SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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/ / Preliminary Proxy Statement
/ / Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e) (2))
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Columbia U.S. Government Securities Fund, Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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/x / No fee required
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of Schedule 14A
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
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Definitive Additional Material
(This page is from the Fund's 2000 Semi-Annual Report may be deemed soliciting
material)
Fund Developments
Recently, the Board of Directors of Columbia U.S. Government Securities
Fund approved a number of changes that are intended to increase the Fund's
overall investment flexibility and performance potential. A proxy statement
requesting shareholders to vote on the changes--which include a new name,
investment objective and strategy--was recently mailed to investors in the Fund.
Currently, the Fund's Investment objective seeks preservation of
capital and a high level of income by investing at least 80% of its assets in
direct obligations of the U.S. Government. If approved by shareholders, the
Fund's new investment objective would be to seek a high level of current income
consistent with a high degree of stability. The Fund would achieve this
objective by investing primarily in high quality, short-term fixed income
instruments. This change would allow the Fund to invest in a wider array of
short-term, high quality bonds, including debt of federal agencies,
investment-grade corporate bonds, asset-backed securities and mortgage-related
securities, as well as some non-investment grade bonds (no more than 10% of Fund
assets). The intent is to generate substantially higher income and potentially
greater total return with only a small increase in risk. Furthermore, the name
of the Fund would be changed to Columbia Short Term Bond Fund to better reflect
the investment objective and strategy.
For investors living in high income tax states, a fund investing
primarily in government securities can provide relief from state taxes. However,
the Fund's Board believes that the potential yield advantage afforded by
changing the Fund's investment objective and strategy will, over the long-term,
offset the reduced state tax benefit. We anticipate that the Fund will continue
to provide some opportunity for state tax relief as it is expected that the Fund
will invest between 0% and 30% of its assets in U.S. Government obligations.
Another benefit of the proposed change in investment objective and
strategy would be lower expenses. While the investment advisory fee would remain
at 0.50%, operating expenses (which were an additional 0.41% of net assets in
1999) would be capped at 0.25%, for an overall lower fee of 0.75% of net assets.
These lower fees would further enhance the return potential for the Fund.
Both the Board and the Fund's current management believe that the
proposed changes to the Fund will be in the best interests of investors.
Shareholders in the Fund are encouraged to vote in favor of the proposal, and
any questions about the vote may be directed to Columbia at 1-800-547-1707. We
look forward to the results of the Special Meeting of Shareholders on September
15.
Thank you for your investment in Columbia U.S. Government Securities
Fund.
Jeffrey L. Rippey
Portfolio Manager
