-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dbf6fcy1kJuwCuYXdg91icbq7AKzDexVeBYun25OpybkxLe5vmXimQmTLWsJ0Cgm FBLOrKPj2u2egzbaH7I6rw== /in/edgar/work/0000021832-00-000349/0000021832-00-000349.txt : 20001120 0000021832-00-000349.hdr.sgml : 20001120 ACCESSION NUMBER: 0000021832-00-000349 CONFORMED SUBMISSION TYPE: DEFS14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001227 FILED AS OF DATE: 20001117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY FUNDS TRUST I CENTRAL INDEX KEY: 0000021832 STANDARD INDUSTRIAL CLASSIFICATION: [0000 ] IRS NUMBER: 046143403 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: SEC FILE NUMBER: 811-02214 FILM NUMBER: 772087 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL TRUST I DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL HIGH YIELD SECURITIES TRUST DATE OF NAME CHANGE: 19910917 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL HIGH YIELD SECURITIES INC DATE OF NAME CHANGE: 19850909 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY FUNDS TRUST III CENTRAL INDEX KEY: 0000021847 STANDARD INDUSTRIAL CLASSIFICATION: [ ] IRS NUMBER: 046012903 FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: SEC FILE NUMBER: 811-00881 FILM NUMBER: 772088 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL TRUST III DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL GROWTH SHARES TRUST DATE OF NAME CHANGE: 19910917 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL GROWTH SHARES INC DATE OF NAME CHANGE: 19860827 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY FUNDS TRUST IV CENTRAL INDEX KEY: 0000276716 STANDARD INDUSTRIAL CLASSIFICATION: [ ] IRS NUMBER: 042651415 FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: SEC FILE NUMBER: 811-02865 FILM NUMBER: 772089 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL TRUST IV DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL TAX EXEMPT TRUST DATE OF NAME CHANGE: 19910917 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL TAX EXEMPT HIGH YIELD TRUST DATE OF NAME CHANGE: 19851117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY FUNDS TRUST II CENTRAL INDEX KEY: 0000315665 STANDARD INDUSTRIAL CLASSIFICATION: [ ] IRS NUMBER: 046452949 FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: SEC FILE NUMBER: 811-03009 FILM NUMBER: 772090 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL TRUST II / DATE OF NAME CHANGE: 19950926 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL MONEY MARKET FUND DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL TRUST II DATE OF NAME CHANGE: 19920505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY FUNDS TRUST V CENTRAL INDEX KEY: 0000810891 STANDARD INDUSTRIAL CLASSIFICATION: [ ] FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: SEC FILE NUMBER: 811-05030 FILM NUMBER: 772091 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL TRUST V DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL MASSACHUSETTS TAX EXEMPT TRUST DATE OF NAME CHANGE: 19911016 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY FUNDS TRUST VII CENTRAL INDEX KEY: 0000876980 STANDARD INDUSTRIAL CLASSIFICATION: [0000 ] IRS NUMBER: 541503200 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: SEC FILE NUMBER: 811-06347 FILM NUMBER: 772092 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CENTER CITY: BOSTON STATE: MA ZIP: 02211 BUSINESS PHONE: 6174263750 MAIL ADDRESS: STREET 1: ONE FINANCIAL CENTER CITY: BOSTON STATE: MA ZIP: 02211 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL TRUST VII DATE OF NAME CHANGE: 19950406 FORMER COMPANY: FORMER CONFORMED NAME: LIBERTY FINANCIAL TRUST DATE OF NAME CHANGE: 19930311 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY FUNDS TRUST VI CENTRAL INDEX KEY: 0000883163 STANDARD INDUSTRIAL CLASSIFICATION: [0000 ] IRS NUMBER: 046700215 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: SEC FILE NUMBER: 811-06529 FILM NUMBER: 772093 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CENTER CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL TRUST VI DATE OF NAME CHANGE: 19920826 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND CENTRAL INDEX KEY: 0001093062 STANDARD INDUSTRIAL CLASSIFICATION: [0000 ] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: SEC FILE NUMBER: 811-09709 FILM NUMBER: 772094 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 MAIL ADDRESS: STREET 1: ONE FINANCIAL CENTER CITY: BOSTON STATE: MA ZIP: 02111 FORMER COMPANY: FORMER CONFORMED NAME: STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND/MA DATE OF NAME CHANGE: 19990811 DEFS14A 1 0001.txt MULTI PROXY STATEMENT, PROXY CARDS, PROXY INSERT 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: [ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ X ] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to 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). A formal Notice of Special Meetings of Shareholders appears on the next few pages, and is 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 BY MAIL, BY FAX (NOT AVAILABLE FOR ALL SHAREHOLDERS; REFER TO ENCLOSED PROXY INSERT), BY PHONE OR IN PERSON. 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 toll free at 1-877-518-9416 between the hours of 9:00 a.m. and 11:00 p.m. Eastern time. 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, /s/ Stephen E. Gibson Stephen E. Gibson, President November 17, 2000 G-60/598D-1000 NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS TO BE HELD ON DECEMBER 27, 2000 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 Liberty California Tax-Exempt Fund Liberty Connecticut Tax-Exempt Fund Liberty Massachusetts Tax-Exempt Fund Liberty New York Tax-Exempt Fund Liberty 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 1 NOTICE IS HEREBY GIVEN that Special Meetings of Shareholders of the Liberty Mutual Funds listed above will be held at 10:00 a.m. Eastern time on Wednesday, December 27, 2000, at the offices of Colonial Management Associates, Inc., One Financial Center, Boston, Massachusetts 02111-2621 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 authorize the Funds to cast votes for the election of 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 17, 2000 NOTICE: YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. YOU CAN VOTE EASILY AND QUICKLY BY PHONE, BY MAIL, BY FAX (NOT AVAILABLE FOR ALL SHAREHOLDERS; REFER TO ENCLOSED PROXY INSERT) OR IN PERSON. PLEASE HELP YOUR FUND AVOID THE EXPENSE OF A FOLLOW-UP MAILING BY VOTING TODAY! 2 SPECIAL MEETINGS OF SHAREHOLDERS LIBERTY MUTUAL FUNDS PROXY STATEMENT GENERAL INFORMATION November 17, 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 3 Part 2. Proposals. Page 6 Part 3. Information Regarding Voting and Shareholder Meetings. Page 33 Part 4. Fund Information. Page 36
If at any time you have any questions regarding the information contained in the proxy statement, please call SCC toll free at 1-877-518-9416 between the hours of 9:00 a.m. and 11:00 p.m. Eastern time. This proxy statement was first mailed to shareholders on or about November 17, 2000. PART 1. OVERVIEW. The Boards of Trustees of the Trusts listed on the Notice of Special Meetings of Shareholders (Trusts) and of 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. Throughout this proxy statement, the Funds listed on the 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: 3
LIBERTY MUTUAL FUND WHOSE SHAREHOLDERS ARE ENTITLED TO TABLE OF PROPOSALS VOTE CONTENTS 1. To elect a Board of Trustees Each Liberty Mutual Fund listed Page 6 of each Trust. on the Notice of Special Meetings 2. To approve new portfolio Liberty Newport Global Page 13 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 21 agreement with Unibank Securities, Inc. 4. To authorize Liberty Money Liberty Money Market Fund Page 27 Market Fund and Liberty Municipal and Liberty Municipal Money Money Market Fund to cast votes Market Fund for the election of a Board of Trustees of the SR&F Base Trust.
VOTING PROCESS. You can vote in any one of the following four ways: a. By mail, by filling out and returning the enclosed proxy card; b. By phone, by calling toll free 1-877-518-9416 between the hours of 9:00 a.m. and 11:00 p.m. Eastern time; c. By fax (not available for all shareholders; refer to enclosed proxy insert); or d. 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. 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. Set forth below is a summary of each proposal that the Boards of Trustees recommend that you consider: PROPOSAL 1. ELECT A BOARD OF TRUSTEES OF EACH TRUST. 4 We ask that you consider the election of eleven nominees as members of the Board of Trustees of each Trust. These eleven nominees, if elected, will serve as Trustees of each 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. AUTHORIZE LIBERTY MONEY MARKET FUND AND LIBERTY MUNICIPAL MONEY MARKET FUND TO CAST VOTES FOR THE ELECTION OF 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 5 of Trustees of the Trusts, as well as eight Liberty closed-end funds and, in the case of Messrs. Lowry, Mayer and Neuhauser, one other Liberty open-end trust and eleven Liberty closed-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 meetings held on October 25-26, 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 of the Stein Roe Funds; and Liberty Financial Companies, Inc. (Liberty Financial), the indirect parent of the investment advisors to the Liberty Fund Complex and the 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 for Liberty Financial and potential future cost savings for the Liberty Fund Complex, 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. Each nominee, if elected, will serve as a Trustee of each Trust. 6
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.
7
NOMINEE NAME & AGE PRINCIPAL OCCUPATION (1) AND DIRECTORSHIPS TRUSTEE SINCE - ------------------ ------------------------------------------ ------------- Janet Langford Kelly Executive Vice President-Corporate New nominee (41) Development, General Counsel and Secretary of Kellogg Company (food, beverage and tobacco producer) since September 1999; Senior Vice President, Secretary and General Counsel of Sara Lee Corporation (branded, packaged, consumer-products manufacturer) prior thereto. Richard W. Lowry Private Investor since 1987 (formerly 1995 (64) Chairman and Chief Executive Officer of U.S. Plywood Corporation (building products producer) from August 1985 to August 1987). Salvatore Macera Private Investor since 1981 (formerly 1998 (69) Executive Vice President and Director of Itek Corporation (electronics) from 1975 to 1981). 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 (building products producer), Lee Enterprises (print and on-line media) and WR Hambrecht + Co. (financial service provider). Charles R. Nelson Van Voorhis Professor, Department of New nominee (57) Economics, University of Washington; 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) Trustee of the Liberty Fund Complex since 2000 (47) August 2000; Trustee of the Stein Roe Funds since October 2000; Vice President of the Liberty Mutual Funds and Stein Roe 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; Director of Alpha Trade Inc. (broker-dealer), Colonial Advisory Services, Inc. Liberty Funds Distributor, Inc. and Liberty Funds Services, Inc. since April, 2000. Chief Operating Officer, Putnam Mutual Funds prior thereto.
8
NOMINEE NAME & AGE PRINCIPAL OCCUPATION (1) AND DIRECTORSHIPS TRUSTEE SINCE - ------------------ ------------------------------------------ ------------- Thomas E. Stitzel Business Consultant since 1999; Professor 1998 (64) of Finance and Dean, College of Business, Boise State University prior thereto; Chartered Financial Analyst. Thomas C. Theobald Managing Director, William Blair Capital New nominee (62) Partners (private equity investing) since 1994; Chief Executive Officer and Chairman of the Board of Directors, Continental Bank Corporation (banking services) prior thereto. Anne-Lee Verville Consultant since 1997; General manager, 1998 (55) Global Education Industry (global education applications) prior thereto; formerly President, Applications Solutions Division, IBM Corporation (global education and global applications) from 1991 to 1994.
- --------------------------- (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, but is an "interested person," as defined in the Investment Company Act of 1940, as amended (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, the parent company of the advisors to the Funds and an indirect majority-owned subsidiary of Liberty Mutual Insurance Company. The following persons who are currently serving on each Board of Trustees are not standing for reelection:
NOMINEE NAME & AGE PRINCIPAL OCCUPATION (1) AND DIRECTORSHIPS TRUSTEE SINCE - ------------------ ------------------------------------------ ------------- Tom Bleasdale Retired (formerly Chairman of the Board 1987 (70) and Chief Executive Officer, Shore Bank & Trust Company (banking services) from 1992 to 1993); Director, Empire Co. (food distributor). Lora S. Collins Attorney (formerly Attorney, Kramer, Levin 1991 (65) Naftalis & Frankel (law firm) from 1986 to 1996). James E. Grinnell Private investor since November 1988. 1995 (72) James L. Moody, Jr. Retired (formerly Chairman of the Board, Hannaford Bros. Co. (food retailer) from 1984 to 1997 and Chief Executive Officer prior thereto).
9 (1) Except as otherwise noted, each individual has held the office indicated or other offices in the same company for the last five years. 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 Fund Complex will each bear one-half of the cost of the payments; the Liberty Fund Complex portion of the payments will be allocated among the Liberty Fund Complex 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 37. 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 investment advisor affiliates, but is considered interested as a result of his affiliation with a broker-dealer. Mr. Palombo is an interested person because of his affiliation with Liberty Financial. 10 AUDIT COMMITTEE. The Audit Committee of each Trust, consisting of Ms. Verville (Chairperson) and Messrs. Bleasdale, Grinnell, Lowry Macera and Moody, 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 (Chairperson), Grinnell and Stitzel and Ms. 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 (Chairperson), 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 Trust, Attention: Secretary, One Financial Center, 11th Floor, Boston, Massachusetts 02111-2621. The Boards of Trustees and the Committees held meetings during the following fiscal years ended: November 30, 1999 for 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 and Liberty Utilities Fund (Liberty Funds Trust IV) Board of Trustees 6 Audit Committee 3 Compensation Committee 2 Governance Committee 4
December 31, 1999 for Liberty High Yield Securities Fund, Liberty Income Fund, Liberty Strategic Income Fund (Liberty Funds Trust I), Liberty Newport Tiger Fund (Liberty Funds Trust VII) 11 Board of Trustees 6 Audit Committee 3 Compensation Committee 2 Governance Committee 4
January 31, 2000 for Liberty California Tax-Exempt Fund, Liberty Connecticut Tax-Exempt Fund, Liberty Massachusetts Tax-Exempt Fund, Liberty New York Tax-Exempt Fund and Liberty Ohio Tax-Exempt Fund (Liberty Funds Trust V) Board of Trustees 6 Audit Committee 3 Compensation Committee 1 Governance Committee 4
June 30, 2000 for Liberty Money Market Fund (Liberty Funds Trust II), Liberty Municipal Money Market Fund (Liberty Funds Trust IV), Liberty Growth & Income Fund and Liberty Newport Asia Pacific Fund (Liberty Funds Trust VI) Board of Trustees 6 Audit Committee 4 Compensation Committee 2 Governance Committee 6
August 31, 2000 for Liberty Intermediate Government Fund, Liberty Newport Greater China Fund and Liberty Newport Japan Opportunities Fund (Liberty Funds Trust II), Liberty Federal Securities Fund (Liberty Funds Trust III), Liberty Newport Europe Fund (Liberty Funds Trust VII) and Liberty Floating Rate Advantage Fund Board of Trustees 6 Audit Committee 4 Compensation Committee 2 Governance Committee 6
October 31, 2000 for Liberty Tax-Managed Aggressive Growth Fund and Liberty Tax-Managed Value Fund (Liberty Funds Trust I), Liberty Contrarian Fund, Liberty Contrarian Equity Fund, Liberty Contrarian Income Fund, Liberty Newport Global Utilities Fund, Liberty Newport International Equity Fund, Liberty Real Estate Fund, Liberty Select Value Fund, The Liberty Fund and Liberty Special Fund (Liberty Funds Trust III) Board of Trustees 6 Audit Committee 4
12 Compensation Committee 2 Governance Committee 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 was a member. THE BOARDS OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF EACH LIBERTY MUTUAL FUND VOTE FOR EACH NOMINEE IN 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 of each Trust 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 13 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 are expected to continue to manage the Fund and will remain dual employees of Stein Roe and Newport. 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. 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 were approximately $861,000, and the aggregate fee paid by Liberty Newport Global Utilities Fund to Stein Roe under the existing Management Agreement were approximately $484,000. 14 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 fees paid by Liberty Newport Global Utilities Fund to Colonial under the existing Administration Agreement were 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 each Fund's investment advisor 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. 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 Funds, as well as the increased complexity of the international securities markets. 15 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 initial term 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). 16 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 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 02210-2214. 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. 17 The principal executive offices of Liberty Mutual and Liberty Mutual Equity Corporation are located at 175 Berkeley Street, Boston, Massachusetts 02117. On November 1, 2000, Liberty Financial announced that it had retained CS First Boston to help explore strategic alternatives, including the possible sale of Liberty Financial. 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 02111-2621. 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, Kevin M. Carome, 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 02210-2214; that of Mr. Gibson is One Financial Center, Boston, Massachusetts 02111-2621; 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. 18 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, which will continue after each Management Agreement is approved. 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 02111-2621, 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, which will continue to be paid after each Management Agreement is approved. 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 02111-2621, acts as distributor for each Fund under a distribution agreement, which will continue after each Management Agreement is approved. 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 19
- -------------------------------------------------------------------------------- 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 continue to 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 or administrator, 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. 20 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 02210-2214; 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:
- -------------------------------------------------------------------------------- TOTAL NET ASSETS ANNUAL 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%(c) 13.0 - -------------------------------------------------------------------------------- Stein Roe Asia Pacific Fund 0.55%(d) 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. 21 (c) The fund commenced operations on November 1, 1999 and has not paid management fees to Newport. (d) 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. THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF EACH APPLICABLE LIBERTY MUTUAL 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 the 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 22 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, which will have the ability to invest in foreign securities after its merger with Liberty Strategic Balanced 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. 23 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 applicable provisions of 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 02111-2621, 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 02210-2214. 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 24 Liberty Mutual Equity Corporation are located at 175 Berkeley Street, Boston, Massachusetts 02117. On November 1, 2000, Liberty Financial announced that it had retained CS First Boston to help explore strategic alternatives, including the possible sale of Liberty Financial. 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 02111-2621. 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, Kevin M. Carome, Gail E. Knudsen, Pamela A. McGrath, Joseph R. Palombo, Dianne Paras, Vincent P. Pietropaolo and Glenn M. Wolfset. Colonial provides, pricing and bookkeeping services to the Fund pursuant to a Pricing and Bookkeeping Agreement, which will continue after the Sub-Advisory Agreement is approved. 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. 25 Liberty Funds Services, Inc. (LFSI), a subsidiary of LFG located at One Financial Center, Boston, Massachusetts 02111-2621, 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, which will continue to be paid after the Sub-Advisory Agreement is approved. 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 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 02111-2621, acts as distributor for the Fund under a distribution agreement, which will continue after the Sub-Advisory Agreement is approved. 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 continue to 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 26 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: 27
- -------------------------------------------------------------------------------- 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. AUTHORIZE LIBERTY MONEY MARKET FUND AND LIBERTY MUNICIPAL MONEY MARKET FUND TO CAST VOTES FOR THE ELECTION OF A BOARD OF TRUSTEES OF THE 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") In addition to voting for members of the Board of Trustees of your respective Trust, you are also being asked to authorize your Fund to cast votes for the election of the same candidates for a Board of Trustees of the SR&F Base Trust (Base Trust) as for your respective 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 28 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 authorization of each Fund to cast votes for the election of trustees of the Base Trust. If you vote for this Proposal, your approval or disapproval of each nominee in Proposal 1 will be voted in the same manner for or against each nominee in this Proposal. 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 the Base 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 (such as the elimination of six board meetings as a result of the consolidation and the corresponding elimination of the need to prepare duplicative board materials) and potential future cost savings for the Liberty Fund Complex, 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). 29 The following table sets forth certain information about each nominee. Each nominee, if elected, will serve as a Trustee of the Base Trust.
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.
30
YEAR OF ELECTION OR RECOMMENDED FOR ELECTION NOMINEE NAME & AGE PRINCIPAL OCCUPATION (1) AND DIRECTORSHIPS AS TRUSTEE - ------------------ ------------------------------------------ ------------ Janet Langford Kelly Executive Vice President-Corporate 1996 (41) Development, General Counsel and Secretary of Kellogg Company (food, beverage and tobacco producer) since September 1999; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer-products manufacturer) prior thereto. Richard W. Lowry Private Investor 1987 (formerly Chairman New nominee (64) and Chief Executive Officer, U.S. Plywood Corporation (building products producer) from August 1985 to August 1987). Salvatore Macera Private Investor since 1981 (formerly New nominee (69) Executive Vice President and Director of Itek Corporation (electronics) from 1975 to 1981). 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, prior thereto; Director, Johns Manville (building products producer), Lee Enterprises (print and on-line media) and WR Hambrecht + Co. (financial service provider). Charles R. Nelson Van Voorhis Professor, Department of 1987 (57) Economics, University of Washington; consultant on economic and statistical matters. John J. Neuhauser Academic Vice President and Dean of New nominee (57) Faculties, Boston College, since August, 1999; Dean, Boston College School of Management prior thereto.
31
YEAR OF ELECTION OR RECOMMENDED FOR ELECTION NOMINEE NAME & AGE PRINCIPAL OCCUPATION (1) AND DIRECTORSHIPS AS TRUSTEE - ------------------ ------------------------------------------ ------------ Joseph R. Palombo(3) Trustee of the Liberty Fund Complex since 2000 (47) August 2000; Trustee of the Stein Roe Funds since October 2000; Vice President of the Liberty Mutual Funds and SteinRoe 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; Director of Alpha-Trade Inc. (broker-dealer), Colonial Advisory Services, Inc., Liberty Funds Distributor, Inc. and Liberty Funds Services, Inc. since April, 2000. Chief Operating Officer, Putnam Mutual Funds prior thereto. Thomas E. Stitzel Business Consultant since 1999; New nominee (64) Professor of Finance and Dean, College of Business, Boise State University prior thereto; Chartered Financial Analyst. Thomas C. Theobald Managing Director, William Blair Capital 1996 (62) Partners (private equity investing) since 1994; Chief Executive Officer and Chairman of the Board of Directors, Continental Bank Corporation (banking services) prior thereto. Anne-Lee Verville Consultant since 1997; General Manager, New nominee (55) Global Education Industry (global education applications) prior thereto; formerly President, Applications Solutions Division, IBM Corporation (global education and global applications) from 1991 to 1994.
- --------------------------- (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, the parent company of the advisors to the Funds and an indirect majority-owned subsidiary of Liberty Mutual Insurance Company. 32 The following persons who are currently serving on each Board of Trustees are not standing for reelection:
ELECTION AS NOMINEE NAME & AGE PRINCIPAL OCCUPATION (1) AND DIRECTORSHIPS TRUSTEE John A. Bacon Jr. Private Investor. 1998 (72) William W. Boyd Chairman and Director of Sterling 1994 (72) Plumbing (manufacturer of plumbing products). Lindsay Cook (2) Executive Vice President of Liberty 1994 (47) Financial since March 1997; Senior Vice President prior thereto.
- --------------------------- (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. Cook is an "interested person," as defined in the 1940 Act, because he is an officer of Liberty Financial. 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, Messrs. Bacon and Boyd, 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 33 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 36. 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 (Chairperson), 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, Attention: Secretary, One Financial Center, 11th Floor, Boston, Massachusetts 02111-2621. 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 34 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 Fund Portfolio - -------------------------------------------------------------------------------- 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 Value LITEF Liberty Intermediate
35 Fund Tax-Exempt 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 LMMMF Liberty Municipal Money China Fund Market 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 Fund Tax-Exempt Fund - -------------------------------------------------------------------------------- LCIF Liberty Contrarian LMATEF Liberty Massachusetts Income Fund Tax-Exempt 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. 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 for the Liberty Newport Global Utilities Fund (LNGUF), the Liberty Newport International Equity Fund (LNIEF) and The Liberty Fund (TLF). Liberty Financial will bear the cost of the solicitation which are estimated at $15,000, $15,000 and $100,000 for LNGUF, LNIEF and TLF, respectively. 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. 36 B. RECORD DATE AND QUORUM. Each shareholder of record of any Liberty Mutual 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 and 3. 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. 37 C. 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, Massachusetts 02111-2621. You may also revoke your proxy by voting again by using one of the following three ways: (a) by using your enclosed proxy card; (b) by fax (not available for all shareholders; refer to the enclosed proxy insert) or (c) voting in person at the Meetings. You may also revoke your vote telephonically by calling SCC at 1-800-732-3683. D. 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. You may submit shareholder proposals to the Secretary of the Liberty Mutual Funds, Attention: William J. Ballou, One Financial Center, 11th Floor, Boston, Massachusetts 02111-2621. E. 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 02111-2621 OR BY CALLING 1-800-426-3750. F. 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). G. 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 90 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 38 whether the meeting is adjourned to permit additional solicitation with respect to any other proposal. H. 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(h) 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. None of the persons have made such Section 16(a) filings for the fiscal year ended August 31, 2000. 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: 39
LIBERTY OUTSTANDING OUTSTANDING OUTSTANDING MUTUAL FUND 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 LTEF 144,371,138.034 15,870,162.790 389,499.862 LTEIF 16,346,727.166 3,265,663.585 73,256.843 LMMMF 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
OUTSTANDING LIBERTY CLASS A OUTSTANDING OUTSTANDING OUTSTANDING MUTUAL FUND SHARES CLASS B SHARES CLASS C SHARES CLASS I SHARES LCEF 4,080,501.791 28,816.534 608.519 591,404.515
OUTSTANDING LIBERTY CLASS A OUTSTANDING OUTSTANDING OUTSTANDING MUTUAL FUND SHARES CLASS B SHARES CLASS C SHARES CLASS Z 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
40
LIBERTY OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING MUTUAL FUND CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS J 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 SHARES CLASS B SHARES CLASS C SHARES CLASS I 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 SHARES CLASS B SHARES CLASS C SHARES CLASS T 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 SHARES CLASS B SHARES CLASS C SHARES CLASS J 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
41
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 at the Meetings but which are included 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(B) 10.69% Fenner & Smith, Inc. 1,173,308.314(C) 12.37% For the Sole Benefit of its Customers 4800 Deer Lake Drive E. 3rd Floor Jacksonville, FL 32216 LHYSF C Banc One Securities Corp 2,829,878.142 29.84% 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(B) 5.55% Fenner & Smith, Inc. 880,929.778(C) 12.09% BankBoston NA Custodian 4800 Deer Lake Drive E. 3rd Floor Jacksonville, FL 32216
42
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
43
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) 38,310.617(C) 12.45% For the Sole Benefit 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
44
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
45
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
46 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
47
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(A) 6.26% C Fenner & Smith, Inc. 588,410.739(B) 11.42% For the Sole Benefit 23,307.294(C) 6.60% of its Customers 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
48
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
49
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
50
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
51
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
52
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
53
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 LMMMF A Billy Gene Yarbrough 2,035,235.050 17.40% Louise Yarbrough Trustees Yarbrough Family Trust 97 Dobbins Street Vacaville, CA 95688 LMMMF B RSBCO 80,700.693 14.39% FBO Julianne F. Cole P.O. Drawer 1410 Ruston, LA 71273 LMMMF B Vincent Dellaquilla 32,071.970 5.72% Yolanda Dellaquilla Joann Lendroth 33 Wolcott Street New Haven, CT 06513 LMMMF B Charles R. Matties 94,190.420 16.79% Laura B. Matties 84 Overbrook Road West Hartford, CT 06107
54
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 LMMMF C David M. Sutcliffe 15,949.950 7.15% Trustee DCR Trust P.O. Box 220 Wrentham, MA 02093 LMMMF 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(B) 16.07% Fenner & Smith, Inc. 30,528.279(C) 15.22% For the Sole Benefit 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(A) 7.65% C Fenner & Smith, Inc. 566,811.317(B) 5.68% For the Sole Benefit 193,373.004(C) 28.03% of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 LCTTEF A, B & Merrill Lynch, Pierce, 1,119,185.003(A) 12.01% C Fenner & Smith, Inc. 1,323,067.710(B) 15.19% For the Sole Benefit 99,985.017(C) 20.56% of its Customers 4800 Deer Lake Drive 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
55
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(B) 17.77% For the Sole Benefit 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
56
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
57
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(A) 5.69% C Fenner & Smith, Inc. 3,773,008.783(B) 14.63% For the Sole Benefit 1,186,974.366(C) 28.73% of its Customers 4800 Deer Lake Drive E. 2nd Floor Jacksonville, FL 32246 LNTF A & Z Charles Schwab & Co 2,629,110.834(A) 9.45% Inc. 2,639,505.544(Z) 18.00% Attn: Mutual Fund Operations 333/4 101 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
58
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. 59 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 EXECUTIVE OFFICER - ---------- -------------------- ----------------- Stephen E. Gibson (46) President of the Liberty Funds Complex 1998 since June, 1998, President of the Stein Roe Funds since November, 1999; 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 since January, 2000; (formerly Assistant Chairman and Executive Vice President from August, 1998 to January, 2000; Managing Director of Marketing of Putnam Investments, June, 1992 to July, 1996.) Pamela A. McGrath (46) Treasurer and Chief Financial Officer of 1999 the Liberty Funds Complex and Liberty All-Star Funds since April, 2000; Treasurer of the Stein Roe Funds since April 2000; Treasurer and Chief Financial Officer since December, 1999 and Senior Vice President of LFG since April, 2000; 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 prior thereto. Glenn M. Wolfset (37) Controller and Chief Accounting Officer 2000 of the Liberty Funds since October, 2000; Senior Vice President of Colonial and LFG since March, 2000; Senior Vice President from 1999 to 2000 and Vice President from 1994 to 1999 of Scudder Kemper Investments.
60
EXECUTIVE OFFICER OFFICE WITH THE LIBERTY MUTUAL FUNDS; YEAR OF ELECTION AS NAME & AGE PRINCIPAL OCCUPATION EXECUTIVE OFFICER - ---------- -------------------- ----------------- Kevin M. Carome (44) Executive Vice President of Liberty Funds 2000 Complex and Liberty All-Star Funds since October, 2000; Executive Vice President of the Stein Roe Funds since May 1999; formerly Vice President from April, 1998 to May 1999, Assistant Secretary from April 1998 to February, 2000 and Secretary from February, 2000 to May, 2000); Chief Legal Officer, Liberty Financial since August, 2000; Senior Vice President, Legal, LFG since January, 1999; General Counsel and Secretary of Stein Roe since January, 1998; Associate General Counsel and Vice President of Liberty Financial prior thereto. William J. Ballou (35) Secretary of the Liberty Funds Complex and 2000 Liberty All-Star Funds since October, 2000; Assistant Secretary from October, 1997 to October, 2000 of the Liberty Funds Complex; Assistant Secretary of the Stein Roe Funds from May, 2000 to November, 2000; Vice President, Assistant Secretary and Counsel of Colonial since October, 1997; Vice President and Counsel since April, 2000 and Assistant Secretary since December, 1998 of LFG; Associate Counsel; Massachusetts Financial Services Company from May, 1995 to September, 1997; Associate, Ropes & Gray from September, 1991 to May, 1995).
(1) Except as otherwise noted, each individual has held the office indicated or other offices in the same company for the last five years. 61 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: 62
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(1) $1,146(2) $541(3) $1,387(4) 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(5) 993(6) 472(7) 1,094(8) Mr. Neuhauser 454 1,139 540 1,230 Mr. Stitzel 423 1,078 510 1,294 Ms. Verville 422(9) 1,066(10) 503(11) 1,316(12)
- -------- (1) Includes $234 payable in later years as deferred compensation. (2) Includes $593 payable in later years as deferred compensation. (3) Includes $276 payable in later years as deferred compensation. (4) Includes $636 payable in later years as deferred compensation. (5) Total compensation of $403 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (6) Total compensation of $993 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (7) Total compensation of $472 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (8) Total compensation of $1,094 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (9) Total compensation of $422 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (10) Total compensation of $1,066 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (11) Total compensation of $503 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (12) Total compensation of $1,316 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 63
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(13) $570(14) $3,590(15) $796(16) 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(17) 497(18) 2,906(19) 694(20) Mr. Neuhauser 989 568 3,260 791 Mr. Stitzel 1,039 537 3,376 749 Ms. Verville 1,055(21) 530(22) 3,429(23) 768(24)
- -------- (13) Includes $511 payable in later years as deferred compensation. (14) Includes $291 payable in later years as deferred compensation. (15) Includes $1,697 payable in later years as deferred compensation. (16) Includes $409 payable in later years as deferred compensation. (17) Total compensation of $879 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (18) Total compensation of $497 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (19) Total compensation of $2,906 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (20) Total compensation of $694 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (21) Total compensation of $1,055 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (22) Total compensation of $530 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (23) Total compensation of $3,429 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (24) Total compensation of $768 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 64
LIBERTY MUTUAL FUND TLF LTMAGF - --------------------------------------------------------------- FISCAL YEAR END 10/31/99 10/31/99(25) - --------------------------------------------------------------- TRUSTEE: Mr. Bleasdale $7,468(26) $451(27) 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(28) 451(29) Mr. Neuhauser 6,728 455 Mr. Stitzel 6,971 433 Ms. Verville 7,088(30) 451(31)
- -------- (25) 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. (26) Includes $3,508 payable in later years as deferred compensation. (27) Includes $232 payable in later years as deferred compensation. (28) Total compensation of $6,007 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (29) Total compensation of $451 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (30) Total compensation of $7,088 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (31) Total compensation of $451 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. 65
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(32) $10,598(33) $1,312(34) $1,303(35) 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(36) 9,384(37) 1,160(38) 1,153(39) Mr. Neuhauser 83 10,504 1,304 1,295 Mr. Stitzel 144 9,985 1,241 1,232 Ms. Verville 144(40) 9,869(41) 1,222(42) 1,214(43)
- -------- (32) Includes $73 payable in later years as deferred compensation. (33) Includes $5,487 payable in later years as deferred compensation. (34) Includes $675 payable in later years as deferred compensation. (35) Includes $670 payable in later years as deferred compensation. (36) Total compensation of $129 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (37) Total compensation of $9,384 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. (38) Total compensation of $1,160 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. (39) Total compensation of $1,153 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. (40) Total compensation of $144 for the fiscal year ended October 31, 1999, will be payable in later years as deferred compensation. (41) Total compensation of $9,869 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. (42) Total compensation of $1,222 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. (43) Total compensation of $1,214 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. 66
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(44) $5,056(45) $1,156(46) $6,723(47) Ms. Collins 4,375 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(48) 4,485(49) 1,022(50) 5,851(51) Mr. Neuhauser 4,608 4,962 1,138 6,566 Mr. Stitzel 4,379 4,692 1,076 6,260 Ms. Verville 4,328(52) 4,710(53) 1,076(54) 6,301(55)
- -------- (44) Includes $2,405 payable in later years as deferred compensation. (45) Includes $2,573 payable in later years as deferred compensation. (46) Includes $594 payable in later years as deferred compensation. (47) Includes $2,832 payable in later years as deferred compensation. (48) Total compensation of $4,112 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. (49) Total compensation of $4,485 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. (50) Total compensation of $1,022 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. (51) Total compensation of $5,851 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. (52) Total compensation of $4,328 for the fiscal year ended November 30, 1999, will be payable in later years as deferred compensation. (53) Total compensation of $4,710 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. (54) Total compensation of $1,076 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. (55) Total compensation of $6,301 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. 67
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(56) $1,779(57) $1,173(58) $1,398(59) 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(60) 1,568(61) 1,035(62) 1,233(63) Mr. Neuhauser 3,546 1,750 1,155 1,376 Mr. Stitzel 3,357 1,645 1,084 1,292 Ms. Verville 3,372(64) 1,661(65) 1,095(66) 1,305(67)
- ---------------------------------------------------- (56) Includes $1,820 payable in later years as deferred compensation. (57) Includes $903 payable in later years as deferred compensation. (58) Includes $595 payable in later years as deferred compensation. (59) Includes $709 payable in later years as deferred compensation. (60) Total compensation of $3,198 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. (61) Total compensation of $1,568 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. (62) Total compensation of $1,035 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. (63) Total compensation of $1,233 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. (64) Total compensation of $3,372 for the fiscal year ended December 31, 1999, will be payable in later years as deferred compensation. (65) Total compensation of $1,661 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. (66) Total compensation of $1,095 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. (67) Total compensation of $1,305 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. 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(68) $916(69) $5,278(70) $588(71) 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(72) 807(73) 5,029(74) 561(75) Mr. Neuhauser 934 903 5,040 564 Mr. Stitzel 876 847 4,809 536 Ms. Verville 885(76) 855(77) 4,748(78) 528(79)
- -------- (68) Includes $479 payable in later years as deferred compensation. (69) Includes $463 payable in later years as deferred compensation. (70) Includes $2,576 payable in later years as deferred compensation. (71) Includes $290 payable in later years as deferred compensation. (72) Total compensation of $836 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. (73) Total compensation of $807 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. (74) Total compensation of $5,029 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. (75) Total compensation of $561 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. (76) Total compensation of $885 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. (77) Total compensation of $855 for the fiscal year ended January 31, 2000, will be payable in later years as deferred compensation. (78) Total compensation of $4,748 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. (79) Total compensation of $528 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. 69
LIBERTY MUTUAL FUND LMMF LMMMF LFRAF LIGF - ------------------------------------------------------------------------------------------------- FISCAL YEAR END 6/30/00 6/30/00 8/31/00 8/31/00 - ------------------------------------------------------------------------------------------------- TRUSTEE: Mr. Bleasdale $1,608(80) $602(81) $239(82) $3,484(83) 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(84) 573(85) 233(86) 3,312(87) Mr. Neuhauser 1,535 577 217 3,333 Mr. Stitzel 1,464 548 210 3,183 Ms. Verville 1,311(88) 541(89) 207(90) 3,206(91)
(80) Includes $792 payable in later years as deferred compensation. (81) Includes $300 payable in later years as deferred compensation. (82) Includes $77 payable in later years as deferred compensation. (83) Includes $1,752 payable in later years as deferred compensation. (84) Total compensation of $1,532 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. (85) Total compensation of $573 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. (86) Total compensation of $233 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. (87) Total compensation of $3,312 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. (88) Total compensation of $1,311 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. (89) Total compensation of $541 for the fiscal year ended June 30, 2000, will be payable in later years as deferred compensation. (90) Total compensation of $207 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. (91) Total compensation of $3,206 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 70
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(92) $811(93) $3,250(94) $361(95) 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(96) 776(97) 3,093(98) 354(99) Mr. Neuhauser 875 775 3,105 341 Mr. Stitzel 705 740 2,969 326 Ms. Verville 709(100) 744(101) 2,990(102) 326(103)
(92) Includes $384 payable in later years as deferred compensation. (93) Includes $394 payable in later years as deferred compensation. (94) Includes $1,629 payable in later years as deferred compensation. (95) Includes $162 payable in later years as deferred compensation. (96) Total compensation of $736 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. (97) Total compensation of $776 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. (98) Total compensation of $3,093 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. (99) Total compensation of $354 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. (100) Total compensation of $709 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. (101) Total compensation of $744 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. (102) Total compensation of $2,990 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. (103) Total compensation of $326 for the fiscal year ended August 31, 2000, will be payable in later years as deferred compensation. 71
TOTAL COMPENSATION PAID FROM LIBERTY FUND COMPLEX TO THE BOARD OF TRUSTEES LIBERTY MUTUAL FUND FOR THE CALENDAR YEAR ENDED* - ----------------------------------------------------------------- TRUSTEE: Mr. Bleasdale $103,000(104) Ms. Collins 96,000 Mr. Grinnell 100,000 Mr. Lowry 97,000 Mr. Macera 95,000 Mr. Mayer 101,000 Mr. Moody 91,000(105) Mr. Neuhauser 101,252 Mr. Stitzel 95,000 Ms. Verville 96,000(106)
(104) Includes $52,000 payable in later years as deferred compensation. (105) Total compensation of $91,000 for the calendar year ended December 31, 1999, will be payable in later years as deferred compensation. (106) 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 at the Meetings but which are included in a separate proxy statement. 72 The following table sets forth the compensation paid to certain Trustees 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, 1999(107) - ----------------------------------------------------------- James E. Grinnell 25,000 Richard W. Lowry 25,000 William E. Mayer 25,000 John J. Neuhauser 25,000
(107) 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). 73 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. A-1 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. 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. A-2 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. A-3 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 B-1 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. B-2 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 B-3 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. B-4 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. B-5 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: B-6 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. 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 INSTRUCTION: to withhhold authority to vote for any individual nominee(s), mark the "For All Except" box and strike a line through the name(s) of the nominee(s). Your shares will be voted for the remaining nominee(s). For Withheld For All All From All Nominees Nominees Nominees Except as Noted __ __ __ |__| |__| |__| MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE AT LEFT |__| 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. Please be sure to sign and date this Proxy 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. 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 INSTRUCTION: to withhhold authority to vote for any individual nominee(s), mark the "For All Except" box and strike a line through the name(s) of the nominee(s). Your shares will be voted for the remaining nominee(s). For Withheld For All All From All Nominees Nominees Nominees Except as Noted __ __ __ |__| |__| |__| 2. To approve or disapprove a sub-advisory agreement with Unibank Securities, Inc. (Item 3 of the Notice). For Against Abstain __ __ __ |__| |__| |__| MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE AT LEFT |__| 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. Please be sure to sign and date this Proxy 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. 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 INSTRUCTION: to withhhold authority to vote for any individual nominee(s), mark the "For All Except" box and strike a line through the name(s) of the nominee(s). Your shares will be voted for the remaining nominee(s). 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 2 of the Notice). For Against Abstain __ __ __ |__| |__| |__| MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE AT LEFT |__| 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. Please be sure to sign and date the Proxy. 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. 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 INSTRUCTION: to withhhold authority to vote for any individual nominee(s), mark the "For All Except" box and strike a line through the name(s) of the nominee(s). Your shares will be voted for the remaining nominee(s). For Withheld For All All From All Nominees Nominees Nominees Except as Noted __ __ __ |__| |__| |__| 2. To authorize the Fund to cast vote for the same nominees for the election of a Board of Trustees of SR&F Base Trust for whom you voted above (Item 4 of the Notice). For Against Abstain __ __ __ |__| |__| |__| MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE at LEFT |__| 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. Please be sure to sign and date this Proxy Date_________________ _________________________ ______________________ Shareholder sign here Co-owner sign here TWO CONVENIENT WAYS TO VOTE YOUR PROXY The enclosed proxy statement provides details on important issues affecting your Liberty Funds. The Board of Trustees recommends that you vote for all proposals. We are offering two additional ways to vote: by telephone or fax. These methods may be faster and more convenient than the traditional method of mailing back your proxy card. If you are voting by telephone or fax, you SHOULD NOT mail your proxy card. Vote by Telephone: o Read the proxy statement and have your proxy card available. o When you are ready to vote, call toll free 1-877-518-9416 between 9:00 a.m. and 11:00 p.m. EST. o Following the instructions provided to cast your vote. A representative will be available to answer questions. Vote by Fax: o Read the proxy statement o Complete the enclosed proxy card. o Fax your proxy card to 1-800-733-1885. YOUR PROXY VOTE IS IMPORTANT! SHM-43/623D-1000 (11/00) 00/2027 -----END PRIVACY-ENHANCED MESSAGE-----