, under a provision of the federal securities laws applicable to soft
dollars, Liberty WAM is not required to use the soft dollar product in managing
those accounts that generate the trade. Thus, the Funds that generate the
brokerage commission used to acquire the soft dollar product may not benefit
directly from that product. In effect, those Funds are cross subsidizing Liberty
WAM's management of the other Funds that do benefit directly from the product.
This practice is explicitly sanctioned by a provision of the Securities Exchange
Act of 1934, which creates a "safe harbor" for soft dollar transactions
conducted in a specified manner. Although it is inherently difficult if not
impossible to document, Liberty WAM believes that over time most, if not all,
Funds benefit from soft dollar products such that cross subsidizations even out.
Liberty WAM attempts to reduce or eliminate this conflict by directing Fund
trades for soft dollar products only if Liberty WAM concludes that the
broker-dealer supplying the product is capable of providing a combination of the
best net price and execution on the trade. As noted above, the best net price,
while significant, is one of a number of judgmental factors Liberty WAM
considers in determining whether a particular broker is capable of providing the
best net price and execution. Liberty WAM may cause a Fund to pay a brokerage
commission in a soft dollar trade in excess of that which another broker-dealer
might have charged for the same transaction.
Liberty WAM acquires two types of soft dollar research products: (i) proprietary
research created by the broker-dealer firm executing the trade and (ii) other
products created by third parties that are supplied to Liberty WAM through the
broker-dealer firm executing the trade.
Proprietary research consists primarily of traditional research reports,
recommendations and similar materials produced by the in house research staffs
of broker-dealer firms. This research includes evaluations and recommendations
of specific companies or industry groups, as well as analyses of general
economic and market conditions and trends, market data, contacts and other
related information and assistance. Liberty WAM's research analysts periodically
rate the quality of proprietary research produced by various broker-dealer
firms. Based on these evaluations, Liberty WAM develops target levels of
commission dollars on a firm-by-firm basis. Liberty WAM attempts to direct
trades to each firm to meet these targets.
D-3
52
Liberty WAM also uses soft dollars to acquire products created by third parties
that are supplied to Liberty WAM through broker-dealers executing the trade (or
other broker-dealers who "step in" to a transaction and receive a portion of the
brokerage commission for the trade). These products include the following:
- DATABASE SERVICES -- comprehensive databases containing current and/or
historical information on companies and industries. Examples include
historical securities prices, earnings estimates, and SEC filings. These
services may include software tools that allow the user to search the database
or to prepare value-added analyses related to the investment process (such as
forecasts and models used in the portfolio management process).
- QUOTATION/TRADING/NEWS SYSTEMS -- products that provide real time market data
information, such as pricing of individual securities and information on
current trading, as well as a variety of news services.
- ECONOMIC DATA/FORECASTING TOOLS -- various macro economic forecasting tools,
such as economic data and economic and political forecasts for various
countries or regions.
- QUANTITATIVE/TECHNICAL ANALYSIS -- software tools that assist in quantitative
and technical analysis of investment data.
- FUNDAMENTAL INDUSTRY ANALYSIS -- industry-specific fundamental investment
research.
- OTHER SPECIALIZED TOOLS -- other specialized products, such as specialized
economic consulting analyses and attendance at investment-oriented
conferences.
Many third-party products include computer software or on-line data feeds.
Certain products also include computer hardware necessary to use the product.
Certain of these third-party services may be available directly from the vendor
on a hard-dollar basis. Others are available only through broker-dealer firms
for soft dollars. Liberty WAM evaluates each product to determine a cash ("hard
dollars") value of the product to Liberty WAM. Liberty WAM then on a
product-by-product basis targets commission dollars in an amount equal to a
specified multiple of the hard dollar value to the broker-dealer that supplies
the product to Liberty WAM. In general, these multiples range from 1.25 to 1.85
times
D-4
53
the hard dollar value. Liberty WAM attempts to direct trades to each firm to
meet these targets. (For example, if the multiple is 1.5:1.0, assuming a hard
dollar value of $10,000, Liberty WAM will target to the broker-dealer providing
the product trades generating $15,000 in total commissions.)
The targets that Liberty WAM establishes for both proprietary and for third
party research products typically will reflect discussions that Liberty WAM has
with the broker-dealer providing the product regarding the level of commissions
it expects to receive for the product. However, these targets are not binding
commitments, and Liberty WAM does not agree to direct a minimum amount of
commissions to any broker-dealer for soft dollar products. In setting these
targets, Liberty WAM makes a determination that the value of the product is
reasonably commensurate with the cost of acquiring it. These targets are
established on a calendar year basis. Liberty WAM will receive the product
whether or not commissions directed to the applicable broker-dealer are less
than, equal to or in excess of the target. Liberty WAM generally will carry over
target shortages and excesses to the next year's target. Liberty WAM believes
that this practice reduces the conflicts of interest associated with soft dollar
transactions, since Liberty WAM can meet the non-binding expectations of
broker-dealers providing soft dollar products over flexible time periods. In the
case of third party products, the third party is paid by the broker-dealer and
not by Liberty WAM. Liberty WAM may enter into a contract with the third party
vendor to use the product. (For example, if the product includes software,
Liberty WAM will enter into a license to use the software from the vendor.)
In certain cases, Liberty WAM may use soft dollars to obtain products that have
both research and non-research purposes. Examples of non-research uses are
administrative and marketing functions. These are referred to as "mixed use"
products. In each case, Liberty WAM makes a good faith evaluation of the
research and non-research uses of these services. These evaluations are based
upon the time spent by Firm personnel for research and non-research uses.
Liberty WAM pays the provider in cash ("hard dollars") for the non-research
portion of its use of these products.
Consistent with industry practice, Liberty WAM does not require that the Fund
that generates the trade receive any benefit from the soft dollar product
obtained through the trade. As noted above, this may result in cross
subsidization of soft dollar products among Funds. As noted
D-5
54
therein, this practice is explicitly sanctioned by a provision of the Securities
Exchange Act of 1934, which creates a "safe harbor" for soft dollar transactions
conducted in a specified manner.
In certain cases, Liberty WAM will direct a trade to one broker-dealer with the
instruction that it execute the trade and pay over a portion of the commission
from the trade to another broker-dealer who provides Liberty WAM with a soft
dollar research product. The broker-dealer executing the trade "steps out" of a
portion of the commission in favor of the other broker-dealer providing the soft
dollar product. Liberty WAM may engage in step out transactions in order to
direct soft dollar commissions to a broker-dealer which provides research but
may not be able to provide best execution. Brokers who receive step out
commissions typically are brokers providing a third-party soft dollar product
that is not available on a hard-dollars basis. Liberty WAM has not engaged in
step out transactions as a manner of compensating broker-dealers that sell
shares of investment companies managed by Liberty WAM.
The Trust's purchases and sales of securities not traded on securities exchanges
generally are placed by Liberty WAM with market makers for these securities on a
net basis, without any brokerage commissions being paid by the Trust. Net
trading does involve, however, transaction costs. Included in prices paid to
underwriters of portfolio securities is the spread between the price paid by the
underwriter to the issuer and the price paid by the purchasers. Each Fund's
purchases and sales of portfolio securities in the over-the-counter market
usually are transacted with a broker-dealer on a net basis without any brokerage
commission being paid by such Fund, but do reflect the spread between the bid
and asked prices. Liberty WAM may also transact purchases of some portfolio
securities directly with the issuers.
With respect to a Fund's purchases and sales of portfolio securities transacted
with a broker or dealer on a net basis, Liberty WAM may also consider the part,
if any, played by the broker or dealer in bringing the security involved to
Liberty WAM's attention, including investment research related to the security
and provided to the Fund.
D-6
55
APPENDIX E
COMPENSATION PAID BY A FUND TO THE ADVISOR AND AFFILIATES
FOR EACH FUND'S LAST FISCAL YEAR
($ IN THOUSANDS)
----------------------------------------------------------------------------------------------------------------------------------
NET
NET BROKERAGE
TRANSFER NET NET COMMISSIONS
AGENCY FEES FOR DISTRIBUTION ON
AND PRICING AND FUND'S
NET NET SHAREHOLDER AND SERVICE PORTFOLIO
ADVISORY ADMINISTRATIVE SERVICING BOOKKEEPING (12b-1) TRANSACTIONS
FEE FEES PAID FEES SERVICES FEES PAID PAID TO
PAID TO PAID TO PAID TO TO ADVISORS'
TO ADVISORS' ADVISORS' ADVISORS' ADVISORS' BROKERAGE
NAME OF FUND ADVISOR AFFILIATES AFFILIATES(a) AFFILIATES AFFILIATES AFFILIATES
----------------------------------------------------------------------------------------------------------------------------------
Liberty Acorn Fund $26,750 $1,958 $1,339 $0 $26 $0
----------------------------------------------------------------------------------------------------------------------------------
Liberty Acorn International 23,515 1,484 1,344 0 12 0
----------------------------------------------------------------------------------------------------------------------------------
Liberty Acorn USA 2,844 152 189 0 2 0
----------------------------------------------------------------------------------------------------------------------------------
Liberty Acorn Twenty 585 33 123 0 6 0
----------------------------------------------------------------------------------------------------------------------------------
Liberty Acorn Foreign Forty 1,334 70 113 0 5 0
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------- --------------
PERCENTAGE
OF
FUND'S
TOTAL
BROKERAGE
COMMISSIONS
PAID TO
ADVISORS'
BROKERAGE
NAME OF FUND AFFILIATES
----------------------------------- --------------
Liberty Acorn Fund 0%
------------------------------------------------------------------
Liberty Acorn International 0
---------------------------------------------------------------------------------
Liberty Acorn USA 0
------------------------------------------------------------------------------------------------
Liberty Acorn Twenty 0
---------------------------------------------------------------------------------------------------------------
Liberty Acorn Foreign Forty 0
------------------------------------------------------------------------------------------------------------------------------
(a) Liberty Funds Services, Inc. served as transfer agent for only a short
period during fiscal year 2000; therefore, this figure partly represents
<-> payments made to an unaffiliated transfer agent.
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57
APPENDIX F
SHARES OUTSTANDING AND ENTITLED TO VOTE
For each class of the Fund's shares entitled to vote at the Meeting, the number
of shares outstanding as of August 23, 2001 was as follows:
NUMBER OF SHARES OUTSTANDING AND
ENTITLED TO VOTE PER CLASS
---------------------------------------------------------------
NAME OF FUND Z A B C
------------ - - - -
Liberty Acorn Fund 234,346,085.017 8,896,816.502 9,392,088.339 4,519,604.010
Liberty Acorn
International 96,624,408.994 1,197,193.256 823,847.528 687,535.207
Liberty Acorn USA 13,791,872.008 905,774.407 881,411.341 503,532.692
Liberty Acorn Twenty 4,721,438.281 651,795.502 657,291.996 231,421.404
Liberty Acorn Foreign
Forty 4,506,697.825 276,909.874 172,338.413 300,082.701
OWNERSHIP OF SHARES
The following tables show certain information regarding the beneficial ownership
of Class Z shares of each Fund as of August 15, 2001 by each trustee and by all
trustees and executive officers of the Liberty Acorn Trust as a group.
PERCENTAGE OF
NUMBER OF OUTSTANDING
FUND SHARES SHARES HELD
NAME ---- --------- -------------
Irving B. Harris(a) Liberty Acorn Fund 2,000,210.000 *
Liberty Acorn
International 214,445.661 *
Liberty Acorn USA 90,662.986 *
Liberty Acorn Twenty 17,372.000 *
Liberty Acorn Foreign
Forty 7,003.000 *
Ralph Wanger(b) Liberty Acorn Fund 620,460.855 *
Liberty Acorn
International 141,851.800 *
Liberty Acorn USA 20,399.733 *
Liberty Acorn Twenty 23,412.835 *
Liberty Acorn Foreign
Forty 21,643.347 *
Leo Guthart Liberty Acorn Fund 3,908.010 *
Liberty Acorn
International 2,614.180 *
Liberty Acorn USA 3851.340 *
Jerome Kahn, Jr.(c) Liberty Acorn Fund 12,408.000 *
Liberty Acorn Foreign
Forty 11,704.890 *
F-1
58
PERCENTAGE OF
NUMBER OF OUTSTANDING
FUND SHARES SHARES HELD
NAME ---- --------- -------------
Steven N. Kaplan Liberty Acorn Fund 533.047 *
Liberty Acorn
International 355.018 *
Liberty Acorn USA 559.393 *
Liberty Acorn Twenty 644.026 *
Liberty Acorn Foreign
Forty 519.503 *
David C. Kleinman Liberty Acorn Fund 686.970 *
Liberty Acorn
International 1,569.920 *
Roger S. Meier Liberty Acorn Fund 1,426.88 *
Liberty Acorn
International 11,951.30 *
Liberty Acorn Twenty 9,196.296 *
Liberty Acorn Foreign
Forty 4,313.570 *
Charles P. McQuaid(d) Liberty Acorn Fund 251,397.214 *
Liberty Acorn
International 49,164.629 *
Liberty Acorn USA 80,480.908 *
Liberty Acorn Twenty 68,991.905 1.46%
Liberty Acorn Foreign
Forty 42,037.866 *
Allan B. Muchin Liberty Acorn Fund 3,555.920 *
Robert E. Nason Liberty Acorn Fund 4,908.900 *
Liberty Acorn
International 1,877.483 *
Liberty Acorn USA 2,361.686 *
Liberty Acorn Twenty 2,560.256 *
Liberty Acorn Foreign
Forty 1,314.951 *
Trustees and
executive officers
as a group Liberty Acorn Fund 2,774,582.011 1.18%
Liberty Acorn
International 422,141.731 *
Liberty Acorn USA 197,471.083 1.42%
Liberty Acorn Twenty 121,684.793 2.57%
Liberty Acorn Foreign
Forty 87,955.093 1.96%
---------------
*less than 1%
(a)Includes shares over which Mr. Harris has power to vote and dispose, but no
economic beneficial interest. Of the shares disclosed, Mr. Harris has
economic beneficial interest in 29,542 shares of Liberty Acorn Fund.
(b)Includes shares held for Mr. Wanger's economic beneficial interest in the
Advisor's employees' profit sharing plan over which
F-2
59
Mr. McQuaid has voting discretion as trustee of the plan. These shares are
also included under Mr. McQuaid's name.
(c)Excludes shares over which Mr. Kahn shares investment and voting power with
Mr. Harris.
(d)Includes shares in which, as trustee of the Advisor's employees' profit
sharing plan, Mr. McQuaid has beneficial interest by virtue of having voting
discretion over the shares held in the plan. Of the shares disclosed, Mr.
McQuaid has economic beneficial interest in 99,895.251 shares of Liberty
Acorn Fund, 27,342.988 shares of Liberty Acorn International, 48,231.98
shares of Liberty Acorn USA, 28,051.37 shares of Liberty Acorn Twenty and
22,349.70 shares of Liberty Acorn Foreign Forty.
As of August 15, 2001, the following persons owned of record or beneficially 5%
or more of the noted class of shares of the noted Fund:
SHARES BENEFICIALLY PERCENTAGE OF OUTSTANDING
FUND AND CLASS OWNED SHARES OF CLASS OWNED
-------------- ------------------- -------------------------
LIBERTY ACORN FUND
CLASS Z
National Financial Services Co. 17,503,458.119 7.47%
For the Exclusive Benefit of our
Customers
One World Financial Center
200 Liberty Street
New York, NY 10281-1003
State of Illinois 29,675,077.916 12.67%
Employees Deferred Comp Plan
Attn: Don Templeman
200 W. Washington
Springfield, IL 62706-0001
Charles Schwab & Co. Inc. 20,789,662.316 8.88%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
LIBERTY ACORN FUND
CLASS A
Merrill Lynch Pierce Fenner &
Smith 562,965.064 6.43%
For the Sole Benefit of its
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E 2nd Fl.
Jacksonville, FL 32246-6484
FTC & Co. Attn: Datalynx #022 531,902.090 6.07%
P.O. Box 173736
Denver, CO 80217-3736
F-3
60
SHARES BENEFICIALLY PERCENTAGE OF OUTSTANDING
FUND AND CLASS OWNED SHARES OF CLASS OWNED
-------------- ------------------- -------------------------
Charles Schwab & Co. Inc. 507,681.629 5.79%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
LIBERTY ACORN FUND
CLASS C
Merrill Lynch Pierce Fenner &
Smith 378,538.950 8.59%
For the Sole Benefit of its
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E 2nd Fl.
Jacksonville, FL 32246-6484
LIBERTY ACORN INTERNATIONAL
CLASS Z
National Financial Services Corp. 9,450,070.137 9.77%
Cust. For the Exclusive Benefit
of Our Customers
P.O. Box 3908 Church St. Station
New York, NY 10008-3908
Charles Schwab & Company 20,501,198.287 21.19%
Mutual Fund Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
LIBERTY ACORN USA
CLASS Z
Vanguard Fiduciary Trust Company 742,273.322 5.38%
Liberty Acorn USA
P.O. Box 2600
Valley Forge, PA 19482-2600
Firstar Bank Trustee 693,961.924 5.03%
FBO City of Milwaukee Def. Comp.
P.O. Box 1787
Milwaukee, WI 53201-1787
Charles Schwab & Co. Inc. 2,539,206.678 18.42%
Custody Account for Benefit of
Our Customers
Attn: Mutual Fund Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
LIBERTY ACORN USA
CLASS C
Dean Witter 25,457.591 5.88%
FBO M. Page Laughlin
P.O. Box 250
New York, NY 10006-0250
F-4
61
SHARES BENEFICIALLY PERCENTAGE OF OUTSTANDING
FUND AND CLASS OWNED SHARES OF CLASS OWNED
-------------- ------------------- -------------------------
LIBERTY ACORN TWENTY
CLASS Z
National Financial Services Co. 263,423.297 5.58%
For the Exclusive Benefit of Our
Customers
One World Financial Center
200 Liberty Street
New York, NY 10281-1003
Charles Schwab & Co. Inc. 540,107.576 11.44%
Custody Account for Benefit of
Our Customers
Attn: Mutual Fund Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
LIBERTY ACORN TWENTY
CLASS C
Attn: William Mitchelson 14,705.882 6.43%
NFSC FEBO #HDM 105422
Salem Five Cents Savings Bank
210 Essex St.
Salem, MA 01970-3705
Investors Bank & Trust IRA 18,024.513 7.88%
Richard N. Roscelli Deceased
FBO Richard K. Roscelli
Beneficiary
16 Dalebrook Rd.
Bloomfield, NJ 07003-4152
LIBERTY ACORN FOREIGN FORTY
CLASS Z
National Financial Services Co. 1,052,542.203 23.36%
For the Exclusive Benefit of Our
Customers
One World Financial Center
200 Liberty Street
New York, NY 10281-1003
Charles Schwab & Co. Inc. 605,875.429 13.44%
Custody Account for Benefit of
Our Customers
Attn: Mutual Fund Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
LIBERTY ACORN FOREIGN FORTY
CLASS B
LPL Financial Services 12,126.877 7.04%
9785 Towne Centre Dr.
San Diego, CA 92121-1968
F-5
62
SHARES BENEFICIALLY PERCENTAGE OF OUTSTANDING
FUND AND CLASS OWNED SHARES OF CLASS OWNED
-------------- ------------------- -------------------------
LIBERTY ACORN FOREIGN FORTY
CLASS C
Attn: William Mitchelson 18,011.527 6.00%
NFSC FEBO #HDM 105422
Salem Five Cents Savings Bank
210 Essex St.
Salem, MA 01970-3705
(*) Shares are believed to be held only as nominee.
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63
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64
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66
PLEASE VOTE PROMPTLY
*********************************
Your vote is important, no matter how many shares you own. Please vote on the
reverse side of this proxy card and sign in the space(s) provided. Return your
completed proxy card in the enclosed envelope today.
You may receive additional proxies for other accounts. These are not duplicates;
you should sign and return each proxy card in order for your votes to be
counted.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. The signers of this
proxy hereby appoint Ralph Wanger, Bruce H. Lauer and Charles P. McQuaid,
each of them proxies of the signers, with power of substitution to vote at the
Special Meeting of Shareholders to be held at Chicago, Illinois, on Wednesday,
October 24, 2001, and at any adjournments, as specified herein, and in
accordance with their best judgment, on any other business that may properly
come before this meeting.
AFTER CAREFUL REVIEW, THE BOARD OF TRUSTEES UNANIMOUSLY HAS RECOMMENDED A VOTE
"FOR" ALL MATTERS.
67
Liberty Acorn Fund
Liberty Acorn Foreign Forty
Liberty Acorn International
Liberty Acorn USA
Liberty Acorn Twenty
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
AND, ABSENT DIRECTION, WILL BE VOTED FOR EACH ITEM BELOW. THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH THE HOLDER'S BEST JUDGEMENT AS TO ANY OTHER MATTER.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING ITEM:
1. Proposal to approve a new investment advisory agreement. [Item 1 of the
Notice.]
For Against Abstain
[X] [X] [X]
MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE NEW ADDRESS AT LEFT
[X]
PLEASE MARK, SIGN DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
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.
Please be sure to sign and date this proxy.
Date________________________
___________________________ _________________________
Shareholder sign here Co-owner sign here