PRES14A 1 0001.txt MULTI PROXY STATEMENT AND PROXY CARDS 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 Filed by the Registrant [ X ] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ X ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 LIBERTY FUNDS TRUST I Liberty High Yield Securities Fund Liberty Income Fund Liberty Strategic Income Fund Liberty Tax-Managed Aggressive Growth Fund Liberty Tax-Managed Value Fund LIBERTY FUNDS TRUST II Liberty Intermediate Government Fund Liberty Money Market Fund Liberty Newport Greater China Fund Liberty Newport Japan Opportunities Fund LIBERTY FUNDS TRUST III Liberty Contrarian Fund Liberty Contrarian Equity Fund Liberty Contrarian Income Fund Liberty Federal Securities Fund Liberty Newport Global Utilities Fund Liberty Newport International Equity Fund Liberty Real Estate Fund Liberty Select Value Fund The Liberty Fund Liberty Special Fund LIBERTY FUNDS TRUST IV Liberty Counselor Balanced Portfolio Liberty Counselor Growth Portfolio Liberty Counselor Income Portfolio Liberty High Yield Municipal Fund Liberty Tax-Exempt Fund Liberty Tax-Exempt Insured Fund Liberty Municipal Money Market Fund Liberty Utilities Fund LIBERTY FUNDS TRUST V Colonial California Tax-Exempt Fund Colonial Connecticut Tax-Exempt Fund Colonial Massachusetts Tax-Exempt Fund Colonial New York Tax-Exempt Fund Colonial Ohio Tax-Exempt Fund LIBERTY FUNDS TRUST VI Liberty Growth & Income Fund Liberty Newport Asia Pacific Fund LIBERTY FUNDS TRUST VII Liberty Newport Europe Fund Liberty Newport Tiger Fund LIBERTY FLOATING RATE ADVANTAGE FUND ------------------------------------------ (Name of Registrant as Specified In Its Charter) ------------------------------------------ (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of Filing Fee (Check the appropriate box): [ X ] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. 1) Amount Previously Paid: 2) Form, Schedule or Registration Statement No.: 3) Filing Party: 4) Date Filed: LIBERTY MUTUAL FUNDS One Financial Center, Boston, Massachusetts 02111 Dear Shareholder: Your Fund will hold a special meeting on December 27, 2000 at 10:00 a.m. Eastern Time, at the offices of Colonial Management Associates, Inc. (Colonial). An exhibit summarizing the proposals and the voting process (Exhibit A) and formal Notice of Special Meetings of Shareholders appear on the next few pages, followed by the proxy statement which explains in more detail the proposals to be considered. We hope that you can attend the Meeting in person; however, we urge you in any event to vote your shares at your earliest convenience. YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. YOU CAN VOTE EASILY AND QUICKLY AT OUR WEB SITE, BY MAIL, BY FAX (NOT AVAILABLE FOR ALL SHAREHOLDERS; REFER TO ENCLOSED PROXY INSERT), BY PHONE OR IN PERSON. TO VOTE THROUGH OUR WEB SITE, JUST FOLLOW THE SIMPLE INSTRUCTIONS THAT APPEAR ON THE ENCLOSED PROXY INSERT. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE HAS BEEN ENCLOSED FOR YOUR CONVENIENCE. PLEASE HELP YOUR FUND AVOID THE EXPENSE OF A FOLLOW-UP MAILING BY VOTING TODAY! Your Fund is using Shareholder Communications Corporation (SCC), a professional proxy solicitation firm, to assist shareholders in the voting process. As the date of the special meeting approaches, if we have not yet received your vote, you may receive a telephone call from SCC reminding you to exercise your right to vote. Please take a few moments to review the details of each proposal. If you have any questions regarding the proxy statement, please feel free to call SCC at 1-800-732-3683. Our hearing impaired shareholders may call Liberty Funds Services, Inc., the Liberty Mutual Funds' transfer agent, at 1-800-528-6979 if you have special TTD equipment. We appreciate your participation and prompt response in these matters and thank you for your continued support. Sincerely, [GRAPHIC OMITTED][GRAPHIC OMITTED] Stephen E. Gibson, President November 13, 2000 [Job Code] EXHIBIT A Throughout this exhibit and the proxy statement, the Funds listed on the following Notice of Special Meetings of Shareholders are referred to collectively as the "Liberty Mutual Funds" and the Trusts listed on the Notice of Special Meetings of Shareholders are referred to collectively as the "Trusts." The following table lists the proposals, the affected Funds and the page of the proxy statement the proposals are discussed in greater detail: ------------------------------------ --------------------------------- --------- Liberty Mutual Fund Whose Shareholders are Entitled to Table of Proposals Vote Contents ------------------------------------ --------------------------------- --------- ------------------------------------ --------------------------------- --------- 1. To elect a Board of Trustees Each Liberty Mutual Fund Page of each Trust. ------------------------------------ --------------------------------- --------- ------------------------------------ --------------------------------- --------- 2. To approve new portfolio Liberty Newport Global Page management agreements with Newport Utilities Fund and Liberty Fund Management, Inc. Newport International Equity Fund ------------------------------------ --------------------------------- --------- ------------------------------------ --------------------------------- --------- 3. To approve a sub-advisory The Liberty Fund Page agreement with Unibank Securities, Inc. ------------------------------------ --------------------------------- --------- ------------------------------------ --------------------------------- --------- 4. To elect a Board of Trustees Liberty Money Market Fund and Page of the SR&F Base Trust. Liberty Municipal Money Market Fund ------------------------------------ --------------------------------- --------- VOTING PROCESS. You can vote in any one of the following five ways: a. By mail, by filling out and returning the enclosed proxy card; b. By phone, by calling 1-800-732-3683 and following the instructions; c. By internet, by visiting our Web site at www.libertyfunds.com and clicking on "Proxy Voting;" d. By fax (not available for all shareholders; refer to enclosed proxy insert); or e. In person at the Meeting. Shareholders who owned shares on the record date, September 29, 2000, are entitled to vote at the meeting. Shareholders are entitled to cast one vote for each share owned on the record date. We encourage you to vote by internet, using the 12-digit or 14-digit "control" number that appears on the enclosed proxy card. Voting by internet will reduce expenses by saving postage costs. If you choose to vote by mail or by fax, and you are an individual account owner, please sign exactly as your name appears on the proxy card. Either owner of a joint account may sign the proxy card, but the signer's name must exactly match the name that appears on the card. Whichever method you choose, please carefully read the proxy statement which outlines in more detail the proposals you are asked to vote on. 4 NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS TO BE HELD ON DECEMBER 27, 2000 LIBERTY FUNDS TRUST I LIBERTY FUNDS TRUST IV Liberty Counselor Balanced Portfolio Liberty High Yield Securities Fund Liberty Counselor Growth Portfolio Liberty Income Fund Liberty Counselor Income Portfolio Liberty High Yield Municipal Fund Liberty Strategic Income Fund Liberty Tax-Exempt Fund Liberty Tax-Managed Aggressive Liberty Tax-Exempt Insured Fund Growth Fund Liberty Tax-Managed Value Fund Liberty Municipal Money Market Fund Liberty Utilities Fund LIBERTY FUNDS TRUST II LIBERTY FUNDS TRUST V Liberty Intermediate Government Liberty California Tax-Exempt Fund Fund Liberty Connecticut Tax-Exempt Fund Liberty Money Market Fund Liberty Massachusetts Tax-Exempt Fund Liberty New York Tax-Exempt Fund Liberty Newport Greater China Liberty Ohio Tax-Exempt Fund Fund Liberty Newport Japan Opportunities Fund LIBERTY FUNDS TRUST VI LIBERTY FUNDS TRUST III Liberty Growth & Income Fund Liberty Contrarian Fund Liberty Newport Asia Pacific Fund Liberty Contrarian Equity Fund Liberty Contrarian Income Fund LIBERTY FUNDS TRUST VII Liberty Newport Europe Fund Liberty Federal Securities Fund Liberty Newport Tiger Fund Liberty Newport Global Utilities Fund Liberty Newport International LIBERTY FLOATING RATE ADVANTAGE FUND Equity Fund Liberty Real Estate Fund Liberty Select Value Fund The Liberty Fund Liberty Special Fund NOTICE IS HEREBY GIVEN that Special Meetings of Shareholders of the Liberty Mutual Funds listed above will be held at 10:00 a.m. on Wednesday, December 27, 2000 at the offices of Colonial Management Associates, Inc., One Financial Center, Boston, Massachusetts 02111 for these purposes: 1. Shareholders of each Liberty Mutual Fund: To elect a Board of Trustees of the Trust of which such Liberty Mutual Fund is a series; 2. Shareholders of Liberty Newport Global Utilities Fund and Liberty Newport International Equity Fund: To approve a new portfolio management agreement for each Fund with Newport Fund Management, Inc.; 3. Shareholders of The Liberty Fund: To approve a sub-advisory agreement with Unibank Securities, Inc.; 4. Shareholders of Liberty Money Market Fund and Liberty Municipal Money Market Fund: To elect a Board of Trustees of the SR&F Base Trust; and 5. 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 September 29, 2000, are entitled to notice of and to vote at the meeting and any adjourned session. By order of the Board of Trustees, William J. Ballou, Secretary November 13, 2000 NOTICE: YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. YOU CAN VOTE EASILY AND QUICKLY AT OUR WEB SITE, BY PHONE, BY MAIL, BY FAX (NOT AVAILABLE FOR ALL SHAREHOLDERS; REFER TO ENCLOSED PROXY INSERT) OR IN PERSON. TO VOTE THROUGH OUR WEB SITE, JUST FOLLOW THE SIMPLE INSTRUCTIONS THAT APPEAR ON THE ENCLOSED PROXY INSERT. PLEASE HELP YOUR FUND AVOID THE EXPENSE OF A FOLLOW-UP MAILING BY VOTING TODAY! SPECIAL MEETINGS OF SHAREHOLDERS LIBERTY MUTUAL FUNDS PROXY STATEMENT General Information November 13, 2000 This proxy statement, which is divided into the following four parts, is a combined proxy statement for all of the Liberty Mutual Funds listed in the Notice of Special Meetings of Shareholders: Part 1. Overview. Page Part 2. Proposals. Page Part 3. Information Regarding Voting and Shareholder Meetings. Page Part 4. Fund Information. Page If at any time you have any questions regarding the information contained in the proxy statement, please call SCC at 1-800-732-3683. This proxy statement was first mailed to shareholders on or about November 13, 2000. PART 1. OVERVIEW. The Boards of Trustees of the Trusts listed on the Notice of Special Meetings of Shareholders (Trusts) and the SR&F Base Trust have called Special Meetings of Shareholders for 10:00 a.m. Eastern Time, Wednesday, December 27, 2000, for the purposes described in the accompanying Notice of Special Meetings of Shareholders and as summarized below. The purpose of this proxy statement is to provide you with additional information regarding the proposals to be voted on at the meeting and to request your proxy to vote in favor of the proposals. Set forth below is a summary of each proposal that the Boards of Trustees recommends that you consider: PROPOSAL 1. ELECT A BOARD OF TRUSTEES OF EACH TRUST. We ask that you consider the election of eleven nominees as members of the Board of Trustees of each Trust. Each nominee, if elected, will serve as a trustee of the Trusts until the next meeting of shareholders or until a successor is elected, or until death, resignation, removal or retirement. PROPOSAL 2. APPROVE NEW PORTFOLIO MANAGEMENT AGREEMENTS WITH NEWPORT FUND MANAGEMENT, INC. (Liberty Newport Global Utilities Fund and Liberty Newport International Equity Fund). We ask that you approve new portfolio management agreements with Newport Fund Management, Inc. for Liberty Newport Global Utilities Fund and Liberty Newport International Equity Fund. PROPOSAL 3. APPROVE A SUB-ADVISORY AGREEMENT WITH UNIBANK SECURITIES, INC. (The Liberty Fund). We ask that you approve a new sub-advisory agreement with Unibank Securities, Inc. for The Liberty Fund. PROPOSAL 4. ELECT A BOARD OF TRUSTEES OF THE SR&F BASE TRUST (Liberty Money Market Fund and Liberty Municipal Money Market Fund). We ask that you consider the election of eleven nominees as members of the Board of Trustees of the SR&F Base Trust. Each nominee, if elected, will serve as a trustee of the SR&F Base Trust until the next meeting of shareholders or until a successor is elected, or until death, resignation, removal or retirement. PART 2. PROPOSALS. PROPOSAL 1. ELECT A BOARD OF TRUSTEES. The purpose of this proposal is to elect four new members as well as seven of the currently serving members of the Boards of Trustees of the Trusts. All of the nominees listed below, except for the proposed four new members (Ms. Kelly and Messrs. Hacker, Nelson and Theobald), are currently members of the Boards of Trustees of the Trusts, as well as nine Liberty closed-end funds (and, in the case of Messrs. Lowry, Mayer and Neuhauser, one) other Liberty open-end trusts (collectively, the "Liberty Fund Complex"), and have served in that capacity continuously since originally elected or appointed. All of the currently serving members, other than Mr. Palombo, have been previously elected to those Boards by the shareholders of the Liberty Fund Complex. The proposed four new members currently serve on the Boards of Trustees of two Stein Roe closed-end funds and seven Stein Roe open-end trusts (collectively, the "Stein Roe Funds"), and were recommended for election as Trustees of the Trusts by the Boards of Trustees of each of the Trusts at a meeting held on October 25, 2000. Each of the nominees elected will serve as a Trustee of each of the Trusts until the next meetings of shareholders of the Liberty Mutual Funds called for the purpose of electing a Board of Trustees, and until a successor is elected and qualified or until death, retirement, resignation or removal. Currently, two different boards of trustees are responsible for overseeing substantially all of the Liberty Fund Complex and Stein Roe Funds. The Trustees of the Liberty Fund Complex and the Stein Roe Funds and Liberty Financial Companies, Inc. ("Liberty Financial"), the indirect parent of the investment advisors to the Liberty Mutual and Stein Roe Funds, have agreed that shareholder interests can more effectively be represented by a single board with responsibility for overseeing substantially all of the Liberty Fund Complex and Stein Roe Funds. Creation of a single, consolidated board should also provide certain administrative efficiencies and potential future cost savings for both the Liberty Fund Complex and Stein Roe Funds and Liberty Financial. The nominees listed below will be the members of the single, consolidated Board of Trustees. The persons named in the enclosed proxy card intend to vote at the Meetings in favor of the election of the nominees named below as Trustees (if so instructed). If any nominee listed below becomes unavailable for election, the enclosed proxy card may be voted for a substitute nominee in the discretion of the proxy holder(s). Information about the Nominees Set forth below is information concerning each of the nominees. Nominee Name & Age Principal Occupation (1) and Directorships Trustee Since ------------------ ------------------------------------------ ------------- Douglas A. Hacker Executive Vice President and Chief New nominee (43) Financial Officer of UAL, Inc. (airline) since July, 1999; Senior Vice President and Chief Financial Officer of UAL, Inc. prior thereto. Janet Langford Kelly Executive Vice President-Corporate New nominee (41) Development, General Counsel and Secretary, Kellogg Company, since September, 1999; Senior Vice President, Secretary and General Counsel of Sara Lee Corporation (branded, packaged, consumer-products manufacturer). Richard W. Lowry Private Investor since 1987. (formerly 1995 (64) Chairman and Chief Executive Officer of U.S. Plywood Corporation). Salvatore Macera Private Investor since 1981. (formerly 1998 (69) Executive Vice President and Director of Itek Corporation (electronics)). Nominee Name & Age Principal Occupation (1) and Directorships Trustee Since ------------------ ------------------------------------------ ------------- William E. Mayer(2) Partner, Park Avenue Equity Partners 1994 (60) (venture capital) since November, 1996; Dean, College of Business and Management, University of Maryland, prior thereto; Director, Johns Manville, Lee Enterprises and WR Hambrecht + Co. Charles R. Nelson Van Voorhis Professor, Department of New nominee (57) Economics, University of Washington and consultant on economic and statistical matters. John J. Neuhauser Academic Vice President and Dean of 1985 (57) Faculties, Boston College, since August, 1999; Dean, Boston College School of Management prior thereto. Joseph R. Palombo(3) Vice President of the Liberty Mutual 2000 (47) Funds from April, 1999 to October, 2000; Executive Vice President and Director of Colonial and Stein Roe & Farnham Incorporated; Executive Vice President and Chief Administrative Officer of Liberty Funds Group LLC since April, 1999; Chief Operating Officer, Putnam Mutual Funds prior thereto. Thomas E. Stitzel Business Consultant since 1999; Chartered 1998 (64) Financial Analyst; Professor of Finance and Dean, College of Business, Boise State University prior thereto. Thomas C. Theobald Managing Director, William Blair Capital New nominee (62) Partners (private equity investing) since 1994; (formerly Chief Executive Officer and Chairman of the Board of Directors, Continental Bank Corporation). Anne-Lee Verville Consultant since 1997; General Manager, 1998 (54) Global Education Industry prior thereto; formerly President, Applications Solutions Division, IBM Corporation (global education and global applications). --------------------------- (1) Except as otherwise noted, each individual has held the office indicated or other offices in the same company for the last five years. (2) Mr. Mayer is not affiliated with Liberty Financial Companies, Inc. (Liberty Financial), but is an "interested person," as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), because of his affiliation with WR Hambrecht + Co. (a registered broker-dealer). (3) Mr. Palombo is an "interested person," as defined in the 1940 Act, because of his affiliation with Liberty Financial. Trustees' Compensation; Meetings and Committees A. Trustees' Compensation. The members of the Board of Trustees of each Trust will serve as Trustees of the Liberty Fund Complex and Stein Roe Funds, for which service each Trustee, except for Mr. Palombo, will receive an annual retainer of $45,000, and attendance fees of $8,000 for each regular joint Board meeting and $1,000 for each special joint Board meeting. The Board of Trustees is expected to hold six regular joint Board meetings each year. Committee chairs will receive an additional annual retainer of $5,000. Other Committee members will receive an additional annual retainer of $1,000, and receive $1,000 for each special meeting attended on a day other than a regular joint Board meeting day. Two-thirds of the Trustees' fees are allocated among the Liberty Fund Complex and Stein Roe Funds based on their relative net assets, and one-third of the fees is divided equally among the Liberty Fund Complex and Stein Roe Funds. The Liberty Mutual Funds do not currently provide pension or retirement plan benefits to the Trustees. However, certain Trustees currently serving on the Board of Trustees of the Liberty Mutual Funds who are not continuing on the combined Board of Trustees of the Liberty Mutual and Stein Roe Funds will receive payments at an annual rate equal to their 1999 Trustee compensation for the lesser of two years or until the date they would otherwise have retired at age 72. These payments will be made quarterly, beginning in 2001. Liberty Financial and the Liberty Mutual Funds will each bear one-half of the cost of the payments; the Liberty Mutual Funds' portion of the payments will be allocated among the Liberty Mutual Funds based on each fund's share of the Trustee fees for 2000. Further information concerning the Trustees' compensation is disclosed under Part 4. Fund Information on page ___. B. Meetings and Certain Committees. Composition. The current Board of Trustees of each Trust consists of two interested and nine non-interested Trustees. Mr. Mayer is not affiliated with Liberty Financial or any of its affiliates, but is considered interested as a result of his affiliation with a broker-dealer. Audit Committee. The Audit Committee of each Trust, consisting of Ms. Verville (Chairperson) and Tom Bleasdale, James E. Grinnell, James L. Moody, Jr., and Messrs. Lowry and Macera, all of whom are non-interested Trustees, recommends to the Board of Trustees the independent accountants to serve as auditors, reviews with the independent accountants the results of the auditing engagement and internal accounting procedures and considers the independence of the independent accountants the range of their audit services and their fees. Compensation Committee. The Compensation Committee of each Trust, consisting of Messrs. Neuhauser (Chairman), Grinnell and Stitzel and Lora S. Collins, all of whom are non-interested Trustees, reviews compensation of the Board of Trustees. Governance Committee. The Governance Committee of each Trust, consisting of Messrs. Bleasdale (Chairman), Lowry, Mayer and Moody and Ms. Verville, all of whom are non-interested Trustees, except for Mr. Mayer (Mr. Mayer is interested as a result of his affiliation with a broker-dealer, but is not affiliated with Liberty Financial), recommends to the Board of Trustees, among other things, nominees for trustee and for appointments to various committees. The Committee will consider candidates for trustee recommended by shareholders. Written recommendations with supporting information should be directed to the Committee in care of the applicable Liberty Mutual Fund. The Boards of Trustees and the Committees held the following number of meetings during the following fiscal years ended: November 30, 1999 of Liberty Funds Trust IV (11/30/99 Funds); December 31, 1999 of Liberty Funds Trust I, and Liberty Funds Trust VII (12/31/99 Funds); January 31, 2000 of Liberty Funds Trust V (1/31/00 Funds); June 30, 2000 of Liberty Funds Trust VI, Liberty Funds Trust II and Liberty Funds Trust IV (6/30/00 Funds); August 31, 2000 of Liberty Funds Trust II , Liberty Funds Trust III, and Liberty Funds Trust III (8/31/00 Funds); and October 31, 2000 of Liberty Funds Trust III and Liberty Funds Trust I (10/31/00 Funds) as follows: ------------------------- --------------- ---------------- --------------- 11/30/99 Funds 12/31/99 Funds 1/31/00 Funds ------------------------- --------------- ---------------- --------------- ------------------------- --------------- ---------------- --------------- Board of Trustees 6 6 6 ------------------------- --------------- ---------------- --------------- ------------------------- --------------- ---------------- --------------- Audit Committee 3 3 3 ------------------------- --------------- ---------------- --------------- ------------------------- --------------- ---------------- --------------- Compensation Committee 2 2 1 ------------------------- --------------- ---------------- --------------- ------------------------- --------------- ---------------- --------------- Governance Committee 4 4 4 ------------------------- --------------- ---------------- --------------- ------------------------- --------------- ---------------- --------------- 6/30/00 Funds 8/31/00 Funds 10/31/00 Funds ------------------------- --------------- ---------------- --------------- ------------------------- --------------- ---------------- --------------- Board of Trustees 6 6 6 ------------------------- --------------- ---------------- --------------- ------------------------- --------------- ---------------- --------------- Audit Committee 4 4 4 ------------------------- --------------- ---------------- --------------- ------------------------- --------------- ---------------- --------------- Compensation Committee 2 2 2 ------------------------- --------------- ---------------- --------------- ------------------------- --------------- ---------------- --------------- Governance Committee 6 6 5 ------------------------- --------------- ---------------- --------------- During the most recently completed fiscal years, each of the current Trustees attended more than 75% of the meetings of the Board of Trustees of each Trust and the committees of which such Trustee is a member. THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF EACH LIBERTY MUTUAL FUND VOTE FOR PROPOSAL 1. REQUIRED VOTE FOR PROPOSAL 1 Shareholders of each Liberty Mutual Fund vote together with the shareholders of the other series of the applicable Trust for the election of Trustees. A plurality of the votes cast at the Meetings, if a quorum is represented, is required for the election of each Trustee to the Board of Trustees of each Trust. Since the number of Trustees has been fixed at eleven, this means that the eleven persons receiving the highest number of votes will be elected. PROPOSAL 2. APPROVE NEW PORTFOLIO MANAGEMENT AGREEMENTS WITH NEWPORT FUND MANAGEMENT, INC. (Newport) (Liberty Newport Global Utilities Fund and Liberty Newport International Equity Fund - herein referred to for purposes of this Proposal 2 as each a "Fund" or collectively the "Funds") A. Description of Proposal. The Board of Trustees of Liberty Funds Trust III proposes that the shareholders of each Fund approve a new Management Agreement, substantially in the form set forth in Appendix A to this proxy statement, between the Trust, on behalf of each Fund, and Newport. Newport is an affiliate of Colonial, the current investment advisor of Liberty Newport International Equity Fund, and Stein Roe & Farnham Incorporated (Stein Roe), the current investment advisor of Liberty Newport Global Utilities Fund. The new Management Agreements are identical to the existing Management Agreements, except that Newport will now provide investment management services to each of the Funds. With respect to Liberty Newport International Equity Fund, Newport will engage Colonial at Newport's own expense to provide administrative services to the Fund. With respect to the Liberty Newport Global Utilities Fund, the current portfolio managers are dual employees of Stein Roe and Newport and will continue to manage the Fund as employees of Newport. If the new Management Agreement for Liberty Newport Global Utilities Fund is not approved, the current portfolio managers will continue to manage the Fund and will remain dual employees of Stein Roe and Newport. The existing Management Agreement for Liberty Newport International Equity Fund, dated October 1, 1997, was most recently approved by the shareholders of the Fund on February 15, 1995. The existing Management Agreement for Liberty Newport Global Utilities Fund, dated February 26, 1999, was most recently approved by shareholders of the Fund on February 4, 1993. The existing Management Agreements for Liberty Newport International Equity Fund and Liberty Newport Global Utilities Fund provide for monthly fees at the annual rate of 0.75% and 0.40%, respectively, of each Fund's average daily net assets. For the fiscal year ended October 31, 1999, the aggregate fees paid by Liberty Newport International Equity Fund to Colonial under the existing Management Agreement was approximately $861,000, and the aggregate fee paid by Liberty Newport Global Utilities Fund to Stein Roe under the existing Management Agreement was approximately $484,000. Colonial currently provides administrative services to Liberty Newport Global Utilities Fund under a separate Administration Agreement for an annual fee of 0.25% of the Fund's average daily net assets. For the fiscal year ended October 31, 1999, the aggregate fee paid by Liberty Newport Global Utilities Fund to Colonial under the existing Administration Agreement was approximately $363,000. Upon shareholder approval of the new Management Agreements, Newport will provide investment management services to Liberty Newport International Equity Fund and Liberty Newport Global Utilities Fund, and be responsible for providing administrative services to Liberty Newport International Equity Fund. Newport will be paid at the same annual rate for providing these services as was paid under the existing Management Agreement. With respect to Liberty Newport Global Utilities Fund, the current Administration Agreement with Colonial will remain in effect. It is important to note that the annual rates payable by the Funds for investment management and administrative services will not increase or decrease as a result of the Trust entering into new Management Agreements on behalf of the Funds. B. Consideration by the Board of Trustees. The Board of Trustees met on December 15-16, 1999, to consider, among other things, the proposed change of each Fund's investment advisor. After due consideration, the Board of Trustees, including all Trustees who were not interested and who had no direct or indirect financial interests in the operation of the new Management Agreements or in any agreements related thereto, unanimously approved the new Management Agreements, subject to shareholder approval. The Board of Trustees concluded that the new Management Agreements are fair and reasonable, and are in the best interest of shareholders of each Fund. During the course of their deliberations, the Board of Trustees considered a variety of factors. The Board of Trustees considered the fact that the new Management Agreements with Newport would not impact the current fee structure of the existing Management Agreements, and that the current expense waivers would continue until further notice. The Board of Trustees, however, focused specifically on the experience and size of Newport's international investment management team, Newport's growth investment style, Newport's expertise and proven performance as an investment advisor of international and global growth funds similar to the Liberty Mutual Funds, as well as the increased complexity of the international securities markets. C. Comparison and Impact of the Existing and New Management Agreements. For each of the Funds, the new Management Agreement is identical to the existing Management Agreement except for its effective date and the named investment advisor. The new Management Agreements do not differ from the existing Management Agreements with respect to the investment advisor's responsibilities or duties to the Funds, or the fees payable to the investment advisor for providing those services. Compensation under the existing and new Management Agreements is subject to reduction if in any year the expenses of a Fund exceed the limits on investment company expenses imposed by any statute or regulatory authority of any jurisdiction in which shares of the Fund are qualified for offer and sale. No such limits currently are in effect. Both the existing and new Management Agreements provide that, subject to the Board of Trustees' supervision, the investment advisor will manage the assets of each Fund in accordance with its Prospectus and Statement of Additional Information, purchase and sell securities and other investments on behalf of the Fund, and report results to the Board of Trustees periodically. With respect to Liberty Newport International Equity Fund, the existing and new Management Agreements also require the investment advisor to furnish, at its expense: (a) office space, supplies, facilities and equipment; (b) executive and other personnel for managing the affairs of the Fund (excluding custodial, transfer agency, pricing and certain record keeping services); and (c) compensation to Trustees who are directors, officers of or employees of the advisor or its affiliates. Any liability of the investment advisor to the Trust, the Fund and/or its shareholders is limited to situations involving the advisor's own willful misfeasance, bad faith, gross negligence or reckless disregard of its duties. Each new Management Agreement provides that it will continue in effect for an initial term ending June 30, 2002 and thereafter so long as it is approved annually in accordance with the 1940 Act. The existing and new Management Agreements may be terminated at any time by Newport, by the Board of Trustees or by vote of a majority of the outstanding voting securities of any Fund without penalty on 60 days' written notice, and shall automatically terminate upon any "assignment" (as that term is defined in the 1940 Act). Each new Management Agreement may be amended only by the affirmative vote of the holders of a "majority of the outstanding voting securities" of the Fund (as defined in the 1940 Act). D. Comparison of Investment Objectives and Strategies. In the case of Liberty Newport Global Utilities Fund, Newport will not change the investment objective or strategy of the Fund. In the case of Liberty Newport International Equity Fund, Newport will not change the Fund's investment objective, but will change its investment strategy. Colonial's investment strategy in selecting stocks for Liberty Newport International Equity Fund has been to choose companies in industries and markets which Colonial believes will react favorably to inflation in the U.S. economy. Inflation-sensitive companies in which Liberty Newport International Equity Fund has invested include companies engaged in the development and processing of natural resources and companies engaged in consumer-oriented business. As the new advisor to Liberty Newport International Equity Fund, Newport will no longer focus on inflation-sensitive stocks and will select stocks of international companies with long-term, above average growth potential. These are companies with proven management, predictable growth rates and low levels of debt. Newport may sell a stock if there is a deterioration in a company's fundamentals or a change in a company's management style, or if Newport identifies a different company with more attractive growth prospects. The Board of Trustees has approved this change to the investment strategy of Liberty Newport International Equity Fund. The change in the investment strategy of Liberty Newport International Equity Fund is not a change to a fundamental policy of the Fund and therefore, shareholder approval of this change is not required. This change also does not affect Liberty Newport International Equity Fund's investment goal, which is to seek the preservation of capital purchasing power and long-term growth. E. Information concerning Colonial, Stein Roe, Newport and their affiliates. Colonial Management Associates, Inc. and Stein Roe & Farnham Incorporated Colonial and/or its affiliate, Colonial Advisory Services, Inc. (CASI), has rendered investment advisory services to investment company, institutional and other clients since 1931. Colonial currently serves as investment advisor or administrator for 70 open-end and 9 closed-end management investment company portfolios. As of September 30, 2000, Colonial managed and/or administered over $18 billion in assets. The directors of Colonial are Stephen E. Gibson and Joseph R. Palombo. Mr. Gibson is the President and Chief Executive Officer of Colonial. Mr. Palombo is the Executive Vice President and Chief Administrative Officer of Colonial. The business address of the directors and officers of Colonial is One Financial Center, Boston, Massachusetts 02111. In addition, the following individuals who are officers or Trustees of the Funds' Trusts are also officers or directors of Colonial: William J. Ballou, Suzan M. Barron, Michael G. Clarke, Stephen E. Gibson, Ellen Harrington, Russell L. Kane, Gail E. Knudsen, Pamela A. McGrath, Joseph R. Palombo, Dianne Paras, Vincent P. Pietropaolo and Glenn M. Wolfset. Stein Roe and its predecessor have been providing investment advisory services since 1932. Stein Roe acts as investment advisor to wealthy individuals, trustees, pension and profit sharing plans, charitable organizations and other institutional investors. The sole director of Stein Roe is C. Allen Merritt, Jr. Mr. Merritt is Chief Operating Officer of Liberty Financial. Stephen E. Gibson is President of Stein Roe's Mutual Funds division and William E. Rankin is President of Stein Roe's Private Capital Management division. The business address of Mr. Merritt is 600 Atlantic Avenue, Federal Reserve Plaza, Boston, Massachusetts 02210; that of Mr. Gibson is One Financial Center, Boston, Massachusetts 02111; and that of Mr. Rankin is One South Wacker Drive, Chicago, Illinois 60606. In addition, the following individuals who are officers or Trustees of the Funds' Trusts are also officers or directors of Stein Roe: Stephen E. Gibson and Joseph R. Palombo. Colonial provides, and after shareholder approval of the new Management Agreement, will continue to provide, pricing and bookkeeping services to each of the Funds pursuant to a Pricing and Bookkeeping Agreement. For each Fund, Colonial is paid a monthly fee of $2,250 plus the following percentages of the Fund's average daily net assets over $50 million: 0.035% annually on the next $950 million; 0.025% annually on the next $1 billion; 0.015% annually on the next $1 billion; and 0.001% annually on the excess over $3 billion For the fiscal year ended October 31, 1999, the pricing and bookkeeping fees paid by Liberty Newport International Equity Fund and Liberty Newport Global Utilities Fund to Colonial under the Pricing and Bookkeeping Agreement were approximately $50,000 and $65,000, respectively. Liberty Funds Services, Inc. (LFSI), a subsidiary of LFG, located at One Financial Center, Boston, Massachusetts 02111, is the Funds' investor servicing agent (transfer, plan and dividend disbursing agent, and shareholder services provider), for which it receives monthly fees paid by each Fund. The fee paid to LFSI is based on the average daily net assets of each Fund, charges based on the number of shareholder accounts and transactions and reimbursement for certain out-of-pocket expenses. For the fiscal year ended October 31, 1999, the aggregate fees paid to LFSI on behalf of Liberty Newport International Equity Fund and Liberty Newport Global Utilities Fund were approximately $395,000 and $509,000, respectively. Liberty Funds Distributor, Inc. (LFDI), a subsidiary of Colonial, located at One Financial Center, Boston, Massachusetts 02111, acts as distributor for each Fund under a distribution agreement. The Trustees have approved a 12b-1 plan (Plan) for each Fund pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, each Fund pays LFDI a service fee at an annual rate of 0.25% of the Fund's net assets attributable to Classes A, B and C. Each Fund also pays a monthly distribution fee at an annual rate of 0.75% of the average daily net assets attributable to Class B and Class C Shares. For the fiscal year ended October 31, 1999, the aggregate fees paid by the Funds to LFDI were as follows: 12b-1 fees paid to LFDI for the fiscal year ended October 31, 1999 ----------------------- ------------------ ------------------ Liberty Newport Liberty Newport International Global Utilities Fees (Approximate) Equity Fund Fund ----------------------- ------------------ ------------------ ----------------------- ------------------ ------------------ Service Fees $280,000(a) $457,000(c) ----------------------- ------------------ ------------------ ----------------------- ------------------ ------------------ Distribution Fees $420,000(b) $56,000(d) ----------------------- ------------------ ------------------ (a) $139,000 were attributable to Class A Shares; $138,000 were attributable to Class B Shares; $3,000 were attributable to Class C Shares. (b) $411,000 were attributable to Class B Shares; $9,000 were attributable to Class C Shares. (c) $438,000 were attributable to Class A Shares; $16,000 were attributable to Class B Shares; $3,000 were attributable to Class C Shares. (d) $48,000 were attributable to Class B Shares; $8,000 were attributable to Class C Shares. Colonial and Stein Roe may use the services of AlphaTrade Inc. (AlphaTrade), a registered broker-dealer subsidiary of Colonial, when buying or selling certain equity securities for a Fund's portfolio pursuant to procedures adopted by the Trustees and Rule 17e-1 under the 1940 Act. For the fiscal year ended October 31, 1999, the aggregate commissions paid by Colonial to AlphaTrade on behalf of Liberty Newport International Equity Fund was $25,135, which constituted 15.6% of the Fund's aggregate brokerage commissions. No commissions were paid by Stein Roe to AlphaTrade on behalf of Liberty Newport Global Utilities Fund for the fiscal year ended October 31, 1999. In addition to the fees described above, each Fund pays all of its expenses not assumed by its advisor, including, without limitation, fees and expenses of the independent Trustees, interest charges, taxes, brokerage commissions, expenses of issue or redemption of shares, fees and expenses of registering and qualifying shares of each Fund for distribution under federal and state laws and regulations, custodial, auditing and legal expenses, expenses of determining net asset value of each Fund's shares, expenses of providing reports to shareholders, proxy statements and proxies to existing shareholders, and its proportionate share of insurance premiums and professional association dues or assessments. Each Fund also is responsible for such non-recurring expenses as may arise, including litigation in which each Fund may be a party, and other expenses as determined by the Board of Trustees. Each Fund may have an obligation to indemnify its officers and Trustees with respect to litigation. Newport Fund Management, Inc. Newport is a direct majority-owned subsidiary of Newport Pacific Management, Inc. (Newport Pacific), 580 California Street, San Francisco, California 94104. Newport Pacific is a direct wholly-owned subsidiary of Liberty Newport Holdings, Limited (Liberty Newport), which in turn is a direct wholly-owned subsidiary of Liberty Financial. The directors of Newport are Lindsay Cook, J. Andrew Hilbert, John M. Mussey and Thomas R. Tuttle. Mr. Cook is an Executive Vice President of Liberty Financial. Mr. Hilbert is Chief Financial Officer of Liberty Financial. Mr. Mussey is Vice Chairman of Newport and Newport Pacific. Mr. Tuttle is the President and Chief Executive Officer of Newport. He also is President of Newport Pacific. The business address of Mr. Cook and Mr. Hilbert is 600 Atlantic Avenue, Federal Reserve Plaza, Boston, Massachusetts 02210; and that of Messrs. Mussey and Tuttle is 580 California Street, San Francisco, California 94104. F. Other Funds Managed by Newport. In addition to the services proposed to be provided by Newport to each of the Funds, Newport also provides management and other services and facilities to other investment companies. Information with respect to the assets of and management fees payable to Newport by funds having investment objectives similar to those of the Funds is set forth below: ------------------------------------------ ----------------- ------------------ Annual Total Net Assets 9/30/00 Fund Management Fee (in Millions) ------------------------------------------ ----------------- ------------------ ------------------------------------------ ----------------- ------------------ Liberty Newport Tiger Fund 1.00%(a) $954.9 ------------------------------------------ ----------------- ------------------ ------------------------------------------ ----------------- ------------------ Stein Roe Small Cap Tiger Fund 1.15%(b) 10.4 ------------------------------------------ ----------------- ------------------ ------------------------------------------ ----------------- ------------------ Liberty Newport Japan Opportunities Fund 0.95%(b) 90.5 ------------------------------------------ ----------------- ------------------ ------------------------------------------ ----------------- ------------------ Liberty Newport Greater China Fund 1.15%(b) 66.8 ------------------------------------------ ----------------- ------------------ ------------------------------------------ ----------------- ------------------ Liberty Newport Asia Pacific Fund 1.00%(b) 17.7 ------------------------------------------ ----------------- ------------------ ------------------------------------------ ----------------- ------------------ Liberty Newport Europe Fund 0.70%(d) 13.0 ------------------------------------------ ----------------- ------------------ ------------------------------------------ ----------------- ------------------ Stein Roe Asia Pacific Fund 0.55%(c) 5.3 ------------------------------------------ ----------------- ------------------ (a) The management fee is 1.00% for the first $100 million of average net assets; 0.75% for the next $1.4 billion; 0.70% for the next $1 billion; and 0.65% over $2.5 billion. (b) Newport has voluntarily agreed to waive a certain portion of the management fee and reimburse the fund for certain expenses. Newport may terminate the fee waiver and expense reimbursement arrangement at any time. (c) Stein Roe & Farnham Incorporated is the advisor to the fund and receives an annual fee of 0.95%. Newport receives 0.55% as sub-advisor to the fund. (d) The fund commenced operations on November 1, 1999 and has not paid management fees to Newport. THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF EACH APPLICABLE LIBERTY FUND VOTE FOR PROPOSAL 2. REQUIRED VOTE FOR PROPOSAL 2 Approval of the new Management Agreement for each Fund will require the affirmative vote of a "majority of the outstanding voting securities" of the Fund (as defined in the 1940 Act), which means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the Fund or (2) 67% or more of the shares of the Fund present at the Meeting if more than 50% of the outstanding shares of the Fund are represented at the Meeting in person or by proxy. PROPOSAL 3. APPROVE A SUB-ADVISORY AGREEMENT WITH UNIBANK SECURITIES, INC. (The Liberty Fund - herein referred to for purposes of this Proposal 3 as the "Fund") A. Description of Proposal. The Board of Trustees of Liberty Funds Trust III (Trust) proposes that the shareholders of the Fund approve a Sub-Advisory Agreement, substantially in the form set forth in Appendix B, among Colonial, the investment advisor to the Fund, Unibank Securities, Inc., which does business in the U.S. as Unibank Investment Management (Unibank), and the Trust, on behalf of the Fund. Under the terms of the Sub-Advisory Agreement, Unibank will manage a portion of the assets of the Fund, as determined by Colonial, in accordance with the investment objectives, policies and limitations of the Fund as set forth in the Fund's Prospectus and Statement of Additional Information (as modified to take into account the Fund's acquisition of Liberty Strategic Balanced Fund (Balanced Fund), which is subject to the approval of the shareholders of the Balanced Fund). Unibank will invest primarily in large capitalization, non-U.S. equity securities for the Fund. Approval of the Sub-Advisory Agreement will not affect the amount of management fees paid by the Fund to Colonial; Colonial, not the Fund, pays sub-advisory fees to Unibank under the Sub-Advisory Agreement. Currently, Colonial manages the investment of the assets of Fund pursuant to a Management Agreement between the Trust, on behalf of the Fund, and Colonial, dated March 27, 1995, as amended , which was most recently approved by the shareholders of the Fund on February 15, 1995. Colonial receives monthly fees at the annual rate of 0.55% for the first $1 billion of the average daily net assets of the Fund and 0.50% of assets in excess of $1 billion. For the fiscal year ended October 31, 1999, the aggregate fees paid by the Fund to Colonial under the Management Agreement were approximately $8,985,000. B. Consideration by the Board of Trustees. The Board of Trustees met on October 25/26, 2000, to consider, among other things, the proposed retention by Colonial of Unibank as a sub-advisor to the Fund. After due consideration, the Board of Trustees, including all Trustees who were not interested and who had no direct or indirect financial interest in the operation of the Sub-Advisory Agreement or in any agreements related thereto, unanimously approved the Sub-Advisory Agreement, subject to shareholder approval. The Board of Trustees concluded that the Sub-Advisory Agreement is fair and reasonable, and is in the best interest of the shareholders of the Fund. During the course of their deliberations, the Board of Trustees focused on the experience and proven performance of Unibank as an investment advisor to international and global funds as well as on the increased complexity of the international securities markets. The Board of Trustees also considered a variety of factors, including that the Sub-Advisory Agreement with Unibank will not affect the fees paid by the Fund under the Management Agreement. C. Description of Sub-Advisory Agreement. Pursuant to the terms of the Sub-Advisory Agreement, Unibank, under the supervision of the Board of Trustees and Colonial, will: (a) manage the investment of a portion of the assets of the Fund, as determined by Colonial, in accordance with the investment objectives, policies and limitations of the Fund as stated in the Fund's then current Prospectus and Statement of Additional Information; (b) place purchase and sale orders for portfolio transactions for the Fund; (c) evaluate such economic, statistical and financial information and undertake such investment research as it shall deem advisable; (d) employ professional portfolio managers to provide research services to the Fund; and (e) report results to the Board of Trustees. For the services to be rendered by Unibank under the Sub-Advisory Agreement, Colonial will pay Unibank a monthly fee at the annual rate of 0.40% of the average daily net asset value of that portion of the Fund's assets under management by Unibank. Any liability of Unibank to the Trust, the Fund and/or its shareholders is limited to situations involving Unibank's own willful misfeasance, bad faith or gross negligence in the performance of its duties. The Sub-Advisory Agreement provides that it will remain in effect for an initial term ending June 30, 2002 and from year to year thereafter so long as its continuance is specifically approved at least annually by the Board of Trustees or by vote of a majority of the outstanding voting securities of the Fund. The Sub-Advisory Agreement may be terminated at any time without penalty on sixty days' written notice to Unibank by vote of the Board of Trustees, by vote of a majority of the outstanding voting securities of the Fund, or by Colonial, or by Unibank on ninety days' written notice to Colonial and the Trust. The Sub-Advisory Agreement will terminate automatically in the event of its assignment or in the event that the Management Agreement for the Fund shall have terminated for any reason. The Sub-Advisory Agreement may be amended only in accordance with the 1940 Act. The preceding description of the proposed Sub-Advisory Agreement is qualified in its entirety by reference to the form of Sub-Advisory Agreement that is set forth in Appendix B to this proxy statement. D. Information concerning Colonial, Unibank and their affiliates. Colonial Management Associates, Inc. Colonial, located at One Financial Center, Boston, Massachusetts 02111, is a wholly-owned subsidiary of Liberty Funds Group, LLC (LFG), which in turn is an indirect wholly-owned subsidiary of Liberty Financial. Liberty Financial 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 September 30, 2000, LFC Management Corporation owned 71.12% of Liberty Financial. Liberty Financial is a diversified and integrated asset management organization which provides insurance and investment products to individuals and institutions. The principal executive offices of Liberty Financial, LFC Management Corporation, Liberty Corporate Holdings, Inc., and LFC Holdings, Inc. are 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 Liberty Financial 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 Liberty Mutual and Liberty Mutual Equity Corporation are located at 175 Berkeley Street, Boston, Massachusetts 02117. Colonial and/or its affiliate, Colonial Advisory Services, Inc. (CASI), has rendered investment advisory services to investment company, institutional and other clients since 1931. Colonial currently serves as investment advisor or administrator for 70 open-end and 9 closed-end management investment company portfolios. As of September 30, 2000, Colonial managed and/or administered over $18 billion in assets. The directors of Colonial are Stephen E. Gibson and Joseph R. Palombo. Mr. Gibson is the President and Chief Executive Officer of Colonial. Mr. Palombo is the Executive Vice President and Chief Administrative Officer of Colonial. The business address of the directors and officers of Colonial is One Financial Center, Boston, Massachusetts 02111. In addition, the following individuals who are officers or Trustees of the Funds' Trusts are also officers or directors of Colonial: William J. Ballou, Suzan M. Barron, Michael G. Clarke, Stephen E. Gibson, Ellen Harrington, Russell L. Kane, Gail E. Knudsen, Pamela A. McGrath, Joseph R. Palombo, Dianne Paras, Vincent P. Pietropaolo and Glenn M. Wolfset. Colonial provides, and after shareholder approval of the Sub-Advisory Agreement will continue to provide, pricing and bookkeeping services to the Fund pursuant to a Pricing and Bookkeeping Agreement. Colonial is paid a monthly fee of $2,250 plus the following percentages of the Fund's average daily net assets over $50 million: 0.035% annually on the next $950 million; 0.025% annually on the next $1 billion; 0.015% annually on the next $1 billion; and 0.001% annually on the excess over $3 billion For the fiscal year ended October 31, 1999, the pricing and bookkeeping fees paid by the Fund to Colonial under the Pricing and Bookkeeping Agreement were approximately $534,000. Liberty Funds Services, Inc. (LFSI), a subsidiary of LFG located at One Financial Center, Boston, Massachusetts 02111, is the Trust's investor servicing agent (transfer, plan and dividend disbursing agent, and shareholder services provider), for which it receives monthly fees paid by the Trust. The fee paid to LFSI is based on the average daily net assets of the Fund, charges based on the number of shareholder accounts and transactions, and reimbursement for certain out-of-pocket expenses. For the fiscal year ended October 31, 1999, the aggregate fees paid by to LFSI on behalf of the Fund were approximately $4,728,000. Liberty Funds Distributor, Inc. (LFDI), a subsidiary of Colonial located at One Financial Center, Boston, MA 02111, acts as distributor for the Fund under a distribution agreement. The Trustees have approved a 12b-1 plan (Plan) for the Fund pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund pays LFDI a service fee at an annual rate of 0.25% of the Fund's net assets attributable to Classes A, B and C. The Fund also pays a monthly distribution fee at an annual rate of 0.75% of the average daily net assets attributable to Class B and Class C Shares. For the fiscal year ended October 31, 1999, the aggregate fees paid by the Fund to LFDI were as follows: 12b-1 fees paid to LFDI for the fiscal year ended October 31, 1999 ---------------------------- --------------------------------- Fees (Approximate) The Liberty Fund ---------------------------- --------------------------------- ---------------------------- --------------------------------- Service Fees $4,082,000(a) ---------------------------- --------------------------------- ---------------------------- --------------------------------- Distribution Fees $5,370,000(b) ---------------------------- --------------------------------- (a) Classes A, B, and C. (b) $5,311,000 were attributable to Class B shares; $59,000 were attributable to Class C shares. Colonial may use the services of AlphaTrade Inc. (AlphaTrade), a registered broker-dealer subsidiary of Colonial, when buying or selling certain equity securities for the Fund's portfolio pursuant to procedures adopted by the Trustees and Rule 17e-1 under the 1940 Act. For the fiscal year ended October 31, 1999, Colonial did not pay any commissions to AlphaTrade on behalf of the Fund. In addition to the fees described above, the Fund pays all of its expenses not assumed by its advisor, including, without limitation, fees and expenses of the independent Trustees, interest charges, taxes, brokerage commissions, expenses of issue or redemption of shares, fees and expenses of registering and qualifying shares of the Fund for distribution under federal and state laws and regulations, custodial, auditing and legal expenses, expenses of determining net asset value of the Fund's shares, expenses of providing reports to shareholders, proxy statements and proxies to existing shareholders, and its proportionate share of insurance premiums and professional association dues or assessments. The Fund also is responsible for such non-recurring expenses as may arise, including litigation in which the Fund may be a party, and other expenses as determined by the Board of Trustees. The Fund may have an obligation to indemnify its officers and Trustees with respect to litigation. Unibank Securities, Inc. Unibank is located at 13-15 West 54th Street, New York, New York, 10019. Unibank offers a range of equity investment products and services to institutional clients, including private and public retirement funds, unions, endowments, foundations and insurance companies, as well as to mutual fund sponsors on a sub-advisory basis. Unibank often structures portfolios to meet benchmarks established by the client, or tailored to standard Morgan Stanley Capital International (MSCI) benchmarks such as the MSCI EAFE Index. Unibank is a direct wholly-owned subsidiary of Unibank A/S, one of Scandinavia's leading financial institutions, which in turn is a direct wholly-owned subsidiary of Unidanmark A/S, which in turn is a direct wholly-owned subsidiary of Nordic Baltic Holding AB. The principal executive offices of Unibank A/S are located at Torvegade 2 DK-1786 Copenhagen V, Denmark. The principal executive offices of Unidanmark A/S are located at Strandgrade 3 DK-1786 Copenhagen V., Denmark. The principal executive offices of Nordic Baltic Holding AB are located at Hamngatan 10, SE-105 71 Stockholm, Sweden. The directors of Unibank Securities, Inc. are Henrik Bak, Ole Jacobsen, Jerry Murphy, Peter Nyegaard and Finn Pedersen. Mr. Bak is President and Chairman of the Board of Unibank Securities, Inc. Mr. Jacobsen is Managing Director and Head of Unibank Investment Management. Mr. Murphy is Head of Administration, Nordic Baltic Holding, New York. Mr. Nyegaard is Head of Markets, Nordic Baltic Holding AB. Mr. Pedersen is Head of Equities, Aros Maizel. The business address of each of Messrs. Bak, Nyegaard, Murphy, Jacobsen and Pedersen is 13-15 West 54th Street, New York, New York, 10019. In addition to the services proposed to be provided by Unibank to the Fund, Unibank also provides sub-advisory and other services and facilities to other investment companies. Information with respect to the assets of and management fees payable to Unibank by funds having objectives similar to the Fund is set forth below: ------------------------------------------- -------------------- --------------- Total Net Assets Annual Management 9/30/00 Fund Fee (in Thousands) ------------------------------------------- -------------------- --------------- ------------------------------------------- -------------------- --------------- UM International Equity Fund 0.60%(a) $15,697 ------------------------------------------- -------------------- --------------- (a) The management fee is 0.95%, which is paid to Undiscovered Managers, LLC, the investment advisor to the Fund. Unibank is the sub-advisor to the Fund and receives a sub-advisory fee of 0.60% for the first $200 million of average net assets, 0.55% for the next $100 million, and 0.50% for assets in excess of $300 million. THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF THE LIBERTY FUND VOTE FOR PROPOSAL 3. REQUIRED VOTE FOR PROPOSAL 3 Approval of a new Sub-Advisory Agreement for any Fund will require the affirmative vote of a "majority of the outstanding voting securities" of the Fund (as defined in the 1940 Act), which means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the Fund or (2) 67% or more of the shares of the Fund present at the Meeting if more than 50% of the outstanding shares of the Fund are represented at the Meeting in person or by proxy. PROPOSAL 4. ELECTION OF A BOARD OF TRUSTEES FOR SR&F BASE TRUST (Liberty Money Market Fund and Liberty Municipal Money Market Fund - herein referred to for purposes of this Proposal 4 as each a "Fund" or collectively the "Funds") You are being asked to approve the election of six new members as well as five of the currently serving members of the Board of Trustees of the SR&F Base Trust ("Base Trust"). Rather than investing directly in portfolio securities, each of Liberty Money Market Fund and Liberty Municipal Money Market Fund is a feeder fund that invests all of its assets in a master fund. The master fund for Liberty Money Market Fund is SR&F Cash Reserves Portfolio and the master fund for Liberty Municipal Money Market Fund is SR&F Municipal Money Market Portfolio (each, a "Portfolio"). Each Portfolio is a series of the Base Trust. Each of the Funds, as a Portfolio investor, has been requested by the Base Trust to vote on the election of trustees of the Base Trust. Therefore, each Fund is soliciting proxies from its shareholders relating to the election of trustees of the Base Trust. All of the nominees listed below, except for the proposed six new members (Ms. Verville and Messrs. Lowry, Macera, Mayer, Neuhauser and Stitzel), are currently members of the Board of Trustees of the Base Trust, as well as two Stein Roe closed-end funds and seven other Stein Roe open-end trusts (collectively, the "Stein Roe Funds"), and have served in that capacity continuously since originally elected or appointed. All of the currently serving members, other than Ms. Kelly and Mr. Palombo, have been previously elected by the shareholders of theBase Trust. The proposed six new members currently serve on the Boards of Trustees of ten Liberty closed-end funds and a number of Liberty open-end trusts (collectively, the "Liberty Fund Complex") and were recommended for election as Trustees of the Base Trust by the Board of Trustees of the Base Trust at a special meeting held on October 17, 2000. Each of the nominees elected will serve as a Trustee of the Base Trust until the next meeting of shareholders of the Funds called for the purpose of electing a Board of Trustees, and until a successor is elected and qualified or until death, retirement, resignation or removal. Currently, two different boards of trustees are responsible for overseeing substantially all of the Liberty Fund Complex and Stein Roe Funds. Liberty Financial and the Trustees of the Liberty Fund Complex and Stein Roe Funds have agreed that shareholder interests can more effectively be represented by a single board with responsibility for overseeing substantially all of the Liberty Fund Complex and Stein Roe Funds. Creation of a single, consolidated board should also provide certain administrative efficiencies and potential future cost savings for both the Liberty Fund Complex and Stein Roe Funds and Liberty Financial. The nominees listed below will be the members of the single, consolidated Board of Trustees. The persons named in the enclosed proxy card intend to vote at the Meetings in favor of the election of the nominees named below as Trustees (if so instructed). If any nominee listed below becomes unavailable for election, the enclosed proxy card may be voted for a substitute nominee in the discretion of the proxy holder(s). The following table sets forth certain information about each nominee: Year of Election or Recommended for Election Nominee Name & Age Principal Occupation (1) and Directorships as Trustee ------------------ ------------------------------------------ ---------- Douglas A. Hacker Executive Vice President and Chief 1996 (43) Financial Officer of UAL, Inc. (airline) since July, 1999; Senior Vice President and Chief Financial Officer of UAL, Inc. prior thereto. Janet Langford Kelly Executive Vice President-Corporate 1996 (41) Development, General Counsel and Secretary, Kellogg Company, since September, 1999; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer-products manufacturer). Richard W. Lowry Private Investor 1987. (formerly New nominee (64) Chairman and Chief Executive Officer, U.S. Plywood Corporation). Salvatore Macera Private Investor since 1981. (formerly New nominee (69) Executive Vice President and Director of Itek Corporation (electronics)). William E. Mayer(2) Partner, Park Avenue Equity Partners New nominee (60) (venture capital) since November, 1996; Dean, College of Business and Management, University of Maryland, priorthereto; Director, Johns Manville, Lee Enterprises and WR Hambrecht + Co. Charles Nelson Van Voorhis Professor, Department of 1987 (57) Economics, University of Washington and consultant on economic and statistical matters. Year of Election or Recommended for Election Nominee Name & Age Principal Occupation (1) and Directorships as Trustee ------------------ ------------------------------------------ ----------- John J. Neuhauser Academic Vice President and Dean of New nominee (57) Faculties, Boston College, since August, 1999; Dean, Boston College School of Management priorthereto. Joseph R. Palombo(3) Vice President of the Liberty Mutual 2000 (47) Funds from April, 1999 to October, 2000; Executive Vice President and Director of Colonial and Stein Roe & Farnham Incorporated; Executive Vice President and Chief Administrative Officer of Liberty Funds Group LLC since April, 1999; Chief Operating Officer, Putnam Mutual Funds priorthereto. Thomas E. Stitzel Business Consultant since 1999; Chartered New nominee (64) Financial Analyst; Professor of Finance and Dean, College of Business, Boise State University priorthereto. Thomas C. Theobald Managing Director, William Blair Capital 1996 (62) Partners (private equity investing) since 1994; (formerly Chief Executive Officer and Chairman of the Board of Directors, Continental Bank Corporation. Anne-Lee Verville Consultant since 1997; General Manager, New nominee (54) Global Education Industry priorthereto; formerly President, Applications Solutions Division, IBM Corporation (global education and global applications). --------------------------- (1) Except as otherwise noted, each individual has held the office indicated or other offices in the same company for the last five years. (2) Mr. Mayer is an "interested person," as defined in the Investment Company Act of 1940 (1940 Act) because of his affiliation with WR Hambrecht & Co. (a registered broker-dealer). (3) Mr. Palombo is an "interested person," as defined in the 1940 Act because of his affiliation with Liberty Financial Companies, Inc. (Liberty Financial), an indirect majority-owned subsidiary of Liberty Mutual Insurance Company. Trustees' Compensation; Meetings and Committees A. Trustees' Compensation. The Board of Trustees will serve as Trustees of the Liberty Fund Complex and Stein Roe Funds for which each Trustee, except for Mr. Palombo, will receive an additional annual retainer of $45,000, and attendance fees of $8,000 for each regular joint Board meeting and $1,000 for each special joint Board meeting. The Board is expected to hold six regular joint Board meetings each year. Committee chairs will receive an annual retainer of $5,000. Other Committee members will receive an additional annual retainer of $1,000, and receive $1,000 for each special meeting attended on a day other than a regular joint meeting day. Two-thirds of the Trustees' fees are allocated among the Liberty Fund Complex and Stein Roe Funds based on their relative net assets, and one-third of the fees are divided equally among the Liberty Fund Complex and Stein Roe Funds. The Stein Roe Funds do not currently provide pension or retirement plan benefits to the Trustees. However, William W. Boyd and John A. Bacon, two of the Trustees currently serving on the Boards of Trustees of the Stein Roe Funds who are not continuing on the Boards, will receive certain payments after completing their service on the Boards. Mr. Boyd will receive a payment of $50,000 upon his departure. Mr. Bacon will receive payments at an annual rate equal to the 1999 compensation of the Trustees of the Stein Roe Funds until he would otherwise have retired at age 74 on December 31, 2001. The payments to Mr. Bacon will be made quarterly, beginning in 2001. Liberty Financial and Stein Roe Funds will each bear one-half of the cost of the payments to Messrs. Boyd and Bacon; the Stein Roe Funds' portion of the payments will be allocated among the Stein Roe Funds based on each fund's share of the Trustee fees for 2000. Further information concerning the Trustees' compensation is included in Part 4. Fund Information on page _____. B. Meetings and Committees. The current Board of Trustees of the Stein Roe Funds consists of one interested and six non-interested Trustees. Audit Committee. The Audit Committee of the Stein Roe Funds, consisting of Messrs. Hacker (Chairman), Bacon, Boyd, Nelson and Theobald and Ms. Kelly, all of whom are non-interested Trustees, recommends to the Board of Trustees the independent accountants to serve as auditors, reviews with the independent accountants the results of the auditing engagement and internal accounting procedures and considers the independence of the independent accountants, the range of their audit services and their fees. Compensation Committee. The Compensation Committee of the Stein Roe Funds, consisting of Messrs. Boyd and Nelson, both of whom are non-interested Trustees, reviews compensation of the board members who are not affiliated with the investment adviser. Nominating Committee. The Nominating Committee of the Stein Roe Funds, consisting of Messrs. Boyd and Nelson, both of whom are non-interested Trustees, recommends to the Board of Trustees, among other things, nominees for trustee and for appointments to various committees. The Committee will consider candidates for trustee recommended by shareholders. Written recommendations with supporting information should be directed to the Committee in care of your Fund. Executive Committee. The Executive Committee of the Stein Roe Funds, consisting of Mr. Boyd, a non-interested Trustee, and Mr. Cook, an interested Trustee, is authorized to take certain actions delegated to it by the full Board of Trustees and to exercise the full powers of the Board of Trustees, with some exceptions, between Board meetings. Record of Board and Committee Meetings. During the fiscal year ended June 30, 2000, the Board of Trustees of the Base Trust held six meetings, the Audit Committee held four meetings, the Compensation Committee held one meeting, the Nominating Committee did not hold any meetings and the Executive Committee held two meetings. During the most recently completed fiscal years, each of the current Trustees attended more than 75% of the meetings of the Board of Trustees and the committees of which such Trustee is a member. If any nominee listed above becomes unavailable for election, the enclosed proxy card may be voted for a substitute nominee in the discretion of the proxy holder(s). THE BOARD OF TRUSTEES OF THE BASE TRUST RECOMMENDS THAT THE SHAREHOLDERS OF EACH FUND VOTE FOR EACH NOMINEE IN PROPOSAL 4. REQUIRED VOTE FOR PROPOSAL 4 Shareholders of each Fund vote together with the shareholders of the other feeder funds of the respective Portfolios and with the shareholders of the other master funds of the Base Trust for the election of Trustees of the Base Trust. A plurality of the votes cast at the Meetings for the Base Trust, if a quorum is represented, is required for the election of each Trustee to the Board of Trustees of the Base Trust. PART 3. INFORMATION REGARDING VOTING AND SHAREHOLDER MEETINGS. This section provides further information regarding the methods of voting and shareholder meetings. In Parts 3 and 4, the following acronym codes will be used to identify the Liberty Mutual Funds: ------------- -------------------------- ---------- ---------------------------- CODE LIBERTY MUTUAL FUND CODE LIBERTY MUTUAL FUND ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LHYSF Liberty High Yield LCBP Liberty Counselor Balanced Securities Portfolio Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LIF Liberty Income Fund LCGP Liberty Counselor Growth Portfolio ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LSIF Liberty Strategic Income LCIP Liberty Counselor Income Fund Portfolio ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LTMAGF Liberty Tax-Managed LHYMF Liberty High Yield Aggressive Growth Fund Municipal Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LTMVF Liberty Tax-Managed LITEF Liberty Intermediate Value Tax-Exempt Fund Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LIGF Liberty Intermediate LTEF Liberty Tax-Exempt Fund Government Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LMMF Liberty Money Market Fund LTEIF Liberty Tax-Exempt Insured Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LNGCF Liberty Newport Greater LTEMMF Liberty Tax-Exempt Money China Market Fund Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LNJOF Liberty Newport Japan LUF Liberty Utilities Fund Opportunities Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LCF Liberty Contrarian Fund LCATEF Liberty California Tax-Exempt Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LCEF Liberty Contrarian LCTTEF Liberty Connecticut Equity Tax-Exempt Fund Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LCIF Liberty Contrarian LMATEF Liberty Massachusetts Income Tax-Exempt Fund Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LFSF Liberty Federal LNYTEF Liberty New York Securities Fund Tax-Exempt Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LNGUF Liberty Newport Global LOHTEF Liberty Ohio Tax-Exempt Utilities Fund Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LNIEF Liberty Newport LGIF Liberty Growth & Income International Fund Equity Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LREF Liberty Real Estate Fund LNAPF Liberty Newport Asia Pacific Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LSVF Liberty Select Value Fund LNEF Liberty Newport Europe Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- LSF Liberty Special Fund LNTF Liberty Newport Tiger Fund ------------- -------------------------- ---------- ---------------------------- ------------- -------------------------- ---------- ---------------------------- TLF The Liberty Fund LFRAF Liberty Floating Rate Advantage Fund ------------- -------------------------- ---------- ---------------------------- A. Proxy Solicitation Methods. Shareholders of the Liberty Mutual Funds entitled to vote at the Meetings will receive proxy materials in the mail. The Funds have engaged the services of SCC to assist in the solicitation of proxies. As the date approaches, if your vote is not received, you may receive a call from SCC reminding you to exercise your right to vote. At this time, you may elect to vote your shares telephonically. B. Proxy Solicitation Costs. The Liberty Mutual Funds will bear the cost of the solicitation (with a portion of certain Funds' expenses borne by Liberty Financial) which includes printing of proxy materials, mailing and the tabulation of votes. By voting as soon as you receive your proxy materials, you will help reduce the cost of additional mailings. The cost of this assistance for each Liberty Mutual Fund is not expected to exceed the following: ------------- -------------------------- ----------- --------------------------- CODE SOLICITATION COST CODE SOLICITATION COST ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LHYSF $107,912 LCBP 1,962 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LIF 17,768 LCGP 2,928 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LSIF 152,376 LCIP 833 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LTMAGF 1,138 LHYMF 9,371 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LTMVF 6,880 LITEF 1,639 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LIGF 69,210 LTEF 108,397 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LMMF 23,856 LTEIF 8,704 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LNGCF 18,096 LTEMMF 1,459 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LNJOF 12,756 LUF 105,786 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LCF 763 LCATEF 10,934 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LCEF 13,410 LCTTEF 7,512 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LCIF 991 LMATEF 9,083 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LFSF 71,536 LNYTEF 5,055 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LNGUF 25,572 LOHTEF 5,947 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LNIEF 16,505 LGIF 172,610 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LREF 2,202 LNAPF 3,695 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LSVF 102,922 LNEF 1,915 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- LSF 17,335 LNTF 199,050 ------------- -------------------------- ----------- --------------------------- ------------- -------------------------- ----------- --------------------------- TLF $164,763 LFRAF 3,780 ------------- -------------------------- ----------- --------------------------- C. Record Date and Quorum. Each shareholder of record of any Fund at the close of business on September 29, 2000 (Record Date) will have one vote for each share held. Holders of 30% of the shares of each Liberty Mutual Fund voting on a Proposal outstanding on the Record Date constitute a quorum and must be present in person or represented by proxy for business to be transacted at the Meetings on Proposals 2 and 3. With respect to Proposal 1, shareholders of each Liberty Mutual Fund vote together with the shareholders of the other series of the applicable Trust for the election of Trustees; 30% of the outstanding shares of the Trust constitutes a quorum for voting on the election of Trustees. With respect to Proposal 4, the shareholders of each of Liberty Money Market Fund and Liberty Municipal Money Market Fund vote together with the shareholders of the other feeder funds of the respective Portfolios and with the shareholders of the other master funds of the Base Trust for the election of Trustees of the Base Trust; 30% of the outstanding shares of the Base Trust constitutes a quorum for voting on the election of Trustees. Regardless of how you vote ("For", "Against" or "Abstain"), your shares will be counted as present and entitled to vote for purposes of determining the presence of a quorum. If a shareholder withholds authority or abstains, or the proxy reflects a "broker non-vote" (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power on a particular matter), it will have the effect of votes (a) present for purposes of determining a quorum for each proposal and (b) against proposals 2 through 4. With respect to the election of Trustees (Proposals 1 and 4), withheld authority, abstentions and broker non-votes have no effect on the outcome of the voting. D. Revoking Your Proxy. You may revoke your proxy at any time up until the voting results are announced at the Meetings. You may revoke your proxy by writing to the Secretary of the Liberty Mutual Funds, Attn: William J. Ballou, One Financial Center, 11th Floor, Boston, MA 02111-2621. You may also revoke your proxy by voting again by using one of the following four ways: (a) by accessing our Web site; (b) by using your enclosed proxy card; (c) by fax (not available for all shareholders; refer to the enclosed proxy insert) or (d) voting in person at the Meetings. You may also revoke your vote telephonically by calling SCC at 1-800-732-3683. E. Shareholder Proposals. Proposals of shareholders which are intended to be considered for inclusion in the Liberty Mutual Funds' proxy statement must be received within a reasonable amount of time prior to any meetings. The Liberty Mutual Funds do not currently intend to hold shareholder meetings in 2001. F. Annual/Semiannual Reports. Further information concerning a Liberty Mutual Fund is contained in its most recent Annual and/or Semiannual Report to Shareholders, which is obtainable free of charge by writing Colonial Management Associates, Inc. at One Financial Center, Boston, Massachusetts 02111 or by calling 1-800-426-3750. G. Other Matters. As of the date of this proxy statement, only the business mentioned in proposals 1 through 4 of the Notice of the Special Meetings of Shareholders is contemplated to be presented. If any procedural or other matters come before the Meetings, your proxy shall be voted in accordance with the best judgement of the proxy holder(s). H. Adjournment. If sufficient votes in favor of any of the proposals set forth in the Notice of Special Meetings of Shareholders are not received by the time scheduled for the meeting, the persons named as proxies may propose adjournments of the meeting for a period or periods of not more than 120 days in the aggregate to permit further solicitation of proxies with respect to those proposals. Any adjournment will require the affirmative vote of a majority of the votes cast on the question in person or by proxy at the session of the meeting to be adjourned. The persons named as proxies will vote in favor of adjournment those proxies that are entitled to vote in favor of such proposals. They will vote against adjournment those proxies required to be voted against such proposals. Any proposals for which sufficient favorable votes have been received by the time of the meeting may be acted upon and considered final regardless of whether the meeting is adjourned to permit additional solicitation with respect to any other proposal. I. Compliance with Section 16(a) of the Securities Exchange Act of 1934 (Liberty Floating Rate Advantage Fund only). Section 16(a) of the Securities Exchange Act of 1934, as amended, and Section 30(f) of the 1940 Act, as amended, require the Fund's Board and certain other persons (Section 16 reporting persons), to file with the Securities and Exchange Commission (SEC) initial reports of ownership and reports of changes in ownership of the Fund's shares and to furnish the Fund with copies of all Section 16(a) forms they file. Based solely upon a review of copies of such reports furnished to the Fund for the fiscal year ended August 31, 2000, the Section 16 reporting persons complied with all Section 16(a) filings applicable to it. PART 4. FUND INFORMATION. For each class of each Liberty Mutual Fund's shares and each Trust's shares entitled to vote at the Meetings, the number of shares outstanding as of September 29, 2000 was as follows: -------------- --------------------- --------------------- --------------------- Liberty Mutual Fund Outstanding Outstanding Outstanding Class A Shares Class B Shares Class C Shares -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LIF 16,148,249.120 5,552,405.321 427,097.942 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LMMF 239,005,963.398 71,961,717.385 4,112,265.135 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LCF 331,485.813 74,278.688 4,412.855 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LNGUF 10,348,066.451 930,888.097 62,594.830 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LSF 4,884,506.242 0.000 0.000 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LCIP 298,986.212 250,776.121 187,015.430 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LHYMF 5,788,695.741 9,226,892.968 303,956.972 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LITEF 1,598,122.143 1,119,745.397 181,420.286 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LTEF 144,371,138.034 15,870,162.790 389,499.862 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LTEIF 16,346,727.166 3,265,663.585 73,256.843 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LTEMMF 11,693,512.056 560,889.127 222,996.360 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LCATEF 9,320,321.743 8,710,410.880 486,216.731 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LCTTEF 27,046,330.054 9,976,521.288 689,904.308 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LMATEF 18,851,864.727 5,901,995.294 177,799.580 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LNYTEF 6,334,227.330 6,049,749.324 80,177.473 -------------- --------------------- --------------------- --------------------- -------------- --------------------- --------------------- --------------------- LOHTEF 6,563,828.390 3,997,235.115 40,882.573 -------------- --------------------- --------------------- --------------------- -------------- --------------- ---------------- ---------------- --------------- Liberty Outstanding Outstanding Outstanding Outstanding Mutual Fund Class A Class B Shares Class C Shares Class I Shares Shares -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LCEF 4,080,501.791 28,816.534 608.519 591,404.515 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- Liberty Outstanding Outstanding Outstanding Outstanding Mutual Fund Class A Class B Shares Class C Shares Class Z Shares Shares -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LHYSF 76,049,963.256 85,000,541.081 9,484,939.401 94,118.705 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LTMAGF 314,282.990 1,118,558.394 76,151.548 10,377.487 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LTMVF 1,155,286.572 4,127,766.734 835,535.857 103.950 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LIGF 76,405,556.013 26,876,141.566 307,789.366 966,002.020 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LNGCF 3,189,764.828 320,194.813 71,303.235 8,143.287 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LNIEF 3,368,778.377 3,420,523.691 88,370.612 479,140.841 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LFSF 57,933,053.043 5,154,093.185 353,058.312 102.664 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LREF 530,746.385 92,439.873 13,527.014 33,788.089 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LSVF 17,344,993.683 13,474,790.485 1,043,774.270 47,566.852 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- TLF 85,501,505.934 60,443,270.570 640,428.421 313.575 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LCBP 777,227.095 1,152,133.755 470,120.394 53,994.765 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LCGP 909,246.217 1,164,332.097 499,742.022 81,282.092 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LUF 16,651,725.002 28,643,739.600 200,553.719 14,549.200 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LGIF 15,676,398.992 38,455,709.768 1,403,147.563 52.015 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LNAPF 425,886.313 236,850.346 52,040.187 91,432.893 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LNEF 796,834.961 261,794.817 41,326.596 3,031.573 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LFRAF 6,284,360.530 1,850,429.620 1,454,213.709 221,897.853 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- Liberty Outstanding Outstanding Outstanding Outstanding Mutual Fund Class A Class B Shares Class C Shares Class J Shares Shares -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LSIF 91,129,446.697 120,605,548.331 7,289,349.992 90,370,760.596 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- Liberty Outstanding Mutual Fund Class Z Shares -------------- --------------- -------------- --------------- LSIF 793,964.353 -------------- --------------- -------------- --------------- ---------------- ---------------- --------------- Liberty Outstanding Outstanding Outstanding Outstanding Mutual Fund Class A Class B Shares Class C Shares Class I Shares Shares -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LCIF 441,733.547 23,503.966 2,671.810 10,601.265 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- Liberty Outstanding Mutual Fund Class Z Shares -------------- --------------- -------------- --------------- LCIF 363,381.320 -------------- --------------- -------------- --------------- ---------------- ---------------- --------------- Liberty Outstanding Outstanding Outstanding Outstanding Mutual Fund Class A Class B Shares Class C Shares Class T Shares Shares -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LNTF 27,808,356.182 25,782,765.785 4,131,642.676 4,311,916.152 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- Liberty Outstanding Mutual Fund Class Z Shares -------------- --------------- -------------- --------------- LNTF 14,660,618.823 -------------- --------------- -------------- --------------- ---------------- ---------------- --------------- Liberty Outstanding Outstanding Outstanding Outstanding Mutual Fund Class A Class B Shares Class C Shares Class J Shares Shares -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- ---------------- ---------------- --------------- LNJOF 1,189,572.229 1,547,061.523 621,308.594 90.000 -------------- --------------- ---------------- ---------------- --------------- -------------- --------------- --------------- Liberty Outstanding Outstanding Mutual Fund Class N Shares Class Z Shares -------------- --------------- --------------- -------------- --------------- --------------- LNJOF 375,473.000 293,020.205 -------------- --------------- --------------- --------------------------------------- ---------------------------------------- Liberty Trust Outstanding Shares --------------------------------------- ---------------------------------------- --------------------------------------- ---------------------------------------- Liberty Funds Trust I 559,435,280.400* --------------------------------------- ---------------------------------------- --------------------------------------- ---------------------------------------- Liberty Funds Trust II 432,208,774.200 --------------------------------------- ---------------------------------------- --------------------------------------- ---------------------------------------- Liberty Funds Trust III 297,679,032.823 --------------------------------------- ---------------------------------------- --------------------------------------- ---------------------------------------- Liberty Funds Trust IV 262,368,102.700 --------------------------------------- ---------------------------------------- --------------------------------------- ---------------------------------------- Liberty Funds Trust V 125,847,396.700 --------------------------------------- ---------------------------------------- --------------------------------------- ---------------------------------------- Liberty Funds Trust VI 72,651,977.750 --------------------------------------- ---------------------------------------- --------------------------------------- ---------------------------------------- Liberty Funds Trust VII 77,798,287.540 --------------------------------------- ---------------------------------------- --------------------------------------- ---------------------------------------- Liberty Floating Rate Advantage Fund 9,810,901.712 --------------------------------------- ---------------------------------------- * Includes outstanding shares for Liberty Tax-Managed Growth Fund and Liberty Tax-Managed Growth Fund II, two series of Liberty Funds Trust I that will elect trustees of the Trust in a separate proxy statement. As of September 29, 2000, the following shareholders of record owned 5% or more of the applicable outstanding Class(es) of shares of the following Liberty Mutual Funds: -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LHYSF B & C Merrill Lynch, Pierce, 9,086,380.550 10.69% Fenner & Smith, Inc. (B) 12.37% For the Sole Benefit 1,173,308.314 of its Customers (C) 4800 Deer Lake Drive E. 3rd Floor Jacksonville, FL 32216 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LHYSF C Banc One Securities 2,829,878.142 29.84% Corp FBO The One Select Portfolio 733 Greencrest Drive Westerville, OH 43081 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LIF B & C Merrill Lynch, Pierce, 565,392.653 (B) 10.18% Fenner & Smith, Inc. 55,606.580 (C) 13.02% For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LSIF B & C Merrill Lynch, Pierce, 6,688,700.666 5.55% Fenner & Smith, Inc. (B) 12.09% BankBoston NA Custodian 880,929.778 (C) 4800 Deer Lake Drive E. 3rd Floor Jacksonville, FL 32216 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LSIF J Tokai Maruman 90,370,760.596 100.00% (*) Securities 1-10, Nihonbashi 2-Chome Chuo-Ku Tokyo, Japan 103-0027 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LSIF Z Colonial Counselor 472,038.079 59.45% Growth Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LSIF Z Colonial Counselor 111,036.292 13.99% Income Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LSIF Z Colonial Counselor 210,726.507 26.54% Balanced Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTMAGF A, C & Colonial Management 141,666.667 (A) 45.08% Z Associates, Inc. 8,333.333 (C) 10.94% One Financial Center 8,333.333 (Z) 80.30% Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTMAGF B & C Merrill Lynch, Pierce, 103,822.973 (B) 9.28% Fenner & Smith, Inc. 17,189.750 (C) 22.57% For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTMAGF C Cranford Construction 7,105.584 9.33% Company Inc. c/o Selengut 1678 45th Street Brooklyn, NY 11204 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTMAGF C Pegge Ann Wall Trustee 7,283.321 9.56% U/W F Willard Wall Trust 1 32394 Pleasant Oaks Drive Springville, CA 93265 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTMAGF Z Margery L. Hayward 2,044.154 19.70% 7327 W. Lafayette Place Mequon, WI 53092 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTMVF A & C Merrill Lynch, Pierce, 99,831.558 (A) 8.64% Fenner & Smith, Inc. 78,582.051 (C) 9.40% For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LTMVF Z Colonial Management 103.950 100.00% Associates, Inc. One Financial Center Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LIGF B & C Merrill Lynch, Pierce, 1,950,512.625 7.26% Fenner & Smith, Inc. (B) 12.45% For the Sole Benefit 38,310.617 (C) of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LIGF C Cynthia D. Frankel 17,236.089 5.60% P.O. Box 25003 Asheville, NC 28813 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LIGF C The Reese Family 16,307.041 5.30% Partnership 17317 Wood Road Bow, WA 98232 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LIGF Z Colonial Counselor 333,593.438 34.53% Income Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LIGF Z Colonial Counselor 632,244.524 65.45% Balanced Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LMMF A Colonial Investment 27,288,167.790 11.42% Services, Inc. One Financial Center Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LMMF B Susan P. Ryan 209,009.300 5.08% 8 Burlington Road Harwinton CT 06791 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LMMF B Investors Bank & Trust 388,665.500 9.45% Company Custodian Michael Lutsky IRA 4601 Brewster Lane Tarzana, CA 91356 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNGCF A, B & Merrill Lynch, Pierce, 559,280.470 (A) 17.53% C Fenner & Smith, Inc. 67,086.595 (B) 20.95% For the Sole Benefit 15,761.287 (C) 22.10% of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LNGCF Z Colonial Management 7,616.387 93.53% Associates, Inc. One Financial Center Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNJOF A, B & Merrill Lynch, Pierce, 76,377.274 (A) 6.42% C Fenner & Smith, Inc. 208,250.199 (B) 13.46% For the Sole Benefit 99,225.535 (C) 15.97% of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNJOF Z Thomas C. Theobald 16,910.764 5.77% 55 Railroad Avenue Plaza Level Greenwich, CT 06830 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNJOF Z Mitra & Co. 233,736.059 79.77% c/o Marshall & Ilsley Trust Company 1000 N. Water Street Milwaukee, WI 53202 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCF A James E. Crabbe Trustee 200,000.000 60.33% (*) James E. Crabbe Trust 121 SW Morrison Portland, OR 97204 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCF A Richard S. Huson 100,000.000 30.17% Yvonne M. Huson Trustee Richard S. Huson Trust 2480 NW Tower Rock Rd. Bend, OR 97701 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCF B Advest Bank Trustee 8,287.934 11.16% Jacob Levinson Mar Trust FBO M. Levinson Attn: Trust Division 90 State House Square Hartford, CT 06103 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCF C Orville B. Lamb 274.163 6.21% Edna M. Lamb Orville Paul Lamb 101 Honeysuckle Casper, WY 82604 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCEF B Investors Bank & Trust 1,479.255 5.13% Company Custodian Morris E. Kinghorn IRA P.O. Box 83 Pocatello, ID 83204 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LCEF B Investors Bank & Trust 1,616.486 5.61% Company Trustee Arms Inc. 401(k) Plan 2447 E. Sunshine Drive Boise, ID 83712 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCEF C Investors Bank & Trust 284.402 46.74% Company Custodian Clyde Williams SARSEP Plan Burnt Ranch Road Cherry Creek Ranch Mitchell, OR 97750 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCEF C Investors Bank & Trust 41.083 6.75% Company Custodian Susan C. Williams SARSEP Plan 43861 Burnt Ranch Road Mitchell, OR 97750 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCEF C Colonial Management 62.691 10.30% Associates, Inc. One Financial Center Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCEF C Investors Bank & Trust 75.327 12.38% Company Trustee Morgan Franklin Corporation 401(k) Retirement Plan 47042 Dixon Court Lexington Park, MD 20653 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCEF C Investors Bank & Trust 31.998 5.26% Company Trustee Morgan Franklin Corporation 401(k) Retirement Plan 45803 Spruce Drive Lexington Park, MD 20653 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCEF C Don A. McKee 89.993 14.79% Molly McKee 3917 Oakwood Drive N. Pearlanad, TX 77581 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LCEF I Northwestern Trust 470,458.694 79.55% Company Custodian FBO IBEW Local 76 Supplemental Income Fund 1201 3rd Ave. Ste. 2010 Seattle, WA 98101 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCEF I Northwestern Trust 113,624.910 19.21% Company Custodian FBO IBEW Local 76 Supplemental Income Fund 1201 3rd Avenue Ste. 2010 Seattle, WA 98101 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIF A & B Merrill Lynch, Pierce, 49,929.317 (A) 11.30% Fenner & Smith, Inc. 13,433.080 (B) 57.15% Merrill Lynch Financial Data Service Attn: Service Team 4800 Deer Lake Drive E. 3rd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIF A Ibak & Co. 116,525.561 26.38% P.O. Box 1700 102 South Clinton Iowa City, IA 52244 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIF B Raymond James & 1,284.876 5.47% Associates Inc. CSDN Norma B. Porche IRA 127 W. McKennon Bixby, OK 74008 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIF B Jan C. Brueckmann 2,535.358 10.79% 4510 Church Road Hampstead, MD 21074 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIF I Colonial Management 10,601.265 100.00% Associates, Inc. One Financial Center Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIF Z Colonial Counselor 103,003.279 28.35% Income Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIF Z Colonial Counselor 260,272.153 71.63% (*) Balanced Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LFSF A, B & Merrill Lynch, Pierce, 3,625,214.954 6.26% C Fenner & Smith, Inc. (A) 11.42% For the Sole Benefit 588,410.739 (B) 6.60% of its Customers 23,307.294 (C) 4800 Deer Lake Drive E. 3rd Floor Jacksonville, FL 32216 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LFSF C The Simsbury Fire 54,313.566 15.38% District 871 Hopmeadow Street Simsbury, CT 86070 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LFSF C Dental Laboratory 23,051.755 6.53% Assoc of the State of New York A Corporation c/o Mark Polevoy #1 Barstow Rd. Ste. P20 Great Neck, NY 11021 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LFSF Z Colonial Management 102.664 100.00% Associates, Inc. One Financial Center Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNGUF C Merrill Lynch, Pierce, 11,159.305 17.83% Fenner & Smith, Inc. For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNIEF B & C Merrill Lynch, Pierce, 363,249.908 (B) 10.62% Fenner & Smith, Inc. 5,020.230 (C) 5.68% For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNIEF C Colonial Management 9,733.271 11.01% Associates, Inc. One Financial Center Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNIEF Z Colonial Counselor 325,486.231 67.93% Growth Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNIEF Z Colonial Counselor 153,570.425 32.05% Balanced Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LREF A Enele & Co 46,972.293 8.85% Dividend Reinvest c/o Copper Mountain Trust 601 SW Second Avenue Suite 1800 Portland, OR 97204 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LREF A Charles Schwab & Co. 185,632.640 34.98% (*) Inc. Special Custody A/C for Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LREF B Investors Bank & Trust 4,917.683 5.32% Company Custodian Joseph M. Gnesin IRA 11 Beach Street New York, NY 10013 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LREF B First Trust 5,329.694 5.77% Corporation Custodian 17 Tobey Village Office Park Pittsford, NY 14534 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LREF C Daniel Keilitz 886.783 6.56% 17100 Bridgestone Court #207 Ft. Myers, FL 33908 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LREF C Raymond James & 898.473 6.64% Associates, Inc. Custodian 880 Carillon Parkway St. Peters, FL 33716 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LREF I Colonial Counselor 33,681.108 99.68% Income Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LSVF B & C Merrill Lynch, Pierce, 716,672.622 (B) 5.32% Fenner & Smith, Inc. 145,989.764 (C) 13.99% For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LSVF C Banc One Securities 240,769.130 23.07% Corp FBO The One Select Portfolio 733 Greencrest Drive Westerville, OH 43081 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LSVF C AG Edwards & Sons 88,068.956 11.85% One North Jefferson Avenue St. Louis, MO 63103 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LSF A FTC & Co. 577,726.047 11.83% Attn: Datalynx #203 P.O. Box 173736 Denver, CO 80217 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LSF A Charles Schwab & Co. 1,109,976.285 22.72% Inc. Special Custody A/C for Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- TLF Z Louis A. Volante Jr. 313.574 100.00% RoseMarie A. Volante 32 Sheparo Avenue N. Providence, RI 02904 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCBP A Daughters of Mary of 55,791.904 7.18% the Immaculate Conception Manor Convent 50 Pulaski Street New Britian, CT 06053 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCBP A Newtown Square Fire 90,931.449 11.70% Company Commonwealth Bank CSA 8 N Newtown St. Rd. P.O. Box 453 Newtown Square, PA 19073 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCBP C Robert T. Buchanan 26,811.273 5.70% Sara M. Buchanan Trustee Kangaroo Court Restaurants Texas, Inc. 102 W. Crocket St. #800 San Antonio, TX 78205 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCBP C The Trustees for the 74,330.937 15.81% Plan of McAllen Bolt & Screw Inc. Profit Sharing Retirement Plan A/C Master Account P.O. Box 1090 McAllen, TX 78505 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LCBP C Bruno A. Schiavo 31,688.134 6.74% Michelina Schiavo Trustee B&M Schiavo Nominee Trust 79 Walker Road Westwood, MA 02090 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCGP A International 97,875.461 10.76% BancShares Corporation Employee Profit Sharing Plan 1200 San Bernardo Ave. Laredo, TX 78042 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCGP A International Bank of 90,252.165 9.93% Commerce Trustee Abraham Rigal Trust 1200 San Bernardo Ave. Laredo, TX 78042 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCGP C Roberto & Soila Garcia 26,683.094 5.34% Family Ltd Partnership 304 Sunflower Street McAllen, TX 78504 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCGP C Liberty Securities C 65,974.144 13.20% c/o Independent Financial Mark 100 Manhattanville Road Puchase, NY 10577 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCGP C William A. Schuchmann 26,837.065 5.37% 56 North Prospect Street Ansonia, CT 06401 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCGP C Lazaro Geideshman 93,476.850 18.71% 302 Convent Laredo, TX 78040 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCGP C Tommy L. Davis 28,293.777 5.66% Joan A. Davis 1012 Petra Drive Napa, CA 94558 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP A Margaret Bagdigian 24,958.481 8.35% 19 Batterson Park Road Farmington, CT 06032 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP A Investors Bank & Trust 21,821.714 7.30% Company Custodian Donald W. Hofsess IRA 865 South Adams Street Denver, CO 80209 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP A Valerie Parker 15,989.166 5.35% 252 Lexington Road Concord, MA 01742 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LCIP A Bernard Dathe 43,355.603 14.50% Margaret Dathe 265 Oak Park Lane Pleasant Hill, CA 94523 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP A Investors Bank & Trust 16,761.822 5.61% Company Custodian Sylvan B. Baer IRA 3770 S. Albion Street Englewood, CO 80110 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP B Investors Bank & Trust 28,781.052 11.48% Company Custodian Donald L. Noblit IRA 563 Pochassic Road Westfield, MA 01085 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP C John Fertig Jr. 11,955.780 6.39% Janice Nardona-Clews Trustees Sophie S. Nardona Trust 24 Gilbert Street Waterbury, CT 06702 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP C Estelle Mosko Trustee 13,718.446 7.34% Estelle Mosko Trust 390 Forest Street Denver, CO 80220 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP C Laredo Childrens Museum 11,980.902 6.41% West End Washington St. Laredo, TX 78040 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP C International Bank of 13,272.595 7.10% Commerce Trustee Belia R. Munoz Guerra Trust 1200 San Bernardo Ave. Laredo, TX 78042 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP C Mary Louise Johnican 21,191.795 11.33% Rhonda Rochelle Herndon 3221 8th Street Bay City, TX 77414 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP C Ella Bocock 9,664.357 5.17% P.O. Box 513A Port Lavaca, TX 77979 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP C Bobby W. Neuman 9,694.920 5.18% 110 Blackstone Port Lavaca, TX 77979 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP C Jess C. Sanford 18,529.038 9.91% 27 Oak Circle Bay City, TX 77414 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LCIP C Joycelyn L. Handel 10,855.621 5.80% 2725 E. Fir Unit #94 Mount Vernon, WA 98273 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCIP C Stephen H. Tontini 17,071.413 9.13% Ana I Solloso Blanco Lockheed Martin Bethesda Mail Pouch #52 Attn: S. Tontini/6801 Rockledge Drive Bethesda, MD 20817 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LHYMF B & C Merrill Lynch, Pierce, 864,860.035 (B) 9.37% Fenner & Smith, Inc. 21,965.601 (C) 7.23% For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LHYMF C Bost & Co 47,303.690 15.56% Mellon Private Asset Management Attn: Mutual Fund Operations P.O. Box 534005 Pittsburgh, PA 15253 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LITEF A & C Merrill Lynch, Pierce, 93,766.769 (A) 5.87% Fenner & Smith, Inc. 71,220.571 (C) 39.26% For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LITEF C Leone O'Ferrall 12,369.869 6.82% Angeline O'Ferrall Trustee Leone & Angeline O'Ferrall Rev Trust P.O. Box 145 Gualala, CA 95445 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LITEF C Donald I. Coggins 12,820.513 7.07% Trustee Donald I. Coggins Trust P.O. Box 544 Wilmington, VT 05363 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LITEF C Eleanor B. Coggins 16,025.641 8.83% Trustee Eleanor B. Coggins Trust Lape Raponda P.O. Box 544 Wilmington, VT 05363 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LTEF B Merrill Lynch, Pierce, 1,048,557.256 6.61% Fenner & Smith, Inc. For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTEF C Terry Collins 203,886.537 52.35% RoseMary Collins 306 Jester Court Petaluma, CA 94954 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTEIF B & C Merrill Lynch, Pierce, 229,841.980 (B) 7.04% Fenner & Smith, Inc. 17,692.177 (C) 24.15% For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTEIF C Don C. Fisher Trustee 6,730.574 9.19% Don C. Fisher Living Trust P.O. Box 701 Jackson, WY 83001 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTEIF C Francis E. Torr 12,742.951 17.39% Florence J. Torr Trustees Torr Family Trust 1 Bear Creek Road Novato, CA 94947 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTEMMF A Billy Gene Yarbrough 2,035,235.050 17.40% Louise Yarbrough Trustees Yarbrough Family Trust 97 Dobbins Street Vacaville, CA 95688 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTEMMF B RSBCO 80,700.693 14.39% FBO Julianne F. Cole P.O. Drawer 1410 Ruston, LA 71273 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTEMMF B Vincent Dellaquilla 32,071.970 5.72% Yolanda Dellaquilla Joann Lendroth 33 Wolcott Street New Haven, CT 06513 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTEMMF B Charles R. Matties 94,190.420 16.79% Laura B. Matties 84 Overbrook Road West Hartford, CT 06107 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LTEMMF C David M. Sutcliffe 15,949.950 7.15% Trustee DCR Trust P.O. Box 220 Wrentham, MA 02093 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LTEMMF C Colonial Management 108,381.860 48.60% Associates, Inc. One Financial Center Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LUF B & C Merrill Lynch, Pierce, 4,602,211.650 16.07% Fenner & Smith, Inc. (B) 15.22% For the Sole Benefit 30,528.279 (C) of its Customers 4800 Deer Lake Drive E. 3rd Floor Jacksonville, FL 32216 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LUF Z Colonial Counselor 14,497.353 99.64% Income Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCATEF A, B & Merrill Lynch, Pierce, 2,068,678.383 7.65% C Fenner & Smith, Inc. (A) 5.68% For the Sole Benefit 566,811.317 (B) 28.03% of its Customers 193,373.004 (C) 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LCTTEF A, B & Merrill Lynch, Pierce, 1,119,185.003 12.01% C Fenner & Smith, Inc. (A) 15.19% For the Sole Benefit 1,323,067.710 20.56% of its Customers (B) 4800 Deer Lake Drive 99,985.017 (C) E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LMATEF C Sybil N. Wetzler 12,581.399 7.08% Teresa A. Wetzler-Finn Steven A. Finn Trustee Sybil N. Wetzler Rev Trust 5 Tallyho Lane Andover, MA 01810 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LMATEF C Merrill Lynch, Pierce, 39,366.697 22.14% Fenner & Smith, Inc. For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LMATEF C Teresa A. Wetzler-Finn 11,318.347 6.37% Lawrence A. Wetzler Trustees U/W Jacob Neumann 5 Tallyho Lane Andover, MA 01810 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LMATEF C Emily M. Robinson 12,601.336 7.09% Barrett F. Robinson 405 Winter Street North Andover, MA 01845 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNYTEF A & B Merrill Lynch, Pierce, 735,457.793 (A) 11.61% Fenner & Smith, Inc. 1,075,058.659 17.77% For the Sole Benefit (B) of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNYTEF C Joan Parrotta 4,386.483 5.47% 262-17 Grand Central Parkway Little Neck, NY 11362 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNYTEF C Abe Weinstein 14,653.813 18.28% Laura Weinstein David Weinstein Linda Marine 92-30 56 Avenue #1K Elmhurst, NY 11373 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNYTEF C Howard Read 7,163.801 8.93% Acct #2 25 Eagle Street c/o Read & Laniado Albany, NY 12207 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNYTEF C Dino Gobbo 5,813.756 7.25% Marita Gobbo 76-11 175 Street Flushing, NY 11366 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNYTEF C Read & Laniado 14,499.362 18.08% A Partnership 25 Eagle Street Albany, NY 12207 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LOHTEF A, B & Merrill Lynch, Pierce, 388,168.470 (A) 5.91% C Fenner & Smith, Inc. 302,536.402 (B) 7.57% For the Sole Benefit 4,353.684 (C) 10.65% of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LOHTEF C Virginia Royko Trustee 2,127.959 5.21% Howard W. Rose Irrevocable Trust 7450 Little Mountain Road Mentor, OH 44060 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LGIF C Merrill Lynch, Pierce, 91,069.436 6.49% Fenner & Smith, Inc. For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LGIF C Banc One Securities 93,538.117 6.67% Corp. FBO The One Select Portfolio 733 Greencrest Drive Westerville, OH 43081 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LGIF Z Colonial Management 52.015 100.00% Associates, Inc. One Financial Center Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNAPF A & C Colonial Management 244,505.198 (A) 57.41% Associates, Inc. 10,605.322 (C) 20.38% One Financial Center Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNAPF C Merrill Lynch, Pierce, 8,378.478 16.10% Fenner & Smith, Inc. For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNAPF Z Colonial Counselor 61,928.635 67.73% Growth Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNAPF Z Colonial Counselor 29,225.670 31.96% Balanced Portfolio 245 Summer Street Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNEF A, C & Colonial Management 479,324.792 (A) 60.15% (*) Z Associates, Inc. 10,000.000 (C) 24.20% One Financial Center 10,000.000 (Z) 32.99% Boston, MA 02111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LNEF A Newport Fund 157,211.210 19.73% Management, Inc. 580 California St. #1960 San Francisco, CA 94104 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNEF C Merrill Lynch, Pierce, 4,221.835 10.22% Fenner & Smith, Inc. For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNEF Z Michael Ellis 546.610 18.03% Kirsty Ellis 346 Woodside Avenue Mill Valley, CA 94941 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNEF Z John J. Harrell 570.211 18.81% P.O. Box 965 Lyle, WA 98635 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNEF Z Thomas R. Tuttle 711.238 23.46% Sylvia C. Tuttle Trustee Tuttle Revocable Trust 440 Davis Court #1621 San Francisco, CA 94111 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNTF A Pershing Custodian 1,672,700.730 6.02% One Pershing Plaza Jersey City, NJ 07399 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNTF A, B & Merrill Lynch, Pierce, 1,580,581.891 5.69% C Fenner & Smith, Inc. (A) 14.63% For the Sole Benefit 3,773,008.783 28.73% of its Customers (B) 4800 Deer Lake Drive 1,186,974.366 E. 2nd Floor (C) Jacksonville, FL 32246 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNTF A & Z Charles Schwab & Co 2,629,110.834 9.45% Inc. (A) 18.00% Attn: Mutual Fund 2,639,505.544 Operations 333/4 (Z) 101 Montgomery Street San Francisco, CA 94104 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNTF Z The Northern Trust 3,206,009.472 21.87% Company Trustee Liberty Mutual 401(k) Retirement Plan P.O. Box 92956 Chicago, IL 60607 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ --------------- --------------- Number of Percentage of Liberty Class Outstanding Outstanding Mutual Fund of Name and Address of Shares of Shares of Class Shares Shareholder Class Owned Owned -------------- -------- ------------------------ --------------- --------------- -------------- -------- ------------------------ --------------- --------------- LNTF Z Wendel & Co 1,433,450.350 9.78% c/o Bank of New York Mutual Funds/Reorg Dept. P.O. Box 1066 Wall Street Station New York, NY 10268 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNTF Z The James Irvine 3,157,673.131 21.54% Foundation One Market Steuart Tower Suite 2500 San Francisco, CA 94105 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LNTF Z Fidelity Investments 1,081,495.535 7.38% Institutional Operations Company Inc. Agent for Certain Employee Benefits Plan 100 Magellan Way Mail Zone KW1C Covington, KY 41015 -------------- -------- ------------------------ ---------------- -------------- -------------- -------- ------------------------ ---------------- -------------- LFRAF A, B, Keyport Life Insurance 881,812.317 (A) 13.97% C & Z Company 880,110.800 (B) 47.30% c/o Chris Westfall 220,384.088 (C) 15.08% 125 High Street 221,499.132 (Z) 99.01% Boston, MA 02101 -------------- -------- ------------------------ ---------------- -------------- * Entity owned 25% or more of the outstanding shares of beneficial interest of named Fund, and therefore may be presumed to "control" such Fund, as that term is defined in the 1940 Act. As of the Record Date, the executive officers and the current Boards of Trustees as a group were known to beneficially own less than 1% of each of the outstanding Class(es) of shares of each of the Liberty Mutual Funds. The following table sets forth certain information about the executive officers of each Liberty Mutual Fund: Executive Officer Office with the Liberty Mutual Funds; Year of Election as Name & Age Principal Occupation (1) Executive Officer ---------- ------------------------ ----------------- Stephen E. Gibson President of the Liberty Funds since 1998 (46) June, 1998, Chairman of the Board since July, 1998, Chief Executive Officer and President since December, 1996 and Director, since July, 1996 of the Colonial (formerly Executive Vice President from July, 1996 to December, 1996); Director, Chief Executive Officer and President of Liberty Funds Group LLC (LFG) since December, 1998 (formerly Director, Chief Executive Officer and President of The Colonial Group, Inc. (TCG) from December, 1996 to December, 1998); President and Vice Chairman of Stein Roe & Farnham Incorporated (SR&F) since January, 2000 (formerly Assistant Chairman from August, 1998 to January, 2000) (formerly Managing Director of Marketing of Putnam Investments, June, 1992 to July, 1996.) Pamela A. McGrath Treasurer and Chief Financial Officer 1999 (46) of the Liberty Funds and Liberty All-Star Funds since April, 2000; Treasurer, Chief Financial Officer and Vice President of LFG since December, 1999; Chief Financial Officer, Treasurer and Senior Vice President of Colonial since December, 1999; Director of Offshore Accounting for Putnam Investments from May, 1998 to October, 1999; Managing Director of Scudder Kemper Investments from October, 1984 to December, 1997. Glenn M. Wolfset Controller and Chief Accounting 2000 (37) Officer of the Liberty Funds since October, 2000; Senior Vice President since March, 2000; Senior Vice President from 1999 to 2000 and Vice President from 1994 to 1999 of Scudder Kemper Investments. Kevin M. Carome Executive Vice President of Liberty (44) Funds and Liberty All-Star Funds since October, 2000; Executive Vice President and Assistant Secretary, Liberty Funds Group - Chicago; Senior Vice President, Legal since January, 1999 of LFG; General Counsel and Secretary of Stein Roe & Farnham, Inc. since 1998; Associate General Counsel and Vice President of Liberty Financial Companies, Inc. through January, 1999. Executive Officer Office with the Liberty Mutual Funds; Year of Election as Name & Age Principal Occupation (1) Executive Officer ---------- ------------------------ ----------------- William J. Ballou Secretary of the Liberty Funds and 2000 (35) Liberty All-Star Funds since October, 2000 (Formerly Assistant Secretary from October, 1997 to October, 2000); Vice President, Assistant Secretary and Counsel of Colonial since October, 1997; Vice President and Counsel since April, 2000 and Assistant Secretary since December, 1988 of LFG (Formerly Associate Counsel from May, 1995 to September, 1997, MFS). (1) Except as otherwise noted, each individual has held the office indicated or other offices in the same company for the last five years. The current Board of Trustees received the following compensation from each Liberty Mutual Fund as of each Fund's fiscal year end and for the calendar year ended December 31, 1999(1): ------------------- ------------- -------------- ------------- ------------- LIBERTY MUTUAL FUND LCF LCEF LCIF LNGUF ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Fiscal Year End 10/31/99 10/31/99 10/31/99 10/31/99 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Trustee: ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Bleasdale $456(2) $1,146(3) $541(4) $1,387(5) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Ms. Collins 427 1,077 509 1,164 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Grinnell 445 1,123 530 1,213 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Lowry 432 1,088 514 1,176 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Macera 423 1,078 510 1,294 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Mayer 451 1,105 523 1,176 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Moody 403(6) 993(7) 472(8) 1,094(9) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Neuhauser 454 1,139 540 1,230 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Stitzel 423 1,078 510 1,294 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Ms. Verville 422(10) 1,066(11) 503(12) 1,316(13) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- LIBERTY MUTUAL FUND LNIEF LREF LSVF LSF ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Fiscal Year End 10/31/99 10/31/99 10/31/99 10/31/99 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Trustee: ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Bleasdale $1,104(14) $570(15) $3,590(16) $796(17) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Ms. Collins 937 536 3,093 748 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Grinnell 976 558 3,224 779 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Lowry 946 542 3,126 756 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Macera 1,039 537 3,376 749 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Mayer 945 552 3,133 768 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Moody 879(18) 497(19) 2,906(20) 694(21) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Neuhauser 989 568 3,260 791 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Stitzel 1,039 537 3,376 749 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Ms. Verville 1,055(22) 530(23) 3,429(24) 768(25) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- LIBERTY MUTUAL FUND TLF LTMAGF ------------------- ------------- -------------- ------------------- ------------- -------------- Fiscal Year End 10/31/99 10/31/99(26) ------------------- ------------- -------------- ------------------- ------------- -------------- Trustee: ------------------- ------------- -------------- ------------------- ------------- -------------- Mr. Bleasdale $7,468(27) $451(28) ------------------- ------------- -------------- ------------------- ------------- -------------- Ms. Collins 6,387 433 ------------------- ------------- -------------- ------------------- ------------- -------------- Mr. Grinnell 6,657 451 ------------------- ------------- -------------- ------------------- ------------- -------------- Mr. Lowry 6,453 433 ------------------- ------------- -------------- ------------------- ------------- -------------- Mr. Macera 6,971 433 ------------------- ------------- -------------- ------------------- ------------- -------------- Mr. Mayer 6.460 451 ------------------- ------------- -------------- ------------------- ------------- -------------- Mr. Moody 6,007(29) 451(30) ------------------- ------------- -------------- ------------------- ------------- -------------- Mr. Neuhauser 6,728 455 ------------------- ------------- -------------- ------------------- ------------- -------------- Mr. Stitzel 6,971 433 ------------------- ------------- -------------- ------------------- ------------- -------------- Ms. Verville 7,088(31) 451(32) ------------------- ------------- -------------- ------------------- ------------- -------------- ------------- ------------- LIBERTY MUTUAL FUND LTMVF LTEF LTEIF LHYMF ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Fiscal Year End 10/31/99 11/30/99 11/30/99 11/30/99 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Trustee: ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Bleasdale $153(33) $10,598(34) $1,312(35) $1,303(36) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Ms. Collins 145 9,974 1,235 1,227 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Grinnell 145 10,396 1,287 1,278 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Lowry 147 10,109 1,247 1,239 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Macera 144 9,985 1,241 1,232 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Mayer 151 10,048 1,244 1,237 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Moody 129(37) 9,384(38) 1,160(39) 1,153(40) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Neuhauser 83 10,504 1,304 1,295 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Stitzel 144 9,985 1,241 1,232 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Ms. Verville 144(41) 9,869(42) 1,222(43) 1,214(44) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- LIBERTY MUTUAL FUND LUF LHYSF LIF LSIF ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Fiscal Year End 11/30/99 12/31/99 12/31/99 12/31/99 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Trustee: ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Bleasdale $4,649(45) $5,056(46) $1,156(47) $6,723(48) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Ms. Collins 4,374 4,711 1,077 6,271 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Grinnell 4,560 4,909 1,123 6,489 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Lowry 4,420 4,760 1,088 6,347 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Macera 4,379 4,692 1,076 6,260 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Mayer 4,423 4,958 1,134 6,562 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Moody 4,112(49) 4,485(50) 1,022(51) 5,851(52) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Neuhauser 4,608 4,962 1,138 6,566 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Stitzel 4,379 4,692 1,076 6,260 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Ms. Verville 4,328(53) 4,710(54) 1,076(55) 6,301(56) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- LIBERTY MUTUAL FUND LNTF LCATEF LCTTEF LMATEF ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Fiscal Year End 12/31/99 1/31/00 1/31/00 1/31/00 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Trustee: ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Bleasdale $3,615(57) $1,779(58) $1,173(59) $1,398(60) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Ms. Collins 3,369 1,658 1,093 1,480 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Grinnell 3,509 1,728 1,139 1,358 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Lowry 3,405 1,675 1,105 1,317 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Macera 3,357 1,645 1,084 1,292 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Mayer 3,542 1,746 1,151 1,372 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Moody 3,198(61) 1,568(62) 1,035(63) 1,233(64) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Neuhauser 3,546 1,750 1,155 1,376 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Mr. Stitzel 3,357 1,645 1,084 1,292 ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- -------------- ------------- ------------- Ms. Verville 3,372(65) 1,661(66) 1,095(67) 1,305(68) ------------------- ------------- -------------- ------------- ------------- ------------------- ------------- ------------- -------------- ------------- LIBERTY MUTUAL FUND LNYTEF LOHTEF LGIF LNAPF ------------------- ------------- ------------- -------------- ------------- ------------------- ------------- ------------- -------------- ------------- Fiscal Year End 1/31/00 1/31/00 6/30/00 6/30/00 ------------------- ------------- ------------- -------------- ------------- ------------------- ------------- ------------- -------------- ------------- Trustee: ------------------- ------------- ------------- -------------- ------------- ------------------- ------------- ------------- -------------- ------------- Mr. Bleasdale $948(69) $916(70) $5,278(71) $588(72) ------------------- ------------- ------------- -------------- ------------- ------------------- ------------- ------------- -------------- ------------- Ms. Collins 883 854 4,787 533 ------------------- ------------- ------------- -------------- ------------- ------------------- ------------- ------------- -------------- ------------- Mr. Grinnell 920 889 4,989 555 ------------------- ------------- ------------- -------------- ------------- ------------------- ------------- ------------- -------------- ------------- Mr. Lowry 893 863 4,931 549 ------------------- ------------- ------------- -------------- ------------- ------------------- ------------- ------------- -------------- ------------- Mr. Macera 876 847 4,761 530 ------------------- ------------- ------------- -------------- ------------- ------------------- ------------- ------------- -------------- ------------- Mr. Mayer 930 898 4,989 555 ------------------- ------------- ------------- -------------- ------------- ------------------- ------------- ------------- -------------- ------------- Mr. Moody 836(73) 807(74) 5,029(75) 561(76) ------------------- ------------- ------------- -------------- ------------- ------------------- ------------- ------------- -------------- ------------- Mr. Neuhauser 934 903 5,040 564 ------------------- ------------- ------------- -------------- ------------- ------------------- ------------- ------------- -------------- ------------- Mr. Stitzel 876 847 4,809 536 ------------------- ------------- ------------- -------------- ------------- ------------------- ------------- ------------- -------------- ------------- Ms. Verville 885(77) 855(78) 4,748(79) 528(80) ------------------- ------------- ------------- -------------- ------------- -------------------- ------------- ------------- ------------- ------------- LIBERTY MUTUAL FUND LMMF LTEMMF LFRAF LIGF -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Fiscal Year End 6/30/00 6/30/00 8/31/00 8/31/00 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Trustee: -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Bleasdale $1,608(81) $602(82) $239(83) $3,484(84) -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Ms. Collins 1,456 546 204 3,162 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Grinnell 1,517 569 216 3,327 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Lowry 1,501 562 221 3,253 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Macera 1,449 543 210 3,182 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Mayer 1,517 569 213 3,296 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Moody 1,532(85) 573(86) 233(87) 3,312(88) -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Neuhauser 1,535 577 217 3,333 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Stitzel 1,464 548 210 3,183 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Ms. Verville 1,311(89) 541(90) 207(91) 3,206(92) -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- LIBERTY MUTUAL FUND LNGCF LNJOF LFSF LNEF -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Fiscal Year End 8/31/00 8/31/00 8/31/00 8/31/00 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Trustee: -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Bleasdale $773(93) $811(94) $3,250(95) $361(96) -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Ms. Collins 700 733 2,949 321 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Grinnell 736 772 2,638 339 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Lowry 722 757 3,035 336 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Macera 705 740 2,968 326 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Mayer 729 763 3,074 334 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Moody 736(97) 776(98) 3,093(99) 354(100) -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Neuhauser 875 775 3,105 341 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Mr. Stitzel 705 740 2,969 326 -------------------- ------------- ------------- ------------- ------------- -------------------- ------------- ------------- ------------- ------------- Ms. Verville 709(101) 744(102) 2,990(103) 326(104) -------------------- ------------- ------------- ------------- ------------- ------------------- --------------------------------------- TOTAL COMPENSATION PAID FROM LIBERTY FUNDS COMPLEX TO THE BOARD OF LIBERTY MUTUAL TRUSTEES FOR THE CALENDAR YEAR ENDED* FUND ------------------- --------------------------------------- ------------------- --------------------------------------- Fiscal Year End 12/31/99 ------------------- --------------------------------------- ------------------- --------------------------------------- Trustee: ------------------- --------------------------------------- ------------------- --------------------------------------- Mr. Bleasdale $103,000 (105) ------------------- --------------------------------------- ------------------- --------------------------------------- Ms. Collins 96,000 ------------------- --------------------------------------- ------------------- --------------------------------------- Mr. Grinnell 100,000 ------------------- --------------------------------------- ------------------- --------------------------------------- Mr. Lowry 97,000 ------------------- --------------------------------------- ------------------- --------------------------------------- Mr. Macera 95,000 ------------------- --------------------------------------- ------------------- --------------------------------------- Mr. Mayer 101,000 ------------------- --------------------------------------- ------------------- --------------------------------------- Mr. Moody 91,000 (106) ------------------- --------------------------------------- ------------------- --------------------------------------- Mr. Neuhauser 101,252 ------------------- --------------------------------------- ------------------- --------------------------------------- Mr. Stitzel 95,000 ------------------- --------------------------------------- ------------------- --------------------------------------- Ms. Verville 96,000 (107) ------------------- --------------------------------------- The following table sets forth the compensation paid to Messrs. Birnbaum, Grinnell, Lowry, Mayer and Neuhauser in their capacities as Trustees or Directors of the Liberty All-Star Equity Fund, the Liberty All-Star Growth Fund, Inc. and Liberty Funds Trust IX (together, Liberty All-Star Funds) for service during the calendar year ended December 31, 1999: ---------------------- ----------------------------------------------------- Total Compensation Paid To The Trustees From the Liberty All-Star Funds For The Calendar Year Ended Trustee December 31, 1999108 ---------------------- ----------------------------------------------------- ---------------------- ----------------------------------------------------- Robert J. Birnbaum $25,000 ---------------------- ----------------------------------------------------- ---------------------- ----------------------------------------------------- James E. Grinnell 25,000 ---------------------- ----------------------------------------------------- ---------------------- ----------------------------------------------------- Richard W. Lowry 25,000 ---------------------- ----------------------------------------------------- ---------------------- ----------------------------------------------------- William E. Mayer 25,000 ---------------------- ----------------------------------------------------- ---------------------- ----------------------------------------------------- John J. Neuhauser 25,000 ---------------------- ----------------------------------------------------- 1 The Liberty Mutual Funds do not currently provide pension or retirement plan benefits to the Trustees. 2 Includes $234 payable in later years as deferred compensation. 3 Includes $593 payable in later years as deferred compensation. 4 Includes $276 payable in later years as deferred compensation. 5 Includes $636 payable in later years as deferred compensation. 6 Total compensation of $403 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 7 Total compensation of $993 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 8 Total compensation of $472 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 9 Total compensation of $1,094 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 10 Total compensation of $422 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 11 Total compensation of $1,066 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 12 Total compensation of $503 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 13 Total compensation of $1,316 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 14 Includes $511 payable in later years as deferred compensation. 15 Includes $291 payable in later years as deferred compensation. 16 Includes $1,697 payable in later years as deferred compensation. 17 Includes $409 payable in later years as deferred compensation. 18 Total compensation of $879 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 19 Total compensation of $497 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 20 Total compensation of $2,906 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 21 Total compensation of $694 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 22 Total compensation of $1,055 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 23 Total compensation of $530 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 24 Total compensation of $3,429 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 25 Total compensation of $768 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 26 Since the Fund has not completed its first full fiscal year, compensation is estimated based upon future payments to be made and upon estimated relative Fund net assets. 27 Includes $3,508 payable in later years as deferred compensation. 28 Includes $232 payable in later years as deferred compensation. 29 Total compensation of $6,007 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 30 Total compensation of $451 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 31 Total compensation of $7,088 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 32 Total compensation of $451 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 33 Includes $73 payable in later years as deferred compensation. 34 Includes $5,487 payable in later years as deferred compensation. 35 Includes $675 payable in later years as deferred compensation. 36 Includes $670 payable in later years as deferred compensation. 37 Total compensation of $129 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 38 Total compensation of $9,384 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. 39 Total compensation of $1,160 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. 40 Total compensation of $1,153 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. 41 Total compensation of $144 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 42 Total compensation of $9,869 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. 43 Total compensation of $1,222 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. 44 Total compensation of $1,214 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. 45 Includes $2,405 payable in later years as deferred compensation. 46 Includes $2,573 payable in later years as deferred compensation. 47 Includes $594 payable in later years as deferred compensation. 48 Includes $2,832 payable in later years as deferred compensation. 49 Total compensation of $4,112 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. 50 Total compensation of $4,485 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. 51 Total compensation of $1,022 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. 52 Total compensation of $5,851 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. 53 Total compensation of $4,328 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. 54 Total compensation of $4,710 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. 55 Total compensation of $1,076 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. 56 Total compensation of $6,301 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. 57 Includes $1,820 payable in later years as deferred compensation. 58 Includes $903 payable in later years as deferred compensation. 59 Includes $595 payable in later years as deferred compensation. 60 Includes $709 payable in later years as deferred compensation. 61 Total compensation of $3,198 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. 62 Total compensation of $1,568 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. 63 Total compensation of $1,035 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. 64 Total compensation of $1,233 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. 65 Total compensation of $3,372 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. 66 Total compensation of $1,661 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. 67 Total compensation of $1,095 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. 68 Total compensation of $1,305 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. 69 Includes $479 payable in later years as deferred compensation. 70 Includes $463 payable in later years as deferred compensation. 71 Includes $2,576 payable in later years as deferred compensation. 72 Includes $290 payable in later years as deferred compensation. 73 Total compensation of $836 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. 74 Total compensation of $807 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. 75 Total compensation of $5,029 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. 76 Total compensation of $561 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. 77 Total compensation of $885 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. 78 Total compensation of $855 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. 79 Total compensation of $4,748 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. 80 Total compensation of $528 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. 81 Includes $792 payable in later years as deferred compensation. 82 Includes $300 payable in later years as deferred compensation. 83 Includes $77 payable in later years as deferred compensation. 84 Includes $1,752 payable in later years as deferred compensation. 85 Total compensation of $1,532 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. 86 Total compensation of $573 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. 87 Total compensation of $233 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 88 Total compensation of $3,312 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 89 Total compensation of $1,311 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. 90 Total compensation of $541 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. 91 Total compensation of $207 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 92 Total compensation of $3,206 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 93 Includes $384 payable in later years as deferred compensation. 94 Includes $394 payable in later years as deferred compensation. 95 Includes $1,629 payable in later years as deferred compensation. 96 Includes $162 payable in later years as deferred compensation. 97 Total compensation of $736 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 98 Total compensation of $776 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 99 Total compensation of $3,093 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 100 Total compensation of $354 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 101 Total compensation of $709 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 102 Total compensation of $744 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 103 Total compensation of $2,990 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 104 Total compensation of $326 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 105 Includes $52,000 payable in later years as deferred compensation. 106 Total compensation of $91,000 for the calendar year ended December 31, 1999, will be payable in later years as deferred compensation. 107 Total compensation of $96,000 for the calendar year ended December 31, 1999, will be payable in later years as deferred compensation. * Includes compensation from Liberty Tax-Managed Growth Fund and Liberty Tax-Managed Growth Fund II, two series of Liberty Funds Trust I that will elect trustees of the Trust in a separate proxy statement. 108 The Liberty All-Star Funds are advised by Liberty Asset Management Company (LAMCO). LAMCO is an indirect wholly-owned subsidiary of Liberty Financial Companies, Inc. (an intermediate parent of the Colonial). Appendix A FORM OF MANAGEMENT AGREEMENT AGREEMENT dated as of [ ], 2000, between LIBERTY FUNDS TRUST III, a Massachusetts business trust (Trust), with respect to [NAME OF FUND] (Fund), and NEWPORT FUND MANAGEMENT, INC., a Virginia corporation (Adviser). In consideration of the promises and covenants herein, the parties agree as follows: 1. The Adviser will manage the investment of the assets of the Fund in accordance with its prospectus and statement of additional information and will perform the other services herein set forth, subject to the supervision of the Board of Trustees of the Trust. The Adviser may delegate its investment responsibilities to a sub-adviser. 2. In carrying out its investment management obligations, the Adviser shall: (a) evaluate such economic, statistical and financial information and undertake such investment research as it shall believe advisable; (b) purchase and sell securities and other investments for the Fund in accordance with the procedures described in its prospectus and statement of additional information; and (c) report results to the Board of Trustees of the Trust. 3. The Adviser shall furnish at its expense the following: (a) office space, supplies, facilities and equipment; (b) executive and other personnel for managing the affairs of the Fund (including preparing financial information of the Fund and reports and tax returns required to be filed with public authorities, but exclusive of those related to custodial, transfer, dividend and plan agency services, determination of net asset value and maintenance of records required by Section 31(a) of the Investment Company Act of 1940, as amended, and the rules thereunder (1940 Act)); and (c) compensation of Trustees who are directors , officers, partners or employees of the Adviser or its affiliated persons (other than a regulated investment company). 4. The Adviser shall be free to render similar services to others so long as its services hereunder are not impaired thereby. 5. The Fund shall pay the Adviser monthly a fee at the annual rate of [ %] of the average daily net assets of the Fund. 6. If the operating expenses of the Fund for any fiscal year exceed the most restrictive applicable expense limitation for any state in which shares are sold, the Adviser's fee shall be reduced by the excess but not to less than zero. Operating expenses shall not include brokerage, interest, taxes, deferred organization expenses, Rule 12b-1 distribution fees, service fees and extraordinary expenses, if any. The Adviser may waive its compensation (and bear expenses of the Fund) to the extent that expenses of the Fund exceed any expense limitation the Adviser declares to be effective. 7. This Agreement shall become effective as of the date of its execution, and (a) unless otherwise terminated, shall continue until June 30, 2002 and from year to year thereafter so long as approved annually in accordance with the 1940 Act; (b) may be terminated without penalty on sixty days' written notice to the Adviser either by vote of the Board of Trustees of the Trust or by vote of a majority of the outstanding shares of the Fund; (c) shall automatically terminate in the event of its assignment; and (d) may be terminated without penalty by the Adviser on sixty days' written notice to the Trust. 8. This Agreement may be amended in accordance with the 1940 Act. 9. For the purpose of the Agreement, the terms "vote of a majority of the outstanding shares", "affiliated person" and "assignment" shall have their respective meanings defined in the 1940 Act and exemptions and interpretations issued by the Securities and Exchange Commission under the 1940 Act. 10. In the absence of willful misfeasance, bad faith or gross negligence on the part of the Adviser, or reckless disregard of its obligations and duties hereunder, the Adviser shall not be subject to any liability to the Trust or the Fund, to any shareholder of the Trust or the Fund or to any other person, firm or organization, for any act or omission in the course of, or connected with, rendering services hereunder. LIBERTY FUNDS TRUST III on behalf of [name of fund] By: Name: Title: NEWPORT FUND MANAGEMENT, INC. By: Name: Title: A copy of the document establishing the Trust is filed with the Secretary of The Commonwealth of Massachusetts. This Agreement is executed by officers not as individuals and is not binding upon any of the Trustees, officers or shareholders of the Trust individually but only upon the assets of the Fund. Appendix B SUB-ADVISORY AGREEMENT SUB-ADVISORY AGREEMENT, dated this [ ] day of [ ], by and between COLONIAL MANAGEMENT ASSOCIATES, INC. a Massachusetts corporation (the "Adviser"), UNIBANK SECURITIES, INC., d/b/a "UNIBANK INVESTMENT MANAGEMENT," a company incorporated under the laws of the State of Delaware (the "Sub-Adviser") and LIBERTY FUNDS TRUST III (the "Trust"), on behalf of THE LIBERTY FUND (the "Fund"). WITNESSETH: WHEREAS, the Adviser provides the Fund, a series of the Trust, an open-end investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), business services pursuant to the terms and conditions of an investment advisory agreement dated March 27, 1995, as amended October 1, 1997 (the "Advisory Agreement"), between the Adviser and the Trust, on behalf of the Fund; and WHEREAS, the Sub-Adviser is willing to provide services to the Adviser on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties hereto as herein set forth, the parties covenant and agree as follows: 1. Duties of the Sub-Adviser. Subject to the supervision of the Trustees of the Trust and the Adviser, the Sub-Adviser will: (a) manage the investment of a portion of the assets of the Fund, as determined by the Adviser, in accordance with the Fund's investment objectives, policies and limitations as stated in the Fund's then current Prospectus (the "Prospectus") and Statement of Additional Information (the "Statement"), and in compliance with the 1940 Act and the rules, regulations and orders thereunder; (b) place purchase and sale orders for portfolio transactions for the Fund; (c) evaluate such economic, statistical and financial information and undertake such investment research as it shall believe advisable; (d) employ professional portfolio managers to provide research services to the Fund; and (e) report results to the Board of Trustees of the Trust. The Adviser agrees to provide the Sub-Adviser with such assistance as may be reasonably requested by the Sub-Adviser in connection with its activities under this Agreement, including, without limitation, information concerning the Fund, its funds available, or to become available, for investment and generally as to the conditions of the Fund's affairs. Should the Trustees of the Trust or the Adviser at any time make any determination as to investment policy and notify the Sub-Adviser thereof in writing, the Sub-Adviser shall be bound by such determination for the period, if any, specified in such notice or until notified that such determination has been revoked. Further, the Adviser or the Trustees of the Trust may at any time, upon written notice to the Sub-Adviser, suspend or restrict the right of the Sub-Adviser to determine what assets of the Fund shall be purchased or sold and what portion, if any, of the Fund's assets shall be held uninvested. It is understood that the Adviser undertakes to discuss with the Sub-Adviser any such determinations of investment policy and any such suspension or restrictions on the right of the Sub-Adviser to determine what assets of the Fund shall be purchased or sold or held uninvested, prior to the implementation thereof. 2. Certain Information to the Sub-Adviser. Copies of the Prospectus and the Statement have been delivered to the Sub-Adviser. The Adviser agrees to notify the Sub-Adviser of each change in the investment policies of the Fund and to provide to the Sub-Adviser as promptly as practicable copies of all amendments and supplements to the Prospectus and the Statement. In addition, the Adviser will promptly provide the Sub-Adviser with any procedures applicable to the Sub-Adviser adopted from time to time by the Trustees of the Trust and agrees to provide promptly to the Sub-Adviser copies of all amendments thereto. 3. Execution of Certain Documents. Subject to any other written instructions of the Adviser and the Trustees of the Trust, the Sub-Adviser is hereby appointed the Adviser's and the Trust's agent and attorney-in-fact to execute account documentation, agreements, contracts and other documents as the Sub-Adviser shall be requested by brokers, dealers, counterparties and other persons in connection with its management of the assets of the Fund. 4. Reports. The Sub-Adviser shall furnish to the Trustees of the Trust or the Adviser, or both, as may be appropriate, quarterly reports of its activities on behalf of the Fund, as required by applicable law or as otherwise requested from time to time by the Trustees of the Trust or the Adviser, and such additional information, reports, evaluations, analyses and opinions as the Trustees of the Trust or the Adviser, as appropriate, may request from time to time. 5. Compensation of the Sub-Adviser. For the services to be rendered by the Sub-Adviser under this Agreement, the Adviser shall pay to the Sub-Adviser compensation, computed and paid monthly in arrears in U.S. dollars, at an annual rate of 0.40% of the average daily net asset value of the portion of the Fund's assets under management by the Sub-Adviser. If the Sub-Adviser shall serve for less than the whole of any month, the compensation payable to the Sub-Adviser with respect to the Fund will be prorated. The Sub-Adviser will pay its expenses incurred in performing its duties under this Agreement. Neither the Trust nor the Fund shall be liable to the Sub-Adviser for the compensation of the Sub-Adviser. For the purpose of determining fees payable to the Sub-Adviser, the value of the Fund's net assets shall be computed at the times and in the manner specified in the Prospectus and/or Statement. 6. Limitation of Liability of the Sub-Adviser. The Sub-Adviser shall not be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the execution and management of the Fund, except for willful misfeasance, bad faith or gross negligence in the performance of its duties and obligations hereunder. The Trust, on behalf of the Fund, may enforce any obligations of the Sub-Adviser under this Agreement and may recover directly from the Sub-Adviser for any liability it may have to the Fund. 7. Activities of the Sub-Adviser. The services of the Sub-Adviser to the Fund are not deemed to be exclusive, the Sub-Adviser being free to render investment advisory and/or other services to others. 8. Covenants of the Sub-Adviser. The Sub-Adviser agrees that it (a) will not deal with itself, "affiliated persons" of the Sub-Adviser, the Trustees of the Trust or the Fund's distributor, as principals, agents, brokers or dealers in making purchases or sales of securities or other property for the account of the Fund, except as permitted by the 1940 Act and the rules, regulations and orders thereunder and subject to the prior written approval of the Adviser, and except in accordance with Rule 17e-1 procedures as approved by the Trustees from time to time and (b) will comply with all other provisions of the then-current Prospectus and Statement relative to the Sub-Adviser and its trustees, officers, employees and affiliates. 9. Representations, Warranties and Additional Agreements of the Sub-Adviser. The Sub-Adviser represents, warrants and agrees that: (a) It (i) is registered as an investment adviser under the U.S. Investment Advisers Act of 1940 (the "Advisers Act"), is authorized to undertake investment business in the U.S. and is registered under the laws of any jurisdiction in which the Sub-Adviser is required to be registered as an investment adviser in order to perform its obligations under this Agreement, and will continue to be so registered for so long as this Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the Advisers Act from performing the services contemplated by this Agreement; (iii) has met, and will continue to meet for so long as this Agreement remains in effect, any other applicable Federal or State requirements, or the applicable requirements of any regulatory or industry self-regulatory agency, necessary to be met in order to perform the services contemplated by this Agreement; (iv) has the authority to enter into and perform the services contemplated by this Agreement; (v) will immediately notify the Adviser in writing of the occurrence of any event that would disqualify the Sub-Adviser from serving as an investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act or otherwise; and (vi) will immediately notify the Adviser in writing of any change of control of the Sub-Adviser or any parent of the Sub-Adviser resulting in an "assignment" of this Agreement. (b) It will maintain, keep current and preserve on behalf of the Fund, in the manner and for the periods of time required or permitted by the 1940 Act and the rules, regulations and orders thereunder and the Advisers Act and the rules, regulations and orders thereunder, records relating to investment transactions made by the Sub-Adviser for the Fund as may be reasonably requested by the Adviser or the Fund from time to time. The Sub-Adviser agrees that such records are the property of the Fund, and will be surrendered to the Fund promptly upon request. (c) The Sub-Adviser has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the 1940 Act and, if it has not already done so, will provide the Adviser and the Trust with a copy of such code of ethics, and upon any amendment to such code of ethics, promptly provide such amendment. At least annually the Sub-Adviser will provide the Trust and the Adviser with a certificate signed by the chief compliance officer (or the person performing such function) of the Sub-Adviser certifying, to the best of his or her knowledge, compliance with the code of ethics during the immediately preceding twelve (12) month period, including any material violations of or amendments to the code of ethics or the administration thereof. (d) It has provided the Adviser and the Trust with a copy of its Form ADV as most recently filed with the Securities and Exchange Commission (the "SEC") and will, promptly after filing any amendment to its Form ADV with the SEC, furnish a copy of such amendment to the Adviser and the Trust. 10. Duration and Termination of this Agreement. This Agreement shall become effective on the date first above written and shall govern the relations between the parties hereto thereafter, and shall remain in force until June 30, 2002 and from year to year thereafter but only so long as its continuance is "specifically approved at least annually" by the Board of Trustees of the Trust or by "vote of a majority of the outstanding voting securities" of the Fund. This Agreement may be terminated at any time without penalty on sixty days' written notice to the Sub-Adviser by vote of the Board of Trustees of the Trust, by "vote of a majority of the outstanding voting securities" of the Fund, or by the Adviser. This Agreement also may be terminated at any time without penalty by the Sub-Advisor on ninety days' written notice to the Adviser and Trust. This Agreement shall automatically terminate in the event of its "assignment" or in the event that the Advisory Agreement shall have terminated for any reason. 11. Amendments to this Agreement. This Agreement may be amended in accordance with the 1940 Act. 12. Certain Definitions. The terms "specifically approved at least annually", "vote of a majority of the outstanding voting securities", "assignment", "control", "affiliated persons" and "interested person", when used in this Agreement, shall have the respective meanings specified, and shall be construed in a manner consistent with, the 1940 Act and the rules, regulations and orders thereunder, subject, however, to such exemptions as may be granted by the SEC under the 1940 Act. 13. Survival of Representations and Warranties; Duty to Update Information. All representations and warranties made by the Sub-Adviser pursuant to Section 9 hereof shall survive for the duration of this Agreement and the Sub-Adviser shall immediately notify, but in no event later than five (5) business days, the Adviser in writing upon becoming aware that any of the foregoing representations and warranties are no longer true. 14. Miscellaneous. This Agreement shall be governed by and construed in accordance with the internal laws of The Commonwealth of Massachusetts. All notices provided for by this Agreement shall be in writing and shall be deemed given when received, against appropriate receipt, by the Sub-Adviser's Secretary in the case of the Sub-Adviser, the Adviser's General Counsel in the case of the Adviser, and the Trust's Secretary in the case of the Fund, or such other person as a party shall designate by notice to the other parties. This Agreement constitutes the entire agreement among the parties hereto and supersedes any prior agreement among the parties relating to the subject matter hereof. The section headings of this Agreement are for convenience of reference and do not constitute a part hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered in their names and on their behalf by the undersigned, thereunto duly authorized, and their respective seals to be hereto affixed, all as of the day and year first written above. COLONIAL MANAGEMENT ASSOCIATES, INC. By: ------------------------------------- Name: Title: UNIBANK SECURITIES, INC. By: -------------------------------------- Name: Title: LIBERTY FUNDS TRUST III, on behalf of The Liberty Fund By: -------------------------------------- Name: Title: -------- 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 William J. Ballou, Suzan M. Barron, Stephen E. Gibson, Russell L. Kane, Pamela A. McGrath, and Vincent P. Pietropaolo each of them proxies of the signers, with power of substitution to vote at the Special Meeting of Shareholders to be held at Boston, Massachusetts, on Wednesday, December 27, 2000, and at any adjournments, as specified herein, and in accordance with their best judgement, 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. [Liberty Logo] LIBERTY Liberty Funds Services, Inc. Liberty Income Fund Liberty Strategic Income Fund Liberty High Yield Securities Fund Liberty Intermediate Government Fund Liberty Federal Securities Fund Liberty Ohio Tax-Exempt Fund Liberty Connecticut Tax-Exempt Fund Liberty New York Tax-Exempt Fund Liberty California Tax-Exempt Fund Liberty Tax-Exempt Insured Fund Liberty Massachusetts Tax-Exempt Fund Liberty Tax-Exempt Fund Liberty High Yield Municipal Fund Liberty Select Value Fund Liberty Growth & Income Fund Liberty Utilities Fund Liberty Newport Japan Opportunities Fund Liberty Newport Greater China Fund Liberty Newport Tiger Fund Liberty Newport Asia Pacific Fund Liberty Newport Europe Fund Liberty Tax-Managed Value Fund Liberty Tax-Managed Aggressive Growth Fund Liberty Special Fund Liberty Real Estate Fund Liberty Contrarian Equity Fund Liberty Contrarian Income Fund Liberty Contrarian Fund Liberty Counselor Income Portfolio Liberty Counselor Balanced Portfolio Liberty Counselor Growth Portfolio Liberty Floating Rate Advantage Fund This proxy, when properly executed, will be voted in the manner directed herein and, absent direction, will be voted FOR Item 1 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 elect eleven Trustees (Item 1 of the Notice). (01) Douglas A. Hacker (02) Janet Langford Kelly (03) Richard W. Lowry (04) Salvatore Macera (05) William E. Mayer (06) Charles Nelson (07) John J. Neuhauser (08) Joseph R. Palombo (09) Thomas E. Stitzel (10) Thomas C. Theobald (11) Anne-Lee Verville For Withheld For All All From All Nominees Nominees Nominees Except as Noted __ __ __ |__| |__| |__| MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE BELOW |__| ---------------------------------------- ---------------------------------------- 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 corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. Date_________________ ------------------------- --------------------- Shareholder sign here Co-owner sign here 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 William J. Ballou, Suzan M. Barron, Stephen E. Gibson, Russell L. Kane, Pamela A. McGrath, and Vincent P. Pietropaolo each of them proxies of the signers, with power of substitution to vote at the Special Meeting of Shareholders to be held at Boston, Massachusetts, on Wednesday, December 27, 2000, and at any adjournments, as specified herein, and in accordance with their best judgement, 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. [Liberty Logo] LIBERTY Liberty Funds Services, Inc. THE LIBERTY FUND This proxy, when properly executed, will be voted in the manner directed herein and, absent direction, will be voted FOR Item 1 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 elect eleven Trustees (Item 1 of the Notice). (01) Douglas A. Hacker (02) Janet Langford Kelly (03) Richard W. Lowry (04) Salvatore Macera (05) William E. Mayer (06) Charles Nelson (07) John J. Neuhauser (08) Joseph R. Palombo (09) Thomas E. Stitzel (10) Thomas C. Theobald (11) Anne-Lee Verville For Withheld For All All From All Nominees Nominees Nominees Except as Noted __ __ __ |__| |__| |__| 2. To approve or disapprove a sub-advisory agreement with UnibankSecurities, Inc. (Item 4 of the Notice). For Against Abstain __ __ __ |__| |__| |__| MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE BELOW |__| ---------------------------------------- ---------------------------------------- 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 corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. Date_________________ ------------------------- ---------------------- Shareholder sign here Co-owner sign here 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 William J. Ballou, Suzan M. Barron, Stephen E. Gibson, Russell L. Kane, Pamela A. McGrath, and Vincent P. Pietropaolo each of them proxies of the signers, with power of substitution to vote at the Special Meeting of Shareholders to be held at Boston, Massachusetts, on Wednesday, December 27, 2000, and at any adjournments, as specified herein, and in accordance with their best judgement, 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. [Liberty Logo] LIBERTY Liberty Funds Services, Inc. Liberty Newport Global Utilities Fund Liberty Newport International Equity Fund This proxy, when properly executed, will be voted in the manner directed herein and, absent direction, will be voted FOR Item 1 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 elect eleven Trustees (Item 1 of the Notice). (01) Douglas A. Hacker (02) Janet Langford Kelly (03) Richard W. Lowry (04) Salvatore Macera (05) William E. Mayer (06) Charles Nelson (07) John J. Neuhauser (08) Joseph R. Palombo (09) Thomas E. Stitzel (10) Thomas C. Theobald (11) Anne-Lee Verville For Withheld For All All From All Nominees Nominees Nominees Except as Noted __ __ __ |__| |__| |__| 2. To approve or disapprove a new portfolio management agreement with Newport Fund Management (Item 3 of the Notice). For Against Abstain __ __ __ |__| |__| |__| MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE BELOW |__| ---------------------------------------- ---------------------------------------- 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 corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. Date_________________ ------------------------- ---------------------- Shareholder sign here Co-owner sign here 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 William J. Ballou, Suzan M. Barron, Stephen E. Gibson, Russell L. Kane, Pamela A. McGrath, and Vincent P. Pietropaolo each of them proxies of the signers, with power of substitution to vote at the Special Meeting of Shareholders to be held at Boston, Massachusetts, on Wednesday, December 27, 2000, and at any adjournments, as specified herein, and in accordance with their best judgement, 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. [Liberty Logo] LIBERTY Liberty Funds Services, Inc. Liberty Money Market Fund Liberty Municipal Money Market Fund This proxy, when properly executed, will be voted in the manner directed herein and, absent direction, will be voted FOR Item 1 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 elect eleven Trustees (Item 1 of the Notice). (01) Douglas A. Hacker (02) Janet Langford Kelly (03) Richard W. Lowry (04) Salvatore Macera (05) William E. Mayer (06) Charles Nelson (07) John J. Neuhauser (08) Joseph R. Palombo (09) Thomas E. Stitzel (10) Thomas C. Theobald (11) Anne-Lee Verville For Withheld For All All From All Nominees Nominees Nominees Except as Noted __ __ __ |__| |__| |__| 2. Proposal to elect eleven Trustees of the SR&F Base Trust (Item 5 of the Notice). (01) Douglas A. Hacker (02) Janet Langford Kelly (03) Richard W. Lowry (04) Salvatore Macera (05) William E. Mayer (06) Charles Nelson (07) John J. Neuhauser (08) Joseph R. Palombo (09) Thomas E. Stitzel (10) Thomas C. Theobald (11) Anne-Lee Verville For Withheld For All All From All Nominees Nominees Nominees Except as Noted __ __ __ |__| |__| |__| MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE BELOW |__| ________________________________________ ________________________________________ 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 corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. Date_________________ _________________________ ______________________ Shareholder sign here Co-owner sign here TWO CONVENIENT WAYS TO VOTE YOUR PROXY PROXY VOTING--QUICK AND CONVENIENT The enclosed proxy statement provides details on important issues affecting your Liberty and Stein Roe Funds. The Board of Trustees recommends that you vote for all proposals. We are offering two ways to vote: by internet or fax. These methods may be quicker and more convenient than the traditional method of mailing back your proxy card. Please follow the simple instructions on this proxy insert. If you are voting by internet or fax, you SHOULD NOT mail your proxy card. YOUR PROXY VOTE IS IMPORTANT!
Vote by Internet: Vote by Fax: Read the proxy statement and have your proxy card Read the proxy statement. available. Visit our Web site (www.libertyfunds.com or Fax your proxy card to 1-800-733-1885. www.steinroe.com) and go to "Proxy Voting." When you are ready to vote, click on the [blue] "Vote My Proxy" link. Enter the 14-digit Control Number from your proxy card. Follow the instructions provided on the site.
CONVENIENT WAY TO VOTE YOUR PROXY PROXY VOTING--QUICK AND CONVENIENT The enclosed proxy statement provides details on important issues affecting your Liberty and Stein Roe Funds. The Board of Trustees recommends that you vote for all proposals. We are offering another way to vote: by internet. This method may be quicker and more convenient than the traditional method of mailing back your proxy card. Please follow the simple instructions on this proxy insert. If you are voting by internet, you SHOULD NOT mail your proxy card. YOUR PROXY VOTE IS IMPORTANT! Vote by Internet: Read the proxy statement and have your proxy card available. Visit our Web site (www.libertyfunds.com or www.steinroe.com) and go to "Proxy Voting." When you are ready to vote, click on the [red] "Vote My Proxy" link. Enter the 12-digit Control Number from your proxy card. Follow the instructions provided on the site.